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Business Lessons from a Radicalby Ray C Anderson
1 Mission Zero
I am Ray Anderson, and in addition to being a husband, a father, and a grandfather, Im an industrialist. Some would say a radical industrialist. Time magazine called me a “Hero of the Environment.” U.S. News & World Report said I was “Americas Greenest CEO.” Fortune magazine was kind and astute enough to include my company, Interface, in its annual list of the “100 Best Companies to Work For”—twice. The GlobeScan (2007) Survey of Sustainability Experts listed Interface, Inc., as leading the list of global companies with the greatest commitment to sustainability. Following Interface, in order of ranking, were: Toyota, GE, BP, and DuPont.
But Ive also been called a hypocrite and a dreamer who pours his time, energy, and stockholder money into lofty ideas about ecology and sustainability instead of the bottom line. Yet I would reply that Im as profit-minded and competitive as anyone youre likely to meet.
I grew up in a small Georgia town during the tail end of the Great Depression and the Second World War. My father worked in the post office. My mother was a retired schoolteacher. I attended college on a football scholarship, graduated with highest honors, and spent seventeen years in industry working for someone else.
Then, in 1973, I took the entrepreneurial plunge and founded a company, Interface, with nothing more than a good idea, my lifes savings, and the faith of a few brave investors. We grew that company from scratch into the world leader in carpet tiles (modular carpet) with annual sales of more than a billion dollars.
In 1994, at age sixty and in my companys twenty-second year, I steered Interface on a new course—one designed to reduce our environmental footprint while increasing our profits. I wanted Interface, a company so oil-intensive you could think of it as an extension of the petrochemical industry, to be the first enterprise in history to become truly sustainable—to shut down its smokestacks, close off its effluent pipes, to do no harm to the environment, and to take nothing from the earth not easily renewed by the earth. Believe me when I say that that goal is one enormous challenge.
But as I said, Im profit-minded and extremely competitive. I thought “going green” would definitely enhance our standing with our customers and maybe give us some good press, too. But Ialso thought it just might be a way to earn bigger profits from doing what was right by the earth. No one had ever attempted that kind of transformation on such a large scale before. We aimed to turn the myth that you could do well in business or do good, but not both, on its head. Our goal was to prove—by example—that you could run a big business both profitably and in an environmentally responsible way. And we succeeded beyond my own high aspirations.
Not everyone at my company was happy with this in August 1994. It had been a very good year at Interface. We had weathered a deep recession, we were growing again and very profitable. Why should we conduct this grand experiment when nobody, not even I, knew how it would come out? It was a reasonable question.
We caught plenty of flak from outside the company, too. Wall Street heard “environment” and thought “costs.” Even after we showed them how reaching for sustainability could take a big bite out of waste and save us real money, even after we discovered that running a billion-dollar corporation with the earth in mind was a terrific new business model, there was still a lot of skepticism. There still is some, even though we now have over a decade of hard numbers that prove—beyond a doubt—that our course was both right and smart. Why, then, all the resistance?
I think its because our transformation flew in the face of all the old rules that still drive the “take-make-waste” economy, old rules that we inherited from the steam-driven days of the first industrial revolution and (many of us) unthinkingly accept as true. That old way of doing business seemed to work just fine when we thought the earth could provide endless resources, endless energy, and endless room to throw away all the stuff we make and waste.
But those rules dont work anymore. Daniel Quinn, in his book Ishmael, said that theyre like those badly designed wings of the early aircraft at the dawn of human flight. Our civilization is like that would-be “aeronaut” who jumps off a high cliff in his misbegotten craft. Hes pedaling away, wings flapping like mad; the wind is in his face, and the poor fool thinks hes flying when hes really in free fall. Though the ground seems far away at first, his flight is doomed because the design of his wings has ignored the laws of aerodynamics.
Like that high cliff, the vast resources available to our industrial civilization—the oceans, forests, fossil fuels, even the air we breathe—make the “ground” seem far away to us. But as sure as gravity, its rushing up fast. Our flight will end up no better than his. Why? Because our industrial civilization has ignored the laws of sustainability, laws that would enable humanity to pull out of our terminal dive and “fly.”
Whichever way we look, from global warming to deforestation, from empty water reservoirs to vanishing species, to the price of a gallon of gas at the pump, the evidence is all around us. The earth is finite and fragile, and we ignore these plain physical facts at our peril. Thats why we need a new industrial revolution and a new set of wings, ones properly designed according to the laws of “aerodynamics.” Wings that will allow our civilization—and our grandchildrens—to fly, sustainably. To soar, not crash.
But conventional wisdom and the status quo are powerful sedatives. Like opiates, they dim our vision and blur our minds. They whisper, Maybe all those arguing experts are wrong. Maybe theres nothing to worry about. Or, okay, so theres a problem, but I surely cant solve it. Why even try?
Maybe thats why conventional wisdom, wed to the status quo, was certain there was no business case for sustainability, that what we started at Interface was misguided, tangential, and doomed to fail.
Conventional wisdom was wrong. Consider a few facts. Remember the Kyoto Protocol? It was designed to reduce greenhouse gas (GHG) emissions by about 7 percent by 2012 here in the United States. Though a small reduction like that doesnt even begin to address the problem of climate disruption, a lot of my peers in industry were sure that if the United States signed on to Kyoto, it would drive them right out of business. Really?
From 1996, our baseline year, through 2008, my business has cut its net greenhouse gas emissions not by 7 percent, but by 71 percent (in absolute tons), while our sales increased by two-thirds and our earnings doubled. Profit margins expanded, not contracted, while GHG intensity, relative to sales, declined some 82 percent.
No business case for sustainability?
While some businesses fret and sweat over rising fuel bills, renewable energy, limitless and available right now, provides electricity to power eight of our ten factories. The electrical power for seven of them comes entirely from renewables. Our consumption of fossil fuels per square yard of carpet is down 60 percent. As I write this, the price of oil has broken all previous records. Will it stay up there? Will it keep on rising, or fall back? I dont know. But go take a look at some of your recent fuel bills. Think you could make the case for reducing them by over half?
Our companywide waste elimination measures have put a cumulative $405 million of avoided costs back into our pockets. Not only have these measures paid for themselves, they helped us ride out the deepest, longest marketplace decline—the “perfect storm” of Y2Ks diversion of capital to computer systems, the bursting of the dot-com bubble, and 9/11—in our industrys history.
Even better, taking a sledgehammer to conventional wisdom has thrown innovation into overdrive. Weve patented machines, processes, and products that do a whole lot more with a whole lot less, and better, too. Each year, more of our products take their inspiration from nature, exhibiting natures beauty as well as benefiting from her genius for design that has been perfected over billions of years.
Were making more of our carpets from recycled materials, too; at last count, weve kept 175 million pounds of carpet out of landfills and trimmed the scrap we generate and send to the landfills by 78 percent. Now, what used to be waste for the landfill goes back into our factories as feedstock. Valuable organic molecules are salvaged to be used again and again, with less fresh oil required each year, emulating nature in our industrial processes. After all, in nature, one organisms waste becomes another organisms food.
We havent used our final drop of oil quite yet, but I can see that day coming, and I hope to be around when it arrives. Just think about what that could mean for your business, your family, and your country. And if enough people did it, the planet.
In fact, since 2003, weve manufactured and sold over eighty-three million square yards of carpet with no net global-warming effect—zero—to the earth. We call these climate-neutral products “Cool Carpet,™” and they have been runaway bestsellers. Thats competitive advantage at its best—doing well by doing good.
Heres the thing: Sustainability has given my company a competitive edge in more ways than one. It has proven to be the most powerful marketplace differentiator I have known in my long career. Our costs are down, our profits are up, and our products are the best theyve ever been. It has rewarded us with more positive visibility and goodwill among our customers than the slickest, most expensive advertising or marketing campaign could possibly have generated. And a strong environmental ethic has no equal for attracting and motivating good people, galvanizing them around a shared higher purpose, and giving them a powerful reason to join and to stay.
Sometimes even they are surprised. Some of our best engineers and managers from top-tier universities have come up and told me, Ray, I never thought Id be working for a carpet company. They come and they stay, because we arent just making carpets. Were making history.
The business case for sustainability is crystal clear, and were just beginning. You see, theres a mountain out there that we call “Mount Sustainability.” It is higher than Everest, but we have a plan to climb it—all the way to the top—by the year 2020. We call this initiative Mission Zero.
We will reach the summit when we have cut our last umbilical cord to the mines and the oil wells, when we no longer dump any waste into the landfills or pollution into the air or water. When we no longer take anything from the earth that the earth cannot renew rapidly and naturally.
But Mount Sustainability is a high, high mountain—higher than Everest. There isnt just one path up but at least seven, and we know we must climb them all. Yet, if a company like mine can get there, any company can get there. And I believe that this book will help others—from CEOs to suburban homeowners—find their own way to their own summits, too.
Mind you, striving for the top will require nothing short of a vast, ethically driven redesign of our industrial system, a new industrial revolution that corrects the many things the first one got wrong. But can we do it in time?
I think we can, though I cant promise the climb will be easy or painless. But there certainly is reason for hope. As physicist Amory Lovins likes to say, “If something exists, it must be possible.” We at Interface have committed ourselves to bringing sustainability fully into existence, to proving that it is not only possible, but profitable—a better way to bigger, more legitimate profits.
One day while explaining our plan for achieving sustainability, I drew a simple illustration of Mount Sustainability, with the point at the summit representing zero footprint and a stick figure (us) climbing the mountain. This has become a simple, but clear and widely understood, depiction of our vision and mission.
Based on our experiences since 1994, I can promise this: Done right, sustainability doesnt cost. It pays. And the view from that summit—looking out on a clean, healthy world for which our children and grandchildren will thank us—will make every step you and I take today for ourselves, and for them, worthwhile.
Copyright © 2009, 2010 by Ray C. Anderson
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