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Sustainability no longer an advantage for small companies.

Posted 05.07.10 by Adrian Ho

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Image via mr. nightshade

The story of the startup, founded upon a philosophy of making money while doing good for the planet is so common now that it has become archetypal. This story traces its roots directly back to the grassroots environmental movements sparked by books like Silent Spring. This is just one more telling of the story of David over Goliath, or of the 300.

However, I think that this newer story has taken an unexpected turn in the last few years.

At the start of the environmental movement, the enemies were institutions like big business and big government; the heroes, individuals and small groups. Action took the form of protests, or small heroic acts to advance understanding of the issues or to orchestrate protection of valuable resources.

However, as our collective understanding progressed, and we learned more about the issues, it became increasingly clear that the problems were larger than we had imagined. Science has revealed that the “enemy” are not institutions per se, but rather that the “enemy” is mankind as a whole. And by and large, the majority have embraced “the message,” but individually we often feel powerless and insignificant.

It’s not surprising then that protest and small acts of heroism are being brushed aside in favour of more sweeping, large-scale changes, reforms and actions. Actions that, by and large, can only be contemplated and executed by the old enemy – the institutions of big business and big government.

I think that this has created a surprising turn around, which I alluded to in my post on setting the agenda in business and marketing. Where sustainability was formerly a strategy for small companies to create disruption in markets dominated by larger companies, I think that it is now primarily a strategy for big companies to create even more distance between themselves and the competition.

In moving from being a strategy of creating awareness to one of creating action, I think that “sustainability” has become something against which only a company with scale and resources can make any meaningful progress. What do you think?

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  • Anonymous

    I’ll first say that sustainability should be seen as a business model not a business ploy. In that regard, businesses should see value in sustainability even after it is no longer a novel idea. To understand the benefits of sustainability as a model one needs to re-frame the conversation so that intangible benefits are as important as profit.

    To your question, I agree that the large companies are poised to make the most substantial impact. I wrote a post earlier this week that led me to some discussions about how Walmart, the biggest business in the world has the resources and scalability to make sustainability normal and accessible. After all, for sustainability to remain, well, sustainable, it needs to become the norm.

    John Grant, author, “Green marketing is making green seem normal, not normal seem green.”

    Great post, love the topic.

  • http://zeusjones.com/blog adrianho

    Yes, agreed. The usage of sustainability as a strategy is a bit cynical (and pessimistic on my part), I’d love for it to be THE business model not just a business model. Thanks Andrew – we’re also big fans of John’s thinking here too.

  • andrewbrynjulson

    I'll first say that sustainability should be seen as a business model not a business ploy. In that regard, businesses should see value in sustainability even after it is no longer a novel idea. To understand the benefits of sustainability as a model one needs to re-frame the conversation so that intangible benefits are as important as profit.

    To your question, I agree that the large companies are poised to make the most substantial impact. I wrote a post earlier this week that led me to some discussions about how Walmart, the biggest business in the world has the resources and scalability to make sustainability normal and accessible. After all, for sustainability to remain, well, sustainable, it needs to become the norm.

    John Grant, author, “Green marketing is making green seem normal, not normal seem green.”

    Great post, love the topic.

  • http://zeusjones.com/blog adrianho

    Yes, agreed. The usage of sustainability as a strategy is a bit cynical (and pessimistic on my part), I'd love for it to be THE business model not just a business model. Thanks Andrew – we're also big fans of John's thinking here too.

  • http://edwardboches.com/ Edward Boches

    Simple but important insight. Note brands like Pepsi. Now catching up to the small companies like Dancing Deer Bakery. The unfortunate thing is that a lot of companies will give more lip service than true commitment. Hope I’m wrong.

  • http://edwardboches.com/ Edward Boches

    Simple but important insight. Note brands like Pepsi. Now catching up to the small companies like Dancing Deer Bakery. The unfortunate thing is that a lot of companies will give more lip service than true commitment. Hope I'm wrong.

  • http://zeusjones.com/blog adrianho

    Hey Edward, good to see you!

    That’s the new role for small companies, to keep the corporations on the straight and narrow!

    I think many will see it as a ploy but I have optimism that more will embrace it as a smart strategy and something that makes what they do more meaningful. People in big companies want to care about their jobs too. I think things like this make everyone’s life better.

  • Sarah Jones

    Did you see Michael Russo’s recent post over on the HBR blog? He’s thinking along similar lines (he too cites Method, one of our favorite modern brands at ZJ, as an exemplar). http://blogs.hbr.org/cs/2010/05/what_you_can_learn_from_missio.html

    But he suggests – and I agree – that small mission-driven companies are responsible for more than “protest and small acts of heroism”. While mainstream corporations have the means and scale to drive significant change, mission-driven companies can provide innovative ideas and authentic leadership. Rather than sweeping their work to the side, I wonder how mainstream companies can work with these smaller organizations to develop strategies that make being responsible pay – for everyone.

  • http://zeusjones.com/blog adrianho

    Good point, competition is so 20th century, and acquisition is 00s thinking. I agree the interesting thing will be the new kinds of partnerships that are formed.

  • http://www.influxinsughts.com ed cotton

    Adrian,

    I think your post is right on- big companies have the power to make massive change and we’ve all read and seen what Wal-Mart has been doing in the area of sustainability. Big corporations now realize there are huge gains to be made to their bottom lines by being more sustainably focused.

    However, I would challenge you on the suggestion that small companies are no longer relevant in this space- they are pushing into areas not even contemplated by larger players. i would use Zipcar as an example here.

    In addition, you have to assume most large corporations by their very nature are based on the traditional form of capitalism and that their approach to sustainability rests on this. Look out and watch out for people with new models in this space, small companies that will look at alternatives like reuse and barter.

    Big companies do have the scale to make a difference, but there’s something of a long-tail here- the combined effect of small companies might be greater in the long term and are more likely to innovate in the sustainability space.

  • http://zeusjones.com/blog adrianho

    I’ve had to think about this for a bit and I don’t disagree with what you’re saying here, but let me see if I can provide a counterpoint.

    I think that Zipcar (and their like) are operating as a lab, creating markets that – when large enough – a big company will have a much better claim on filling.

    Some “attributes” like personal service, craftsmanship, passion, handmade, etc. are very hard to scale and therefore solid attributes upon which to base a small business. For a small company, an investment in these is a direct investment in margin.

    Sustainability is much better at scale and therefore an “investment in sustainability” probably won’t lead to margin improvement or margin protection. In fact, in the long run, it’s probably money down the drain from a pure investment standpoint.

    I’d argue small companies need to have as capitalist a mindset as large ones, therefore if I were an entrepreneur starting up or a VC, I would have to think twice about basing a large part of my strategy upon sustainability.

  • http://zeusjones.com/blog adrianho

    Hey Edward, good to see you!

    That's the new role for small companies, to keep the corporations on the straight and narrow!

    I think many will see it as a ploy but I have optimism that more will embrace it as a smart strategy and something that makes what they do more meaningful. People in big companies want to care about their jobs too. I think things like this make everyone's life better.

  • http://twitter.com/adamronich Adam Ronich

    Too many thoughts to be brief – sorry about the tome.

    I hear the words “setting the agenda” and automatically link it with Noam Chomsky and political science – which may be an appropriate reaction. I equate it to Fox News or Huffpo (not to get too political) who steer honest debate into single issue politics with relentless adherence to ideology and talking points. Then I get caught up in the semantics of “setting” and “shaping” the agenda.

    We talk about the effect of social media and participatory culture as putting people in control. If this is true, then -in theory – it would also flip the funnel of influence, where the public now has the ability to reach, shape and define what is good behavior (Ashley’s point) therefore “setting” the agenda.

    If the public sets the agenda, conglomerates and corporations have the size to “shape” the agenda into one that fits and supports their actions. In essence, buying a share of voice that is translated to a share of concern. And while there is increased transparency with Corporate America, most of the public isn’t engaged. The lack of honest interrogation of these companies allows them to hide dysfunction. If people were to actually explore Walmart’s commitment they’d see sustainability efforts are merely slowing the intensity of their footprint, not reducing it. In fact, Walmart’s footprint is still growing. This is the danger in shaping the agenda – the illusion of importance. It’s a tactic used to divert attention from the whole, to the singular. A reduction to representations when the story is the big picture.

    Which brings us to a fundamental point: growth is the enemy of sustainability. So as long as shareholders value growth above all and corporations measure their value in terms of market capitalization, mature publicly traded companies will forever be at odds with the idea of sustainability. This is further evidenced by how corporations sell in sustainability practices. Knowing most organizations will only support the cause when it’s financially prudent, change agents must sell it in not for altruistic reasons, but for efficiency and wear a sort of deep-green Six Sigma belt. In the end, it’s still framed in what’s best for their interests, not our interests.

    Let’s look at the last line here, because I find it really interesting. “I think that “sustainability” has become something against which only a company with scale and resources can make any meaningful progress”.

    This is where scale becomes interesting. Small companies have the advantage of inspiring personal sustainability. Corporations have the advantage of enforcing public sustainability.

    Small companies can be structured in a way that they have a net-plus affect on the environment. They can offer deeper experiences where advocates know they are supporting positive change and living to a higher set of values. It challenges them to be better where the motivation is measuring themselves against others who have similar principles, magnifying beliefs. This is personal, meaningful change on an individual level and largely a grassroots effort that is in opposition to popular culture, not part of it.

    If we are talking about sustainability as a movement, then as Mel Gibson said in Braveheart – “we need the nobles.” Those in a position of power, who control the systems have to be on board before the masses react. Using the ‘research as marketing’ observation as an analogy, if a company of this size is doing something the masses believe it must be important. Control agents can also use default principles to change behavior. In the end, progress needs the nobles to lend credibility, and to change the systems of control to benefit the public at large.

    For me, right now it’s a question of influence, specifically, who is trying to influence who? And can they? We know behavioral change has less to do with the influentials than it does with a population’s willingness to change. The Passionate Mass has spoken and some first-follower corporations have shown a willingness to change, but in their attempt to influence change on a greater scale will The Cynical Mass be as open to change as the corporations were? Can corporations inspire a larger acceptance of sustainability? It may be that corporations will ultimately make a larger contribution by mandating change, than inspiring it.

    This is the symbiotic relationship between small and big influencing cultural change. Humans are constantly looking out for a place to go, one where others are too. Small inspires movements, big makes them popular or the norm. This is the both benefit from common causes, only differently point.

    …good discussion though, I’m having fun thinking about it.

  • Sarah Jones

    Did you see Michael Russo's recent post over on the HBR blog? He's thinking along similar lines (he too cites Method, one of our favorite modern brands at ZJ, as an exemplar). http://blogs.hbr.org/cs/2010/05/what_you_can_le…

    But he suggests – and I agree – that small mission-driven companies are responsible for more than “protest and small acts of heroism”. While mainstream corporations have the means and scale to drive significant change, mission-driven companies can provide innovative ideas and authentic leadership. Rather than sweeping their work to the side, I wonder how mainstream companies can work with these smaller organizations to develop strategies that make being responsible pay – for everyone.

  • http://zeusjones.com/blog adrianho

    Whew, like you said lots of (good) points, but the one that really gets me thinking is your assertion that:

    “If people were to actually explore Walmart’s commitment they’d see sustainability efforts are merely slowing the intensity of their footprint, not reducing it. In fact, Walmart’s footprint is still growing…

    “Which brings us to a fundamental point: growth is the enemy of sustainability. So as long as shareholders value growth above all and corporations measure their value in terms of market capitalization, mature publicly traded companies will forever be at odds with the idea of sustainability.”

    I think you have hit onto something very important here which is that the overall business model of the company must be considered before one can make a judgment on their efficacy re: sustainability. If, like Walmart, the overall business is clearly about increasing consumption, then all sustainability efforts are simply aimed at fixing problems they create. However, aren’t some big companies in the business of stealing share – or replacing existing consumption? In a mature category like automobiles, I think we have reached the limit of market size, therefore the battle is replacement.

    Similarly, many small companies are going into existing markets to replace existing consumption, but I would think there are a bunch of small businesses that start in brand new categories that are spurring increased consumption. Can you really say that:

    “Small companies can be structured in a way that they have a net-plus affect on the environment.”

    Lots to chew on here

  • http://zeusjones.com/blog adrianho

    Good point, competition is so 20th century, and acquisition is 00s thinking. I agree the interesting thing will be the new kinds of partnerships that are formed.

  • http://www.influxinsughts.com ed cotton

    Adrian,

    I think your post is right on- big companies have the power to make massive change and we've all read and seen what Wal-Mart has been doing in the area of sustainability. Big corporations now realize there are huge gains to be made to their bottom lines by being more sustainably focused.

    However, I would challenge you on the suggestion that small companies are no longer relevant in this space- they are pushing into areas not even contemplated by larger players. i would use Zipcar as an example here.

    In addition, you have to assume most large corporations by their very nature are based on the traditional form of capitalism and that their approach to sustainability rests on this. Look out and watch out for people with new models in this space, small companies that will look at alternatives like reuse and barter.

    Big companies do have the scale to make a difference, but there's something of a long-tail here- the combined effect of small companies might be greater in the long term and are more likely to innovate in the sustainability space.

  • http://zeusjones.com/blog adrianho

    I've had to think about this for a bit and I don't disagree with what you're saying here, but let me see if I can provide a counterpoint.

    I think that Zipcar (and their like) are operating as a lab, creating markets that – when large enough – a big company will have a much better claim on filling.

    Some “attributes” like personal service, craftsmanship, passion, handmade, etc. are very hard to scale and therefore solid attributes upon which to base a small business. For a small company, an investment in these is a direct investment in margin.

    Sustainability is much better at scale and therefore an “investment in sustainability” probably won't lead to margin improvement or margin protection. In fact, in the long run, it's probably money down the drain from a pure investment standpoint.

    I'd argue small companies need to have as capitalist a mindset as large ones, therefore if I were an entrepreneur starting up or a VC, I would have to think twice about basing a large part of my strategy upon sustainability.

  • http://twitter.com/adamronich Adam Ronich

    Too many thoughts to be brief – sorry about the tome.

    I hear the words “setting the agenda” and automatically link it with Noam Chomsky and political science – which may be an appropriate reaction. I equate it to Fox News or Huffpo (not to get too political) who steer honest debate into single issue politics with relentless adherence to ideology and talking points. Then I get caught up in the semantics of “setting” and “shaping” the agenda.

    We talk about the effect of social media and participatory culture as putting people in control. If this is true, then -in theory – it would also flip the funnel of influence, where the public now has the ability to reach, shape and define what is good behavior (Ashley’s point) therefore “setting” the agenda.

    If the public sets the agenda, conglomerates and corporations have the size to “shape” the agenda into one that fits and supports their actions. In essence, buying a share of voice that is translated to a share of concern. And while there is increased transparency with Corporate America, most of the public isn’t engaged. The lack of honest interrogation of these companies allows them to hide dysfunction. If people were to actually explore Walmart's commitment they'd see sustainability efforts are merely slowing the intensity of their footprint, not reducing it. In fact, Walmart’s footprint is still growing. This is the danger in shaping the agenda – the illusion of importance. It’s a tactic used to divert attention from the whole, to the singular. A reduction to representations when the story is the big picture.

    Which brings us to a fundamental point: growth is the enemy of sustainability. So as long as shareholders value growth above all and corporations measure their value in terms of market capitalization, mature publicly traded companies will forever be at odds with the idea of sustainability. This is further evidenced by how corporations sell in sustainability practices. Knowing most organizations will only support the cause when it’s financially prudent, change agents must sell it in not for altruistic reasons, but for efficiency and wear a sort of deep-green Six Sigma belt. In the end, it’s still framed in what’s best for their interests, not our interests.

    Let’s look at the last line here, because I find it really interesting. “I think that “sustainability” has become something against which only a company with scale and resources can make any meaningful progress”.

    This is where scale becomes interesting. Small companies have the advantage of inspiring personal sustainability. Corporations have the advantage of enforcing public sustainability.

    Small companies can be structured in a way that they have a net-plus affect on the environment. They can offer deeper experiences where advocates know they are supporting positive change and living to a higher set of values. It challenges them to be better where the motivation is measuring themselves against others who have similar principles, magnifying beliefs. This is personal, meaningful change on an individual level and largely a grassroots effort that is in opposition to popular culture, not part of it.

    If we are talking about sustainability as a movement, then as Mel Gibson said in Braveheart – “we need the nobles.” Those in a position of power, who control the systems have to be on board before the masses react. Using the ‘research as marketing’ observation as an analogy, if a company of this size is doing something the masses believe it must be important. Control agents can also use default principles to change behavior. In the end, progress needs the nobles to lend credibility, and to change the systems of control to benefit the public at large.

    For me, right now it’s a question of influence, specifically, who is trying to influence who? And can they? We know behavioral change has less to do with the influentials than it does with a population’s willingness to change. The Passionate Mass has spoken and some first-follower corporations have shown a willingness to change, but in their attempt to influence change on a greater scale will The Cynical Mass be as open to change as the corporations were? Can corporations inspire a larger acceptance of sustainability? It may be that corporations will ultimately make a larger contribution by mandating change, than inspiring it.

    This is the symbiotic relationship between small and big influencing cultural change. Humans are constantly looking out for a place to go, one where others are too. Small inspires movements, big makes them popular or the norm. This is the both benefit from common causes, only differently point.

    …good discussion though, I’m having fun thinking about it.

  • http://zeusjones.com/blog adrianho

    Whew, like you said lots of (good) points, but the one that really gets me thinking is your assertion that:

    “If people were to actually explore Walmart's commitment they'd see sustainability efforts are merely slowing the intensity of their footprint, not reducing it. In fact, Walmart’s footprint is still growing…

    “Which brings us to a fundamental point: growth is the enemy of sustainability. So as long as shareholders value growth above all and corporations measure their value in terms of market capitalization, mature publicly traded companies will forever be at odds with the idea of sustainability.”

    I think you have hit onto something very important here which is that the overall business model of the company must be considered before one can make a judgment on their efficacy re: sustainability. If, like Walmart, the overall business is clearly about increasing consumption, then all sustainability efforts are simply aimed at fixing problems they create. However, aren't some big companies in the business of stealing share – or replacing existing consumption? In a mature category like automobiles, I think we have reached the limit of market size, therefore the battle is replacement.

    Similarly, many small companies are going into existing markets to replace existing consumption, but I would think there are a bunch of small businesses that start in brand new categories that are spurring increased consumption. Can you really say that:

    “Small companies can be structured in a way that they have a net-plus affect on the environment.”

    Lots to chew on here

  • http://twitter.com/adamronich Adam Ronich

    The black and white response would be: at a company level growth is growth regardless of the source of acquisition, therefore still at odds.

    There are business models that sound sustainable, for category conditions and overall consumption, but ultimately it’s not just the model but the physical operations of a big company that prevents the sustainable advantage. It’s kind of Clay Shirky’s complex business model argument.

    Back to macro effects on sustainability. Let’s look at the conquest models. With stealing the idea sounds good, but the practice is bad. It’s inefficient with scaled competitors where most are at a point of diminishing returns making old systems work harder. And it sometimes has the effect of actually growing the category.

    However, there is something really interesting about the a replacement idea. I think it’s a better framing of the opportunity. I’m going to think about this differently, not about objectives (market share) but about goals because I think it’s a bigger principle.

    It works as a metric as well. If you factor what you are replacing into the sustainability equation, it solves your bigger picture point of view. It may be implausible to track cradle-to-cradle and factor in replacement effect, but it would get at a more holistic idea of sustainability. I thought about Walmart here, and it might be possible, in the role of an editor brand, to take credit for the changes made with their suppliers and for the net replacement effect of products they sell, and measure that sustainability effort against their operational footprint….and my brain crashed…reboot…In the Internet of Things era this will be possible.

    A conglomerate would make the most impact here. Picture Berkshire with a model of developing and running companies with replacement strategies to disrupt the most inefficient categories (method-esque). It would be small to mid level in several categories, but as a holding company it would have the power of scale. It might be crucial to have exit strategies for the companies to complete the sustainability loop.

    Cultural Tangent: Let’s elevate the idea of replacement. If over consumption is…well over, are we entering A Replacement Economy? We’ve strived to add foolishly to our lives for some time, are we now looking to replace with better options? Not a revolutionary idea, but the focal point is different. This is in direct contrast to the Good Enough Revolution (lol the speed of change huh).

    Example: I’m thinking of a bicycle company replacing automotive usage while recycling existing unwanted bicycles, this would be an example of a net-positive effect – side note: you can say anything if you have the right measurement model.

    Well challenged sir.

  • http://twitter.com/adamronich Adam Ronich

    The black and white response would be: at a company level growth is growth regardless of the source of acquisition, therefore still at odds.

    There are business models that sound sustainable, for category conditions and overall consumption, but ultimately it's not just the model but the physical operations of a big company that prevents the sustainable advantage. It's kind of Clay Shirky's complex business model argument.

    Back to macro effects on sustainability. Let's look at the conquest models. With stealing the idea sounds good, but the practice is bad. It's inefficient with scaled competitors where most are at a point of diminishing returns making old systems work harder. And it sometimes has the effect of actually growing the category.

    However, there is something really interesting about the a replacement idea. I think it's a better framing of the opportunity. I'm going to think about this differently, not about objectives (market share) but about goals because I think it's a bigger principle.

    It works as a metric as well. If you factor what you are replacing into the sustainability equation, it solves your bigger picture point of view. It may be implausible to track cradle-to-cradle and factor in replacement effect, but it would get at a more holistic idea of sustainability. I thought about Walmart here, and it might be possible, in the role of an editor brand, to take credit for the changes made with their suppliers and for the net replacement effect of products they sell, and measure that sustainability effort against their operational footprint….and my brain crashed…reboot…In the Internet of Things era this will be possible.

    A conglomerate would make the most impact here. Picture Berkshire with a model of developing and running companies with replacement strategies to disrupt the most inefficient categories (method-esque). It would be small to mid level in several categories, but as a holding company it would have the power of scale. It might be crucial to have exit strategies for the companies to complete the sustainability loop.

    Cultural Tangent: Let's elevate the idea of replacement. If over consumption is…well over, are we entering A Replacement Economy? We've strived to add foolishly to our lives for some time, are we now looking to replace with better options? Not a revolutionary idea, but the focal point is different. This is in direct contrast to the Good Enough Revolution (lol the speed of change huh).

    Example: I'm thinking of a bicycle company replacing automotive usage while recycling existing unwanted bicycles, this would be an example of a net-positive effect – side note: you can say anything if you have the right measurement model.

    Well challenged sir.

  • http://twitter.com/1foodsource 1foodsource

    It’s important this movement not be one that is taken advantage of from a marketing perspective. Truth must be the message.

  • http://twitter.com/1foodsource 1foodsource

    It's important this movement not be one that is taken advantage of from a marketing perspective. Truth must be the message.

  • http://givenlondon.com/blog/?p=251 Big versus Small – A response Zeus Jones | Given London

    [...] blog by @adrianho, of Zeus Jones is well worth reading. The last post got me thinking to the extent that I thought I would write my response here rather than hogging the [...]

  • http://givenlondon.com/blog/ David Hawksworth

    Hi There,

    This post got me thinking to the extent that I thought I would write a reply about what I see as the big and important small company advantage – business model innovation. You can read it here if you are interested. http://givenlondon.com/blog/?p=251

    Best,

    David

  • http://givenlondon.com/blog/ David Hawksworth

    Hi There,

    This post got me thinking to the extent that I thought I would write a reply about what I see as the big and important small company advantage – business model innovation. You can read it here if you are interested. http://givenlondon.com/blog/?p=251

    Best,

    David

  • http://www.marketingplusgood.blogspot.com David Yeend

    Small companies are nimble thought-leaders. See Socks4HappyPeople.
    They show us a better way of doing things.
    Large companies can adopt, adapt, and shrink their impact.
    Both are necessary; both are good.
    Shrinking a huge environmental impact to a less-huge environmental impact isn’t failure at all.
    You can look at upstarts as competitors to large companies, or maybe, if they’re both pursuing a similar end, they’re inadvertent collaborators.
    Just a thought.

  • http://www.marketingplusgood.blogspot.com David Yeend

    Small companies are nimble thought-leaders. See Socks4HappyPeople.
    They show us a better way of doing things.
    Large companies can adopt, adapt, and shrink their impact.
    Both are necessary; both are good.
    Shrinking a huge environmental impact to a less-huge environmental impact isn't failure at all.
    You can look at upstarts as competitors to large companies, or maybe, if they're both pursuing a similar end, they're inadvertent collaborators.
    Just a thought.

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