Many people are talking about corporate sustainability, but many don’t understand exactly what corporate sustainability means.
Corporate sustainability is a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social development.
Still, even if a company is interested in achieving corporate sustainability, the prospect may seem overwhelming. But it’s really not that difficult to get started, according to Timothy Iszler, a partner with Crowe Horwath LLP.
“You can take small steps to get started,” says Iszler. “And the benefits can be significant. Generally when companies go through this process, they end up saving money and improving the bottom line.”
Smart Business spoke with Iszler about corporate sustainability and how it can improve a company’s image and its bottom line.
What key factors does a business need to focus on when approaching sustainability?
The first is a commitment from the CEO and top management. Without that commitment from the top, it will be very difficult to get the buy-in of employees and push the initiative throughout the organization. The leaders also have to develop a business case for sustainability, including a return on investment, as well as the compliance aspect with government regulations, consumer concerns and employee interest.
Consumer consciousness may be driving sustainability initiatives, but on the business end, they can also save costs and improve the bottom line.
Another factor to consider is finding the right person to lead the initiative. Don’t just assign someone to lead; instead, talk to people across different departments to find those who are really passionate about the issue, because without that passion and drive, the effort is likely to fail. You also need to measure the results of your efforts, and not just assume that they are working.
Finally, start small. Looking at too many areas at once can be overwhelming, and taking small steps will reap small successes, which will encourage you to continue your efforts.
What are some ways to start small?
One entry point is to look at your product design. For example, Nike started its sustainability initiative by examining its product design and discovered how much waste it had in the process. By reducing that waste, it was able to realize a cost savings, but it was also an environmentally good thing because a lot less material ended up in the landfill.
Another thing you can do, especially in manufacturing, is to go through your processes and determine where things could be done more efficiently to reduce waste. Even things that seem simple, like changing the light bulbs in a factory to more efficient lighting, can result in additional cost savings and benefit the environment.
Also, more and more companies are using environmentally friendly packaging with a certain percentage made from recycled cardboard and other materials. Doing so can not only save you money but also benefit your brand image, as more and more consumers are becoming more environmentally conscious and view recycled packaging in a positive light.
What are the benefits of sustainability?
The biggest one is an improved brand image for the business. There are also cost savings to be realized from things such as using less electricity, and sustainability can give a company an advantage in a very competitive marketplace. Finally, increased employee satisfaction is also a benefit as workers gain pride from working for a company that is doing the right thing for the environment.
How do you get buy-in for sustainability?
Employee buy-in is critical. When you find the right leader for the sustainability initiative, that person needs to put together a sustainability team. The people on the front line are the ones who are going to be able to identify the opportunities in your organization.
The challenge is to identify those people within your company who are driven and have a passion to pursue the opportunities and then have them spread that passion throughout the organization.
Sustainability should flow throughout the organization, not be separated into a silo or an individual department. The goal is to fully integrate sustainability issues into the core business structures and processes, rather than managing them as separate issues.
Can a company begin the process on its own, or should it consider outside help?
That depends on how sophisticated the company is. It can be difficult to identify issues from inside the company. Before you go down that path, it’s a good idea to have someone from outside the company come in and help you develop a plan. An outside firm can help you assess and respond to the risks and opportunities integral to achieving your strategic business objectives. A sustainable corporate governance program provides a platform to understand, communicate, collaborate and deliver solutions in alignment with your organization’s vision and mission.
A consultant will help you answer questions such as: How do customers measure your performance? What sustainability metrics are included? How do your customers validate what you report? What new sustainability initiatives are your customers putting in place? How are you taking advantage of new tax and economic incentives related to sustainability? How are you going to take advantage of the new business opportunities presented by companies reacting to climate change? How are you preparing for CO2 cap and trade programs?
By consulting with a professional firm, your company can take full advantage of sustainability opportunities to help the environment, improve its image and improve the bottom line.
Timothy Iszler is a partner with Crowe Horwath LLP. Reach him at firstname.lastname@example.org.
Randall Dearth knows that people are what make a business successful. That’s why his employees were the first priority on his list when Lanxess Corp. spun off from Bayer Corp. in 2003. Deciding to focus more on life sciences and high-performance materials, Bayer divested most of their chemical operations and some of their material science operations. Lanxess Corp. formed in 2004 as a new, independent entity of Bayer, which meant change had to occur.
“The first thing we had to deal with, and I had to especially deal with here in the U.S., was our people,” says Dearth, president and CEO of Lanxess Corp. “We had a lot of people that were very nervous about leaving Bayer. They didn’t want to go to this new company. So a lot of that was, ‘How do we deal with the people issues, how do we deal with making sure they feel comfortable in this new company but also make sure they had a future?’”
Dearth knew it would take a strong effort and a lot of communication to assure employees that Lanxess, a specialty chemicals company, was going to come out of this situation better than ever and that each employee would play a big part.
Communicate to employees
Having to start fresh with a new location, building and a new company direction, it was important for Dearth to make employees feel welcome.
“I came in with a very strong belief that we needed to set up policies for our employees so they can truly be a part of this new company,” Dearth says. “Our facility here in Pittsburgh went into a brand-new building where the walls were up but nothing else. We worked with our employees in designing the building and asked them what it is they wanted. They wanted a fitness center; they got a fitness center. I wanted to hear from each and every employee. We did a lot of communication, town-hall meetings and round-table meetings to really hear what their concerns were and to make it clear that as a new company, we had a future and we had a lot going for us in terms of our products and our positioning.”
Lanxess Corp. employs nearly 14,500 people globally, with about 1,000 employees here in the U.S. As Lanxess was finding its feet in the first few months, Dearth focused a lot of his time on communicating the company’s goals, vision and direction.
“Originally, we did a tremendous amount of town-hall meetings,” Dearth says. “Every month for the first year, we would get together in a town-hall forum and allow for questioning, talk about our vision, talk about our businesses and educate people about our challenges.”
Many companies discuss their goals, direction and successes in a town-hall forum or at a hotel meeting, but Dearth knew that those meetings alone wouldn’t be enough to communicate what he wanted the company to become.
“We did that not only in town-hall meetings, but then I took them to small groups of 10 to 20 employees where I would specifically ask them their concerns, their issues and what we could do differently,” he says.
In order to give employees an easy and constant way to remember company goals and vision, Dearth created what they call Formula X — a simple guide to help employees stay focused and maintain four basic principles: Seek solutions, not problems; keep it simple; take ownership; think new, and act fast.
“Formula X was how we wanted to run our businesses and how we want our employees to act,” Dearth says. “We’ve got to be quick. I expect from our employees great ideas. I challenge them in small round tables and I ask them what ideas they have that would make things even better, and we try to live these things through.”
As Lanxess started to come together and grow as a company, Dearth says that having a vision and communicating that vision constantly were the keys to making the company successful.
“You need to set a vision,” Dearth says. “Employees look at leadership to say where are we going? Is this really where I want to be? It is imperative that the CEO very clearly sets out, ‘This is the direction, these are the goals we are looking for, and this is what it’s going to look like once we get there,’ and they have to make that clear. Secondly, a good CEO needs to allow his employees the entrepreneurial freedom to do things on their own. Allow them to make mistakes but to also make themselves better. A CEO should encourage entrepreneurial spirit. Also explain cost-effectiveness. As a smaller chemical company, we didn’t have the big, deep pockets of a big multinational company like Bayer, so we had to instill in our employees how we spend our money, what we invest in and how we invested. You have to give a financial sense of the company to your employees.”
Putting a plan in motion
Getting your employees on board with your new company is step one in driving change. Once a company has the support of its employees, they begin forming ideas and plans. It is critical that those plans and ideas be implemented and put into effect throughout the company in order for them to take hold and be successful.
“Because we are a global German company, the tone is going to be set at the very top of our board,” Dearth says. “It is up to me and my management team to take that tone and that vision and where we are going and put it into terms that our employees can understand. I have senior manager and operating committee meetings frequently and talk to members of staff constantly. Anything that might appear as a problem or pushback is handled promptly and discussed. You have to use the tools you give employees. You have to be entrepreneurial, be focused, be quick, and that will allow employees to contribute what they can.”
Change in a company can create a lot of uneasiness among employees. Whether it is good or bad, change can be scary and CEOs and business owners must keep that in mind when implementing plans to move forward. Dearth says that communication and visibility are key things a CEO must do.
“No. 1 is to always communicate, communicate, communicate,” he says. “The worst thing a CEO can do in a period of change is to hibernate. You need to be out in front of the employees, be in front of stakeholders and communicate what’s going on. You have to be very visionary. If you’re bringing in change, you need to be able to make a very compelling case of what change looks like and why change is necessary. Change management also is accountability. As you change your culture and change the way you do things, every single employee is responsible for doing what they can within their responsibilities to make that happen. You will be held accountable, you will be compensated on that, and you will be disciplined on that.”
Build a brand
Another important aspect of change is developing the company brand. Never an easy task, a company’s brand is everything that a company stands for. It will tell employees, shareholders and customers what the company does, what it stands for and where it’s going in the future.
“The challenge we had globally, especially in the U.S., was how do you brand this new company?” Dearth says. “Everybody knows Bayer, but Lanxess, what’s a Lanxess? How do you spell it? How do you pronounce it? We had to spend a lot of time very early on creating a brand for not only our employees but also our customers, our communities and our shareholders. As a publicly traded company, albeit in Europe, shareholders need to know, ‘What is this company, and should I be investing in it?’
“I went out everywhere. I went to trade associations. I’m a member of the American Chemistry Council. … I wanted our local politicians and other companies here in Pittsburgh to know who Lanxess was. I gave tons of presentations and did tons of interviews, and I’m very active on nonprofit boards. I do all of that to let people know who we are.
“When you are creating a new entity, it is critical that you have a strong brand that distinguishes you from where you were and defines who you are and where you are going. To establish your brand, you need to align yourself with it and make sure that it is a consistent and very visible part of everything you do.”
Once a company is established and things are looking up, it is easy to let focus slip away. However, staying focused on goals, monitoring change and being prepared are very important to staying in a growing position.
“Maintaining momentum is very important,” Dearth says. “When we became a new company, employees were obviously excited about building a new company. How do you maintain that excitement when you’re not buying things and perhaps divesting things as we had to do? That was a challenge. The 2009 economy, that says it all right there. We lost 35 percent of our business overnight. How do you very, very quickly react to that? Not knowing how long that crisis was going to last, I had to get my management team in place, and we had to inform employees. This crisis has had a severe impact on Lanxess and things had to change. We had to change our benefits structure a little bit, and we had to take some bonuses away and a few other things, because we weren’t sure how long this was going to be.”
When companies start to grow, they can be faced with challenges at any time. It is critical that companies have programs or teams in place to handle or prepare for those challenges. Without these precautions, a company will only dig themselves into a bigger hole.
“As a chemical company, or as any company, you are constantly going to be faced with challenges and the CEO is responsible for making sure you’re prepared for crises,” Dearth says. “You have to have teams in place and make sure that everybody’s aware of the direction you’re going to fix the problem. Employees are the first thing you should look at. You need to make sure you have well-trained people in the right positions and that they are ready to take on growth and are in the right frame of mind. The CEO has control over that. If you don’t have the right people in the right places, then make changes. Make it so it works. If people aren’t on board with these things, you’re going to flounder. They need to understand why we are buying this, why we are bringing it in, what our growth strategy is and what the goal is for making it happen. You have to make sure that nobody gets too comfortable. When you work for a big company, sometimes it’s easy to get comfortable, because you’re in such a big company sometimes you’re hidden. I know pretty much everybody in this building. I know what their skill sets are. I know what their challenges are. I want to make sure that people are ready to go and focused on the right things.”
How to reach: Lanxess Corp., (800) 526-9377 or www.lanxess.us
The Dearth file
President and CEO
Born: Warren, Ohio
Education: Bachelor’s degree in chemistry, Hiram College; master’s degree in polymer science and engineering from Case Western Reserve University, Cleveland
What are traits of a good leader?
A focus on results, an ability to network, staying true to who you are. Treat people with respect and understanding. Diversify your experiences. Take a chance. Try something new. Surround yourself with great people.
What’s the most important thing a leader has to do?
Dearth on company culture: Last September, Lanxess was a corporate sponsor of a Pittsburgh Penguins preseason game, and Dearth immediately thought of his employees.
“By being a corporate sponsor, we received tickets to the game. We could have given those tickets all to customers or donated them, but I thought it would be a better idea to give each employee two tickets and they could bring their spouse, their significant other, or their kid or friend. I think 80 percent of our employees here in Pittsburgh came to the game, and we had T-shirts made for them and their guests, and we celebrated Lanxess, and we celebrated Pittsburgh, and the employees are still excited about that.
“Culture is extremely important. Fun is also important to culture. When employees come into work, yes we have work to do, yes we have our challenges, but I want them to also see a sense of fulfillment and fun that makes them feel like this is truly the place that I want to be. The CEO plays a big part of that.”
Let me get right to the point. As CEO of your company, you take the lead role in defining market differentiation. So, if that was all you hoped to gain from this article, you can move on. However, if you also want some insight into how you define market differentiation, well then, read on.
What is market differentiation?
As a specialist in brand development, it is disheartening to listen to all of the brand speak. There is much confusion in the marketplace as to what a brand is. So, let’s start with the obvious. Brand is not a logo or an advertising tagline. It is not design elements or a graphical look. According to Webster’s, a brand is a “claim of distinction.” It is important not to confuse brand with branding. A brand defines a company’s market differentiation. It is, by my definition, an undisputable evidence of distinction and something that can be proven. So while branding is what you turn over to your marketing director, brand development must be led by the CEO. A brand’s distinction is what separates it from its competitors. It’s what makes it stand out as extraordinary, different or, better yet, more valuable to the end user.
How to uncover it.
Brand development is the internal discovery of brand distinction. Much to the surprise of many, it is not discovered by talking with your customers or believing that you can become something your organization is not capable of being. Brand is the essence of what your organization already is. It is, in part, what your organization has always been. It is what you are. Remember, your company mission is to “be …,” your vision is to “become …,” and your brand is what you are and what you do differently.
The process starts with fact finding and through a series of stages, extrapolating potential truths, until you have a prioritized list of absolutely unique, provable selling points. And although defined here in a single sentence, don’t underestimate the power of brand discovery. The deeper you dig and the more thorough the analysis, the more obvious the essence of the brand and its leadership capabilities will become. And the easier it will be to assume a long-term brand leadership position going forward.
From this process, you can establish the foundation for an undisputable statement of differentiation and a leadership position you are capable of controlling. It will provide a lens through which all company strategic direction should be viewed. It is your corporate values, reputation capital, name equity and social capital, which encompasses your relational and cognitive beliefs and values. Your company brand is your market driver and, as such, must get incorporated into the company’s mission, strategies and operations. It must align with the overall business plan.
Aligning business strategy and brand strategy.
Our business strategy encompasses our customers, strategic partners, distributors, employees, marketing and sales. So, too, must our brand strategy. And when the two are aligned, they form our overall corporate strategy, infusing our organization with the momentum it needs to take over the leadership position.
What’s the importance of brand leadership? It’s the added-value, good brand-positioning offers. It allows customers to adopt your brand as their own and allows for better brand management, internal adoption and crystal clear communication. Great brands control their categories and thrive for years. They set examples for others to try to mimic.
Are you ready to assume the leadership role?
Once successfully differentiated, a company separates itself from competitors and, thus, assumes a leadership position. Once aligned with the company’s business strategy, it is positioned to succeed. If there is a downside to brand leadership, it would be living up to your company’s claim and having the guts to posture the company as a leader, not a follower. Are you ready?
Kelly Borth is CEO and chief strategy officer for Greencrest, a 20-year-old brand development and strategic marketing firm that turns market players into market leaders. Borth has received numerous honors for her business and community leadership. She serves on several local advisory boards and is one of 30 certified brand strategists in the U.S. Reach her at (614) 885-7921 or email@example.com, or for more information, visit www.greencrest.com.
The golden arches, the swoosh, the apple – Keeven White will tell you these recognizable icons are not brands. He knows that it goes much deeper than logos, taglines or even products – it comes down to consumer perceptions.
As the president and CEO of Whitespace Creative, an Akron-based integrated marketing communications agency and project resource that has averaged 25 percent annual growth over the past decade, White has made branding his business.
White spoke at the Smart Business Akron Live Luncheon at InfoCision Stadium last year about keeping your brand relevant in the face of social media, boredom and busyness.
What is a brand?
A brand is really the perceptions that are held in the mind of your customers. It’s that gut feeling they have about your company and the promise that your company puts out to them, what to expect when working with your brand or company. The brand completely lives within the minds of your customers.
How is branding different today?
The tactical landscape has changed radically. Social media has really taken the control away from you as the company and put it back in the hands of the consumers. It used to be that companies could outspend consumers to take control of that perception by putting a better image out there and saturating the market place with it. Well, now consumers have the voice and they have the ability to get that rapid distribution of their perceptions of what your brand is, and that has really changed the approach that a lot of people have to have in branding.
You still have to have all the advertising and marketing functions, but companies really need to embrace the fact that (social media is) going on because that conversation’s happening whether you’re taking part in it or not. Companies have to find a way to get involved and still influence that discussion, but they can’t do it from the bully pulpit anymore. They have to do it from controlling their products and brands and the way things are going out to the community.
What’s the biggest challenge of branding?
The biggest challenge of branding is boredom, and that comes from inside. Companies tend to get bored with their own brands way before your consumers get bored with it, and that’s from the visual presentation standpoint. They’ve seen it internally for so long, but to the consumers, it’s a small piece of what they see.
It used to be, back in the 70s, the consumer might get 500 pieces of advertising thrown at them per day. Today, it’s more like 3-6,000 thousand pieces per day, so they have tons of clutter coming at them. If you’re lucky enough to create connections with the consumer that they come to expect certain stylistic things coming out of your company and all of a sudden you change those things, you lost a connection that you had. Now you have to fight the 3 to 6,000 other impressions that are coming at them to reconnect those pieces.
What’s the biggest branding mistake leaders make?
They underestimate it. A lot of people want to do it once and just forget about it instead of making it a priority. Brands, if done right, can create long-term value and can drive premium pricing. Just because you have a logo and a couple ads that are consistent doesn’t mean that that’s a brand. You have to constantly focus on enhancing it and expanding it, and too often there’s other things that come up that take priorities, like sales are off this month. But branding has to be a priority at the top level of the company. Keep the focus on making sure that that brand is consistent. … The perceptions are always changing and you have to make sure that you’re trying to influence that.
Talk to your consumers. Find out what they think you are because it probably is going to be a lot different from who you think you are. The brand is not about what you say you are, it’s about what they say you are. You’ve got to get the consumer input and then go about delivering on things and creating more pieces that enhance that expectation.
How to reach: Whitespace Creative, (330) 762-9320 or www.whitespace-creative.com