Sanders: Sustainability is path to profit
By Brian E. Clark
The companies that emerge strongest from the current recession won’t be those that simply slash their payrolls to save money.
Rather, says author and former Yahoo executive Tim Sanders, the winners will be those that continue to innovate and take steps to become more sustainable and environmentally benign.
Companies must “rethink the manufacturing process to reduce the impact on our environment and to create a business that can grow indefinitely,” said Sanders, who will speak May 19 at the Manufacturing Matters conference in Milwaukee.
Additional informationThe conference, hosted by the Wisconsin Manufacturing Extension Partnership, will feature two keynote speakers (including Sanders) plus 20 workshops offering insights and best practices on a wide range of topics, including business transformation leadership, export opportunities, lean manufacturing, marketing, online collaboration and talent management. New this year is a workshop track devoted to sustainability in products and processes.
Sanders said it's wrong to think sustainability is a “cost driver and a profit reducer.”
“If done bluntly, and you try to buy sustainability off the shelf, that’s true,” said Sanders, author of “Saving The World At Work: What Companies and Individuals Can Do to Go Beyond Making a Profit to Making a Difference.”
“But what we have seen is that companies that embrace sustainability during a recession will focus on waste reduction,” he said. “And what they will learn how to do is save even more money now that they can through layoffs and cutbacks and other behavior like that.”
Sanders cited a Georgia carpet company called “Interface,” which anticipated a paradigm shift in the building industry in the mid-1990s.
“Instead of looking at waste reduction as only a budget issue, which would have demoralized the troops, the framed it is an ‘ethical issue,’” he said.
“In other words, wasting oil, energy, plastic or paper became considered stealing from the future and it gave workers a new way to understand waste reduction,” he said.
“It’s not just being a cheapskate, it’s what I call being a ‘greenskate,’” he said. “That’s a person that during these times is able to re-examine everything about a business through an ‘eco-lens’ because when you focus on reducing the waste, you save money and you boost employee morale at the same time.”
Sanders said he worries that manufacturers that are solely focused on cutting staff create “survivors guilt” among their remaining employees, whose confidence, motivation and productivity decline.
“What we will see over the next few years is that manufacturers who right now are focused only on surviving like there will never be an expansion will see an increase in defects and a significant loss of quality,” he said.
“They will also build a brand that (says) they are a terrible place to work for a decade.”
What Interface discovered was not only that it could save $300 million over three years in waste reduction, he said, but that it could take over the carpet market and became known as a great place to work in the process.
Moreover, he said, Interface was able to “poach” the best managers and engineers from competing companies.
“And we’ve seen the same phenomenon at Toyota,” he said. “They adopted the Hybrid Prius model in the early to mid-90s – at a time when their cash couldn’t have been lower - because they had a vision about the future.
“And for the past five years, they have been poaching top talent from GM, Ford and Detroit. I believe the reason Detroit is collapsing is because it had an undue emphasis on SUVs and heavy trucks, which produced 85 percent of their after-tax profits in 2006.”
Sanders said this type of "short-sighted thinking, especially in terms of sustainability, is very dangerous for manufacturers.”