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This Month’s Recommended Book: The Responsibility Revolution

29 Mar, 2010  No Comment

This Month’s Recommended Book: The Responsibility Revolution: How the Next Generation of Businesses Will Win, by Jeffrey Hollender and Bill Breen

Do you think you can learn some lessons from a company that has totally integrated social responsibility into every aspect of its operations, from day one—and even more than 20 years after its founding, continues to grow as much as 51 percent annually? And that particular year was the recession year of 2008, a time when you’d expect a company that sells organic personal care goods and does not attempt to compete on price to be suffering.

That company is Seventh Generation, the sustainability-oriented company that Jeffrey Hollender started in 1988. True to their values, however, Hollender and Breen (a co-founder of Fast Company who serves as Seventh Generation’s Editorial Director) wait until the last chapter to tell a piece of Seventh Generation’s story—specifically how the company brought in a strategic consultant who worked with them on not just identifying their values, but inculcating the core mission so thoroughly into the company DNA that every employee understands and participates in the wider mission to change the world of business, and use business to change the world. That decision is directly related to the company’s phenomenal growth n recent years: 45 percent in 2007, 51 percent in 2008, and an undisclosed but still positive number in the economy-wide traumatic year of 2009.

First, they tell the stories of some other great companies that are making a difference, including some very well-known brands: IBM, Nike, British department store giant Marks & Spencer, Patagonia, and others—each story framed around central lessons within each chapter, and typically two or three companies highlighted in a chapter.

Some of these companies, in particular Nike and Marks & Spencer, came to the sustainability sandbox after deep and stinging criticism by advocates of environmental and social responsibility, but took the message to heart and embraced the mission to reinvent their companies as sustainable.

  • Nike’s supply chain practices weren’t particularly worse than anyone else’s when activists honed in on the company in the 1990s—but it’s mission statement to be a company worthy of respect made it a target. After first defending its practices, the company looked deeper, acknowledged that it could do better, and proceeded to do so. And over time, the company has found that this deep look can not only be highly profitable but also provide leverage points to move the whole industry forward. From reducing printing of marketing materials that get thrown out to turning manufacturing wastes and consumer-discarded sneakers into inputs to designing sustainability into the popular Air Jordan line, Nike ha sconvinced the authors that the shift is genuine.
  • When criticized for some of its practices, Marks & Spencer invited the critics into the process as allies, and began making real improvements. The firm created a list of first 16, then 100 social and environmental responsibility indices that they could measure and improve, and displays both the progress and the shortfalls publicly, in an electronic ticker at corporate headquarters (the company has since expanded to measure 180 scales instead of 100).

    For others, like Organic Valley and Patagonia, sustainability was hard-wired into the corporate DNA from the beginning, and that provided a platform to ask hard questions, expose and then reform their own questionable practices, and come through this high-risk process even stronger.

  • Faced with a supply shortage, Organic Valley turned down its largest customer, Wal-Mart, in favor of continuing to service the small health food stores that had fueled its growth.
  • Patagonia did some research about the impact of chemical agriculture and processing on cotton, and the potentially catastrophic health effects this heavily treated cotton could have on its consumers. The company made the difficult and expensive decision to switch all of its cotton to organic, at a time when suppliers of organic cotton were rare. It also went very transparent about its own shortcomings in previously using the chemical cotton, and went to its customers with the story of what they discovered and what they were doing about it. The company was able to leverage its commitment to build a worldwide market for organic cotton.
  • Etsy, an online handicrafts marketplace, sees a need to enrich itself by enriching the craftspeople from developing countries who sell through the company; cheating its suppliers would be cheating itself.

    The Responsibility Revolution is crammed with great take-aways, many of them focused on authenticity, transparency, interrelatedness, and yes, profitability. Both numbers and stories make an effective case for embracing environmental and social sustainability as a path to financial sustainability.

    When sustainability is really part of the corporate DNA, it opens up vast new markets. In Seventh Generation’s case, the sustainability decision is very strategic: In Hollender’s words, it “helps us define, over the next three to five years, what sustainability will look like in the home care and personal care business.” Thus, the company is able to take the lead and market its innovations before others catch on.

    And yet the company wants to get others on board, even at the cost of that marketing advantage. After discovering how commercial palm oil plantations destroy rainforests, contaminate workers with pesticides, and spew carbon into the atmosphere, Seventh Generation didn’t just switch to sustainable palm oil (a major ingredient in many of its cleansers)—but also began pressuring the industry to switch (even backing legislation that would force this). The company was thrilled when SC Johnson, makers of Raid, Windex and Glade, among other products, came on board. Seventh Generation knows that it can continue to innovate, to raise the bar, to claim credit for sparking this wider movement, even while it can no longer claim to be the only company using sustainably grown palm oil.

    With more of a focus on operations than on marketing, this wonderful book is an excellent complement to my own Guerrilla Marketing Goes Green. I’d advise reading both.