By Jim Tompkins, CEO, Tompkins Associates
Click here to listen to this podcast
Click here to download the mp3
|
Hello, my name is Jim Tompkins. I'm the president and CEO of Tompkins Associates and Tompkins International.
I am pleased to be with you today to kick off our sixth series of this global supply chain podcast. This sixth series will focus on sustainability.
The series will have five parts, and starts today with this introduction podcast. We then dive deeper into the sustainability topic over the next 4 podcasts, with focused podcasts on:
Packaging sustainability
Transportation and supply chain issues
Facility and building sustainability
And finally in part five, the topic of reverse logistics, recycling and reuse.
I will be employing a variety of subject matter experts in these topics, but let me begin by laying down the foundation.
About 2 years ago, I met one of the two authors of the book, Green to Gold. Andy Winston really impressed me as a practical guy who understood how business works.
The title of the book he wrote with Dan Esty was not all that exciting to me, but the subtitle did gain my attention. The subtitle is: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage.
Well, after meeting Andy, and as a student of companies building competitive advantage, I had to read this book. The book is very well done, and so as an introduction to this sustainability series, I went back and referred to Green to Gold.
The following highlights are from this excellent book. In the first chapter, in fact in page two of the book, Esty and Winston really engage the business person by explaining that sustainability can not only be a benefit for a company, but also presents a real threat to the success of a business.
To illustrate the threat that environmental concerns present, they relate a story about Sony Corporation just weeks before Christmas in 2001; when 1.3 million Playstation games were being blocked by the Dutch government in a warehouse because the cables included a small amount of the toxic element cadmium. These 1.3 million games were the entire European shipment. Because of the cadmium crisis, as Sony would call the disaster, they lost $130 million dollars.
This is shocking, as Sony had been, and still is today, an environmental leader. But it just goes to show that even the best of companies can be surprised by environmental issues. The reality is sustainability is both a threat and an opportunity that the enviroment, the topic of sustainability, and the handle 'green' are not fringe issues.
Sustainability is very important to all companies. At the same time Sony was dealing with the cadmium crisis, the chief executive of British Petroleum, John Brown, challenged his business units to reduce their units of greenhouse gases.
Their pursuit was environmentally-oriented, so it was much to their surprise that over the first three years, their $20 million dollar investment in looking for carbon resulted in $650 million dollars in cost savings.
Two years later, the savings number topped $1.5 billion dollars.
BP was the first to demonstrated that a green/sustainability stance truly can turn into a golden opportunity to impact the bottom line. In fact, at the fifth-year celebration, John Brown summarized their success story by saying, "We set out to do good. But we ended up doing well."
Once again, was BP a slacker that really needed to clean up their environmental act? No. BP has always been a strong believer in sustainability. But what we see here is the power of sustainability innovation and the huge benefit to the bottom line that it can bring about.
I really believe what Esty and Winston concluded when they said smart companies seize competitive advantage through strategy management of environmental challenges. Viewing problems and opportunities in a business from a sustainability or an enviromental lense can result in avoiding problems and in creating substantial value. Applying an environmental lense is good business.
The three basic reasons why companies should add an environmental lense to their strategy are:
1. The upside benefits of higher revenue, lower cost, and greater levels of innovation by challenging the status quo.
2. The management of downside risks, not only allows for reduction of costs, but in the public eye gives a company a license to grow. This is what Lee Scott, the past CEO of Wal-Mart, called their sustainability effort their 'license to grow.'
3. It is the right thing to do, and doing the right thing does more than make you feel good. Doing the right thing results in deeper connection to employees, to customers, and to stakeholders.Esty and Winston call this the eco-advantage: The advantage of respecting the environment.
So the sustainability movement has come a long way. It began as something we had to do, because if we did not, the government would step in and make us be environmentally-responsible. But this is no longer the case.
Sustainability has evolved to the point that enviromental management is second nature, and companies are now focusing their attention on the competitive benefits of being sustainable. The leading companies of today go well beyond complying with the law, cutting waste and operating efficiently.
They make sustainability a strategy that they pull into all aspects of their operation. Specifically leading companies today:
1. Design innovation, environmentally-friendly products.
2. Push their suppliers to be better environmental stewards.
3. Measure and publicize their environmental performance.
4. Increase innovation or environmental challenges, and share the success story.
5. Build an eco-advantage culture through strong leadership and engaging all employees in sustainability focus.
This five-part podcast will take you on a journey, hitting on the most important sustainability opportunities.
But before I close this installment, I want to challenge you further. You see, it concerns me that I see many organizations that are pursuing echo-efficiency. Echo-efficiency has to do with cutting waste and reducing resource use. This is a starting point, but what if you maxed out on the echo-efficiency by making the wrong products? How about, echo-effectiveness? This is my term, and maybe it's not clear, but how about not only doing things efficiency, but also doing the right things.
You see, I believe the three Rs of sustainability: reduce, reuse, and recycle, are good but not best. Once again, as back to Esty and Winston, how about the five Rs: Re-imagine, re-design, reduce, reuse, and recycle.
These five Rs force innovation into the life cycle of products and take the environmental lense into a whole new level. This total life cycle view of sustainability is the view I challenge you to target. I am confident that this podcast series will help you move in the direction of sustainability and true competitive advantage.
I appreciate you being with us on this podcast, and I look forward to speaking with you real soon as we continue this series in two weeks. All the best.
© Tompkins International, Inc., All rights reserved.
