Good Business at PSFK Conference New York 2008
MARC: Thank you Piers for inviting me back and putting together an incredible and diverse panel. Companies are struggling with idea of being a good business, and now there’s a certain organizations that are applying metrics. How they’re confronting climate change, government, these social responsibilities. And scandals. Most companies equate these with their bottom line. Jeffrey Hollender, founder of a truly good business, Seventh Generation. Graham Hill, founder of Treehugger, audience base increasingly growing. Joined forces with discovery channel, new program called Planet Green. Jeff Staple, cultural influencer. Designer, artist, entrepreneur, founder of Staple space. Going to talk about Nike and a call about a green shoe design. Finally, Johnny Vulkan, head of Anomaly, nominated one of the most innovative companies, # 24.
We’re living in interesting times. Start with Jeffrey, what it means to start a company from the ground up and run it for as long as he has. Founded on different principles and metrics.
JEFFREY: In this world of companies figuring out how to be responsible, we were founded with the mission to have a positive effect on society, and belief that a business can do that and be more successful than most businesses. Failed to prove that in the first 10 years, but the second 10 have been much better. No one talked about this for the first 18 and 19 years. It’s wonderful to see so many companies want to do something good. What’s terrifying is that you can’t give away money with one hand and steal it with another. If you think about Clorox, green works are great products. The problem is, what about all the other cleaning products they sell? Probably the most dangerous you could have in your house. Ecoimagination is a wonderful thing that GE is going, but cold power and nuclear plants are not wonderful. You want to support them but when there isn’t transparency around what they’re doing, it’s problematic. We’re at a time in history where if we don’t get ourselves out of the mess we’re in, I don’t know who will. Not our political figures. Over the next years it will be telling if companies can be transparent so we can see the good and the not so good ones. And if they can break free of the paradigm that good is what you do some of the time but not all the time. Even for Seventh Generation, what we’ve succeeded in doing is being less bad. The notion of a company or product that on a total basis is actually good so that the world is really a better place, social equity, justice, all the factors we have to consider – sustainability is about the whole system of our planet. I can’t say that Seventh Generation in total has left the world a better place. That’s the goal that business faces. How do we be good instead of less bad?
MARC: Nike is a good case study, faced their moment of truth when the sweatshops affected their corporate reputation. Often find themselves faced with these situations that affect their bottom line.
JEFF: The project was code name Ecotech, environmentally sustainable shoe. Richard Clark was getting no love from Nike. You have a $2billion company with no regard to the company at all. So if we set resources to make one shoe to save the environment, what do the other 199 styles say? He needed to come together with a brand of radicals within Nike, had to go to an outside agency which was Staple Design because we’d been doing work with them before. So having to change hears is a very different paradox to work with. We had to change people’s opinions one person at a time. We developed a shoe – these were early sketches. What does it have to do? What are the checkpoints to allow us to call it environmentally sustainable? Goes from materials to manufacturing, production, even through sales and marketing. Everything has to be green. And these are some of the images (SHOWS PICTURES). Ended up calling it Nike Considered. In our space downtown, we did the launch for it. Nike has to deal with the backlash. We don’t want to come off as saviors, turn into bad PR. People think we’re trying to brush away what happened with our labor issues. It was gorilla, grass roots. It was about innovation and technology and doing something good with that. But it wasn’t saving the world. We converted our space into a workshop so that my mission was to dispel any doubt people might have had, what’s hiding up Nike’s sleeve? We laid it all out. There is not glue, toxins, adhesives, every piece is renewable, no air freighting. We had to show and prove. We nailed shoes to the wall split them open, and proved it to everybody. Here is Air Jordan next the green one. It’s all about high performance, $200 footwear, and then buy the next one. But this one, #23, the final Air Jordan, is completely made with Considered sensibilities in it. But there’s no PR behind it at all. It’s the evolution from that to that. The idea is to get people into this culture is to buy it and discover it on their own. So the evolution from what we did in 2002 to now 2008, people in the NBA now playing in a green shoe. You can say what you want about Nike, but it is an amazing thing. If you can turn a big ship just a little bit, it’s amazing what the ripple effect can be.
MARC: Green is tied so much to consumer behavior. To an extent, that’s important. That’s not gonna get us to where we need to go. What undercurrents this is how much is in the hand of the consumer. And how much does a company have to take on to make the choice invisible. How much on an infrastructure level to change the way business is done, things invisible to the average consumer. Nike made it invisible to them, and it’s designs all these decisions, employees, how they treat vendors overseas. It has a ripple effect. Design decisions affect 80% of how the product is made.
JOHNNY: What can we do to impact the shift of brands? Talking about Coca Cola. It’s on us to try to lead people and encourage brands to engage in that conversation. It’s happening in large beverage companies. They’re going to resolve it in their actions. I think we have to provide them with the competence to go with, to show some guys at Coke how you can do things. If that ship does move, the impact will be profound. Bottled water – fundamentally what our company tries to do is to help brands bet to a better place. In business and society sense. A lot of people feel guilty about bottled water, a lot don’t. It has a role. When you’re out, water is a valid choice to have. The water manufacturers have to take full responsibility the same way they do for every product. And they’re ready to do it – to replenish the water used in production, the full life of packaging and where it ends up. Coke just built the largest recycling plant in America, collecting recycled items from your home. As a society we like to pick easy targets Air travel – don’t know who will say they’re never going to fly to Europe ever again. Have to do research in solving these things rather than pointing fingers.
MARC: Framework that Piers set up, not necessarily being green. A lot of water companies are in the cross hairs, symbol of what’s wrong with the world. A lot of water companies are tying their product to some sort of social good. World water day. Most have stepped up to the plate. But it opens the discussion, the product itself vs. the message you’re sending. 50 cents is going to good causes – offset of the product itself and the externalities, contributing to good in the world. A lot of companies invested in an old way of making things are faced with, well, what can we do? The best we can do is try to give back. Some consider that Greenwashing. Is that a valid response?
JEFF: Change is difficult. Human nature is one of the hardest things to change. Much easier to donate money. That’s why it’s an initial reaction. It’s easy and it’s fast.
JEFFREY: What is so challenging, no, I don’t’ want to not challenge Nike or Coke to move in the right direction. We don’t’ have a system that says how good do you have to be to be good enough? Cigarette companies? We don’t have any standards. It’s hard for consumers to make decisions. There is no standard, other than the one, the B corporation. It’s a fantastic idea. We’re a charter member. In general, there aren’t standards. That has done a huge amount for green construction. There is a standard. There’s no standard for a good company.
JOHNNY: If share prices are going up, you’re succeeding. What other metrics can we create and measure what is good. What it might feel like and look like. It starts at individual level, conversations you have at your company. And your own value judgment on that. It’s hard to put a metric on that. But it’s a starting point. It’s individuals that have often triggered the way we think about it.
JEFF: There’s shame, and there’s being looked up to. Example of littering, in the 70’s. Now that’s just not appropriate. A lot is evolving as human. In the day, might have been a way for better slavery, donate to certain causes. We have more equality for the sexes, for races, animals. And that social part’s so important. We’re seeing some of the touchstones, bottled water, SUV’s. We will see this over time, piece by piece. One of our biggest problems is in the architecture area, having huge houses. Hopefully it will all become less acceptable, you’ll be looked down upon for drinking bottled water.
GRAHAM: About metrics – when a smaller company that started with pure DNA then gets merged or acquired by Clorox – I hear a lot of backlash against that. They’ve sold out, sold their soul to the devil. If you’re doing something better for the earth and you have means of spreading that goodness using billions of dollars of backing, is that not a good thing? Maybe that is a sellout.
JEFF: The big question is if it changes? If it stays the same and affects the rest of the company, it’s fantastic.
JEFFREY: Of 100 organic companies around ten years ago, 95 of them are now part of big multi-national companies. I’m not sure you can guy the values and belief system required to make a good company. If it’s not there from the leadership of the company, in their DNA – you can’t buy being a nicer guy. It’s part of business we don’t want to talk about. It’s not easy trying to be good. We all do a lot of bad stuff. None of us are perfect. And it’s true with a company. They want to hide the bad stuff they do and talk about the good stuff. Unfortunately, the world is changing so that today, we’ve had this huge exposure, you’re gonna be exposed whether you like it or not. You can proactively frame what they’re doing wrong and need to change – it’s critical to talk about not only what they need to do, but to shift 20% of production over this period of time. If you don’t make these commitments, it’s hard to be credible.
JEFF: What’s happened to those 95 companies? Have they been influenced?
JEFFREY: Have a lot to do with the culture of the acquirer. Aveda has been left alone. People from Ben and Jerry’s were imposed on by Unilever, squeezed the heart and soul out of the company, and people who were there for that reason have left. A big company can’t say that’s the way they’re going to be enlightened, by buying a little bit of goodness.
MARC: The Staple example, internal evangelism that can effect change within a given company.
GRAHAM: In our case, we were a dozen people who worked on the project. We had to make a prototype and working model. We had to show it to the CEO, straight to the top. We had to put it on Mark’s desk. If he hated it, it was dead. If he loved it, he brought it down and showed it to the rest.
JEFF: Nike at its core is a design company. Designers are at heart problem solvers. You think it matters?
GRAHAM: Definitely. You get thousands of talented people together, they’re gonna makes some good stuff. When it won the silver award for product design – where were you two years ago? Again, back to measuring metrics. We’re doing this, hence, we’re good. That is, I think, the next challenge.
QUESTION: For a log of CPG products, how much is the influence and up to retailers to measure the products they want to be carrying and will it accelerate the process?
JEFFREY: Absolutely. I used to talk about Wal-Mart as the favorite company to hate. They can drive more change quicker than anyone else. They said all laundry detergent has to be double concentrated. Because we don’t have consumer or government demanding change, companies can drive change the quickest in this environment.
JEFF: They’re the market in a way so when they state their demands, it just ripples.
QUESTION: Professor Mohammed Unis, Nobel Prize for micro lending program, proposed the separate metrics to the marketplace to Wall Street, more social and cultural responsibilities. Ideas?
JEFF: I completely agree.
JEFFREY: If you want to look for good businesses, the businesses he’s started come as close as you can get.
GRAHAM: It’s gonna be very difficult to change. They want to be on top and win. If you set up a game for them to play, they will want to win.
JEFFREY: He basically says, businesses that can make money will always focus on making money. So you need a new form of social enterprise, businesses that are responsible. A mixture between a profit and non-profit. Their mission is to serve their constituents, not to make money. It’s definitely worth reading.
MARC: Tonight Paul Pollack, works on a very grass roots level, works with micro loans, whole different take on the idea of corporate philanthropy, to help improve the lives of people. People are naturally entrepreneurial. He’s speaking tonight at Pratt at 6PM. Thank you very much.