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Growing Green

Three Smart Paths to Developing Sustainable Products

by Gregory Unruh and Richard Ettenson

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Idea in Brief—the core idea

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Article Summary

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Growing Green: Three Smart Paths to Developing Sustainable

Products

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Growing Green


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Idea in Brief

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Green growth is at the top of many leaders’ agendas, but the way forward is rarely clear. Here are three broad product strategies that can align your green goals with your capabilities.

An

accentuate

strategy involves highlighting existing green attributes in your company’s portfolio. An alternative is to

acquire

a green brand. If you have substantial product-development skills and assets, you can

architect

new offerings—build them from scratch. Which strategy is best depends on how “greenable” your portfolio is and how advanced your green product development capabilities are.

For any of these paths, understanding customers’ expectations and competitors’ capabilities, and aligning offerings and messaging to prevent charges of green-washing, are essential to success.

GREEN DEVELOPMENT CAPABILITIESHIGH

HIGH

LOW

GRE

ENA

BLE

ATTR

IBU

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ARCHITECT

ACCENTUATE

ACQUIRE

ANY OF THE THREE

This document is authorized for use only in Business and Sustainable Development - 03212013 by Dr. Trupti Mishra at Shailesh J. Mehta School of Management from March 2013 to September 2013.

Growing Green


by Gregory Unruh and Richard Ettenson

harvard business review • june 2010 page 2

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Soon after its launch, in 1987, Clorox’s Britawater filter seized a leadership positionamong pitcher filtration systems, and by 2002it controlled 70% of the market. But over thenext five years, as the market contracted,Brita’s share declined. Management’s patiencewith the brand soon wore thin, and in May2007 Clorox CEO Don Knauss told sharehold-ers that Brita had two years to improve or itwould be sold off. “When I got on board,”Knauss remembers, “the question was, Howquickly can we sell this thing?” Then came aremarkable turn: Brita recovered its momen-tum within months, achieving double-digitgrowth and leading the brand back with a ven-geance.

How did its managers do it? By going green,as we’ll detail below.

That strategy wouldn’t have been obvious10 years ago. But thanks to aggressive leader-ship by some of the world’s biggest compa-nies—Wal-Mart, GE, and DuPont amongthem—green growth has risen to the top ofthe agenda for many businesses. From 2007

to 2009 eco-friendly product launches in-creased by more than 500%. A recent IBMsurvey found that two-thirds of executives seesustainability as a revenue driver, and half ofthem expect green initiatives to confer com-petitive advantage. This dramatic shift in cor-porate mind-set and practices over the pastdecade reflects a growing awareness that envi-ronmental responsibility can be a platform forboth growth and differentiation.

Nonetheless, the best approach to achievinggreen growth isn’t always clear. This article isfor executives who believe that developinggreen products makes sense for their organiza-tion and need to determine the best path for-ward. We will introduce and describe threebroad strategies—

accentuate

,

acquire

, and

ar-chitect

—that companies can use to align theirgreen goals with their capabilities. These strat-egies emerged from 10 in-depth case studies ofconsumer product and industrial companiesthat were moving into the green space; we vali-dated the studies in discussions with dozens ofsenior and midlevel sustainability executives.


Growing Green


The framework now plays a central role in thecore executive MBA course offerings in sustain-able business strategy and in the executive ed-ucation programs at Thunderbird School ofGlobal Management.

As we’ll see, green product developmentbrings with it unique cultural, operational, andexecution challenges.

Path #1: Accentuate

An accentuate strategy involves playing up ex-isting or latent green attributes in your cur-rent portfolio. Of the three strategies, it’s themost straightforward to craft and implementand thus is a good place to start.

Some companies find it easy to accentuate.For example, Church & Dwight’s Arm & Ham-mer baking soda has attributes that were justwaiting to be leveraged. As green competitorsemerged, and as customers demanded moreenvironmentally friendly choices, Arm & Ham-mer’s managers emphasized its green creden-tials, positioning the brand as “the #1 environ-mentally sensible alternative for cleaning anddeodorizing” and “committed to the environ-ment since 1846.”

Other companies may have to work harderthan Church & Dwight did, but they can stillharvest low-hanging green fruit. Consider howBrita repositioned its water filters. A decadeago Brita’s sales were siphoned off by the risingpopularity of bottled water, which explodedinto a billion-dollar business. But water bot-tlers attracted loud critics such as the WorldWide Fund for Nature and Corporate Account-ability International, which condemned themfor clogging landfills with plastic and decep-tively advertising their product as better tast-ing and healthier than tap water.

Brita’s managers were quick to see an oppor-tunity. Company research showed that replac-ing bottled water with Brita systems could po-tentially keep millions of bottles a year out oflandfills. To capitalize on this benefit, the man-agers pursued an integrated cross-media com-munications strategy to tout Brita’s green at-tributes, educate consumers about bottlewaste, and encourage a switch to greener alter-natives. As part of this strategy, the companylaunched FilterForGood, a website that invitesvisitors to pledge that they will reduce plasticwaste by switching to reusable bottles. A de-vice on the site graphically updates the tally ofbottles saved. Brita’s managers ensured that

the media picked up on FilterForGood—for ex-ample, by arranging a partnership with NBC’stelevision show

The Biggest Loser

. Within a yearthe company’s water pitcher sales jumped a ro-bust 23%, compared with just 2% for the cate-gory overall.

Brita’s impressive success came in part be-cause it did not overreach in its sustainabilityclaims. Companies that decide to pursue an ac-centuate strategy would be wise to follow itslead. Activists and environmental experts willnot hesitate to point out greenwashing orother undesirable corporate behavior whenthey see it. Consider the experience of Arm &Hammer. Promoting the environmentallyfriendly attributes of the product was easy, butthe company overlooked a major liability: Itused animal testing. Activists took to the blog-osphere and called on customers to switch tothe cruelty-free and equally green Bob’s RedMill baking soda. Although such complaintswon’t necessarily reach or resonate with allyour customers, anticipating and heading offcriticism will strengthen your overall greeningefforts. Transparency in claims and authentic-ity in execution are important elements in thelong-term success of any green strategy.

The broader your brand portfolio, of course,the more exposed you may be to activist andconsumer backlash. Most companies lack agreen heritage; their products were developedbefore sustainability was a concern. So theymust carefully gauge how the rest of theirportfolio will look by comparison with the ac-centuated product. Touting the green at-tributes of some products inevitably promptsthe response “Great! But what about the restof your offerings?” A big gulf between yourgreen and nongreen products can undermineyour legitimate sustainability claims.

Consider BP’s troubled “Beyond Petroleum”rebranding effort. The company’s Helios logoand the prominent solar panels on its servicestations could not hide the fact that more than90% of its revenues came from oil.

Fortune

highlighted the disparity when it wrote,“Here’s a novel advertising strategy—pitchyour least important product and ignore yourmost important one.” To avoid negative com-mentary like this, make sure your strategyaligns with customers’ perceptions.

Brita did that well. Its managers were carefulin their initial communications not to claimthat their brand was a “green product” made

Gregory Unruh

(gregoryunruh.com) is a professor and the director of the Lincoln Center at Thunderbird School of Global Management and the author of

Earth, Inc.

(Harvard Business Press, 2010).

Richard Ettenson

([email protected]) is an associate professor and a Thelma H. Kieckhefer research fellow in global brand marketing at Thunderbird.


mailto:gregoryunruh.com

mailto:[email protected]

mailto:[email protected]

Growing Green


by a “green company.” They recognized thatBrita filter cartridges had to be replaced everyfew months and were not being recycled. Be-cause the FilterForGood campaign was predi-cated on eliminating that kind of waste, themanagers realized that they needed a recyclingsolution for the cartridges. They forged an ap-proach in collaboration with Preserve, whichmanufactures products using recycled plastic,and with Whole Foods Market to provide a so-lution that was simple for customers andhighly visible.

“The filter recycling program builds on thesuccess of Brita’s FilterForGood campaign,” thecompany announced—and went on to sharecredit with its customers: “Now Brita users aremaking another positive impact by recyclingBrita pitcher filters.” By accentuating the prod-uct’s green attributes and eliminating or miti-gating its nongreen elements, Brita enhancedthe credibility of its sustainability efforts.

Path #2: Acquire

If your portfolio has no obvious candidates foraccentuation, a good alternative is to buysomeone else’s green brand. Many high-profilegreen acquisitions have been made since2000, including The Body Shop by L’Oréal,Ben & Jerry’s by Unilever, and Tom’s of Maineby Colgate-Palmolive. In such deals thebuyer’s channel and distribution capabilitiesare often expected to substantially broadenthe green brand’s customer base. Within ayear after Unilever acquired Ben & Jerry’s, forexample, sales had increased by 70% and Ben& Jerry’s had displaced Häagen Dazs as theleading premium ice cream brand.

The prospect of such robust growth is ofcourse appealing, but managers who seek an-other company’s green assets should be mind-ful of two considerations: Culture clash andstrategic fit. Any merger or acquisition canstumble when company cultures collide. Ingreen acquisitions that have idealistic, icono-clastic founders and countercultural work-forces, the problem is exacerbated. ConsiderGroupe Danone’s takeover of Stonyfield Farm.When shareholders forced Stonyfield’sfounder, Gary Hirshberg, to sell, he spent twoyears compiling a list of conditions—includingrules about worker protection and environ-mental restrictions on business operations—toensure that the company’s social missionwould be preserved. It took another two years

to close the deal. By contrast, Unilever gotaround some but not all of the “founder chal-lenges” at Ben & Jerry’s by completing whatwas in effect a hostile buyout of the brand.This approach caused many activists to cry fouland deprived Unilever of the wholeheartedsupport of the ice cream maker’s founders.Ben Cohen said, “Most of what had been thesoul of Ben & Jerry’s is not gonna be aroundanymore.”

All acquisitions present myriad manage-ment challenges, so the problems of integrat-ing an idiosyncratic green business may notseem like a big deal. But scrutiny by the greencommunity may undermine the otherwisesolid business benefits of the acquisition. Evenif product sales go well, sharp questions willmost likely arise about the new parent’s greencredentials. If the acquisition goes badly andsales tumble, not only is the value of the newasset diminished but—potentially even moredamaging—the acquirer risks being accused ofdeliberately destroying a green competitor.Coke faced such criticism after it boughtPlanet Java coffee drinks and Mad River Trad-ers teas and juices and then phased them outtwo years later.

An acquiring company’s actions may havean adverse effect on the carefully crafted brandimage of the acquisition. For example, whenDanone’s agreement with Stonyfield aboutemployee protection ended, Danone sent outpink slips and met with hostile reactions in thepress. Such criticism may have limited impacton the bottom line, but it can diminish thecredibility of a company’s green efforts.

Successful green brands are attractive targetsbecause they have loyal customer bases and be-cause they come with specialized knowledgeabout eco-friendly innovation and manufactur-ing, sustainable supply chain management,and green market development. Bill Morrissey,the vice president of environmental sustain-ability for Clorox, told us that Clorox had notonly growth but also knowledge transfer inmind when it acquired Burt’s Bees, which hadtwo decades of leadership in the green productspace.

Path #3: Architect

For companies with a history of innovationand substantial new-product-development as-sets, architecting green offerings—buildingthem from scratch—becomes a possibility. Al-

Best Practices: Who Accentuates Well?

Supply chain:

Nike requires that its leather suppliers not source from clear-cut Amazon forests.

Manufacturing:

Frito-Lay installed solar panels on its SunChips factory.

Product:

CSX markets rail as the most environmentally friendly op-tion for moving freight.

Packaging:

Sara Lee’s modified packaging for Hillshire Farm has resulted in 900 fewer truck trips a year.

Marketing communications:

Stihl points out that its trimmers and blowers have emission levels lower than those required by the EPA.


Growing Green


though architecting can be slower and morecostly than accentuating or acquiring, it maybe the best strategy for some companies, be-cause it forces them to build valuable compe-tencies. Toyota took this route when it devel-oped the Prius. Although the company iscurrently addressing a raft of quality prob-lems, the lessons of its architect strategy stillstand. The Prius was not the first hybrid intro-duced in the U.S. market (the Honda Insightwas), but it now dominates the fast-growingmarket for more-fuel-efficient cars. Toyota’sbold move to create a green brand has paidhandsome dividends. The Prius towers overthe Insight, its closest competitor, in marketshare. Its dominance has so distracted consum-ers from rival brands that some Honda dealerscomplain of customers who walk into theirshowrooms and request a test-drive in the“Honda Prius.” Toyota has also successfullytransferred its hybrid expertise and greenknow-how to other brands in its portfolio. In2005 the company became the first to estab-lish green credentials in the luxury-car spacewhen it produced a hybrid version of theLexus. Over time, Toyota’s luxury competitorswere forced to follow suit. Mercedes-Benz andBMW recently introduced hybrid models tomeet growing consumer demand and to estab-lish their green credentials and capabilities,and Audi and Porsche will soon do the same.

Clorox, too, in developing its Green Workscleaning products, shows how companies withlimited green expertise but substantial productdevelopment capabilities can architect a greenbrand. Green Works has received a lot of press,but the details of Clorox’s strategy—which westudied from inside the company—are lesswell known. The line of household cleanersemerged from a small skunkworks in the Clo-rox Technical Center led by a handful of inde-pendent and dedicated scientists. In less than ayear company researchers established thebenchmark definition and best practices for a“natural” cleaning product and proceeded todesign a line of offerings that would deliver theefficacy customers demand. The big surprisecame when the marketing team shopped theoriginal five Green Works products (glass, sur-face, all-purpose, bathroom, and toilet-bowlcleaners) to major distributors, including Wal-Mart and Safeway. According to a GreenWorks manager, “The realistic part of our ex-pectations was ‘Hey, if we get three or four

SKUs, we’ll be pretty happy.’” To the team’s de-light, Wal-Mart wanted all five. Distributorsacross the board asked for the entire GreenWorks line and requested that the brand be ex-tended into other categories.

The development of Green Works inducedClorox to accumulate a range of new compe-tencies, including specialized knowledge abouteco-conscious consumers’ preferences and ex-pertise in the supply chain for natural-productsourcing and procurement. Through its deep-ened relationships with Wal-Mart and otherdistributors, Clorox quickly doubled the size ofthe “green clean” market. Even niche brandssuch as Seventh Generation and Method bene-fited from its market development.

Making Green Growth Happen

With an understanding of the three paths togreen growth, managers can begin to craft astrategy that suits their objectives and theirbusiness context. They should begin by evalu-ating each option: Is it feasible? Is it desirable?How would it be implemented?

Feasibility.

In this step companies take stockof their assets along two dimensions: greenableattributes of their existing products and brands,and organizational green product and branddevelopment capabilities. The first requires acareful review of opportunities to promotebrands’ green benefits. Of course, each productwill have its own category-specific attributes,ranging from recyclability to energy efficiencyto reduced toxicity. The Global Reporting Ini-tiative’s list of more than 70 sustainability per-formance indicators is an excellent resource formanagers. It can help them to identify less obvi-ous green features and benefits that are suitedto an accentuate approach or to frame strate-gies and gauge capabilities required for an ar-chitect approach.

The second dimension involves appraisingthe company’s green resources and capabili-ties. This may include a broad review of theprocesses and priorities for innovation andnew-product development, supply chain man-agement, the coordination of and collabora-tion among distributors, and even partnershipswith environmental organizations.

Desirability.

In this step, managers assessthe strategic fit of each option with the com-pany’s objectives and the resources they canbring to bear on the green initiative. Theyneed to consider speed to market and the in-

Best Practices: Who Acquires Well?

Negotiations:

Colgate approached Tom’s of Maine with trust and re-spect, viewing the deal as a partner-ship rather than a takeover.

Company independence:

Unilever agreed to keep Ben & Jerry’s separate from its U.S. ice cream business, with an independent board of directors.

Internal communications:

Tom’s of Maine assured employees that the acquisition would help Colgate inno-vate around sustainability principles.

External communications:

A joint press release from Danone and Stonyfield highlighted the benefits “to both companies of two-way knowledge and talent transfer.


Growing Green


Analyzing Growth Options

To evaluate the fit of a given green product strategy, ask the following questions:

Accentuate

First steps

What’s our strategic goal?

•

To leverage latent assets?

•

Revitalize existing brands?

•

Broaden appeal to green customers?

•

Gain green credibility?Are there potential green brands in our portfolio?

Do we have the resources and capabilities needed for this initiative?

Your portfolio

How will this initiative af-fect the positioning of and resources for our existing brands?

Should our greened brand be a stand-alone or a strategic brand that puts a green halo on the business as a whole?

Your customers

Which consumers in the category are looking for greener prod-ucts?

Does our candidate brand have “permis-sion” to enter the green space?

Can we enhance the value of green in the category?

Your competitors

Are our competitors greening their existing products?

Can we differentiate our brand?

How can we exploit our competitors’ green weaknesses?

How can we capture a “share of voice” in the category?

Red flags

Do we have environmental skel-etons in our current portfolio or business model?

Will our green claims be credible—or are we vulnerable to accusations of “green-washing”?

Acquire

First steps


•

To capture customers?

•

Bring in new green capabilities?

•

Broaden access to mainstream customers?

•

Gain green credibility?Which companies would make attractive green acquisitions?


Your portfolio


Will the initiative provide new abilities that can be applied to other brands?

Should our acquired brand be a stand-alone or a strategic brand that puts a green halo on the business as a whole?

Your customers

Can we sell the green brand to our current customers?

Will acquired customers view us as a cred-ible steward of the brand?

Your competitors

Is this the prototypical brand in the green niche?


How can we prevent competitors from poaching our newly acquired customers?

Can we add green attributes to the new brand or emphasize existing attributes to increase competitiveness?

Red flags



Does the proposed acquisition have an iconic founder, a countercultural work-force, or some other aspect that might create culture clash?

Can we preserve the integrity—“the magic”—of the acquired brand?

Architect

First steps


•

To create new green solutions?

•

Develop unique competencies?

•

Respond to new market needs?

•

Gain green credibility?Will an independent business unit be required?


Your portfolio


Will the initiative provide new abilities that can be applied to other brands?

What will be the relationship between the parent and the new line?

Your customers

What innovations are consumers looking for in a greener alter-native?

Does our parent brand have “permission” to enter the green space?

Will this initiative require us to develop a new brand?

Will we need to educate and develop the market and bring new customers into the category?

Your competitors

Are we creating a new green category?

Can we differentiate our brand?


Does the category already have en-trenched competitors?

Red flags




Growing Green


vestments, reputation, and competencies thatthe initiative will require. For example, an ac-quire strategy will deliver high speed to mar-ket for a company setting out with low greencredentials and low to medium green capabili-ties—but it involves significant investment. Acompany choosing an architect strategy musthave high green capabilities and medium tohigh green credentials—and be prepared for alow speed to market. Companies unwilling orunable to allocate major resources for greeninitiatives will find accentuation the most at-tractive way to enter green markets. For oth-ers, green growth may be part of an enter-prisewide sustainability initiative to retooloperations, shift the culture, and, ultimately,reposition the organization.

Implementation.

This third step involvesacting on all the factors that affect successfulexecution. As outlined in the exhibit “Analyz-ing Growth Options,” companies must aligntheir green strategy with their existing prod-uct portfolio and devote or develop the re-

sources and capabilities needed to achievetheir strategic goals. They must ensure thatthe strategy satisfies customers’ expectationsand, when possible, takes advantage of com-petitors’ green weaknesses. Finally, they mustaddress “red flag” issues that could undermineimplementation.

Whatever path you choose—accentuate, ac-quire, or architect—activists, customers, andthe public won’t see your green initiatives as in-dependent of your other activities and offer-ings. Rather, they will view your efforts as partof the organization’s overall approach. Thatmeans the companies that ultimately succeed ingrowing green will be distinguished by theircommitment to corporatewide sustainability aswell as the performance of their green products.

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Best Practices: Who Architects Well?

New-product development:

Toyota directed its engineers to develop a new fuel-efficient and environmen-tally friendly vehicle within three years.

New production methods:

Patago-nia created a line of products using a closed-loop production system it calls EcoCircle.

Skunkworks:

Clorox provided the resources for a separate Green Works business unit.


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