I started this year with a post on thinking green. Now that we are approaching end of 2008, I thought it would be good to revisit this topic and see how companies around the World have increased profitability by applying creativity that also made them more eco-friendly. Thinking green over the last year went from a differentiating factor to a necessary checkbox feature for every business. Thanks to the general awareness created around the issue, businesses irrespective of the industry are going an extra mile, trying to get a shade of green and then letting the customers know that they are greener than before.
There are some fascinating examples of how creativity in being eco-friendly has spurned innovation in everything, from how to better recycle waste to how to conserve energy. GE lead the way with their Ecomagination initiative. Through one of several innovations under this initiative, GE designed diesel engines for cars as well as trains to cut fuel consumption and reduced emission.
Retail powerhouses including Walmart, Costco and Whole Foods, among others, played their roles in greening up. Walmart, which operates the second largest truck fleet in the country provided funding to truck companies to develop heavy-duty diesel hybrid 18-wheelers. Costco installed sun-panels in its store to generate electricity and provided flexible schedules for its employees to work longer hours four days a week and save gas on commute. Whole Foods replaced plastic containers and utensils at its hot bars with the ones made by sugar-cane waste.
In technology industry, EPA launched a EPEAT (Electronic Product Environmental Assessment Tool) that provides certification to computers based on several criteria to measure the computers greenness. Major computer makers like Apple, Dell, HP and Lenovo stepped up to voluntarily submit their products for review. Dell is leading the way in being greener by initiatives like launching an Eco PC and recovering about 40,000 tons of unwanted equipments for recycling.
These are just few of thousands of initiatives leading to sustainability. The efforts we are seeing in businesses finding ways to be eco-friendly touches on a much bigger issue. A few leaders stood to raise this issue as an important one, created awareness and motivated customers to think about it as an important feature while making a buying decision. This pushed companies to compete and find ways to be more creative and attract customers towards their product. The entire sequence of events sets a classic example of how something starts, finds a few early adopters and then if it reaches the tipping point, we see a surge in development in that area, just like we are seeing in the think green world.
Here’s another installment (bonus!) of the strategy series: Walmart.
Walmart’s tagline (Save money. Live better.) speaks a lot about Walmart’s strategy: commoditize everything and make it about the price tag. Walmart does an excellent job of treating everything, be it computers, electronics, kitchen supplies, bathroom supplies, shoes or clothes, as commodities. Walmart commoditizes everything in its stores, cutting costs and margins and leading way to lower price tag on goods in there.
How does Walmart get successful in this strategy? I believe there are two main factors leading to Walmart’s success in execution. First, Walmart picks the brands that are willing to sell their products as commodities. With lots of options available in every category and Walmart being a retail powerhouse, it is always possible for them to get enough brands, including the well known ones like Dell and Levi’s, willing to commoditize and be part of Walmart’s machinery. Second, Walmart allocated its resources to develop a phenomenal supply chain that helps them reduce costs and optimize their operations. With zero storage space and inventory on wheels and conveyor belts, Walmart manages to keep costs low and make up on credit from its suppliers.
I believe a very clear strategy with perfect execution makes this one retail behemoth stand tough and consistently beat Wall Street expectations even when every other retailer is going south.
Today I volunteered with Food Lifeline, a non-profit organization in Seattle that supplies food to hundreds of food banks in western Washington. We were a group of about 40 volunteers who were given a task to go through thousands of pounds of apples, discard the bad ones and pack the good ones in banana boxes to be dispatched to food banks. Pretty straightforward, but during the process, I noticed that the definition of a good fruit is drastically different for different individuals. In fact, out of 40 people working there, I guess everyone had their own definition of which piece of apple is good to be packed and which one should be discarded. This made me think, can you shop for grocery items like fruits online?
Putting in context, grocery shopping online means relying on someone else making the decision of whether the fruit you are buying is good enough or not. I believe majority of shoppers will question this other person’s decision with an argument that the fruit they got through the online grocery is not as good as what they would have chosen from a lot in the grocery store. You can say the same thing for something like shoes in terms of fitness, easiness and so on. But the major difference between shoes and grocery is that you can return shoes after trying them on and the store will take it back, but in case of fruits and vegetables with a very limited shelf life, it is quite possible that if you ship a perfectly fine fruit back to the online store, it will be rotten by the time it reaches their warehouse making the return policy a bad business decision for the store.
This takes us back to the age old question of what customers buy on the web and what they don’t. I believe customers are more comfortable buying anything that is WYSIWYG (What You See Is What You Get…a different use of a computing term:-)) like electronics, books etc…but then there are always some exceptions!