Ross Net Impact Conference 2010

"You can’t make deep change in the world unless you change yourself. … If you want to change the..."

Sat, 30 Oct 2010 14:39:42 -0400

“You can’t make deep change in the world unless you change yourself. … If you want to change the world, you have to get people to do things they’ve never done before.”

- Ross Professor Robert Quinn, discussing how to be an effective change agent.

"Don’t feel ashamed for being business people. Don’t be ashamed to be American..."

Sat, 30 Oct 2010 13:04:45 -0400

“Don’t feel ashamed for being business people. Don’t be ashamed to be American entrepreneurs.”

- Fredo Arias-King, president of T&R Chemicals Inc.

When Strategy Trumps Finance

Sat, 30 Oct 2010 13:03:00 -0400

Sometimes, strategy has to trump finance. Fredo Arias-King, president of T&R Chemicals, worked on a project that helped the environment and his company. Property rights laws are weak in Mexico and the country suffered years of deforestation. T&R needs resin from pine trees and the country’s laws and lack of forests are major constraints. But indigenous Native American tribes and some collectives in Mexico have strong land protection. So the company worked with tribes to re-forest their land, allowing the inhabitants to sell the tapped pine resin. Pine resin is used in hundreds of products such as adhesives, chewing gum and cleaning solution. This solved problems for both sides. “A resin tapper is the best forest steward,” he says. T&R funded the project and buys about 40% of the resin. The project is not a money maker – it works out to be about neutral – because of the “free rider problem.” Other companies buy resin from the lands also, benefiting from what T&R funded.

But here’s where the strategy card comes in. China is the world’s largest producer of crude gum. But its domestic consumption is rapidly gaining on its supply. Arias-King says that by 2020, the situation will come to a head and one possibility is that China will declare gum resin a critical commodity and protect it. His company must have access to a reliable supply. So while this project might not make sense financially, “strategically, it’s something you have to do.”

"Scale is important … We cannot just be food for the elite."

Sat, 30 Oct 2010 10:02:57 -0400

“Scale is important … We cannot just be food for the elite.”

- Gary Hirshberg, president and CE-YO of Stonyfield Farms, talking about growing organics.

Making Organic Profitable

Sat, 30 Oct 2010 09:56:52 -0400

Stonyfield faced a problem trying to break into the yogurt business. Its gross margin was 10% higher than Dannon and Yoplait. To get around that it had to find a shortcut around the traditional packaged food model – cheap prices, bigger margin, build brand awareness, get trial purchases, repeat purchases, regular purchases, and finally loyalty. Hirshberg skipped the middle parts and went right to loyalty, spending next to nothing on advertising. So it used other ways to communicate. It put items of interest in its lids. It allowed customers to send in lids and adopt a cow. It created YoTube to show videos of farms and sugar harvesting. It gave samples to train commuters in Chicago while trying to break into that market.

“That’s what you do when you don’t have money. You get creative,” Hirshberg said. The end result is a higher net margin than its competitors.

Stonyfield President and CE-YO Stirs It Up

Sat, 30 Oct 2010 09:28:01 -0400

Net Impact 2010 at Ross is underway with Gary Hirshberg, president and CE-YO (yes, that’s his title) of Stonyfield Farms, the famed organic yogurt producer. He begs to differ with CEOs who preach about the primacy of the shareholder. “I really don’t think there can be a primacy of the shareholder when the other stakeholders are losing,” he says. How can a company be successful and destroy its supply chain or mistreat employees so they constantly leave? Hirshberg believes companies are successful when all stakeholders win, not just shareholders.

The history of business and agriculture usually has been one where somebody loses, he says. Hirshberg is changing the game and still making money. Stonyfield has enjoyed a 23% compound annual growth rate over the last 20 years.

Efficiency=Supply

Fri, 29 Oct 2010 17:37:49 -0400

New York City has started an interesting program with Con Edison that Greg Hale of the Natural Resources Defense Council thinks should be rolled out nationwide. The city and the utility will do a five- to ten-year plan to identify constraints in all of the service grid areas. When they find an area where supply won’t meet demand, they put out an RFP for efficiency improvements in that area instead of spending for new generation and transmission. It goes to prove that sometimes efficiency is the best source of supply, Hale says.

"I do think there are ways we can get capital moving into this (energy efficiency) sector. The first..."

Fri, 29 Oct 2010 17:16:28 -0400

“I do think there are ways we can get capital moving into this (energy efficiency) sector. The first thing you have to do is prove the energy savings.”

- Greg Hale, senior financial policy specialist, Natural Resources Defense Council

Automakers have big, complex supply chains and the social risks aren’t with their top – tier one –...

Fri, 29 Oct 2010 15:40:35 -0400

Automakers have big, complex supply chains and the social risks aren’t with their top – tier one – suppliers. The risk is seven or ten steps down the supply line, says Monique Oxender, global manager of supply chain sustainability for Ford Motor Co.

Automakers are being held responsible for those issues down the chain and contract language with the tier one suppliers isn’t going to solve the problem. Increasingly the auto companies are being held responsible for issues all the way to the end of the supply line.

A big issue for companies with supply chains is how to make sure things they buy aren’t made in...

Fri, 29 Oct 2010 15:34:56 -0400

A big issue for companies with supply chains is how to make sure things they buy aren’t made in sweatshops or places with poor labor standards. A panel on Exploring the Social Dimension of Supply Chain Sustainability provides some guidance.

A good place to start is understanding the local markets from where you’re sourcing. Companies should get country risk assessments from NGO and ask some tough questions, says Eric Olson of Business for Social Responsibility. What’s the rule of law like? Who makes the decisions? What’s enforcement like? “It sounds like a lot of work, he says. “It is a lot of work.” But it’s also something a good business should do.

Companies need to do the kind of due diligence they would do if they were building a bricks-and-mortar location, says Bama Athreya, executive director of the International Labor Rights Forum. Before sourcing from a location, it’s a good idea to engage the local population. Too many companies are the last ones to know that a particular industry in a country is well-known for risks such as child labor.

Who's the largest print publisher?

Fri, 29 Oct 2010 15:08:16 -0400

The largest print publisher in the world is Avon Products Inc., where Tod Arbogast is VP of Sustainability and Corporate Responsibility.

“If we’re not responsibly sourcing that paper, I’m not doing my job,” says Arbogast.

Taproot Foundation

Fri, 29 Oct 2010 14:58:00 -0400

Taproot Foundation:

“Our mission is to lead, mobilize, and engage professionals in pro bono service that drives social change.”

Speaker Laura Weiss is VP of Service Innovation.

"Sustainability, if it were clear and known, wouldn’t be sustainability."

Fri, 29 Oct 2010 14:53:42 -0400

“Sustainability, if it were clear and known, wouldn’t be sustainability.”

- Tod Arbogast

Work for Good: Making an Impact with Any Job Title

Fri, 29 Oct 2010 14:46:00 -0400

Cool speaker: Sarah Endlive, founder of “activist” candy company sweetriot.

sweetriot has started by sourcing cacao directly in Latin America, using recyclable, reusable packaging which features emerging artists, and only using all-natural, healthy ingredients for their dark chocolate ‘peaces.’ sweetriot’s products are sold in over 1,700 stores including Whole Foods, Zingerman’s, and Zabar’s. sweetriot was recently named a finalist in Entrepreneur magazine’s “Emerging Entrepreneur” Award and in the Top 3 of Fortune’s Small Business Competition. Sarah’s entrepreneurial work has been covered by The New York Times, The Today Show, Forbes, Newsweek, Business Week, and more.

How has the financial crisis changed views on business education? For one, there’s much greater...

Fri, 29 Oct 2010 13:54:00 -0400

How has the financial crisis changed views on business education? For one, there’s much greater concern about the environment in which business operates, and the roles and responsibilities of business, says Srikant Datar, senior associate dean and accounting professor at Harvard University. That’s true for deans, faculty and students. Courses that address those issues should be worked early into a business school curriculum, he says.

Datar and Ross Professor Jim Walsh are discussing the future of management education.

In a world with no restraints, Walsh says the one thing he would change at the business school would be to make sure students left it with a sense of “confident humility.” Confident in knowing what they’re doing has value in business and the wider world, but also humble enough to know they don’t have all the answers.

Hart says the financial crisis may have heightened the corporate world’s awareness of the base of...

Fri, 29 Oct 2010 12:03:39 -0400

Hart says the financial crisis may have heightened the corporate world’s awareness of the base of the pyramid. It’s harder to launch a new initiative during an economic slump but the crisis hit the top of the pyramid hard, showing that focusing on that alone is unsustainable. The crisis “compels you into this new space. It’s not a choice.”

There’s an interesting intersection between business strategy and poverty alleviation, says Ted...

Fri, 29 Oct 2010 11:48:00 -0400

There’s an interesting intersection between business strategy and poverty alleviation, says Ted London, professor at Ross and senior research fellow at the William Davidson Institute. Business needs new customers, new sources of supply and innovation, and the ability to sustain growth. NGOs have too many people to serve and those people have a lack of market opportunities.

“You cannot donate your way out of poverty,” London says.

But we’ve asked the wrong questions. Instead of asking how we tap the fortune at the base of the pyramid, we should ask how can we create a fortune with the base of the pyramid.

We also have to start approaching the world’s poor as partners, not victims to be served, he says. Then you can co-create and stick around.

Cornell Professor Stuart Hart, distinguished fellow at the William Davidson Institute, talking about...

Fri, 29 Oct 2010 11:37:11 -0400

Cornell Professor Stuart Hart, distinguished fellow at the William Davidson Institute, talking about new ways to reach the world’s poor in the session Creating a Fortune at the Base of the Pyramid: Strategies for the Next Decade. He and the late Ross Professor C.K. Prahalad pioneered the idea that companies could market to the world’s poor, solving problems for them and making a profit.

Hart says early efforts haven’t been very successful – no home runs to copy. Companies mostly have created low-cost versions of what they already made and expanded their distribution to slums and rural areas. “That just hasn’t gotten us where we need to go,” Hart says. So what do BoP 2.0 strategies look like? Start co-creating with people at the base of the pyramid. Companies need to start a true two-way dialogue with the people in the community to determine what a company and a product should look like from the start. That “gives us a chance to create more sustainable, more embedded businesses at the base of the pyramid.”

The first full day of the 2010 Net Impact Conference is just getting underway here at Ross with a...

Fri, 29 Oct 2010 11:05:15 -0400

The first full day of the 2010 Net Impact Conference is just getting underway here at Ross with a large crowd gathered for this national event. Sustainability and corporate responsibility are growing areas of concern for businesses and consumers. The goal of the conference is to get the coming generation of leaders thinking about the next decade – how to make the world more sustainable in 2020.

This morning’s keynote addresses a big topic in sustainability – beverage containers. Discussing the issue will be Nestle Waters North America Inc. President and CEO Kim Jeffery and noted sustainability author William McDonough.

Jeffery said his company – which makes Poland Spring and other brands — is on both the good side and challenged side of sustainability. It provides water as an alternative to carbonated soft drinks, which helps with the obesity problem. But the plastic packaging is a big issue and something the company gives a lot of thought and attention. PET plastic is re-usable, but about 50% of the country has curbside recycling and of those, half of them utilize it. We have “a totally inadequate, fragmented recycling system in America.” Only 30% of all PET plastic in the U.S. is recycled, he said. That demand means it’s more expensive than virgin plastic resin when making new bottles. Still, consumers clearly want bottled water, as about 70% of Americans buy them at some point.

There doesn’t appear to be political will to create a large recycling infrastructure, Jeffery says. So it’s up to companies like Nestle to help build one. Jeffrey proposes a system called Extended Producer Responsibility, or EPR. Producers like Nestle design collection, transportation and distribution. Consumers use return systems.

Jeffery says he’s against bottle bill takeback laws because they only address beverage containers and inhibit the desire for curbside recycling. “They’re expensive for consumers and not expandable.”

McDonough says the problem with water bottles is that so much value is thrown away. And a lot of that ends up in the ocean. Ultimately, it’s a design problem. He said polymer scientists could address the worst-case scenario and make a biodegradable water bottle.

Jeffery said if they made the bottles biodegradable, they couldn’t be recycled. McDonough acknowledged that, but noted that until we solve the recycling problem, so many bottles get lose. Making them less deadly is something worth considering.

Jeffery says the recycling solution likely will have to be a state-by-state process. He’s OK with companies like Nestle being financially responsible for the second life of the products. For example, Nestle is helping fund an EPR program in the Canadian province of Manitoba to expand curbside recycling of all products. The provincial government sets the goals, the companies have to meet them but it’s privately funded. Jeffery said too many states have used funds from bottle returns to cover budget gaps. He thinks Manitoba is a better model. “We think it’s going to be very successful.”