Related collections and offers
|Publisher:||New World Library|
|Sold by:||Barnes & Noble|
|File size:||1 MB|
About the Author
Read an Excerpt
Cause for Success
10 Companies That Put Profits Second and Came in First: How Solving the World's Problems Improves Corporate Health, Growth, and Competitive Edge
By Christine Arena
New World LibraryCopyright © 2004 Christine Arena
All rights reserved.
It's not the strongest of the species that survives nor the most intelligent, but those most adaptive to change.
— Charles Darwin
Rather than resist change, Interface and BP chose to lead the evolution within their industries. They translated environmentally and socially responsible imperatives into business-building opportunities, thus successfully transforming themselves from challenged multinationals into model corporate citizens. Though their routes are unique, the results of their values-led efforts are similar. Both became more efficient and enterprising. Both achieved sustainable leadership positions. Furthermore, both created standards that continue to influence the global economy.
On August 31, 1994, Ray Anderson delivered a speech that dramatically altered the course of his life and the fate of his billion-dollar, publicly held company. As chairman and CEO of Interface, an Atlanta-based manufacturer of carpets, textiles, and architectural products primarily for the commercial interiors market, Anderson had enjoyed increasing success since founding the company in 1973. In just twenty-one years, he had grown Interface from a niche player to an industry leader. He now counted sales operations in 110 countries and 5,500 dedicated employees among his company's greatest assets. But just weeks before Anderson's speech, a few savvy customers began to ask tough questions about the company's environmental policies.
Typically, the Interface sales team responded elegantly to customer inquiries — particularly questions about performance, quality, and durability. But in seeking to respond to these unexpected requests for a thorough explanation of the company's environmental vision, the team was at a loss. "It was an awkward question," Anderson says. "Awkward, because we couldn't get beyond, 'We obey the law; we comply.'" So rather than ignoring the inquiries and moving on to business as usual, the president of Interface's research arm decided to organize a task force to evaluate the company's worldwide environmental stance. Anderson was asked to deliver his speech to kick off the group's first meeting. Feeling completely unprepared, he reluctantly agreed. Anderson realized that he needed to educate himself on the issues that he and his company had so far disregarded — and fast.
Not knowing where to start, Anderson picked up Paul Hawken's renowned book The Ecology of Commerce. Before long he was floored: "The theory presented in that book hit me like a spear in my chest. I would lie in bed at night reading passages to my wife, and we would both weep together out of utter regret and the deepest sense of guilt." Through Hawken's book, Anderson absorbed several awful truths: that the earth's biosphere is in a long-term decline, that such decline is rapid and catastrophic, and that business and industry are largely responsible for the mess. "My business was a culprit, and I was a plunderer of the earth," he recalls.
It was a defining moment for Anderson, who realized that he could no longer run his company the same way. As he absorbed the wider implications of the unfortunate relationship between big business and the biosphere, he saw the world from a different perspective, one in which traditional capitalist tactics no longer seemed relevant. And so, on the day of his speech, Anderson presented his environmental task force with this new perspective and with a corresponding vision of an eco-friendly future for Interface.
His message stunned everyone — including himself. Because of the disparity between his company's present and future course, the company had to be radically reinvented. Sourcing, procurement, product development, marketing processes, and research and development — all had to be aligned with a new and unusually ambitious goal. Starting immediately, Interface was to transform itself twice over — from an industrial "evildoer" to an environmentally sustainable company, and finally to an environmentally restorative company. Eventually, Interface would be the first name in industrial ecology worldwide, through action, not words.
To an audience of seventeen awe-inspired yet baffled task force members, Anderson delivered this message with the intensity of someone who had just undergone a religious conversion. His vehemence was unlike anything they had come to expect from him. In the long run, Anderson's new fervor, radically heightened objectives, progressive thinking, and the management decisions that followed proved to be some of the best strategic moves the company had ever made.
At the time, Interface was the first United States–based industrial enterprise to take a comprehensive stand on environmental issues. Though many manufacturing companies talked about green initiatives, in reality the majority of their claims fell short. "Our competitors were doing zip," Anderson recalls. "We were the first in our category to face these issues comprehensively. I don't know of anyone else who has taken a more aggressive approach to solving environmental problems than we have." Anderson realized that the company's twenty-one-year practice of turning petrochemicals into carpets that last ten years and then spend up to twenty thousand years in landfills could neither sustain the planet nor jibe with a growing swell of consumer activism.
Today Interface owns the environmentally sustainable flooring market. Its eco-friendly policies stimulated a steady rise in market share, and the company is now the largest commercial carpet manufacturer in the world. In the nine years since Anderson's speech, the company's sustainable business policies have created new sources of revenue and allowed them to save more than $231 million in manufacturing costs. In addition, Interface has been twice named as one of Fortune magazine's "100 Best Companies to Work For." It has also been hailed as "the most highly evolved big company in the country" and "the corporation of the twenty-first century."
Anderson himself has achieved icon status, having been described in the media as "the greenest CEO in America," as "a certified captain of industrial capitalism," and as the kind of "radical who makes the folks from Greenpeace look timid." He has received numerous awards and recognitions — including the National Academy of Science's Mitchell Prize, the first CEO recipient ever. To spur other industrial leaders into following his example, as of October 2003 Anderson had personally delivered more than 600 speeches on the topic of business sustainability and has written Mid-Course Correction, a book outlining the first four years of his company's transition.
But perhaps Anderson's greatest legacy lies in his company's demonstration of "cyclic capitalism" — a form of commerce that works to renew itself while at the same time renewing rather than depleting its parent source, the earth. The concept is straightforward: for the past one hundred years, industrial capitalism has been uncompromisingly linear, extracting raw materials and energy to make products and packaging that generate vast quantities of waste.
Over the next one hundred years, Anderson wants industries to increasingly conserve raw materials and energy while recycling their own waste to feed the product cycle. Previously a negative side effect of the industrial process, waste now has the potential to become a viable profit maker for forward-thinking companies. Interface has many economists talking because it is one of the first living models of how and why cyclic capitalism works — and an even better example of what it takes to make such a shift.
The references above are taken from Ray Anderson's essay "Mindset." As of May 2004, this essay had not yet been published.
Many companies find themselves in an awkward position, stuck between their convictions and their actions, between notions of what can be done, given their resources, and what should be done, given their ideals. In most cases, the source of this stagnancy is fear — of the unknown, of not meeting quarterly goals, of disrupting proven processes, of being ridiculed by industry analysts. If you asked Ray Anderson, he would tell you that the key to overcoming these kinds of fears is facing the whole truth and that doing so can enable a full-fledged corporate turnaround.
"Though they were very painful at times, our internal discussions yielded a totally new worldview," Anderson remembers. "We realized not only that our old business approach was upside down, but also that most economists had it wrong too. The economy is a wholly owned subsidiary of the environment. It's not the other way around." By owning up to the company's past infractions and acknowledging its role in a larger, interrelated economic and environmental system, Anderson created a psychological shift that galvanized his workforce. "I remember the watershed moment," Anderson says. "I was presenting my vision to our European contingency, and many in the audience were skeptical. After the speech was over and the group dispersed, I found one of my European managers sitting alone in the auditorium with a copy of my transcript in his hand. He was clearly emotional. He looked up at me and said, 'I've heard this before, but I just want you to know that I get it now.' I realized that the shared sense of distress over what we and companies like us had been doing would serve as the basis of our transformation." Instead of dwelling on the past, Anderson and his team became charged by it.
A company's successful rebirth into true social responsibility requires rare leadership. A distinct combination of rational, emotional, and moral intelligence is key. If the CEO doesn't fully "get it" intuitively, then no one will. The magnitude of environmental or social consequences of the current business course must inspire in him or her an urgency to respond. Turnarounds require an authentic spark from the top. But if the first step toward corporate rebirth is revelation, the next crucial step is steadfast communication, as the arduous task of convincing employees, shareholders, customers, and suppliers follows. For Interface, this meant convincing each group to go about things in an entirely new way.
Anderson made three key decisions that enabled his company to move forward. First, to sell his vision to stakeholders, he implemented a communications strategy that was akin to a political campaign. "I took every available opportunity to talk to people," he says. "I did sales and factory meetings. I talked to people individually. I addressed the supply chain directly, and I gave keynote addresses at international events. I did this for nine years, and I'm still going."
Knowing that with each audience he might face significant resistance, Anderson customized his messages, speaking directly to each group's ambitions and misgivings. Anderson approached each group incrementally — starting with employees, then suppliers, then shareholders, and finally customers — until he had built the necessary momentum and critical mass of support.
Anderson's second crucial decision was to pass ownership of the sustainability strategy from himself, as the visionary, to his audience, the implementers. He looked to employees, suppliers, shareholders, and even customers for the necessary ideas, solutions, and support rather than choosing a course of action by himself and directing others to follow. "This was key," Anderson says, "because everyone went back to their respective businesses and just started agitating. And that's where you start. That's how you do something, anything, to get started."
Anderson communicated the damage the company's classic industrial model of "taking, making, and wasting" had done as simply and directly as he could, while also leveraging Interface's presence. "We are big enough to make a difference, especially when our entire supply chain is engaged," he says. The company relies on such industrial partners as DuPont, Exxon, Solutia, Goodyear, and BASF to make its product cycle work, and Anderson depended on them to recognize the business potential associated with leading industry-wide shifts to more progressive environmental policies.
Anderson also purposefully harnessed the purchasing power of his customers. He understood that if he could convince them to follow along, Interface could dominate the sustainable commercial interiors category — thus forcing competitors to follow suit and slowly changing the industry as a whole. "Our customers are the largest corporations, the biggest hospitals, the largest government agencies, the finest universities, and the busiest airports in the world," he writes. "These fertile conditions just do not exist in very many corporations, and that is why the 'do' factor is so low."
The third crucial decision that Anderson made was to invest heavily in team building. An ongoing series of employee training programs, which are still under way, set the stage for product and process innovations — the results of which Interface now takes to the bank. "We focused a great deal on letting go of old ideas, embracing risk, being willing to take chances, and learning that you can't do it on your own. Out of this, we became a more tightly knit company. The effect of our training approach is that most everyone within the company understands what their role is." Although Anderson admits that the vision still hasn't completely penetrated the company, he adds, "Today if you picked someone off of the product line, they would most likely start talking about sustainability."
TAKING INCREMENTAL STEPS
Change at Interface began as more of a trickle up from below than as a big surge from the top, as small innovations eventually led to larger, system-wide improvements. One of the first ideas came from factory plant managers, several of whom began reusing rather than discarding their carpet trimmings. They ended up preventing more than three million pounds of practically indestructible, nonbiodegradable nylon carpet scrap from being sent to landfills — per factory, per year.
Other Interface divisions began to tell similar stories. For instance, in one of the company's best innovations, the sales team decided to transform the way carpet was sold. Instead of customers purchasing Interface carpet the usual way — buying it, using it for ten years, and then throwing it away — Interface would lease its carpet, enabling the company to take back its products at the end of their cycle, disassemble them, and remake them back into new products.
Another bright idea came from the product development group. They resolved to remove one ounce of nylon per square yard of carpet, which comprised about 4 percent of the average Interface carpet's total face weight, and see how the product held up under performance tests. To the group's delight, product quality remained the same, and so the change was implemented. "The reduction of an ounce of nylon per square yard got to be a big thing," Anderson says. "We discovered that by doing so we saved enough energy upstream to power our factory for two years." Innovations like these continued to unfold across the company, giving rise to broadening policies and eventually to a far more explicit strategy.
At Interface, sustainability didn't just mean environmental advocacy; it meant continually improving operational efficiency, thus improving shareholders' return on investment and enhancing long-term company health. To permanently hold the company to this robust vision of sustainability, Anderson implemented the Seven Fronts, a design model that addressed every aspect of the company's operations.
Through Seven Fronts, Interface would waste less and therefore spend less. It would consume less raw material, and therefore carry less inventory. It would streamline production, and thus use less energy. In addition to improving the company's existing products and processes, the Seven Fronts approach led to some considerable breakthroughs, including the creation of new 100 percent recycled content product lines and of nonrecycled products made for easy disassembly and eventual reuse, as well as the sourcing of revolutionary and environmentally sound materials such as polylactic acid (a new fiber technology derived from corn) and hemp. Interface's eco-sensitive products ended up performing better in the marketplace and are still considered some of the most unique and aesthetically pleasing in the industry.
Since implementing the Seven Fronts, Interface has relied on the ideas behind cyclic capitalism to drive its sales and profits. In general, the past eight years at Interface have shown that increasing efficiency both bolsters social and environmental responsibility and delivers better value to customers and shareholders. Yet the transition from a linear to a cyclic economic model has not been entirely smooth. The company did experience a bump along the way when the industry lost momentum and skeptics began to question the viability of a truly sustainable industrial corporation.
Excerpted from Cause for Success by Christine Arena. Copyright © 2004 Christine Arena. Excerpted by permission of New World Library.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
Introduction: The Rise of the High-Purpose Company,
Chapter 1: Changing Face,
Chapter 2: Rooting Values,
Chapter 3: Cooperating,
Chapter 4: Trading Fairly,
Chapter 5: Need Cycling,
Epilogue Why corporate evolution is mandatory and what you can do,
About the Author,