Green Ambassadors

A recent IBM survey found that two-thirds of executives see sustainability as a revenue driver, and half of them expect green initiatives to confer competitive advantage. This dramatic shift in corporate mindset and practices over the past decade reflects a growing awareness that environmental responsibility can be a platform for both growth and differentiation. Nonetheless, the best approach to achieving green growth isn’t always clear. green product development brings with it unique cultural, operational, and execution challenges. Most companies know that they need to be greening their offerings—if not to gain advantage, then simply to keep up. In this article the authors offer a framework for embarking on the green-product development process, introducing three broad strategies that companies can use to align their green goals and capabilities. An “accentuate” strategy involves evaluating products in the company’s current portfolio and playing up or extending latent or existing green attributes (as Arm & Hammer did when it repositioned its 150-year-old baking soda as “the #1 environmentally sensible alternative for cleaning and deodorizing”). offerings—if not to gain advanAn “acquire” strategy involves buying someone else’s green brand—an approach used effectively by L’Oreal when it acquired The Body Shop, Unilever when it acquired Ben & Jerry’s, and ColgatePalmolive when it acquired Tom’s of Maine. Finally, companies with innovation expertise can use an “architect” strategy, building green products from scratch, as Clorox did when it developed its celebrated Green Works line. Unruh and Ettenson offer case studies, outline benefits and hazards, and describe the optimal organizational and competitive circumstances for each strategy. An accentuate strategy involves playing up existing or latent green attributes in your current portfolio. Of the three strategies, it’s the most straightforward to craft and implement and thus is a good place to start. If your portfolio has no obvious candidates for accentuation, a good alternative is to buy someone else’s green brand. For companies with a history of innovation and substantial new-product-development assets, architecting green offerings—building them from scratch—becomes a possibility. Although architecting can be slower and more costly than accentuating or acquiring, it may be the best strategy for some companies, because it forces them to build valuable competencies. Whatever path you choose—accentuate, acquire, or architect—activists, customers, and the public won’t see your green initiatives as independent of your other activities and offerings. Rather, they will view your efforts as part of the organization’s overall approach. That means the companies that ultimately succeed in growing green will be distinguished by their commitment to corporatewide sustainability as well as the performance of their green products. With an understanding of the three paths to green growth, managers can begin to craft a strategy that suits their objectives and their business context. Whether you're a traditional smokestack industry or a “clean” business like investment banking, your company will increasingly feel the effects of climate change. Even people skeptical of the dangers of global warming are recognizing that simply because so many others are concerned, the phenomenon has wideranging implications. Investors already are discounting share prices of companies poorly positioned to compete in a warming world. Many businesses face higher raw material and energy costs as governments around the globe increasingly enact policies placing a cost on emissions. Consumers are taking into account a company’s environmental record when making purchasing decisions. There’s a burgeoning market in greenhouse gas emission allowances (the so-called carbon market), with annual trading in these assets valued at tens of billions of dollars.

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