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Chapter
6 (Part 1) - The Changing Nature of Competition
In
Section 1 we argued that no one part of society
can address the scale of the sustainability challenge
on its own. In a world where business, government
and civil society all have significant roles to
play, we need to find the best ways to move forward
together. This section will focus on the role business
can play in this process.
This section cannot emphasize enough the importance
in business of seizing new opportunities, encouraging
creativity and the ability to work effectively in
teams to achieve innovation. Running a business
requires skill and frequently demands long hours
and significant personal sacrifice. If there was
an easy way always to stay ahead of the competition,
we would all be millionaires. But there isn’t.
Successful business people seek to remain up to
date with the shifting market for their products
and services and will come to see that sustainability
provides numerous opportunities for unleashing creativity
and innovation. Whilst this chapter, and the online
databases it references, is designed to assist any
business to do its homework faster, improve its
strategic position, and unleash the creativity of
its staff, this is not enough. Genuinely innovative
and highly competitive businesses are always on
the look out for new opportunities and ways to improve
business. The frameworks and guides that follow
will, we believe, help but at the end of the day
someone has to have good ideas and be willing to
take risks. In the end, success comes down to the
determination and united purpose of those people
involved. Is the risk worth the effort? Many companies,
such as Close the Loop® and Interface, believe
it is.
The story of the Australia based company Close the
Loop® provides an insight into the sort of lateral
thinking and risk taking that innovative firms need
in order to truly succeed. Close the Loop® has
achieved zero waste to landfill through technological
innovation. They are the only company in the world
that can recover all material and resource value
from toner and inkjet cartridges. When they began,
there was no machinery in existence to completely
re-process the complex mix of metals, plastics,
toner powder, electronics and inks. A team of Australian
engineering companies, and Australian recycling
experts like Dr John Scheirs formed with the goal
of achieving zero waste to landfill from this complex
and potentially hazardous waste stream, and ultimately
returning the raw material output streams back to
the manufacturer for reuse in new printers and cartridges,
effectively closing the loop. They designed and
built their now famous ‘Green Machine’
to process all-in-one toner cartridges, drum units,
fuser assemblies, and more. Close the Loop®
have continuously improved the machine based on
hands-on experience, and will continue to learn
and upgrade their processes through research and
development (R&D) and continuous improvement.
The inkjet cartridge processing line, built with
the same philosophy, has just been completely rebuilt
with consideration given to fast up scaling capacity
again in the near future. ‘Around 30 per cent
of our current business is export – earning
export dollars by processing cartridge waste from
manufacturing plants in other countries’,
says founder and CEO Steve Morriss. Close the Loop®
is now ready to offer their service of recycling
all inkjet and toner cartridge waste with zero waste
to landfill to cartridge manufacturers worldwide.
Close the Loop® started as a thought, an
idea I had in the shower one day. I find the shower
a great place for dreaming: water is so cleansing,
it’s possible to wash away the clutter and
expose moments of clarity. I’m sure most people
have authentic thoughts, not many act on them though.
The thought that is the starting point of Close
the Loop® is still clear in my mind today and
it goes something like this. ‘Printer manufacturers
will need to get their environmental (sustainability)
act together sooner or later. If I can help them,
I could make a fortune and feel good about myself
at the same time.’ As the owner of a toner
and inkjet cartridge remanufacturing company, the
manufacturers of original equipment (OEMs) and their
distributors were my biggest competition. I would
win business because our cartridges were cheaper
than the original brands, and because I’d
use the environmental angle to my advantage. I’d
contact prospects – schools, government departments,
universities, etc. and offer to collect and recycle
their empty imaging consumables for free. They’d
usually take up my offer because nobody had ever
made such a bold offer before, which would give
me the opportunity to build a relationship and eventually
sell them my cartridges. This system worked really
well but created a problem – how do we recycle
the growing stockpile of empty bottles, cartridges
and drum units, etc. mounting up in our small factory?
After much analysis of the complex and potentially
hazardous stockpile, it became obvious that this
was a waste stream that was not commercially viable
for a small remanufacturer to recycle. The problem,
or opportunity, was that I’d promised it would
not go to landfill and I was absolutely resolved
not to dump the stuff. How could I do it? It would
take machinery not currently in existence to process
the complex mix of metals, plastics, toner powder,
electronics, and inks. It would cost millions to
mechanise the process and how could I finance that?
I was lucky to make ends meet for my young family,
how could I do it? That’s when the idea came,
if I offered a cartridge collection and recycling
service to the 20 or so multinationals that manufacture
printers, copiers, and fax machines, they’d
have the money. I did approach them all, numerous
times, and several responded quite favourably but
guess what? They wanted to see that we could recycle
their cartridges before they’d sign any contracts
and certainly before any money would be paid for
such a service. By this stage that intangible little
packet of energy, my idea, had grown in power. The
idea had gained momentum by being fed continuous
doses of ‘can do attitude’ and ‘never
say die determination’ so that by now, it
was bigger than the constant stream of obstacles
that inevitably confront every idea.
On it went. I was constantly talking up the idea
with infectious passion and it had the effect of
drawing the people I needed to help at just the
right time in the idea’s life cycle. I met
a supplier at a trade show in Las Vegas who’d
had recent experience, and contacts, from raising
significant money for a medical start-up. From that
meeting, and ensuing late night talkfest in my room
in Vegas, we are now an unlisted public company
with over 350 shareholders who have contributed
some 4.5 million dollars to the project called Close
the Loop®. The commitment to ‘Zero Waste
to Landfill’ has its origins in my original
promise to customers. I look back now and realize
that not compromising on that original, somewhat
naïve, claim is a crucial part of our success.
Our strength lies in the plant and equipment we
have developed to recycle every single imaging consumable
known to man with zero waste to landfill. With no
precedent, and a very big recycling challenge, we
set about finding existing technologies, mainly
from the mining industry, that we could adapt to
our project. A relationship was struck with an Australian
engineering company, and with the only real option
available to us, trial and error, we designed and
built our now famous ‘Green Machine’
to process all-in-one toner cartridges, drum units,
fuser assemblies and more. We’ve continuously
improved the machine based on hands-on experience,
and will continue to learn and upgrade our processes
because research and development (R&D), and
continuous improvement of all systems are now heavily
ingrained components of our culture at Close the
Loop®. The inkjet cartridge processing line,
built with the same philosophy, has just been completely
rebuilt with consideration given to fast up scaling
capacity again in the near future.
Our customers have confirmed that there is a need
for our service but getting the volumes to make
it commercially viable was the next problem. By
now, the original thought is the size and strength
of a freight train and most problems are actually
opportunities in disguise, the trick is being open
enough to recognize them. Enter Planet Ark. We have
co-created ‘Cartridges 4 Planet Ark’,
Australia’s leading multi-vendor, extended
producer responsibility (EPR), electronics take-back
programme. With year 1 coming to an end, the volumes
are increasing nicely and combined with our contracts
to import and recycle manufacturing scrap from several
leading inkjet cartridge manufacturers, we have
passed operational breakeven and are charging towards
good profits. Today, we are working closely with
our customers to plan our future direction in terms
of reuse of output streams like ink, toner powder,
metals, engineering grade plastics, etc., and even
closing the loop in terms of designing with the
end (recycling) in mind. The future is very bright
for any business that provides sustainable solutions
if you have big dreams, the drive to put them into
action, and the determination to overcome any obstacle.
Steve Morriss, CEO, Close the Loop®
Interface Ltd[1]
is emerging as a well cited example of a company
that from the outside appears to have taken significant
risks, risks that most companies would not have
contemplated. They have replaced petrochemical based
carpets with carpets made from renewable biomass,
such as corn waste, that can be recycled with little
loss of quality. The new carpet is the first certified
climate-neutral product in the world, that is, all
the climate impact of making and delivering it has
been offset before it gets to you. The carpet is
so non-toxic you can eat it, if you had a mind to,
thus eliminating occupational health and safety
(OH&S) concerns. In the first four years of
this business model and removing waste from its
own operation, Interface more than doubled its revenue,
more than tripled its operating profit, and nearly
doubled its employment, all at the same time. Overall
they have achieved a 97 per cent total reduction
in materials used, whilst providing a better service
in every respect. They have gone further than the
Factor 10 that most sustainable development experts
estimate to be required to achieve ‘sustainable
development’. Interface Ltd is on the way
to achieving Factor 100 and, in doing so, is placing
itself in the right position to become the first
genuinely ‘Sustainable Corporation’
on the planet.
Whilst such a radical change may seem risky, the
strategies that Interface Ltd has adopted to achieve
these results are, in fact, standard business strategies
based on innovation. The key, in this case, is the
company innovating to achieve sustainable development.
The organization first identified new areas where
they could save money. With strong leadership from
their CEO, Ray Anderson, it then identified opportunities
for win–win eco-efficiencies, resulting in
gains that were quick and effective. As a consequence,
Interface Ltd is saving approximately US$200 million
per annum through its eco-efficiency initiatives,
which is, in turn, financing all the remaining initiatives.
Improvements then began affecting the company on
a much more fundamental level. They were able use
this money to embark on Eco-Design to create product
differentiation. This led to the company’s
development of a new form of non-toxic carpets from
renewable feedstocks drawn from agriculture.
Our factories and our suppliers consumed around
1.2 billion pounds of material in 1995 – which
made me want to throw up; 400 million pounds was
relatively benign, 800 million was petro-based,
with two-thirds of that valuable stuff burned up-fossil
fuel gone for ever, except the CO2, helping us lose
coastal Florida in an instant of geological time.
Our company’s technology is plundering the
earth. Society considers me a captain of industry,
but I stand convicted, by myself alone, as a plunderer
and legal thief with perverse tax laws as my accomplice
in crime. Maybe the ‘new industrial revolution’
can keep my kind of out of jail, renewable, cynical
benign, emulating nature, where there is no waste;
we can begin to reinvent civilisation in a quest
to become sustainable, then restorative. [In response
to a question regarding how real this all is, Anderson
responds] Our efforts would be seen through if insincere.
Customers are inclined to support us, which helps
the top line, efficiency helps the bottom line.
It’s a positive feedback loop (of doing well
by doing good): the more good you do, the better
you can do, the more you attract attention, which
helps the top line… It’s one of the
few positive feedback loops that’s good for
the earth. [When a journalist asked] ‘Can
a $1 billion company make a difference in a $25
trillion global economy?’, [Anderson responded],
‘I don’t know. But unless somebody leads,
nobody will’.
Ray Anderson, CEO of Interface
This may seem groundbreaking, but in fact there
is now great experience in all these areas of sustainability
that companies can tap into. There is now even a
new academic field of knowledge called ‘green
chemistry’ that is amongst other things developing
systematically an understanding of how to make everyday
chemicals from crops and biomass waste. As previously
stated, there is a now an emerging ‘wave’
of enabling technologies and innovations in understanding
how we can re-design the industrial system in harmony
with the environment. The changes that Ray Anderson
initiated have also achieved something far greater
than any of this. They have improved morale, made
Interface a high profile company and, consequently,
highly attractive to the top graduates. These changes
have significantly altered the culture of the organization,
unleashing positive changes throughout their operations
globally. It is true, however, that during the period
around the year 2000 Interface Ltd profits and stock
price fell, but that was true of the whole carpet
industry. In that downturn a number of carpet companies
went out of business. Ray Anderson, the CEO of Interface,
argues that the combination of the cost savings
from eco-efficiencies plus the increased profile
globally from Interface’s genuine sustainability
strategy is what kept them in business during this
tough period.
Rob
Coombs, Asia-Pacific President of Interface, writes
of what the experience has been like from the inside
of Interface in the Asia Pacific. He summarizes
many of the key concerns, relevant to all companies,
that have driven these changes within Interface.
This testimony also illustrates some of the key
points in this section of the book. Namely, that
there are significant strategic business opportunities
available – through the adoption of sustainable
solutions – that multinationals and firms
cannot ignore. As with all waves of innovation,
however, companies need to be strategic in deciding
where to invest. Furthermore, he honestly and openly
discusses how a multinational, in this case Interface,
can strategically position itself, in the Asia-Pacific
region, to lead and consolidate in countries where
there are market drivers for sustainable solutions
(i.e. Japan and Australia), whilst awaiting the
emergence of further market opportunities in Asia.
The business world is slowly coming to the realization
that it needs to develop practices sympathetic with
the natural environment in which it operates. The
slumbering giant is beginning to understand that
there are also a range of stakeholders affected
by business practices and that there is a social
contract that needs to be re-thought and redeveloped.
This awakening brings with it many pressures; the
need to rethink age old values and approaches to
problems, the need to find solutions to previously
unapproached technical barriers, and the need to
create a new set of decision making criteria. For
Interface in the Asia-Pacific region, the evolution
of sustainable business practice has created another
challenge: How to play an important part in the
process of becoming a sustainable business within
a large organization at the leading edge of the
debate? How to support the position for which the
company is known globally and how to live up to
the position on a local basis?
Led by Ray Anderson, Interface has created a culture
in which the drive to sustainability is an imperative.
In doing so, the company has established a position
as an early mover, an example to be used when looking
for the route map to an environmentally better business
model. With a vision to become sustainable and then
restorative through the power of its influence by
2020, Interface has already established a clear
measure of business success. It is moving towards
this goal through the adoption of a strategy on
seven fronts: eliminating waste, using only renewable
energy sources, creating only benign emissions,
closing the product loop, energy efficient transport,
energizing people and changing the nature of commerce
itself. Asia-Pacific represents 5 per cent of global
Interface revenues and although the region is seen
as a growth engine for the business, the relatively
small scale of the division creates a series of
challenges around the move to sustainability. How
has Asia-Pacific embraced the philosophy and what
has it done to support it? What are the challenges
faced by a small division of a leading force in
sustainable business development? In answering these
questions it is important to note that the culture
of sustainability within Interface globally is well
developed, with a broad base of leadership created
over the past six years. Whilst there are pockets
around the company where knowledge and activity
are lower than in others, no part of the business
could operate without a long-term commitment to
the vision for the company – it would simply
not fit with the whole.
Let me start with some general observations. First,
there is no Asia-Pacific! The size and cultural
diversity of the region is such that there is no
simple answer to these questions. The response differs
by country. Second, we are driven by the corporate
goal in many different ways and these ways are influenced
by the communities around each site. In some communities
the commitment to sustainability is greater than
in others and therefore more conducive to active
participation by Interface. The focus of the debate
is influenced greatly the same way. For example,
Japan has embraced, by necessity, the concept of
recycling as a noble activity and it is promoted
by government and within the business community.
Thus, Interface is engaged in a wide range of activity
in Japan around this issue, while discussion around
renewable energy receives much less attention. A
third observation is that the two countries across
the region that appear most engaged are Japan and
Australia. In most other countries, sustainability
remains a very low priority and Interface operates
with less external stimulus. As Ray Anderson would
say, the stimulus from customers for more sustainable
solutions is the greatest driver we have. With this
less evident, Interface operates in a vacuum. No
less committed but with the need for more self discipline
to press forward. This discipline is self imposed
by the measurement systems we have in place to monitor
progress on quality, waste, sociometrics, ecometrics
and environmental procedures and standards. The
company’s wide visibility of these measures
assures that the focus is not lost.
In the Asia-Pacific division the progress across
the seven strategic fronts has been in line with
its place in the Interface world. That is, it is
able to move forward independently in many facets
of the effort. Yet there are some developments it
is unable to embrace at the same pace as its larger
divisional cousins because of the scale of the organization.
There are also some areas in which the company actively
centralizes investment and activity in order to
maximize the speed of projects and the return on
investment. Some examples from each of these three
categories follows: the region has a strong track
record in waste elimination, the cornerstone and
enabler of the Interface programme. In both the
Australian and Thailand manufacturing facilities,
Interface has reduced dramatically all forms of
process and material waste. In Australia, for example,
waste per unit of production has reduced by 90 per
cent since 1996, an achievement that has both funded
other sustainability projects and helped to deliver
greatly improved business performance. The waste
effort has been driven in both facilities by people
working in teams at operator level with strong supervisor
leadership. It is very much a grass roots programme
to reduce the company’s environmental footprint.
Equally, regional success in reducing harmful emissions
has been encouraging. Since 1999 our annual greenhouse
gas emissions have reduced from approximately 1650
metric tons of CO2 to 1450 metric tons, while at
the same time we have increased our production throughput
by 35 per cent. The source of these emissions is
electricity production 63 per cent (indirect contribution)
and the burning of natural gas 37 per cent (direct
production). We have reduced and rationalized the
use of solvents at our production facilities and
even gone to the extent of identifying new cleaners
with less solvent emissions for our Carpet Spot
Cleaning Kits, admittedly a small component, but
significant in the message we are trying to put
out into the market place. In the short term we
are evaluating the sale and use of ‘Climate
Neutral’
products and services.
Interface has invested significantly in the region
over the past six years in the education of its
own people around the principles of sustainability.
This investment has covered training programmes
around the scientific basis for the philosophy,
programmes of engagement and training around Interface’s
strategic methodology, communication tools for use
with customers and other interested parties and
the investment in managers dedicated to leading
the Interface Asia Pacific sustainability effort.
There has also been a wide ranging programme of
engagement with the wider community. Probably most
importantly, it has led to activity within the local
communities in which we operate, with projects ranging
from regeneration of natural habitat to the fostering
of sustainable business opportunities within Thai
village communities. Interface strives for a situation
where the nature of commerce changes, from the linear
‘take, make, waste’ process based on
‘making stuff’, to a cyclical process
in which the transactions become service based.
This will result in the customer leasing the benefits
of the product rather than purchasing the physical
properties that provide them. In Australia and Japan,
Interface has developed leasing programmes involving
the leasing of carpet (or the functional benefits
of it), where Interface retains ownership of the
product, maintains and then reclaims it at the end
of its life to ensure landfill is avoided. The success
of the programme is growing, but so far has been
limited by customer acceptance. Long established
procurement methodologies are embedded in many organizations
and will take time to change.
These are some areas in which Interface Asia-Pacific
has independently engaged in sustainable development.
We have also made progress in other ways but at
a slower pace. For example, the adoption of renewable
energy sources has been less widespread than in
other Interface locations, mainly due to the lack
of availability of the source. Local infrastructure
is not available to the same extent in support of
this objective. The company is actively seeking
alternatives to fossil fuels, and remains committed
but frustrated with the lack of realistic options
available. Then there are the areas in which Interface
Asia-Pacific has, through necessity, left major
development to central bodies within the company.
Closing the product loop represents the greatest
technical sustainability challenge faced by Interface,
a company whose product is founded on numerous petro-chemical
based raw materials historically designed not to
separate during or even after use. Creating products
that use post consumer product as raw materials
that can then be recycled (not just down cycled)
into their own raw material stream at the end of
their life, is a goal that has the undivided attention
of many people within the company. Great progress
has been made in Asia Pacific with many of the raw
materials we use. Locally, Interface has been active
in working with outside companies to research ways
to reduce and re-use waste streams. Internally,
we have developed a process that could recycle backing
material and reduce landfill quantities by 80 per
cent. Globally, Interface is inching ever closer
to the end goal. The resources required to undertake
the major technical developments required in this
area have been centralized in the United States.
Local part-recycling initiatives are underway, but
the large scale break through projects will probably
be undertaken elsewhere, before results are implemented
here.
So, where is the scope for improvement? Well, as
staff turns over in a five year period, we have
a need to regenerate some knowledge and vigour around
the subject and with some new champions in place.
Any long-term programme needs regular stimulus and
re-growth: there is a need to redevelop tactical
activity to support each of the seven fronts, to
re-focus leaders and the company as a whole on the
importance of the journey the company is undertaking.
There are also some strategies which require greater
focus, notably the transportation initiative and
the drive for renewable energy sources. As the low
hanging fruits have been picked we now need to be
more innovative. We are a small part of a large
company fully engaged in a long journey. We are
learning more from mistakes than we are from successes.
The region is in the great position of being able
to draw on the resources of a larger parent whilst
enjoying the freedom to develop its own initiatives
as well. Trying to keep pace with the vision and
determination of Ray Anderson, to create the world’s
first sustainable enterprise, is no easy task. But
we wouldn’t have it any other way.
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