Thursday, December 09, 2010

Winning in the Green Frenzy .. HBR, Nov 2010.

There is a lot of talk happening these days on greening of the production line, greening one's suppliers, green initiative and so on. Who will decide the green standards for your industry ? Will you be a follower or will you be deciding these standards ?
The frenzy of greening one's product, process, suppliers and customers and how to win in the green frenzy is detailed in the article "Winning in the Green Frenzy" by Prof Gregory Unruh and Richard Ettensen of the Thunderbird School of Global Management.

Defining the suatainability standards is like tooth and claw competition among the stakeholders of manufacturers, environmental activists, think tanks, bloggers, industry associations, consultants and the competitors in the field.

Once we are in knowledge of the situation of the industry and the capability of one's organisation, we can choose from four different strategies

1. Adopt the existing standards. This is done in already established sectors like building industry where we have the LEED( Leadership in Environmental and Energy Design) certification offering four levels - certified, silver, gold and platinum. Walmart insists that its 100,000 suppliers conform to the "Sustainable product index" - an index which measures product related energy use and waste and evaluates impact on natural resources and communities, for al the items which they supply.

2. Co-opt and modify the standards to suit one's capabilities and processes. When the industry is not that established and the standards are not set rigidly, it always makes sense to partner with some of the leaders / regulating agencies to collaborate and modify the industry requirements to ne's capability.

3. Define standards for one's industry. If a company has the necessary capacities and clout, it can set out to create industry standards. Partnership with an NGO or Uty is vital in this.

4. Breakaway from existing standards and craft one's own standards. What will a company do when the established standards do not play to its advantage in the industry or undermine its competitiveness ? Apple turned the tables on Greenpeace and called its standards not green enough as it did not factor in the power consumption during the useful life of the product. Being green only during manufacture in the case of computers is only part of the story as the power consumption during the life of the computer can also determine how green the product is. If a company can come up with PCs that are energy efficient, it can hijack the standards and establish new standards. The way Apple did.

Once these actions are clear we can choose our path forward. and tackle the GREEN standards challenge headon !!


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