State of Green Business
A Look Inside the Most Sustainable Company on Earth
A Look Inside the Most Sustainable Company on Earth
Marc Gunther: This is Mark Gunther for Greenbiz.com. I’m here today with Ray Anderson. Ray is one of the pioneers for the corporate sustainability movement. He’s the chairman of Interface Carpet, and he’s the author of a new book. The title is Confessions of a Radical Industrialist. Ray, what’s a radical industrialist? It sounds like an oxymoron to me.
Ray Anderson: Well an industrialist woke up one day to realize he had been doing it all wrong all through the years and that the whole industrial system of which he was a part needed to change and needed to change towards sustainability as opposed to the voracious consuming system that we had, or excuse me, still have.
MG: And still have. Right. Well you started Interface in 1973, am I right?
MG: And it was about 20 years later that you decided to change course, that you woke up as you put it. What led you to say, "Where are we going?"
RA: It was the summer of 1994, in our 22nd year I guess, and we began to hear a question from our customers that we never heard before especially from interior designers and architects, and the question was, what's your company doing for the environment?
And we had no answers, so we created a task force in our company to bring people from our businesses around the world to see what we were doing and begin to frame some answers for those customers. The organizers for the task force insisted that I had to launch the task force. Give it a kickoff speech with my environmental vision, but I didn't have an environmental vision. I didn't want to make that speech.
I dragged my feet, I hemmed, I hawed. They stayed on my case and finally I relented and agreed to speak. The date was set, August 31, 1994. Come the middle of August I have not a clue as to what to say. I cannot get beyond, "We obey the law. You comply." About that time that propitious moment, Paul Hawkins's book The Ecology of Commerce landed on my desk and I began to read it. It was a spear in the chest, a real revelation, an eye-opening epiphany. I don't know a better word to describe it.
Hawkin made his central point in three parts. One, the living systems and life support systems of the earth in decline. That's the biosphere that supports all of life is in decline, and he presented plenty of evidence to back up that assertion, and then he said the biggest culprit in this decline is the industrial system. It's the way we make stuff, the take make waste industrial system, digging up the earth and converting it into products that end up in landfills and incinerators very quickly, very short-lived.
Then he says there's really only one institution on earth that's large enough and powerful enough and pervasive enough and wealthy enough to really change all that, and it's not government and it's not the church and it's not education. It is the institution of business and industry, the very institution doing the damage, my institution. So I took all that in. I took it very, very seriously. I made that speech to that little task force and challenged them to lead our company to sustainability and beyond to make interface eventually a restorative company, to put back more than we take from the earth and do good for the earth, not just "no harm."
MG: I want to talk about that in a minute, but first it's obviously been a long journey. What would you say is sort of the single most important change that you made? Do you want to talk about the business model a little bit?
RA: Yeah. The business model is certainly what has emerged, but the biggest single fundamental change is in the attitude and the mindset of our people.
We began with a company full of skeptics. Nobody knew what this meant in 1994. I didn't know what it meant really when I challenged that little group to lead our company to sustainability, but in time with a lot of reading, a lot of study, and a lot of conversation and collaboration, a clear view of what sustainability meant for Interface emerged, and one mind at a time our people came aboard.
That's the way it happens, one mind at a time. To get 4,000 people to change their minds over the course of years is a monumental accomplishment really.
MG: So it really has to be a group effort, because otherwise the whole attempt will not be sustainable if it rests in the CEO's office.
RA: Absolutely right. It absolutely has to be top down, but it also has to be bottom up. You sort of have to meet there in the middle on the common ground. This is one Earth. It's the only Earth we have and we'd better take care of it.
Nature undergirds civilization itself, and if we don't take care of nature and nature doesn't take care of us, we won't have an industrial system someday. We don't have a civilization someday. Nature is the goose that lays all the golden eggs and we don't wanna squeeze her to death.
MG: So talk about the change of the business model because I do think it's a kind of a shift that we could see beginning to be adopted by other industries as well.
RA: Right. As we look at our own business model we are taking raw materials from the Earth through a supply chain, creating products in this linear take-make-waste system that's common to the industrial system, all of that driven by fossil fuel derived energy, wasteful, abusive, and focused on labor productivity, more carpet per man-hour.
As we studied that system we realized that linear had to give way to cyclical, that fossil energy had to give way to renewable energy, that wasteful had to give way to waste-free, abusive to benign, and that we had to learn to focus on resource productivity, the productivity of all resources, not just labor.
When you think about that you have just modeled an industrial system after nature, because nature is all of those things: cyclical, renewable, waste-free, benign, and nature is of course very productive.
MG: You were into biomimicry before the word was invented.
RA: That's exactly true and when I read Janine's book, Biomimicry and got to the last chapter, it described Interface. She had never met anyone and knew nothing about Interface, never met anyone from Interface. I didn't know her until I read her book and then met her later, but she had described Interface in general terms.
MG: Again for people who don't know the company, give me a brief description of how you did change the business model from selling and disposing of carpet to something else.
RA: Well we make carpet tiles primarily, but also broad-length carpet, but the core business is modular carpet, and we make carpet tiles around the world. It's this linear take-make-waste system. Well we set out very early on to create a system that would sell the service that the product delivers as opposed to selling the product itself.
For us that means color, texture, comfort under foot, design, ambiance, functionality, acoustical control, all the reasons anybody would want our product become the service that the product delivers, and we would retain ownership in the stuff, the means of delivery.
That approach to the market did not fly. There was so many impediments that became just too hard, but –- and then today practically all of our business is done in transactional mode, selling the stuff yet again but with a commitment to take the stuff back at the end of its life.
MG: You're not retaining ownership, but you're into a circular model.
RA: Right, but the day will come when retaining ownership becomes the economically advantageous way not only for us but for our customers as well. When we get the price of oil where it ought to be, a lot higher than it is today, and all of this new system, this cyclical system, renewable system is in place and working at 100 percent effectiveness, it will turn out to be more economical to sell the service than to sell the product.
MG: And what percentage would you say of the carpet that goes out the door of Interface ends up coming back, roughly?
RA: 35 percent today.
MG: And you get that to 100, right?
RA: Absolutely, and I say 35 percent today because 35 percent of our raw material today is coming from recycled materials and some bio-based material but renewable sources.
MG: So we're sitting here doing this interview. I have a tape recorder stuck in your face. I'm looking at my computer. Theoretically Olympus, who made the tape recorder could sell me the ability to do digital tapes, take the recorder back when I'm done. Apple, who sold me the computer could be selling me computing power rather than a computer, take it back when it's done. This is an idea that is scaleable at least in theory, correct?
RA: Absolutely. I lease a car today. It's the very same model, and three years from now let the manufacturer have it back. It doesn't actually today go to the manufacturer, but someday it will when the manufacturer has been smart enough to build the car so this can be disassembled into its individual components. Many of those salvaged for life after life.
MG: And so when you know something is coming back you also make it differently, right?
RA: You do. You make it for disassembly. You make it for the most economical approach. Disassembly would be part of the picture. Today we make the stuff too well. [Laughing] We make it, and it's really hard to take it apart, but as we improve the technologies we will be making it for disassembly.
MG: Just a couple of other questions, Ray. Reading from your book this transformation of the business model, cut greenhouse gasses by 82 percent, fossil fuel consumption by 60 percent, waste by 66 percent, water use by 75 percent. Of course the numbers a lot of businesspeople are gonna wonder about are sales and profitability. What's been the impact on the company purely from a business standpoint?
RA: Over that same period of time those reductions were achieved, sales increased 60 percent and profits doubled.
MG: So it's been good for business.
RA: Yeah, and that spans the recession in our industry that's the deepest recession since 1929, so we survived that recession when we might not have without the advantages of sustainability.
When I talk about the advantages it's very clear cut. Our costs are down, not up. The waste elimination effort alone, the first face of Mount Sustainability, has produced over $400 million in waste avoidance, cost avoidance, which has more than paid for all the rest of the sustainability initiative, so sustainability for us has been self-funding. Our products are the best they've ever been.
Biomimicry again has given inspiration to our product designers that they never would've dreamed of without Janine Benyus's stimulating, amazing book. Our people are galvanized around this shad higher purpose.
Maslow said it along time ago. At the top of this pyramid of human needs is this need for self-actualization and that translates into being associated with a higher purpose, and that has brought our people together in ways we would've never imagined and enabled us to hire better people too. I mean, people are seeking out Interface not because we make carpets, but because we're changing the way everything is made and creating the example.
And finally the goodwill of the marketplace has just been astonishing. There's no amount of marketing, of clever promotions, anything we could've done at any cost that would've created the goodwill that this initiative has.
MG: So my last question. You've become in the last five or ten years, maybe a little bit more, along with people like Paul Hawken and Janine Benyus who you say have influenced you one of the evangelists for sustainability in the business world. Taking a broad view, you know what's going on at places like GE and Wal-Mart and we saw Newsweek just came out with a list of the greenest big companies. Is the pace of change that you're seeing in corporate America sufficient to deal with the scope of the environmental problems we're facing?
RA: We have a long way to go, but the pace is quickening and that is very encouraging. You don't have to go back more than five years to see practically nothing being done. I mean we were voices in the wilderness, but business is coming aboard and I think probably [Hurricane] Katrina and Al Gore's movie, that one-two punch was the single biggest stimulus that got business going and created an awareness. Like Deepak Chopra says, people are doing the best they can given their level of awareness. This whole transformation is about raising level of awareness.
MG: Yeah. Well great, Ray. It's been a great pleasure talking to you. Thanks for the book, thanks for your hard work on sustainability, and thanks for sitting down today.
RA: Thank you.
GreenBiz.com Senior Writer Marc Gunther is a longtime journalist and speaker whose focus is business and sustainability. Marc maintains a blog at MarcGunther.com. You can follow him on Twitter @marcGunther.