saving w rld work

the at
What Companies and Individuals Can Do to Go Beyond Making a Profit to Making a Difference

TIM SANDERS
d o u b l e day
n e w yo r k l o nd o n to ro nto sydne y au ck l and

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Sixty days later, Scott gave a landmark speech to thousands of staffers titled 21st-Century Leadership. He admitted to a surprised audience that Wal-Mart had an image problemand a need to address it. These challenges . . . threaten all of us in the broader sense, but they also represent threats to the success of this business. He then laid out a plan to cut the companys carbon footprint, drive waste out of the supply chain, and convert to selling products that sustained the planet. The first part of the program required Wal-Marts fleet of more than 7,000 trucks to increase their fuel efficiency by 25 percent by the end of 2008. If Scotts goal is met, not only will Wal-Mart lower the amount of greenhouse gas added to the atmosphere, but it also will save $200 million per year. The second part called for a store redesign to reduce energy use by 10 percent in three years and to install renewable energy wherever feasible. Scott approved a technology budget of $500 million for each of those years to reduce greenhouse gases produced by the stores. The company also agreed to share the technology it developed with anyone, including competitors such as Costco and Home Depot. The programs third element was an initiative to slash solid waste by 20 percent by 2008, which led to a breakthrough in one of the most wasteful components of consumer products: packaging. Ninety percent of all the greenhouse gases that Wal-Mart emits are derived from its supply chain, and most of that from packaging. Scott realized that requiring Wal-Marts 60,000-plus suppliers to reduce dramatically the size of product packaging would save store space, decrease transportation costs, and lessen the amount of waste the company released into the environment. The plan calls for reusing or recycling 100 percent of the packaging flowing through WalMarts entire supply chain and stores by 2025.

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Next, Scott created an initiative to put organic products on store shelves. Traditionally grown cotton and food fosters pesticide use and groundwater pollution. Scott commanded his buyers to start the shift to organic. Finally, corporate buyers were challenged to source most foods either regionally or locally. As one of Wal-Marts produce department executives, Ron McCormick, described it, the question was: How can we reduce food miles? Scotts plans were immediately met with skepticismgroups from the Sierra Club to Wal-Mart Watch called it greenwashing, an eco-based publicity stunt. However, one environmentalist, Ashok Gupta of the Natural Resource Defense Council, did say this: It seems that Wal-Marts serious. And if they even do half of what they say theyre going to do, its going to make a huge difference for the planet. Fast-forward to May 2006: John Fleming, the chief marketing officer for Wal-Mart, announced the successful implementation of multiple organic food lines and promised that they would be priced only 10 percent higher than conventional foods. Wal-Mart was now selling more organic milk than any other store in the country. By the end of 2008, it will pass Whole Foods and Wild Oats combined in selling organic foods. Under the watchful eye of the media, Wal-Mart innovated, scrimped, and shaved energy use from its business operations. In July 2007, the company reported that its truck fleet had achieved a 15 percent jump in fuel efficiency. But the biggest story at Wal-Mart concerns a single product: the lightbulb. When Wal-Mart execs met with Steve Hamburg, an environmental studies professor at Brown University, Scott boasted about WalMarts plans; Hamburg told them that they were still missing the

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biggest opportunity to change the world. In his view, Wal-Mart should focus on changing its customers home-lighting strategies. Hamburg explained that half of all greenhouse-gas emissions in the world come from power plants, and that half of all power plants exist to keep the lights on. At the time, about 97 percent of domestic lightbulbs were incandescent. Yet the swirl-shaped compact fluorescent lightbulb, or the CFL, is 75 percent more efficient than an incandescent lightbulb, and it lasts ten to twenty times longer. Heres how Wal-Mart figured Hamburgs suggestion would yield savings: If 100 million Wal-Mart customers replaced just one traditional lightbulb with a CFL, the daily energy savings could provide a days worth of electricity for a city of 1.5 million people. Using two bulbs would be the emissions-reduction equivalent of 1.3 million fewer cars on the road every day. And, thought Wal-Mart, if these customers saved $30 over the life of the lightbulb, they would give that money back to Wal-Mart by buying lawn chairs, fencing, and other products. In October 2006, Wal-Mart held a Lightbulb Summit in Las Vegas for suppliers and vendors, with environmentalists and government officials as speakers. Wal-Mart also staged a two-day session to educate attendees about their CFL plan. After the summit, a GE executive told his Wal-Mart contact, Dont go too fast, guys. We have all these plants that produce traditional bulbs. What are we going to do about those? Wal-Marts reply: Were going there. Its up to you to decide if youre coming with us. A few months later, Scott and GEs Immelt hammered out a partnership: GE ramped up CFL production and Osram Sylvania did the same. Jim Jubb, Sylvanias vice president of consumer products, told Fast Company magazine, When Wal-Mart sets their mind to

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something this specific and this narrow, believe me, theyre going to get their way. Wal-Mart did get its way. It used its merchandising prowess to showcase the swirl bulb. In the past, a compact fluorescent lightbulb sat on the bottom shelf, causing buyers to bend over and squint to see exactly what this funny-shaped bulb was, if they noticed it at all. Now store managers moved the CFLs up into prime eye-level real estate. They also used the swirl-shaped bulbs in all the light fixtures they sold, creating interest among shoppers. Finally, they gave up precious space at the end of store aisles to post signs educating customers on how much money they would save if they made the switch. By the summer of 2007, Wal-Mart had sold almost 50 million CFLs.

These fast followers illustrate Harvard professor Henry Chesbroughs definition of the word innovation: when invention is successfully brought to market. Not only did these companies succeed in bringing their unconventional ideas to life, they did so despite being both publicly held and huge. The risks were considerable. GE has often won Fortunes Most Admired Company in America award, and for the last twenty years, Wal-Mart has sold more products than any other company in the world. So when you see companies that are among Americas most admired and feared embracing the same change, what do you have? A revolution that is too legit to quit. Fast followers help to legitimize the pioneers who preceded them. Muddled managers at most companies might have rolled their eyes when they heard about Goodnights employee perks in North Carolina, but they must have been startled when they heard that tech powerhouse Google, another fast follower, was not only acting

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