Walmart / RAISE Interface Case Study

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Walmart / RAISE Interface Case Study

  1. 1. & : MENTORING THE WORLD’S LARGEST RETAILER Understanding the idea of sustainability, how it can drive How and why did an industrial carpet company founded in a business value and how to design more sustainable products small town in Georgia transform itself into all these things? It for customers are some of the most rapidly emerging issues started simply. And, as with most smart business opportunities, businesses face today. While seeking to create strategies that it started with a customer that in 1994 begun asking questions address sustainability and transform corporate culture, about the amount of recycled content in Interface’s carpets Wal-Mart was introduced to an enterprising pioneer named as well as its environmental policies. Interface. Their collaboration is an example of a recent trend to shift the industrial world towards a solution that At the time, Interface didn’t have an environmental policy, will preserve and hopefully restore our environmental and its CEO, Ray Anderson, had no vision of Interface’s resources. And by doing so, just might transform the world. relationship to the environment beyond legal compliance. Inspired by Paul Hawken’s book, The Ecology of Commerce, Anderson had a stunning personal epiphany: the current THE CHALLENGE industrial model under which Interface operated was In an October 2005 internal speech, Lee Scott – CEO of retail plundering the Earth, eradicating and ruining resources giant Wal-Mart – issued a challenge to his company and necessary for future generations. its business partners that has had far-reaching implications for how Wal-Mart’s business will be conducted and how Anderson immediately set out to change Interface’s culture, it will impact customers, communities and the environment. operations and business model – forever. Today, many Specifically, Scott detailed Wal-Mart’s simple, straightforward companies are asking the same important questions environmental goals: Interface began answering more than a decade ago. 1. To be supplied by 100 percent renewable energy 2. To create zero waste 3. To sell products that sustain our resources and environment What prompted such an ambitious set of goals? Are such goals possible, especially for a company with more than 1.8 million employees and 6,000 individual facilities worldwide? Scott, like other forward-thinking business leaders, put his faith in the concept of sustainability. His October 2005 declaration made Wal-Mart’s journey toward sustainability a corporate mandate, a public promise and a notice to all they do business with: Sustainability is a critical part of our business. We encourage our suppliers to incorporate sustainability into their culture and business practices because those who don’t run the risk of being left behind. Today, Interface is more than a carpet company. It has become a corporate WHERE THE JOURNEY BEGAN sustainability benchmark and mentor for Founded in 1973 by Ray Anderson to produce modular carpet, other global companies which know they Atlanta, Georgia-based Interface, Inc., has grown into the must view their operations through a world’s largest manufacturer of modular carpet, with new lens to compete in todays world. approximately $1 billion in revenue. Interface currently employs over 5,000 people, with locations on four continents and sales in more than 100 countries.1 © 2007 INTERFACERAISE, LLC. 770 437 6807 INQUIRIES@INTERFACERAISE.COM
  2. 2. WHAT IS SUSTAINABILITY? Sustainability can be difficult to define. It has social, ecologi- cal and financial components. For Interface, sustainability WHERE THE JOURNEY CHANGED COURSE is an underlying corporate value, ensuring that business decisions are weighed against their potential impact on the After his life-changing discovery, Anderson took what he economic, natural and social systems they touch. It’s a means terms “a mid-course correction” (which later became the for Interface associates to deliver superior value to customers title of his book on the subject) and began a new journey and to shareholders. It’s integrated into all facets of the along a new path, one leading Interface toward sustainability. business. Rather than constraining business practices, By doing so, he began the transformation of Interface into Interface has found that these new “lenses” create new a global sustainability pioneer. avenues for innovation and business opportunity. Anderson and Interface have earned the recognition Anderson likens Interface’s goal of achieving sustainability of world political leaders, environmental organizations, to climbing a mountain higher than Mt. Everest. And Mt. business press, the United Nations, filmmakers and Sustainability (as this mountain has come to be described) is customers. Some recent awards and recognition include: the metaphor most often used by Interface used to define and describe its challenge. As Hartzfeld describes, “Every company – Ranked #1 Leading CSR Company in GlobeScan’s should create its own metaphor to describe this journey. The 2006 Survey of Global Sustainability Experts mountain and Mission Zero™ are ours, but sustainability will – Listed in Progressive Investor SB20: Companies be defined differently for every company that strives for it. Changing the World Mission Zero is Interface’s promise that ‘every decision we – United Nations Habitat Award for Best make will move us closer to eliminating any negative impact Practices to Improve the Living Environment our company may have on the environment by 2020.’” – Global MindChange Award for Business Responsibility from the World Business Academy Many industry giants like Wal-Mart now view the mounting – The opportunity for Anderson to discuss his epiphany costs of environmental degradation to current and future and Interface’s sustainability goals in the feature film generations as “Hurricane Katrina in slow motion” and are documentary The Corporation exploring how they can use their strength and employee – A place on Business Ethics Magazine’s list talent to be responsive to these challenges and deliver of 100 Best Corporate Citizens business value. Sustainability is also driving Interface into a new role in They are asking important questions and beginning to define the business community, as companies seek advice about sustainability for themselves. Companies looking for a new the strategies and framework Interface used to transform path are seeking guides who know the way. After more than its culture, business model and operations. a decade of working along its journey, InterfaceRAISE has the experience to help others see, define and navigate their It is in this advisory capacity that Anderson and Interface own course. first interacted with Wal-Mart, and later became a peer company and corporate sustainability advisor to them. “Visiting Interface and seeing the creativity “Sustainability is the key driver of Interface’s applied to establish more sustainable practices competitive advantage worldwide, not to mention made it undeniable that the rest of us can do the a key driver for the unusually large amount of same. We don’t have to spend time wondering if worldwide recognition the company has received.” we can do something. Instead, we can move on to figuring out how..” – Jim Hartzfeld, Managing Director of InterfaceRAISE – Doug McMillon, President and Chief Executive Officer of SAM’S CLUB2 © 2007 INTERFACERAISE, LLC. 770 437 6807 INQUIRIES@INTERFACERAISE.COM
  3. 3. WHAT IS InterfaceRAISE? InterfaceRAISE was created in response to repeated visits shared their passion and vision for sustainability with and questions from companies taking or exploring their own Wal-Mart, along with their first-hand learning experiences, mid-course correction and curious about the lessons learned beginning with a small group of executives at a retreat in by Anderson and Interface. fall 2004, to training a group of more than 600 Wal-Mart associates in Bentonville, Arkansas. The name RAISE represents many things: to raise awareness, to raise prosperity, to raise customer value, to raise opportunity, At their retreat, the Wal-Mart executives got enthusiastic and to raise purpose, to raise stock price and profit, to raise energized about sustainability. They researched and planned responsibility, to raise our children. The name, like sustain- potential strategies for a year. Most importantly, the senior ability, resonates in a deeply personal, yet different, way leadership team personally explored these issues, not delegating for everyone. to others, listening more than talking. As part of the learning process, InterfaceRAISE staff hosted two groups of Wal-Mart Providing executive education and organizational inspiration, executives in LaGrange, Ga., for a cultural immersion at their the InterfaceRAISE team consists of senior executives and flagship manufacturing facility (now known as a “the living global sustainable development experts who know how to lab” in InterfaceRAISE training sessions). increase business value through sustainability education, cultural transformation and innovation. The Cultural Immersion is now a core product of InterfaceRAISE executive education offerings and was InterfaceRAISE was born with a mission to help others defined by the most powerful elements of the Wal-Mart develop and implement their own value-added strategy. executive visits (and also given its name by the Wal-Mart team), which included mini-lectures and abundant time for one-on-one discussion with the Interface management team and experts. “Interface has been on this path for over a decade, exploring the theory and applying it in a competi- A key outcome of the Cultural Immersion experience tive industrial context. We created InterfaceRAISE is the realization that this journey is as much about people to use our first-hand experience to help companies as recycling and energy use. move up the learning curve faster than by doing it alone, by showing them our scars and medals, like a sherpa in a climbing expedition. “People and companies need to look at their ability to make change in the world. Interface has value Building on Interface’s experiences over the last for being a living model that continues to evolve decade, InterfaceRAISE created products to help other companies climb the learning curve better, its sustainability practice. Their influence is their faster, and more cost-effectively than if they journey, and the length of their journey, and at go it alone.” what depth the company integrated sustainability and change. That has influence.” – Jim Hartzfeld, Managing Director of InterfaceRAISE – Andy Ruben, Vice President for Corporate Strategy and Sustainability at Wal-Mart THE PIONEER AND THE RETAIL WAL-MART GOES PUBLIC WITH ITS JOURNEY GIANT COLLABORATE FOR SUSTAINABILITY The stage was now set for Scott to lay out Wal-Mart’s Over the past several years, one of the most rewarding environmental goals, first at the October 2005 internal interactions for InterfaceRAISE has been with Wal-Mart. address and again in January 2006 at Wal-Mart’s Supplier Anderson was a confidant of Wal-Mart CEO Lee Scott as the Summit. Since the company’s commitment has become company became more aware of its environmental impact apparent to people outside the organization, news and and opportunities. Anderson and Hartzfeld have repeatedly excitement are spreading throughout their global network — to suppliers, the press and consumers. INTERFACE’S MISSION: To be the first company that, by its deeds, shows the entire industrial world what sustainability is in all its dimensions: people, process, product, place and profits — by 2020 — and in doing so we will become restorative through the power of influence.3 © 2007 INTERFACERAISE, LLC. 770 437 6807 INQUIRIES@INTERFACERAISE.COM
  4. 4. HOW WAL-MART DEFINES SUSTAINABILITY Wal-Mart’s transformation is energizing an ongoing public At the January 2006 supplier summit, Lee Scott and every conversation about sustainability, the potential to preserve executive who took the stage spoke about sustainability, both natural resources, and corporate responsibility to do so. from a personal and business perspective. Scott asked, “What Members of the news media have written about the possibility if we used our size and resources to make this country and of Wal-Mart “democratizing sustainability” beyond the this earth an even better place for all of us? What if the consumers who can afford the latest hybrid automobile. very things that many people criticize us for – our size The InterfaceRAISE team knows that sustainability requires and reach - became a trusted friend and ally to all, just transformational change, and that the responsibility for this as it did for us during the Katrina crisis?” type of change is owned at the executive level of a company. Andy Ruben, Vice President for Corporate Strategy and Sustainability at Wal-Mart, was one of the participants in the cultural immersion session and is one of the people whose awareness shifted because of his experience. “We at Wal-Mart are lucky that our sustainability initiative is being inspired and driven from the very top, from our CEO Lee Scott,” says Ruben. “You don’t know what’s going to cause people to change their mindset. One thing that was critical for us was meeting with and learning from Ray Anderson. For others, it’s taking these ideas home and discussing them with their children.” Scott hit upon an important point: The goals Scott set forth during that October 2005 meeting calculate to amazing proportions, if you consider the scale of a company Wal-Mart’s size. They are the world’s largest retailer, with $312.4 billion in 2005 sales. The company employs 1.8 million associates worldwide in more than 3,800 facilities in the United States and more than 2,600 facilities worldwide. More than 138 million customers visit Wal-Mart stores worldwide each week. Obviously they have the ability to influence enormous change. One of Wal-Mart’s biggest potential impacts during its journey will likely be how their initiatives and global influence transform the business models of their suppliers. And they are excited about the possibilities. Ruben agrees, “When we talk to our suppliers about sustainability, we’re not asking for last year’s environmental report. We want to see change in their businesses, not in papers or reports. Suppliers will be the ones to create innovative ways to meet Wal-Mart embodies how a spirit of collaboration between the global challenge of sustainability. We can’t tell them the executive management and people who are, or will be, how to do it; we can only encourage them to do it. They the true innovators and agents of change can happen, and get to decide how.” happen fast. “Our size and span is exactly why sustainability has to exist in the business and why it has to be our way of doing business,” adds Ruben. “Sustainability will keep us competitive and will keep us communicating with our customers, suppliers and associates to collaborate and innovate.”4 © 2007 INTERFACERAISE, LLC. 770 437 6807 INQUIRIES@INTERFACERAISE.COM
  5. 5. DO WELL BY DOING GOOD Hartzfeld, who has been involved with Wal-Mart along this Recent benchmarking studies confirm that executives at journey sees the company’s potential to be a major change over 40 leading companies agree with this view, and many agent – especially among suppliers, offers: “Inspiration from business leaders believe the time for decisive sustainability the most senior people in the organization is key. In a recent action is now. The challenge has been made, and now is the internal meeting, Lee Scott repeatedly reported to his associ- time for companies to rise up to meet this challenge. ates that ‘…never in his career at Wal-Mart has he seen an issue create as much energy, passion and momentum throughout If you are a company considering sustainability initiatives, the company.’ Other companies should be viewing this as an questions to consider are: How can these concepts be exciting challenge, one where innovation and collaboration developed into a strategic growth platform for my company? can improve their business. That is the approach taken by What are the values and core purpose of my company? both Wal-Mart and Interface. Our journeys are unique to What is important to our customers? How can we transform our different business capacities but share the same mission: and improve our existing business using innovation and to do well by doing good. collaboration? How can we begin to do well by doing good? How will we define sustainability? “It is important for companies to view sustainability as a real opportunity that can directly benefit them and their customers - not as simply a PR stunt. Commitment must be absolute to move the bigness of what needs to move. We’ve learned that this type of commitment must come from the top, and that’s the level of commitment we hope to see from each company we work with.” – Andy Ruben, Vice President for Corporate Strategy and Sustainability at Wal-Mart RESOURCES – Anderson, Ray. Mid-Course Correction: Toward a Sustainable Enterprise The Interface Model. White River Junction: Chelsea Green Publishing Company, 1998. – Business Ethics Magazine. “100 Best Corporate Citizens for 2006.” Spring 2006, Vol. 20 #1. – Floor Focus Magazine. “The Top 250 Design Survey.” October 2005. – Hartzfeld, Jim. Personal interview. 15 May 2006. – Kher, Unmesh. “Getting Smart at Being Good…Are SUSTAINABILITY IS A TREND, NOT A FAD Companies Better Off for It?” Time Magazine Jan. 2006. The implementation of sustainability strategies is more than – Ruben, Andy. Personal interview. 18 May 2006. a public relations ploy, a fleeting whim or corporate sidebar. – www.interfaceglobal.com Scott and his team are challenging Wal-Mart’s massive – www.interfacesustainability.com supplier network to help them achieve their aggressive goals – www.walmartfacts.com in ways that deliver new value to the Wal-Mart customer. – www.walmartstores.com As Scott recently told TIME magazine, “We are not being altruistic… this is a business philosophy, not a social philosophy. At some point, businesses will be held accountable for the actions they take.” ABOUT InterfaceRAISE InterfaceRAISE is a corporate sustainability resource center created to answer the requests of the many leading corporations seeking to learn first hand how Interface is building business value through sustainability. The InterfaceRAISE team consists of senior executives and global sustainable development experts who work with client partners to cultivate business value through sustainability education, cultural transformation and innovation.5 © 2007 INTERFACERAISE, LLC. 770 437 6807 INQUIRIES@INTERFACERAISE.COM
  6. 6. INQUIRIES@INTERFACERAISE.COM2859 PACES FERRY ROAD, SUITE 2000ATLANTA, GA 30339 PHONE: 770 437 6807© 2007 INTERFACERAISE, LLC.

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