Transforming big businesses into green businesses might seem like a thorny process.
But older, established companies like Ford have the potential to ignite a new generation of environmentally friendly products, according to Andrew Winston, author of The Big Pivot. By shifting their manufacturing process—like substituting aluminum for steel, as Ford has done—such companies are able to quietly lighten their carbon footprint.
Tech giants, meanwhile, can be surprisingly rough on the environment. Consider this: the “cloud” consumes more energy than the nation of Japan.
But Winston says that some Silicon Valley heavyweights—like Airbnb and Uber—are forging a new business model, a model that reallocates existing products, rather than producing new ones.
I spoke with Winston about how—and whether—companies are embracing environmentalism.
[This interview has been edited and condensed. For the full conversation, visit innovationhub.org.]
Kara Miller: Is concern for the environment fundamentally changing companies?
Andrew Winston: The number of companies that are aware that they need to think about environmental issues or deal with things like climate change is a lot now. But the field of companies that have made it really core to their business is still pretty small. And the businesses in which you hear CEOs talk about environmental issues pretty fluently and really understand how those issues will impact their business is still fairly narrow.
KM: Can you give me an example of a company that is trying a new, unorthodox approach to thinking about the environment?
AW: My work focuses on the big traditional companies and how they are making shifts in how they do things. For example, Ford Motor makes cars, and those vehicles burn a lot of fuel and create a lot of emissions. But ten years ago, Ford was setting their plans for product development based on climate. They looked at what the targets needed to be globally to reduce emissions, and asked what that meant for their vehicles. They looked at different technologies, biofuels, new engine technologies, and of course electrified vehicles. And it has led to the announcement a year ago that the Ford 150 truck would be lighter in 2015. They took 700 lbs out of their best selling, heaviest vehicle, and that reduces emissions.
KM: Where does the incentive for that kind of change come from? Consumers? Government?
AW: It’s a combination. We, as consumers, haven’t been pushing companies that hard. It comes from expected policy and government. And I think it comes from business to business. It’s the pressure of companies on each other. We see the big retailers like Walmart and Target demanding more of all their consumers’ product suppliers. So it is not that consumers are saying: give us greener products with a lot less packaging, but they are happy to buy them when they’re there at the same price and same quality.
KM: When you see smaller companies grow, are they growing in a way that is different from the model that a Ford, a GE, or a GM would have taken 50 or 100 years ago?
AW: If you’re in new technology, it seems like you’re able to question everything. I feel like the startups or the midsize companies are able to ask questions that challenge business models a lot better. The largest hotel chain in the world now is arguably Airbnb, and they don’t own any hotels. And Uber doesn’t own any cars, but they’re offering rides. So you can challenge business models now because of the new technologies. And some of that leads towards lower consumption, a lower footprint on the world. There is some benefit to these newer models.
KM: Do you think that companies have to ask us to rethink luxury and happiness, so that it doesn’t involve so much stuff?
AW: I do. I think companies need to take the lead and ask customers to use less of their products. That can sound completely against the point of business, which is to grow, grow, grow. But it doesn’t have to be. There’s going to be things that people want to use less of, they want the higher quality thing, or they want to be shown how to save money. And as a business, you want to be a partner in that. I put my faith, good or bad, in companies to take the lead.
Tricia Breton contributed to this write-up.