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September 3, 2008 
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Greener Products: Your Ticket to Faster Growth
At a basic level, every company has the same goal: understand customer needs and produce products and services that satisfy them (at a profit, of course). In the environmental realm, it's no different. With so much attention on resource constraints and energy prices, many companies are rushing to help their business customers or end consumers reduce their footprint - it's a fantastic way to steal market share and drive revenues. In this issue we look at the product side of the story. Next month, we'll discuss service offerings, mainly aimed at business customers, that let companies outsource some of their environmental footprint management - from energy optimization to facilities management to software that measures and tracks environmental footprint.
But first, the products. The story begins for so many companies in R&D or product development. Consumer products giant P&G is looking at its product portfolio through a sustainability lens. (In addition, P&G has gotten creative about the innovation process itself, using "Web 2.0" thinking and looking for collaborators from anywhere in the world, and then using its experience and resources to commercialize the best ideas.) It's becoming increasingly clear that green product innovation is far from a philanthropic effort - it's a growth platform, especially during slower economic times when companies rely on their most creative employees the most. Look at GE's success with its ecomagination program, which is zooming past the $20 billion revenue target (GE recently upped that sales goal to $25 billion). I generally focus on the branding side of the GE story, but ecomagination has turned into a true sales growth driver - which it always needed to become to be a real, lasting success. Beyond all the ad campaigns, there are actual greener products that reduce customer environmental footprint (especially in energy and water). The program has become a critical sales tool. GE execs are now doing a lot less speaking about ecomagination (at conferences, events, etc) and a lot more sales meetings with customers. Other companies around the world are explicitly using ecomagination as a model (see Korean telecom company KT's new growth plan) or marking out their own torrid growth path (like Philips's 33% increase in green product sales). In a previous issue, we looked at how companies, in particular tech companies, approach sustainable innovation. This discussion is more about the what. There's no single framework for driving innovation, but one way is to use the large environmental challenges we face - such as energy, water, and toxics - as a catalyst. See if you can help customers reduce their footprint in those areas. So let's look at innovative products that are helping customers reduce their contribution to four major environmental challenges. These examples are just a sampling of the vast selection of greener products out there today. ~Andrew Winston, Founder, Winston Eco-Strategies, Co-author, Green to Gold (Read his "Eco-Advantage" blog here.) Tackling the Energy Crisis, One Product At a Time 
Tech companies are continuing their arms race to reduce energy use in computers at home (Dell and HP are both shooting for 25% energy improvement), in corporate datacenters (IBM is looking to halve energy use), and even software's relatively small role in tech energy use (see Microsoft's efforts on this front). The total GHG savings from all these efforts could be substantial - HP is pitching its products as the way to reduce 1 billion tons of CO2. Tech is the easiest to measure perhaps, but it's in no way the only energy saving category. One of the most successful household products in recent memory is Tide's Coldwater formula, which tackles the 11% of all household energy use that goes to heating water to wash clothes. P&G doesn't release sales numbers (we do know that the category edged up when Coldwater hit shelves in 2005), but execs say that the three-year-old product is in 7 million households. Not bad.
Reducing Water Use 
Water itself is not often the focus of green products. When there are water shortages in particular regions, everyone pays attention, but most of the time it's quasi-invisible. This general lack of focus on water eco-efficiency will change as per capita water accessibility drops. Some of the traditional products in this space, like water-saving showerheads at home, or drip irrigation systems for the ag business, will continue to grow in popularity. For now, though, many innovations tackle multiple challenges through water (like Tide's detergent, or the shower heads that are often pitched as a way to reduce energy use). EcoLab produces more efficient dishwashing systems, used by food service giant Sodexo among others, to reduce water and energy use. Clorox's Brita filters, and companies selling new water-vending machines, pitch you on making your own filtered water at home so you can avoid plastic bottles. As a critical issue, water is climbing the charts fast. Companies will find a good market in helping consumers and businesses manage water use.
Using Less Stuff 
It's hard to get consumers excited about waste reduction, but some companies are trying. Direct sells, like compost systems, are finding a new niche, but the green pitch on resource use is often multilayered. Sigg bottles will help you reduce plastic use from disposable water bottles but will also make a style statement. Designer shopping bags are a similar story. Another angle some companies take is to reduce material/resources for customers before they even handle a product. Xerox launched a new copy paper last year that used 50% less pulp. The customer can feel good without even changing behavior. Of course Xerox, HP, Canon, and others are pitching duplexers in printing to help reduce waste as well. All of these examples demonstrate a good strategy for tackling the un-sexy issue of stuff and waste: help customers reduce in a painless way.
Taking the Toxics Out 
For consumers, after energy costs, the environmental issue that causes the most angst is probably toxics, especially in food and personal care products. Organic foods (by far the fastest growing segment of the food market) and green home care products have taken off. Method, the San Francisco-based upstart, is one notable, and fast-growing, success story. The company has made well-designed, non-toxic cleaners cool and sexy and shifted the industry's mindset - everyone is now designing products that look good on the shelves instead of producing bottles that are only fit for hiding below the sink. Clorox's big play in this space, Green Works, takes the company in a new direction, moving away from its brand challenges around chlorine content in cleaners (see the company's fascinating "in me/on me/around me" strategy discussed here).
In the B2B space, one of my favorite green stories of the last year is about the commercial floor cleaning machine developed by Tennant. It's a longer story than I can do justice to now (see the longer piece I wrote here), but in short, the company's machine uses just tap water and no chemicals to clean hard surfaces (for more, listen to SLM's interview with the CEO). Customers love the fact that they don't have to train custodial workers how to handle toxic chemicals. Companies that can reduce toxicity at their customers' workplaces or homes will discover appreciative, paying customers.  We want to hear from you! Post your comments or questions and we'll feature the best of them here. (Note: You must be a registered SLM user to post. Not yet signed up? Click here!) |
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This work is licensed under a CreativeCommons License. Copyright Sustainable Life Media Inc. 2008
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