By Adam Werbach

Chapter 3: Setting Your North Star and Initiating the TEN Cycle
The Tools of Implementation

When I first started working with Walmart, I needed to understand one of the modern human’s natural habitats-the supermarket. What do people actually do there? Do they choose name brands instead of private-label brands? Do they buy organic? Do they buy everything from one store, or do they shop from many? Why does the average American mom spend about an hour a day shopping?

So I started spending time every week in stores. To my surprise, the people I observed were leaving happy, usually with wide smiles. They were excited to get home and tear into a package of Lay’s potato chips, or make a home-cooked lasagna, or drink a well-deserved beer at the end of a long day. In the produce department, I watched browsers pick up arugula, inspect it, and wonder what it was. In the liquor section, one man must have mistaken me for an employee: "Which wine does not taste too much like vinegar?" "Yellow Tail," I blurted out, surprised and probably violating every "secret shopper" ethical code. "Yellow Tail is an affordable and drinkable New Zealand white wine."
   
At one store, I watched a father with an infant strapped to his chest in a Baby Bjorn carrier trying to control his two other children. The older one was recklessly pushing his younger sibling around in the shopping cart. When the dad yelled at his eldest, his baby started wailing. Nearby, his wife was reading the labels of Soft-Soap hand soap and Suave shampoo, both value brands. When the father finally calmed the three kids down, he joined his wife in her inspection of labels.
   
"Which do you think we can water down?" he asked. They had agreed that they could save money by adding water to their household cleaners and were trying to decide which one was more dilutable. After talking about it for a few minutes and calming one more fight between the two older children, they finally decided that they could water down the Soft-Soap but that they probably could not water down Suave.

Your Sustainability Efforts Must Serve Core Needs
These parents were not looking for an organic shampoo; they needed something that could save them money-and sustainability-driven innovation can do that by compacting soaps, reducing packages, and decreasing the need for hot water. When Walmart asked its manufacturers to look at their goods through the lens of sustainability, one manufacturer of baby car seats focused on packaging. The company’s North Star goal was to ensure the safety of as many babies as possible, and so it wanted to get more seats into the hands of customers.
   
For years, it had shipped its seats in large, white boxes for protection. If it replaced this big, white box with clear, durable plastic wrap, Walmart could fit more car seats in the trucks, cutting down on fuel costs. Since the package was smaller, the store could stock more seats on the floor, which kept the item in stock and in easy view. As soon as the company changed its packaging, sales of seats increased as well.
   
Unfortunately, companies that have jumped onto the sustainability bandwagon too often develop and position their innovations as luxury goods at premium prices, appealing primarily to wealthier consumers. For example, I’m sure that the organic cotton sheets described in an online "green-living" catalog as "Lucia jacquard bedding . . . free of harsh chemical softeners or chlorine" are lovely. They might be comfortable, but the larger challenge is to construct sustainable products that match the core needs of a much larger segment of society than the people who can afford $740 for a queen-size set of those Portuguese bedsheets.
   
So how do you find out what people really want? Just watch what happens when people run out of money in the checkout line, a situation that happens for all sorts of reasons, and even more so in an economic downturn. In the last decade, about 40 percent of American workers have lived paycheck to paycheck.6 Globally, some three billion people live on less than three dollars a day, and because they have less credit, smaller pantries, and few options for savings, they tend to shop more often. In the United States, some people never had, or no longer have, credit cards. Other people set a strict budget and stop spending when they reach it. What they keep and what they put back reveals their priorities, however simplistically and unscientifically. In a supermarket in Montana over about an hour, I saw two shoppers run out of money during the checkout process. Shopper 1 immediately abandoned cheese and eggs and kept the chips, cookies, and soda. Shopper 2 ditched the vegetables first. Almost every time I see people hit their pocketbook’s limit at the cashier, they remove the healthier items. Maybe the healthier alternative costs more. Or maybe they do not consider the healthier alternative a necessity. Or maybe, when strapped for cash, they find enjoyment in the more decadent choices.
   
Watching people shop always reminds me that a strategy for sustainability provides an opportunity to get closer to customers-by saving them money if that is their priority. Or by improving their health and well-being. Or by surprising them pleasantly with innovations that you created by networking with other companies. Or by giving your salespeople a goal that they can believe in enough to share with customers. Or by providing a product label that would have helped the aforementioned parents with the three cranky kids make the more sustainable trade-off-and save them money.

North Star Goals: Guiding Decisions and Actions
In some aspects, running a company is not all that different than sustaining a busy, three-child family. The parents are struggling to pay the mortgage while striving to put away money for a college education, all the while dealing with tantrums and illnesses and unforeseen events. Companies need to take care of their three constituencies, too-customers, employees, and suppliers-constantly innovating on the core product or service, investing in sales and marketing, and finding new ways to save costs in the supply chain. For most families, the North Star is clear-provide the kids more opportunities than what they had. For companies, finding a North Star can be trickier. See "Setting Your North Star Goal" for some specific techniques you can use and questions you can ask yourself and your coworkers to narrow down your company’s goals.
   
Skiers report snow blindness when the sun reflects off the snow and obscures their vision. Is there also "green blindness" that affects companies trying to take a leadership stance? Something happens when the word sustainability comes up. People forget the business. They become fixated on the environmental aspects of sustainability and forget about the economics. Hoards of midlevel managers flock to corporate social responsibility [CSR] conferences to empathize with each other about how difficult it is to get staff, resources, and management attention. The most common question I hear in these meetings is, "How did you get management to listen?"
   
If the goal were to build an information technology system, senior people across the organization would certainly come together to get management attention, time, and resources. Similarly, small, rebel factions across the organization would never have to work across department lines to "build the business case." Quite the opposite; without the business case, there would be no discussion. Why, then, do people struggle with implementing sustainability efforts?
   
They get stuck trying to be good corporate citizens and currying favor with outsiders, never actually figuring out how to connect sustainability to their core business. Some people almost feel guilty talking about sustainability as a business driver. But that’s exactly the approach that would allow them to make the biggest change in the world.
   
Their sustainability initiative must be core to the business-bold, not bolted on, not "feel good once a year" for employees. Economist editor Daniel Franklin explains this point: "Many companies pretend that their sustainability strategy runs deeper than it really does. It has become almost obligatory for executives to claim that CSR is ’connected to the core’ of corporate strategy, or that it has become ’part of the DNA.’ In truth, even ardent advocates of sustainability struggle to identify more than a handful of examples. More often the activities that go under the sustainability banner are a hotchpotch of pet projects at best tenuously related to the core business."9 To be successful, you need to peel off the green blinders and start thinking of sustainability as a new tool set, like information technology or globalization, that can help you reinvigorate a business.
   
At this point, you should have a clearer view of the situation facing a business, relative to changes in society, technology, and resources, based on your STaR map for the organization. Now a company needs to develop North Star goals to guide the whole organization toward executing a strategy for sustainability. Remember, a North Star goal is an overarching business goal that has these characteristics:
ï    It is optimistic and aspirational.
ï    Your organization can achieve it in five to fifteen years.
ï    It applies across the enterprise.
ï    Every employee can personally act on it.
ï    It connects to the core of your business.
ï    It drives excitement and passion in your organization.
ï    It serves a higher purpose than business profitability.
ï    It solves a great human challenge.
ï    It leverages your organization’s strengths.

Smaller companies founded more recently, like Stonyfield Farm and method, were founded with their North Star goals in mind. Their North Star goal connected solving a great human challenge with their organizational strengths. The founders knew the global human challenges that the companies hoped to solve. They built the core of their business around a higher purpose that inevitably drives excitement and passion in the organization. Many older companies, like Johnson & Johnson, have organizational beliefs that point them toward their North Star. Johnson & Johnson’s credo begins, "We believe that our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. JC Penney was founded on the Golden Rule as its operating belief. These strong, credo-based companies can move quite quickly into a strategy for sustainability, since tying the business functions even more closely to solving global human challenges is something the companies already desire. For other companies not built with sustainability in mind, there are a few types of North Star goals that they adopt:
ï    Internal organizing or operating goals
ï    Game-changing goals
ï    Product- or service-changing goals

Internal organizing North Star goals help provide a level of specificity and clarity to the organization. In 2008, for example, Hilton created four initiatives for its hotels around the world: (1) reduce the energy consumption of direct operations by 20 percent, (2) reduce CO2 emissions by 20 percent, (3) reduce waste output by 20 percent, and (4) reduce water consumption by 10 percent.12 These goals represent millions of dollars of cost savings for Hilton and require everyone, from the housekeepers to the operating engineers, to lend a hand. In 2007, Procter & Gamble set a five-year goal to "sell $20 billion worth of ’sustainable innovation products’; reduce carbon dioxide emissions, energy use, water use and waste by 10 percent and deliver 2 billion liters of clean water to children around the world." For P&G, leveraging its global reach to push $20 billion of new "sustainable innovation products" is a way to engage every person in the P&G organization. Sales is what they do.
   
If you set an internal transformation goal (like Hilton’s), then first look at the major resources used in your business and then project the efficiencies you could achieve through different scales of effort. Most companies can exceed even their most ambitious efficiency and waste-reduction goals, because they have much waste in their systems. Without a major conservation effort, from 1975 to 2006, the United States made a dollar of real gross domestic product with 48 percent less total energy, 54 percent less oil, 64 percent less directly used natural gas, 17 percent less electricity, and two-thirds less water. Goals for reducing the absolute amount of CO2 are harder to hit, particularly if yours is a growing business. Do not let that dissuade you. Once you have measured your carbon footprint, your first step should be to increase efficiency, which will result in increasing the profit per unit of carbon consumed. Walter Stahel, who defined the cradle-to-cradle concept, recommends using the metric of dollars of profit per unit of material consumed. Either way, goals to reduce absolute resource consumption are critical across the economy.
   
Game-changing North Star goals change the frame of the external environment so that it will benefit the world and your business. InterfaceFLOR, based in Atlanta, is the world’s largest modular floor coverings manufacturer. It has set out "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." Not only has this mission diverted over one hundred million pounds of material from the landfill, the company has calculated that it avoided $372 million in cumulative waste cost from 1995 to 2007. Under the leadership of its CEO Kevin Roberts, Saatchi & Saatchi has set out to "help a billion people create their own personal sustainability practices through the products and people that touch their lives." He believes that every company will soon be setting North Star goals for itself. "The brands of the future," he says, "will each have a purpose and that priceless competitive advantage which comes from doing the right thing when no one is looking."
   
Product- or service-changing North Star goals inject sustainability innovations into a company’s portfolio of brands. In the leadership-brands model, a company, like Clorox, analyzes society’s changing needs, identifies technologies or brand attributes that help the company meet those needs, and then buys or starts a brand that is separate from its core brand equity and that reaches out to the "sustainable" consumer base. Companies typically also attempt to use the experience of these leadership brands to improve their core company. Burt’s Bees is a learning laboratory for Clorox. Board members from Ben & Jerry’s, which was purchased by Unilever, advise their corporate parent; gadfly businessman Gary Hirshberg’s Stonyfield Farm is determined to aid its new parent, Group Danone; and L’Oreal bought The Body Shop in part to bring a new consciousness to the company.
   
Typically, although not exclusively, leadership brands command a price premium over existing brands and are a means of growing revenue. Take ice cream, for example. When it bought Ben & Jerry’s, Unilever already had brands like Klondike and Breyers. Ben & Jerry’s gave it a means, through premium organic ice cream, to put a higher-priced product to the market.
   
Some companies fear the risk involved in this model. They worry that consumers will ask why their mainstream brands are not sustainable as well. If organic is important, why sell products that use pesticides? Some companies, like General Mills, do not make organic versions of their core products, like Cheerios. Kellogg, on the other hand, has experimented with organic versions of its products, like Raisin Bran. It’s a dynamic moment, and the rules are just now being written. For Clorox, the company had refined its target audience as the mom who was looking for a brand that was optimistically forward-thinking. "We didn’t think she’d find a brand extension believable," said Jessica Buttimer. "She was looking for a trusted adviser, and we wanted to give her one."
   
In the integrating-innovations model, a company slowly improves the products it has without making a big fuss or suggesting that making a product sustainable is anything out of the ordinary. Brands have always improved their products to match the times. Integrating innovation is often a model for building customer loyalty by following changing consumer trends, increasing convenience, or reducing the cost of using the product.
   
One example of a company that is integrating innovations is Procter & Gamble. P&G released Tide Coldwater, a formulation of its best-selling laundry detergent, Tide, that allowed consumers to have the same cleaning results when using cold water. It was marketed as a way for consumers to hold on to their money by saving 80 percent of the energy normally required for each load of hot-water laundry. The company didn’t make a big deal about the fact that if every American changed to cold-water laundry, it would go a long way toward reaching the CO2 reduction commitment that the U.S. negotiators made (although never ratified by the Senate) in the Kyoto Protocol, the first global compact on climate change. For Procter & Gamble, the decision to integrate sustainability innovations into its core brands was a natural choice. At the heart of the worldview of Procter & Gamble is the belief that the consumer is boss. Founded in 1837 by combining the businesses of William Procter, a candle maker, and James Gamble, a soap maker, P&G is now one of the largest companies on the planet, with over three billion transactions a day. Its portfolio includes Tide detergent, Pringles potato chips, Duracell batteries, and Bounty paper towels.
   
Len Sauers is the vice president of global sustainability and helms Procter & Gamble’s sustainability initiative, although it’s frustratingly difficult to get him to explain his specific role in its innovation cycle, since he says without a hint of sarcasm, "There’s no I in P&G." P&G has chosen to integrate sustainability innovations into its core products instead of creating a set of smaller product lines that target the deep-green consumer. "As a company, we believe we can make the most meaningful difference by targeting the mainstream consumer, and that means we need to give her a product with no tradeoffs whatsoever," he said. "We believe our products should have the best of environmental sustainability as well as meeting needs for performance and value."
   
To determine where it could make the biggest impact on environmental sustainability, P&G conducted a life-cycle analysis of the energy use of its products. It found that across the entire company, the largest use of energy was in the consumer-use phase of laundering and that value was driven by the heating of water for the laundry cycle. "This surprised me," Sauers said. "I thought our highest energy impact was going to be somewhere in the manufacturing process."
   
With this fact in hand, Sauers approached the head of R&D. He said, "It was clear to me that if you wanted to make a meaningful difference, targeting this metric of energy was the right thing to do, enabling consumers to wash in cold water was the key." The head of R&D understood the opportunity immediately and set the scientists to work, while the products research group began to gather consumer insights to decide how to commercialize the idea. "The challenge was that the consumer will not accept trade-offs," said Sauer. "She wants performance in cold water that was the same in hot water."
   
P&G’s scientists began to tackle the challenge. They started with the problem: soiled clothes. Soil is hydrophobic, meaning it repels water. Detergents work by using surfactants to get water into the dirt or grime on a piece of clothing to loosen it. Surfactants have the ability to bridge hydrophobic and hydrophilic (water-attracting) molecules. So a surfactant helps brings the water into the soil. To make Tide clean just as well in cold water as it does in hot water, the researchers needed to replace the traditional anionic surfactant with a highly soluble alkyl sulfate (HSAS). An HSAS is more soluble than traditional surfactants, so it gets into solution better in cold water. Voil‡, a cold-water detergent offered the consumer the same cleaning performance that hot water could. P&G’s scientists are constantly looking for materials that are more soluble in cold water than the present surfactants, but the life-cycle analysis, the process of making P&G’s energy effects transparent, provided the opportunity to create a commercial breakthrough.
   
This is the type of innovation that can come from looking at a challenge through the lens of sustainability. Said Sauers, "We do see sustainability as an opportunity. Consumers are becoming more and more eco-aware. If you’re able to give them sustainability in a way that doesn’t require them to make a trade-off, it’s a huge business opportunity."

Reprinted by permission of Harvard Business Press. Excerpted from Strategy for Sustainability: A Business Manifesto (July 2009). Copyright (c) 2009 Adam Werbach; All Rights Reserved.

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