strategy+business is published by PwC Strategy& LLC.
or, sign in with:
strategy and business
 / Autumn 2006 / Issue 44(originally published by Booz & Company)


Janine Benyus: The Thought Leader Interview

We’ll know there’s been a sea change when the consumer takes Wal-Mart’s stand on PVC packaging as a given and carries it to other merchants: “Well, you know, all of their packaging is PVC-free. Why isn’t yours?”

We’re already seeing indicators in the organic food sector. You see it in labeling schemes; people look for Energy Star on appliances and dolphin-safe tuna. It goes from being fringe to the mainstream. Suddenly, it seems, those concerns are simply part of the way we make sense of our shopping experience, as tools for sorting, and as retailers begin to use them more to differentiate themselves and to pull customers in the door.

This always begins with the early adopters. But then the media makes a story of organic baby food versus nonorganic baby food, and suddenly being a good mom means buying organic baby food. And then a company like Wal-Mart starts carrying organic baby food. And of course, it’s got to break over some point where the price becomes affordable. At that point, the customers change from the early adopters who will pay a premium to move the market, to the pragmatists — those who just want to buy something that works well and is as good as it can possibly be but is still affordable. I think we’re starting to see that in some products, not all.

S+B: How does this dynamic play out for a company like GE?
GE is taking a big stand in branding sustainability not only as its differentiator, but as a statement of common sense: “Once we know how to build a clean locomotive engine, why would we do it the dirty way?” It’s branding itself as an innovation company, and setting the standard for its competitors. Any other company selling the old technology will look obsolete. Eventually it will make enough clean locomotives that the price will be affordable, and once that happens, any other company realizes, “We’d better figure out something that is at least as energy efficient, or even more so.” And that’s when you start to have one of these positive feedback effects.

S+B: So going green can set up a kind of virtuous circle, wherein a company’s move toward sustainability sets off a greater demand?
Yes. I’m watching companies that are embracing sustainability depend very heavily on their customers for a new kind of loyalty — it’s more than loyalty, it’s what you would call a co-evolution. The customer who wants sustainable products is pushing the company to produce those products, and the company in turn is listening to that customer and trying to meet their needs, and also educating the customer about the next step in sustainability. This is what you see in complex ecosystems: symbiosis.

Right now, we don’t think of Wal-Mart’s customer base as demanding greener practices; we think of that customer base as sorting on price, and that’s how Wal-Mart has branded itself. But it may come to the point, as the green supply chain educates Wal-Mart, that Wal-Mart in turn will push the green supply chain to get greener. There’s a co-evolution there that can extend even further. Wal-Mart may begin to brand itself around the green offerings, and so it may begin to educate its consumers, and then its consumer base will start to push Wal-Mart even further.

It’s really the story of evolution. You have organisms that are attempting to excel at what they’re doing, while other species are always coming in and looking for opportunities to excel — and all of them have to be economical. So, there’s a standard and that is always rising. Leader organizations can move that standard. Like GE and Wal-Mart, they put their stake in the ground and say, “Here’s the new finish line.” Or as Nike, another leader, says, “It’s the ‘no finish’ line,” because hopefully you keep moving that line. And everybody has to step up.

Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store


Sign up to receive s+b newsletters and get a FREE Strategy eBook

You will initially receive up to two newsletters/week. You can unsubscribe from any newsletter by using the link found in each newsletter.