The Tuck School of Business at Dartmouth’s Business & Society Conference brings together leaders from a wide range of fields to discuss the important role that business leaders can play in creating a more sustainable world.
Welcome back! The 2011 Business & Society Conference is less than two weeks away, and we here at Tuck can't wait for our panelists and guests to descend on campus. This year's conference will address the issues of:
Can We Innovate Our Way Out?
The collective role of the public and private sectors in driving long-term growth
Lee Addams: Practice Expert / Engagement Manager in McKinsey & Company. Dan Bena: Director of Sustainability, Health, Safety, and Environment for PepsiCo. Peter Karlen: Vice President of EarthWater Global, LLC. Sharon Nunes: Vice President of Big Green Innovations in IBM Systems & Technology Group. Michael Dworkin: Director of the Institute for Energy and the Environment and Professor of Law (Moderator).
The water panel engaged the audience on a very difficult yet timely question of how business leaders should think about water scarcity. The panelist presented some of the multidimensional implications that water shortage has imposed on topics related to global health, food security, energy calamity, among other things. But they also shared their insights on how these auxiliary concerns along with the main issue of water shortage can be overcome with the right combination of talent, innovation, and partnership.
The panel represented companies that deal with water issues in vastly different ways. For example, Dan shared how PepsiCo, though not a big user of water from an operational perspective, is concerned about water from supply management perspective. Sharon provided a completely different viewpoint for IBM, which does not provide any goods related to water, but utilizes large amount of water in its operations. Peter of EarthWater demonstrated how innovation has allowed his company to deliver water from previously untapped sources to developing countries in a cost-effective manner. Lee shared how McKinsey advises business institutions and regulatory agencies on innovative ways to navigate within and tackle the water issue. And Professor Dworkin brought to light the interconnectedness of water and energy issues how these problems cannot be viewed in isolation. Though the panel highlighted different vantage points, the panelists were all in agreement that the situation can be improved if we act quickly, intelligently, and collaboratively to solve this pressing issue.
This morning's keynote panel on cleantech VC investing was a remarkable discussion between 5 well-informed, experienced practitioners. The consensus view was that VC plays a key role in helping companies "bet the farm" on new technologies, but that the VC model may not meet the capital needs of many cleantech businesses in reaching commercial scale.
The panelists made a number of excellent and provocative points in support of this argument, which we'll summarize in a separate post. But I wanted to draw particular attention to something Jon Karlen of Flybridge Partners said. VC investors earn their returns from the "homeruns" in their portfolio, which, by definition, will comprise only a handful of their investments. A key success factor in these homeruns is the timing of the investments; that is to say, a great many investments fail because their products are simply too far ahead of where the market is.
As Jon put it: early-stage companies cannot create the demand for their products, so the question for those companies (and their backers) becomes "what wave are we going to ride?" What demand-side trends are large enough to fuel the growth of these companies? How good are investors at detecting those trends? What external forces (e.g. social changes, behavior shifts) are poweful enough to support those demand trends? And how do we better understand those forces?
These questions were a terrific reminder (I thought) of some of the natural constraints of investors and companies in this space, and evidence of our continued relevance as the Business and Society Conference here at Tuck.
The ‘Connecting With Your Customer and Redefining Your Brand’ panel discussed the ways in which organizations are creating new techniques for responsible business conduct and incorporating sustainable thinking into their brand strategy and DNA. The panelists were:
Susan Coté, Director of Brand and Consumer Marketing, Green Mountain Coffee
Daniel Gisser, Director of Corporate Marketing, Eaton Corporation
Jennifer Rushmore, Global Sustainability Leader, Procter & Gamble
Jonathan Yohannan, Senior Vice President, Cone Incorporated
The panel: The panel began with introductions of our distinguished panelists. We then delved into how the sustainable practices at different organizations have evolved. Sustainability at P&G focuses on both social and environmental responsibility. Sustainability has strong heritage at the company which has been awarded and recognized in different parts of the world. P&G focuses on strategic social responsibility which has paved the way for a more environmentally and socially responsible business model.
Sustainability is addressed differently in a B2B business like Eaton. Eaton focuses on efficiency issues related to fuel consumption and greener buildings. The company has embraced green solutions in its best practices as such practices are a big revenue draw and a chance for the company to build its brand.
Green Mountain Coffee Roasters have sustainability embedded in their DNA. They built a tremendously efficient system involving sustainability in all aspects of their business processes. GMCR’s various brands are involved in different areas such as supporting local communities, protecting the environment, taking care of the employees. The triple bottom line concept resonates throughout the company.
Cone was able to address similar issues from a unique perspective, those of the customers themselves. Cone works with different companies to help them improve their communication and corporate responsibility strategy. It is critical for most customer and consumer facing companies to understand and become more engaged with its customers whether it is through cause branding, corporate responsibility, employee management , or others.
Obstacles Companies Have Come Across While Developing Sustainable Initiatives: The panel discussed various issues encountered while addressing sustainability in the products and processes of organizations. The most significant challenge most panelists have come across is the cost of the final product. P&G’s consumer research found that customers on an average are willing to buy green products as long as they function similar and are priced similar to other available products. The company has numerous innovations it would like to bring to market but has postponed doing so because of these concerns.
One of the other concerns facing these companies is how to integrate best processes into the systems of their manufactures and suppliers. For example, GMCR worked with the cup manufacturing company to help integrate better processes in its value chain which led to greener cups and helped reduce its environmental footprint. A company can achieve a better and greener system by not only making its processes better but also by involving other stakeholders in the process building.
The panel also discussed the marketing challenges associated with such initiatives and how companies walk the thin line between making the right communication and avoiding green washing. Both GMCR and P&G work within their strategy which enables them to stay on course for making the right communication with their customers. Eaton mentioned how B2B business are able to deal better with such challenges because it works with its customers throughout the entire process.
Insights from the panel: One of the interesting insights of the panel was how to decide which products and processes are worth investing green innovative ideas and energy. Many products and processes do not have as much ‘green’ potential as one might assume. For example, many products can be designed to be bio-degradable, but would involve chemicals during manufacturing (does this make it no longer sustainable?); A product could be made from glass instead of plastic but the transportation of the heavy glass packaging would have a larger carbon footprint and would reduce the benefit of having glass packaging in place of the plastic. Among several such difficult choices companies have to decide which would make more environmental impact and better business sense. A company has to recognize these challenges and develop its strategy accordingly.
The panel also navigated the predicament companies may face while making such decisions in different geographies, specifically developing countries. The consumers in these countries may not be aware of such issues or may not be really concerned about such products. For a consumer products company it is essential to be aware of regional concerns and address these concerns appropriately.
Finally, the panel had an interesting discussion involving social media – using Facebook and Twitter in the marketing strategy of the company. These channels open the company to an honest dialogue with their customers. However, these channels also must be closely managed as consumers may use this avenue as a safe place to vent and ‘think’ with little consequence to the consumer, but a much larger consequence for the company.
Jonathan Bloom, Deputy Vice President, Department of Compact Implementation, Millennium Challenge Corporation
Acting as a one man show because of the last minute absence of 2 of the 3 panelists due to travel delays and the blizzard in DC, Jonathan Bloom presented engaging commentary on the Millennium Challenge Corporation's (MCC) work with businesses and governments in Africa. MCC's work is focused on poverty reduction through economic development. While Bloom highlighted the need for financial solutions ranging from traditional lending to microfinance, he stressed that before finance comes entrepreneurs, and before entrepreneurs comes markets. "The difficulty in Africa," he said, "is that the economies are sub-scale."
Citing examples as diverse as banks in Tanzania, an increasingly mechanized pineapple plantation in Ghana, and the development of a water treatment system in Mozambique, Bloom is encouraged by the increasing level of innovation and economic development he sees across the continent. The MCC must agree, as it works with more countries in Africa than in any other part of the world.
