The Future of Green Business Strategy

This presentation is a preview of the Future of Green Business Strategy , a research report by future think . The full report can be downloaded at www.getfuturethink.com

The Four Trends We’ll Explore:

1 | Certifiably Green

Green standards and certifications will change the competitive landscape of industries and the players within them.

2 | The Greenest Link

It’s not just about what you make anymore—but about how (and where) you make it.

3 | The Green Seeds of Innovation

The desire to go Green forces companies to reinvent products, services, and business models in ways we’ve never seen before.

4 | Green Goes Niche

The story behind Green goes from mass to niche with highly targeted messages

It’s Not Easy Being Green

Contrary to popular belief— it’s not so easy being Green. Organizations, governments, and individual consumers are all struggling to adapt to a world in which the planet’s health and dwindling natural resources are at the center of a global conversation.

The good news is that everyone seems to be trying to be some shade of Green, and experimentation usually leads to innovation.

“ Green” is perhaps one of the biggest trends to hit the modern marketplace.

Wal-Mart is going Green.

Hollywood celebrities are eco-evangelists.

The 2008 Olympics set the new gold standard for sustainable events.

Religious leaders are making the environment a moral issue.

Everywhere we turn, we’re inundated with some message or story relating to Green and the environment.

But what does it all mean?

Green today means so many different things to different people.

Marketing and PR departments have responded to the changing marketplace by giving everything from consumer products to automobiles a green makeover.

But at the end of the day, sustainability hasn’t become a true business strategy for many organizations.

Some companies, however, are beginning to understand that Green needs to go well beyond clever advertisements or product labels.

The true value behind Green is beginning to reveal itself at this point—which means that your company has a tremendous opportunity to shape customers’ expectations rather than just respond to them.

The conversation around the environment is quickly shifting away from “the quick fix” and toward lasting, sustainable, Green innovation.

When it comes to the wide (and often amorphous) world of Green; metrics, standards, and certifications can help to clear the haze and set minimum expectations.

Organizations across industries are increasingly coming under scrutiny for the practice of “greenwashing” as environmental activist and consumer groups try to decode and validate various environmental claims.

The next wave of change will be to embrace certifications, measurable standards and ‘reporting systems’, all supported by full disclosures.

Companies will have a choice to help set the standards or merely respond to them.

1 | Certifiably Green: Where We Are

Today, many organizations’ environmental strategies revolve around marketing campaigns and repackaging offerings to tout Green claims. Consumers are generally confused about what’s what, as companies toss around the word “Green” with little agreement as to what it really means.

Though many certifications exist today—many environmentalists complain that they are not robust enough to create lasting change.

1 | Certifiably Green: A Case in Point

The U.S. Green Building Council’s LEED (Leadership in Energy and Environmental Design) certification program represents the cream of the crop when it comes to certifications today.

The USGBC’s members comprise of practitioners along every point of the architectural and construction value chain—from designers and furniture makers to architects and raw material suppliers. Each link in the chain contributes their expertise on how to make a building as Green as can be.

1 | Certifiably Green: Where We’re Headed

Given the success that certain industries have had with third-party certifications and reporting standards, we’re likely to see an increase in their use over the next few years.

Organizations across all industries may begin to partner with one another and with non-profit and governmental agencies to establish standards and certifications where they do not exist today.

The key success factor for future certifications will be coordination—careful analysis and accountability across all links in an industry’s value chain.

1 | Certifiably Green: What Does It Mean For You?

Is your organization making environmental claims? How is it supporting and reporting these claims? How can you alter your green message so that the story you tell isn’t vulnerable to criticism?

How can you lead the charge in educating your customers about what Green means in your industry? Who can you partner with (NGO, other industry leaders) to ensure you’re on the leading edge of Green in your industry?

Green is moving from the Marketing Department to the Operations Department as companies start to analyze and optimize each piece of their value chain with an eye toward sustainability.

Being Green isn’t just about new labels and materials. It’s about minimizing environmental impact across an offering’s entire lifecycle—from development to disposal and beyond.

2 | The Greenest Link: Where We Are

LCA (Lifecycle Analysis) and comprehensive value-chain assessments are beginning to gain prominence today as organizations seek to shrink their overall environmental footprints in meaningful ways. There’s both a consumer push and an increasingly strong economic case for doing so.

On the consumer side, we have a general population with unprecedented access to data and information about companies and their operations. Anyone who chooses to do some digging into the environmental practices of a specific company can often create a pretty clear picture of where that company falls on the Green spectrum.

From an economic standpoint, ever-increasing energy and materials costs are pushing companies to streamline their operations, eliminate waste, and reduce energy consumption as much as possible.

2 | The Greenest Link: A Look Into the Future

It’s the year 2025. As LCA and value-chain assessments have grown more robust and detailed over the years, so too has the level of transparency and accountability in the marketplace.

The methods by which we measure and track environmental data have become so effective that every individual around the world can measure his or her environmental footprint.

Worldwide, an Eco-Point system has been implemented to help people track, WeightWatchers style, their impact on the environment so that they can budget their consumption habits and behaviors accordingly.

Flick on a light-switch? 2 Points. Head into the office for work? 12 Points. Read the news online instead of in print? -1 Point.

2 | The Greenest Link: A Look Into the Future

Organizations are graded on not just their operations, but on the behavior of their employees as well.

The Greenest organizations are those whose operations, value chains, products, services, and employees have the smallest aggregated impact.

Certain Green leaders, such as Whole Foods and Toyota, have mandated that employees each spend no more than 1000 Points per week (the amount which has been deemed “sustainable” by the UN ’s Environmental Committee), both in and outside of work.

Employees begin to list their Eco-Points on their résumés and CVs, and these figures are validated as part of the standard background check performed by HR .

2 | The Greenest Link: Where We’re Headed

Over the next few years, organizations are going to realize compelling economic reasons for going Green.

Some will find that Green means lower-costs in terms of raw materials and energy; others will realize increased profits and demand due to new contracts with other institutions who require Green suppliers and vendors.

CSR (Corporate Social Responsibility) reporting will grow increasingly robust and detailed as organizations seek to communicate the level of Green they’ve accomplished to their customers, partners, and shareholders.

2 | The Greenest Link: What Does It Mean For You?

What is one link in your organization’s value chain that you can, in the short term, make more environmentally responsible?

What are the cost-saving opportunities for your organization that also help reduce waste or emissions?

Innovative companies are using Green as a platform for creating value around new product concepts, service strategies, and business models that represent disruptive change in the marketplace. For some companies where innovation once seemed illusive and ambiguous, environmental responsibility has become a goal around which new ideas are brought to life.

It’s called “Green Hat” thinking—the type of idea generation and innovation that comes out of a singular focus on reducing one’s environmental impact as much as possible.

We’re beginning to see a new sort of industrial revolution today wherein many organizations are spending tremendous resources on trying to reinvent the processes, systems, products, and businesses we’ve grown comfortable with over the past century.

Some companies start small—Whole Foods banning plastic shopping bags, for example; while other companies have their sights on much bigger things—such as Honda’s development of hydrogen-powered-zero-emissions vehicles.

3 | The Green Seeds of Innovation: Where We Are

GE: Ecomagination

Ecomagination is designed to meet demand for more energy efficient products and drive sustainable growth.

It reflects GE’s commitment to invest in innovative solutions to environmental challenges, and helps GE develop and deliver valuable, environmentally-focused products while helping protect and grow the bottom line.

Ecomagination focuses on the development of renewable energy sources, water purification initiatives, carbon capture and sequestration systems, and alternative transportation systems.

3 | The Green Seeds of Innovation: A Case in Point

GE: Ecomagination

In 2007, GE invested more than $1 billion on cleaner technology R&D , moving the company closer to its goal of investing $1.5 billion annually in Ecomagination R&D initiatives by 2010.

In 2007, GE achieved approximately 15% growth in Ecomagination revenues over 2006, from $12 billion to $14 billion. Due to the program’s overwhelming success over the past few years, GE forecasts it will surpass $20 billion by 2009 and is consequently raising the annual Ecomagination revenue goal to $25 billion by 2010.

While extensions, enhancements, and carbon offsets will play a major role in making Green a little more mainstream, it’s the disruptive end of the eco-innovation spectrum that’s most exciting and perhaps the most promising in the long term.

Over the next few years, we’ll see organizations use their drive to go Green as a platform for truly disruptive change. Size, experience, and brand name will be less important to success in the marketplace than the magnitude of innovation that some companies attain—and breakthroughs will be born across industries, presenting solutions to some of our most seemingly-intractable environmental issues.

3 | The Green Seeds of Innovation: Where We’re Headed Incremental : Carbon Offsets, Recycling Programs, Product Revisions The Eco-Innovation Spectrum Disruptive: New Business Models, New Links in the Value Chain

If you break your offerings down into their most minute parts, how can you uncover new opportunities to do Green things in fundamentally different ways?

The Green marketplace is full of smaller, younger companies that have risen to great success through innovation. How can you ensure your organization’s long-term competitiveness in an environment in which young, Green upstarts can compete with larger global organizations?

3 | The Green Seeds of Innovation: What Does It Mean for You?

The “Green movement” opens the door to a customer engagement strategy that is deeply connected to their values and identities.

Organizations have an opportunity, through Green, to build strong, lasting relationships with their audiences.

The issue is that the eco-customer isn’t any one person or customer type. Customers don’t all agree on what Green actually means.

Organizations that personalize Green by getting to the heart of their customers’ motivations, fears, and hopes will emerge as the Green market leaders in the years ahead.

Companies today often take a broad, mass-market approach to Green. By trying to appeal to the widest possible audience, many end up diluting their commitments and environmental messages to a point at which messages become unclear and lacking in sincerity.

4 | Green Goes Niche: Where We Are Opinions on the environmental movement and intentions for going green vary greatly from one person to another. Some cite personal guilt and personal health, while others succumb to pressure from children or want to take part in the larger cause of saving the planet.

The world of Green branding and communications will become more focused, targeted, and specific in the years ahead.

4 | Green Goes Niche: Where We’re Headed The language we use to talk about Green will expand to allow for more direct, focused conversations between organizations and their customers. Organizations are increasingly turning to the Web to better engage their customers and understand the nuances and complexities of environmentally focused decisions.

Given the success that certain industries have had with third-party certifications and reporting standards, we’re likely to see an increase in their use over the next few years.

Organizations across all industries may begin to partner with one another and with non-profit and governmental agencies to establish standards and certifications where they do not exist today.

The key success factor for future certifications will be coordination—careful analysis and accountability across all links in an industry’s value chain.

How well do you know your customers’ motivations for going Green? How can you open up communication with them to better understand?

Which Green customers are most important to the growth of your business? How can you ensure you’re reaching them through robust communication and engagement strategies?

The Last Word

Having now peeked into the future of Green, you may have several questions. That’s to be expected. The reality is that Green is essentially synonymous with change— in terms of how we consume, how we do business, how we work, and how we approach innovation.

The beauty of Green, however, is that it is also synonymous with growth. As we move into an era of constrained resources, organizations that help their customers minimize waste and resource consumption will emerge as market leaders. And there are countless ways to get there, no matter what role you play in your organization. If you’re in Product Development, you can shape the future of Green by creating the offerings that push the definition of Green to new heights. If you’re in Operations, you can analyze and redesign the processes by which your organization does business and eliminate waste and inefficiencies. If you’re in Human Resources, you can push for new policies that allow employees to work virtually or new reward systems that incentivize Green behaviors.

The Last Word

Wherever you sit, you have an opportunity to be a leader in the race toward sustainability.

The only question is— how fast are you willing to get there?

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