Monthly Archives: June 2009

Collaboration and Co-Creation of Social Value: Government, Citizens, and Sustainable Cities

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The next few years are likely to witness numerous environmental initiatives around the globe.  For starters, the 2009 UN Climate Change Conference is expected to update the Kyoto Protocol.  Additionally, several countries are looking to green policy stimulus packages to pull them out of the current recession.

At recent G20 conferences, Japan and South Korea trumpeted their stimulus plans as Green New Deals, while China has earmarked $30 billion of its package for environmental programs.  In the United States, the Obama administration continues to emphasize its commitment to the environment, dedicating $80 billion of its $800 billion package to support green projects.

To maximize the benefits from these investments, local governments must successfully engage their citizens to influence their thinking and behaviors.  Indeed, it is no coincidence that the most significant innovations occur within distinct cities or communities, as local governments can more easily interact with citizens, soliciting their feedback on key initiatives and working with them to execute policy. 

The greenest communities share some common characteristics – energy-efficient buildings, renewable energy sources, widespread recycling, efficient and comprehensive mass transit, and substantive nature trails/green space.  But that’s just the cost of being green!

At the end of the day what they excel at is actively involving their residents in implementing green initiatives–the same way as corporations like Whole Foods do (discussed in the previous post).  Two shining examples of innovative community initiatives are Curitiba and Malmö.
Curitiba, in Brazil, developed a holistic urban plan in the 1970s and 80s to preserve green space, establish a recycling program, and reinvent its public transportation system.  However, given Curitiba’s limited resources, it relies heavily on its residents to execute its initiatives.

Watch Brazilian urban planning guru, Jaime Lerner explain his philosophy of how to make life better for people by making cities more livable.

  • Curitiba’s Cambio Verde program enables low-income citizens to exchange their metal and glass waste for fresh produce and bus tickets.  Due to this program and widespread recycling of all residents, the city has emerged as Brazil’s number one recycler, reusing 70% of its waste.
  • Curitiba used existing roadways to develop a rapid transit bus system that links all areas of the city.  Investments in a high-speed, high-capacity bus network increased ridership by 400% in over 20 years; now 60% of urban travel occurs by bus.  While citizens are more likely to own cars than other Brazilians, they use 25% less fuel per capita. Furthermore, 41 cities, ranging from Los Angeles to Bogotá to Seoul, are in the process of replicating Curitiba’s transit system.
  • The city’s Technology Street showcases 24 different homes, each built to spotlight sustainable construction materials, such as bamboo, or homes operating with renewable energy.  The city encourages prospective homeowners to meet with the architects of these residents prior to starting any new construction.
  • Mandates for dedicated green space have encouraged residents to independently plant more than 1.5 million trees on city streets.  A city-appointed shepherd and his flock of 30 sheep trim the grass in many of the nation’s parks! 

Malmö, Sweden, an industrial city in which the economy crashed
and burned in the 1990s, has reinvented itself as a pioneer in
sustainable development as an Ekostaden, or eco-city.  Currently,
Scandinavia receives more recognition than any other region for its
sustainable living practices, with Sweden alone supporting more than 60
“eco-cities.”   How have they done it?  A combination of bold politics,
experimentation, and community empowerment.

Several key initiatives have enabled the city to achieve the following: 

  • Widespread
    solicitation and implementation of citizens’ unique ideas    .  One
    resident developed a plan for a new storm water system that captures
    70% of rain water in one area of the city.
  • A
    community (Western Harbour) in which the government encouraged
    innovation from architects and planners to enable 100% renewable energy
    from the sun, wind, hydropower, and biofuels generated from organic
    waste
  • A mandate for increased green space, resulting in one of
    the largest developments of botanical roof gardens in the world with
    which citizens can insulate their homes, plant their own herbs and
    vegetables,     and reduce the city’s carbon dioxide emissions   
  • A
    transportation system dominated by cyclers and mass transit.  The city
    worked to make the cycling paths and bus network aesthetically pleasing
    to encourage shifts in citizen behavior.

Collaboration and Engagement are potent platforms for the co-creation of value, whether commercial or social.  In both the commercial and social arenas, companies and institutions are only just beginning to truly understand the power of WE.  Appropriately harnessing it and leveraging its power is still a few horizons away.

The old way of doing business is dead for business and marketing executives.  It is dying fast for those who run countries and communities as well.

Customer Collaboration and Cause-Driven Marketing

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You can hardly turn on the television or open a newspaper without witnessing a company’s advertisements featuring its “green” or “sustainable” products or business practices. 

In response to rapidly growing demand from consumers, the market for these products tripled between 2007 and 2008 with Nielsen predicting a marketplace of more than $400 billion in 2010.

But what do companies mean when they claim a green product or sustainable business practice?  A range of interpretations exist, but the majority feature these ideas:

•    Green products are both environmentally and socially responsible and can often be described as follows: organically grown, locally sourced, carbon-neutral, recycled/recyclable, and/or energy-efficient.  A variety of sources show that consumers perceive consumer goods manufacturers such as Seventh Generation, which makes cleaning products from natural ingredients, and Toyota, with the Prius and its commitment to environmental management, as some of the world’s greenest companies.

•    Sustainable business practice can include organizations that produce green products and services but more broadly, it requires a corporate focus on long-term benefits for the environment, community, and society.  Sustainable companies also pursue the “triple bottom line” of people, planet, and profits.  Wal-Mart and Whirlpool, with their efforts to “green” their entire supply chains and introduce eco-friendly products to the masses, represent two companies dedicated to sustainable development.  Some researchers also cite products linked to a cause, such as the Product Red suite, whereby companies donate proceeds to fighting AIDS in Africa.

Due in large part to rapidly shifting consumer attitudes and increasing enthusiasm for green products, companies ranging from Honda to Clorox brought nearly 6,000 “green” products to market in 2007 alone.  However, this proliferation of products during a global recession has led consumers to become very discerning regarding the legitimacy of companies’ green claims.  The cynicism is justified, as often terms like green and sustainable are used to describe a variety of practices ranging from “greenwashing” to reputation-management to customer-focused, holistic sustainable business practice.  

As more companies make green claims, government and consumer scrutiny of these claims also increases.  Many groups now watch out for greenwashing, a practice whereby companies lead consumers to think that their products are more environmentally friendly than they actually are.  Clairol received considerable scrutiny in the early 2000s for claims that its Herbal Essences line offered “a truly organic experience,” when in fact, the formula included many chemicals.  More recently, Kmart and other chains have provoked criticisms for false claims of biodegradable paper goods.

Companies working to improve their reputation in the area of sustainability attempt to offset or neutralize the effects of their businesses without concerning themselves with influencing consumer behavior or the behavior of partners in their supply chain.  Enterprise Rent-a-Car, for example, has independently committed to building 50 million trees over the next 50 years to more than offset the emissions from its vehicles.

However, the most interesting examples of greening and sustainability tend to be where companies actively involve their customers in sustainable business practice.  These companies are most likely to improve their own profitability and succeed in tangibly benefiting their communities through improved consumer behavior.  A few examples of companies leading the pack follow.

Whole Foods won the 2009 Green Choice award from Natural Health magazine due to its commitment to substantive, earth-friendly initiatives that inspire its suppliers, competitors, and customers to follow suit. 
•    After banning plastic bags from its stores in early 2008, the company recently announced that three times as many customers now shop with reusable bags.   Furthermore, it estimates that this shift has kept 150 million bags out of landfills since 2008.  COO A.C. Gallo states, “At first we wondered if shoppers would just switch to paper but to our great surprise, people have been truly excited about using reusable bags.”

Fairmont Hotels and Resorts was the first global hotel to launch an environmental management program back in 1990.  Since then, its commitment to sustainability has touched its partners, guests, and the broader business community. 
•    By 2010, the company’s largest suppliers will comply with its Green Procurement Policy.
•    The company has sold tens of thousands of copies of its Green Partnership Guide, a “going green” handbook for companies across industries. 
•    Guests worldwide pay a premium to contribute to the company’s environmental initiatives, which include Lexus Hybrid Living Suites and Travel Green packages:

Finally, retail giant Wal-Mart has committed itself to improving sustainability across every facet of its business, extending this goal from suppliers to stores to consumers.  The trump card with consumers, not surprisingly, continues to be everyday low prices even within its green product lines.  Evidence that collaboration with consumers is working:
•    66% higher adoption rate of green products (including compact fluorescent bulbs, organic foods, and paper products made with recycled material) among its shoppers between April 2007 to April 2008
•    Increased mainstream acceptance and purchase of Clorox Green Works natural cleaning products and Fair Trade coffee

Corporate practices in green and sustainable initiatives are still in an embryonic stage, making it difficult to offer a prescription for those companies who have yet to start walking.  Perhaps you have come across some initiatives that have impressed you or made you change your own behavior. 

Care to share them with the readers of this blog?  Please do, we can learn together.

GM Reinvention: Symbolism or Substance?

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In December, I blogged about why GM needs to reinvent itself and why a bailout will not be enough.  So, when I heard that GM was planning to reinvent itself, naturally I was both excited and curious.  But before we go any further, just in case any of you gung-ho readers get any wrong ideas – no, I am not taking any credit, just asking questions.

Is GM truly reinventing itself or is it merely trying to dress up its image for life after bankruptcy?  Let’s not be self-serving and evaluate GM’s actions against the criteria for reinvention laid out in my December blog, let’s just listen to GM’s own words on how it intends to lead its new reinvented life and then pause to ask ourselves – symbolism or substance?

Based on reviewing a number of GM’s press and video releases, GM’s new identity revolves around the following features:

  • New GM to be built from GM’s best and strongest parts
  • Best brands, best products (fuel efficient, world class quality, green, outstanding design) 
  • Best in class cars and trucks
  • Product focussed and dedicated to customers (quality and service)
  • Leaner, meaner, greener, faster
While we don’t need to add to the growing numbers who want to kick GM in the teeth, we don’t need to be naive bystanders either.  Does the agenda above suggest reinvention or does it suggest semantic symbolism aimed at placating its new stakeholders and gaining unexamined sympathy of the general public?  Seems like the latter - as far as my vote goes.
Reinvention is not stitching together the best remnants of an eroding asset base that is incapable of producing relevant value for future markets.  Its about transformation, about creating a new asset base capable of producing relevant value for future markets.    
GM has failed on both counts.  Its reinvention manifesto is totally silent on its vision of future value and future customers. 

  • Cars and Trucks are not the only platforms for future value – or is GM declaring that it has no intention of participating in creating mass transit systems for green cities of the future? 
  • Individual customers and families are not the only future customers – or is GM declaring that it has no intention of partnering with municipalities and local governments to help them search for longer term and sustainable transportation solutions?
Alfred D. Chandler, the noted business historian declared that essentially businesses are people.  Another Alfred, Alfred Adler, no business historian, but a psychologist par excellence, advised us that in order to understand people watch their feet.  The Washington Post informs us that at the Detroit Metropolitan Airport, before you reach baggage claim, a new GM auto sits on display in the airport’s gift shop.  Its not the much touted 2011 Volt, not one of the new GM hybrids, not even the Chevy Malibu which has got some impressive positive press.  But a car that flies in the face of all claims of reinvention – the Chevy Camaro SS with a V8 engine!
A throwback to the muscle car days, an era that still maintains an eerie grip on GM’s self image and its business mission.  Sexy with charisma, is how Bob Lutz one of the executives most identified with GM’s reinvention, recently described the Camaro.  He himself drives a gas guzzling Corvette 2009, the ultimate aspiration of muscle car lovers.  If businesses are people, and the people most responsible for GM’s reinvention walk as described above, then all the din about GM’s reinvention is exactly what it is – all hype, no hope!
Wake up, GM! For true reinvention to materialize, the caterpillar needs to become a butterfly!  Time for merely being a faster, leaner, meaner, car company are over – that’s just the cost of doing business, not the platform of a rejuvenated glorious existence.