Net Impact Presentation - New Balance

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First-place winning presentation at the 2011 Boston University School of Management Net Impact Case Competition

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  • Framework should address: (1) responsible leadership and (2) pride
  • Assuming linear function for giving, donating about $9m this year
  • Current CSR Status at NB: good components/ideas and raw passion. ingredients are there, but no cohesion New Goal: Alignment of initiatives through protocol and passion as mandated/manifested in Leadership and company PrideFirst step is to take “Responsible Leadership Steering Committee” and make RL a foundational idea of NBResponsible Leadership to the organization is 6 major components:IdeasInvesting in the community (internal culture and external philanthropy)Sustainable products and practices Ethical and environmentally-conscious decision makingToolsTop down implementationFollow throughAlignmentResponsible leadership will establish standardized principles/standards across the boardCSR no longer silo-ed program – comprehensive strategy with common mandated missionTwo major moves:Org Re-StructureCommunication initative
  • Create “Corporate Social Responsibility” DepartmentEstablish Vice President PositionHire Executive Vice PresidentPromote internally – current employees know company NB values that are integral to successful CSRMaintain Katherine Shepard at Manger PositionHire supporting staffReport directly to CEOLends credibility to the department and the cause, and sends a message of top management buy-inPlaces CSR departmentin organizational line with Apparel division and connects to manufacturing, commercial operations, sourcing, and procurement allowing for CSR integration and connection across departmentsCost: Additional Salaries and Benefits - $350,000Benefit: Visible, sanctioned new department and leadership will be crucial to effective company buy-in, recognition, and incorporation of CSR program
  • Create “Corporate Social Responsibility” DepartmentEstablish Vice President PositionHire Executive Vice PresidentPromote internally – current employees know company NB values that are integral to successful CSRMaintain Katherine Shepard at Manger PositionHire supporting staffReport directly to CEOLends credibility to the department and the cause, and sends a message of top management buy-inPlaces CSR departmentin organizational line with Apparel division and connects to manufacturing, commercial operations, sourcing, and procurement allowing for CSR integration and connection across departmentsCost: Additional Salaries and Benefits - $350,000Benefit: Visible, sanctioned new department and leadership will be crucial to effective company buy-in, recognition, and incorporation of CSR program
  • External CommunicationsPublished Report/Write-up on CSR activitiesImproved Internal CommunicationsThe NewBalance Sheet Bi-monthly letter from the newly formed CSR departmentFeaturing “CSR wins” in departments across the company Presenting “Staff Spotlight” to bolster employee recognition and new initiatives. Letter will be distributed physically (on recycled paper, of course!) as well as posted on the company websiteCost: labor for “Balance Sheet” production included in administrative department salary, with possible additional $3,000 for materials and publishing. Website cost included in current web design and IT salaries and fees.Benefit: Promote transparency in management and incorporate all employees in the success and change of the CSR policy and progress. Improved Internal Communications
  • Life-cycle tracking and sneaker take-back program“Eco score card” from both sides – Full diagnostic on how longs shoe lasts, longevity of every componentEco score card looks the same for a store as it does for a shoe…Biodegradability of shoe – not “green as quality” promotion (see BCG numbers)Carbon footprint of everything record on same Eco score cardEvents where people can bring old New Balance shoes to recycle them and reminisce Old Balance: last run in your old shoes before you recycle themTraining sales associates in greeness
  • Consumers not ready to pay for “green” appareal; not perceived as higher qualityOnly 36% of respondents sometimes or regularly buy green clothing (vs. 69% Paper/packaged goods and 64% fresh meats/veggies) BCG reportLess than 30% of green product buyers perceive green footwear and appareal as higher quality – BCG report Position NB as an industry leader in facility energy efficiently and clean technologyCommit to sustainability of all facilities, starting with storesMake significant investments in use of renewable energy and green store designEnergy Server Architecture or microturbines – symbolic investments that will save money over timePursue high marks from LEED Green Building Rating SystemLEED CertificationGoal: Support notion of New Balance as a green brand through the “face of the company”Shipping practicesAt the front of the green frontier operationallyInvestment: SignificantSavings: SignificantReputational Benefit: SignificantPromotion: Internally include carbon footprint info in highly level reports to employeesExternally stores as advertisements
  • First green shoe looked grossIncentivize designers (w/ prize money) to develop cool looking green shoeContinually invest in this prize to prepare for changing public perception re: quality & green in footwear and apparelBuild stable of Green Balance Boston surprisingly a hot bed for cool shoes (see Bodega & Hanon-NB collab)Build pipeline OAT Dutch designers – compare with 070
  • KAP - possible saves from improvement efforts: $1k to $100kTemporary workers – hiring more temporary workers to fill in hours
  • Net Impact Presentation - New Balance

    1. 1. Bolstering CSR in Nike<br />
    2. 2. Setting the Pace for CSR<br />Team Cool Runnings<br />
    3. 3. Call for Action<br />Issue at Hand: While New Balance (NB) is currently utilizing socially responsible practices, the approach is fragmented.<br />Mission: “Demonstrating responsible leadership, we build global brands that athletes are proud to wear, associates are proud to create, and communities are proud to host.”<br />Goal: Create and align an integrated CSR framework into the NB organization.<br />3<br />
    4. 4. Why Care About CSR?<br />4<br /><ul><li>“Up to 50 per cent of a company’s value could be dependent upon reputation and intangibles”1
    5. 5. Company’s citizenship drives 16.3% of a company’s reputation of products and services2</li></ul>1Veleva, Vesela. “New Balance: Developing an Integrated CSR Strategy.” Richard Ivey School of Business, The University of Western Ontario. Page 6. <br />2Reputation Institute and Boston College Center for Corporate Citizenship, “Building Reputation Here, There and Everywhere: Worldwide Views on Local Impact of Corporate Responsibility,” March 2009, http://bcccc.net/document/docWindow.cfm?fuseaction=document.viewDocument&documentid =1270&documentFormatId=2331, accessed March 29, 2011.<br />
    6. 6. How Do We Get There?<br />Integrated approach:<br />5<br />Joel<br />Stephanie<br />Casey<br />Jackie<br />
    7. 7. Instituting Responsible Leadership<br />6<br />
    8. 8. Reflecting Commitment in Structure<br />We recommend creating a “Corporate Social Responsibility” Department<br />Reporting directly to CEO<br />Establish Executive Vice President Position<br />Est. Incremental Cost: $250,000 per year<br />Benefit: Visible, sanctioned new department and leadership will be crucial to effective company buy-in, recognition, and incorporation of CSR program<br />7<br />
    9. 9. Reflecting Commitment in Structure<br />8<br />
    10. 10. A New Type of Accounting<br />9<br />
    11. 11. 10<br />Aligning Products & Services<br />Products & Services<br />ValuesPrinciples<br />Casey<br />
    12. 12. Green is the New Balance<br />11<br />Responsibility Score Card<br />Factory Store<br />40 Life Street, Boston MA<br />^ LEED Green Building<br /> Certified since 2009<br />^ 78% of electricity from <br /> solar power<br />^ Paperless since March 31, 2009<br />^ Total Carbon Footprint <br /> reduced by 58% since 2007 <br />
    13. 13. A New Footprint<br />Position NB as an industry leader in facility energy efficiency and clean technology<br />How:<br />Invest in cutting edge green innovations for heating, cooling, ventilation, and waste disposal <br />Pursue LEED Green Building Certification for all NB facilities<br />Sponsor LEED training for the VP of CSR<br />Why not green products?<br />Green footwear and apparel not yet perceived as high quality<br />NB wants to be perceived as an athletic shoe company<br />Current green products are painful to look at<br />12<br />
    14. 14. <ul><li>Collaborate with green designers to build a pipeline of green products
    15. 15. Beat major brands to fashionable green offering</li></ul>Green Shoes Everyone Can Love<br />13<br />Current green offering, the 070<br />Where we are headed<br />
    16. 16. Integrating Efficient Operations<br />14<br />Operations<br />Products & Services<br />ValuesPrinciples<br />Stephanie<br />
    17. 17. Shoring Up Operations<br />Goal of Operations in CSR context:<br />Maximize positive impacts on employees, environment, society while adhering to the firm’s overall mission<br />NB is doing the right thing in the U.S. …<br /> … but poorly communicates/recognizes initiatives and is inconsistent overseas<br />15<br />
    18. 18. Empowering through Recognition<br />We recommend launching a “Kaizen Appreciation Program” (KAP)<br />Train each associate in continuous improvement<br />Each quarter, 1 associate is chosen to present improvement project and results to management<br />$1,000 bonus<br />Communicate green initiatives in New Balance Sheet newsletter<br />16<br />
    19. 19. Maintaining a Consistent Approach<br />NB should be consistent in its standards both in the U.S. and overseas<br />We recommend holding temporary workers to the same hour and compliance standards as full-time associates<br />Based on standards within that country<br />Work with organizations such as Maquila<br />We suggest enhancing the compliance standards for apparel and accessories division<br />17<br />
    20. 20. Boosting Morale and Productivity<br />18<br />Benefits<br />Costs<br />
    21. 21. Reaching out to the Community<br />19<br />Joel<br />
    22. 22. “Endorsed by No One”<br />20<br />
    23. 23. Taking Outreach National<br />21<br />
    24. 24. Launching in a Phased Approach<br />22<br />
    25. 25. The Bottom Line<br />23<br />Benefits<br />Costs<br />
    26. 26. Integrated Approach<br />24<br />
    27. 27. Questions?<br />25<br />

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