Overfished Ocean Strategy: Powering Up Innovation for a Resource-Deprived World
208 pages, Berrett-Koehler Publishers, 2014
Overfished Ocean Strategy was born out of frustration. For years I have been working with and managing different businesses—all while trying to figure out how to do it well. Naturally, the issue of sustainability—in the deepest sense of the word—kept coming up on top of the agenda.
With the rapid decline of every resource from oil to water to stable climate, and the increasing expectations from every stakeholder possible, survival has become harder than ever. In essence, our global economy has become “overfished”—we are running out of things to mine and places to trash. Yet, none of the existing models and or approaches, including ones I co-developed in the past, has seemed to produce the desired effect. Thus, I decided to put aside the tired strategy and sustainability frameworks, and focus on what companies actually do in the face of new market realities challenging their abilities to survive. The result is a book about business innovation, and the specific principles that allow companies to navigate the empty economic oceans with beauty and grace. My conclusion? It is time to go beyond sustainability, and move into the territory that holds much more excitement and promise.
The following is an excerpt from the book.
The Death of Green, or Is Your Marriage Sustainable?
Once upon a time, there was a group of change makers that, it seemed, had figured it all out. Long before the awakening of the majority, this tiny minority saw the overfishing of the ocean at a distance and decided to act on it. They took on the challenge of the disappearing economy to a new level and attacked it head-on with new products, new processes, and new services. They wrote numerous books and spoke at many conferences. They pushed for industry-wide changes and gave birth to one unified answer to the resource challenge: the “green” economy.
I used to be one of them.
“Used to” is the crucial element here. For over a decade, I worked with countless companies on a range of sustainability risks and wrote articles and books on how to turn them into opportunities. All those years, it was a real pleasure and honor to work on projects that were much more than skin deep. Like many of you, I watched the rise in importance of everything “green” in media of every kind and attended the never-ending list of events that all seemed to suggest that “green” was the new black. The companies were courageous, the projects had impact, and the discoveries were potent. Yet in the bigger scheme of things, I could barely see any change in the mind-sets, behaviors, and outputs of the majority of companies worldwide. Green—as the answer to the challenge of the overfished oceans—was not working. Increasingly, something simply did not add up.
The myth of “green” has been spreading like wild fire with the helping hand of marketing research. As far back as 2006, a National Consumers League and Fleishman-Hillard survey of US consumers reported the social responsibility of a company as being the number one determining factor of brand loyalty with 35% of respondents placing it on top, well ahead of product price and availability, each receiving a bare 20% of respondents’ votes. Three years later, Deloitte reported that while much of consumer behavior is still dictated by price, quality, and convenience, a whopping 95% of American consumers report that they were willing to “buy green,” while BBMG survey that combined a national poll of 2,000 consumers with ethnographic interviews supported the Deloitte findings: nearly seven in ten Americans (67%) agreed that “even in tough economic times, it is important to purchase products with social and environmental benefits. A year later, it became clear that concerns for the environment were not limited to the consumers from developed economies – the 2010 World Economic Forum report suggested that such concern was as strong in the emerging economies as well, “and in some areas stronger as they are often more directly affected, for example water pollution.” Sounds convincing, right?
The trouble in the research paradise started showing up when the announced willingness to pay, as economists call it, failed to realize in practice. Customers promised one thing and did another. Consumers and the public… expect sustainability as a baseline condition of business. They don’t expect to pay for it…. Green marketers have known this for a long time. Consumers will consistently tell surveys that they are willing to pay more for socially and environmentally superior products. But when they are alone in the shopping aisle…, they rarely fork out more for “green.”… It’s a problem that established companies face when they add a new sustainable product to the portfolio. It immediately prompts the question “Well if this new product’s green, what does that say about the rest of your line?”
Many corporate executives see this response as a slap in the face for taking the path toward sustainability. They are, in a way, being punished for going green.
In 2010, four professors from Villanova University and SUNY Albany discovered during the course of their research that even financial markets are willing to punish for sustainability misdoings while they balk at paying a premium for going green. The researchers found that being listed on a sustainability index doesn’t improve share prices. However, when a company is thrown out from the index, the market inflicts a strong punishment—an average 1.2 percent of share-price loss following the delisting.
Consumer and market research has consistently confirmed academic research of this kind: Trendwatching.com put the death of green as one of its 11 most important trends for 2011, speaking of the plateauing number of consumers searching for “green” products, with the mainstream starting to question the value of going green:
- While 40 percent of consumers say they are willing to purchase green products, only 4 percent of consumers actually do when given the choice. (Source: Journal of Marketing, September 2010.)
- Fifty-eight percent of global consumers think that environmentally friendly products are too expensive, while 33 percent of global consumers think that environmentally friendly products don’t work as well. (Source: GfK Roper, September 2010.)
- While the volume of green products available to US consumers increased by 73 percent between 2009 and 2010, only 5 percent of products were not found to include some “greenwashing” claims. (Source: Terrachoice, October 2010.)
Greenwashing—a practice of deceptively spinning data to create the perception of an environmentally and socially friendly company—has been a fertile ground for mistrust and aversion to green, which seemed to grow through 2010 and 2011. Data from 2012 is even more worrisome. An Advertising Age headline says it all: “As More Marketers Go Green, Fewer Consumers Willing to Pay For It.” What the magazine is referring to is the surprising results of the annual Green Gauge survey by GfK suggesting that while 93 percent of consumers reported they had personally changed their behavior to be more into conservation, they were becoming less willing to pay extra for green products.
The survey of 2,000 US consumers, fielded last summer, finds five- to 12-point drops in the percentage of consumers willing to pay more for eco-friendly cars, biodegradable plastic packaging, energy-efficient light bulbs, electricity from renewable resources, or clothing made of organic or recycled materials. Much of the fault for the consumer pushback lies with marketers for over-hyping green products and making overly aggressive claims. “You have this kind of heightened distrust,” said Diane Crispell, consulting director at GfK. “Consumers have become hypercritical. You see it with green and health claims.”
That is exactly why Volkswagen decided not to sell its Golf TDI BlueMotion in the United States. At 106 mpg, the car is a beacon of efficiency and eco-friendliness. Yet VW sees more potential in Europe, “where gas prices are double those in America, because consumers are more willing to pay up front for efficiency.” Green is dead?!
There is no question that my portrayal of “green” economy is oversimplified, generalized, and exaggerated. It is also very clear that the challenges that the vast majority of “green” products are trying to address are very real, worthy, and urgent. But if, with the help of bad marketing, “green” has become synonymous to overpriced overhyped half-baked solution, that kind of “green” deserves to die. Simply put, no market exists for such solutions. Even more so, this approach undermines consumer trust and kills any chances for any kind of green to be successful. Environmentalists, who for a long time paid attention to environmental sustainability at the expense of financial sustainability, have to learn a hard lesson: both are necessary. Gernot Wagner, Economist & Author at the Environmental Defense Fund, makes this point into a powerful plea: “Don’t stop recycling. Don’t stop buying local. But add mastering some basic economics to your to-do list. Our future will be largely determined by our ability to admit the need to end planetary socialism. That’s the most fundamental of economics lessons and one any serious environmentalist ought to heed.”
I have been working at the intersection of strategy, change management, and sustainability for nearly fifteen years. Most of the time, my job is to help companies with strategic risks and opportunities stemming from the declining resources, subsequent increasing expectation, all happening in the context of radical social-media-fueled transparency. You would think that in the course of fifteen years, this job would become easier. Yet, that is hardly the case: today, managers meet me with exact same amazing mix of horror and boredom in their eyes as they did a decade ago. And when I ask my executive audiences to imagine being invited to a meeting on their company’s sustainability strategy, the answers are consistent across the globe: such meetings are always a pain to endure.
Why must we go to amazing length to explain and convince, excite and activate business leader’s desire to work on managing ever-growing sustainability risks and opportunities? What about it makes it so hard to swallow? Is it the fatigue and intellectual allergy to one more hyped-up management trend? Or is there something deeper? These questions have been driving me crazy for a number of years – until one day at a management gathering an amazing scene made it painfully clear. So, let me set it up for you, too.
Imagine that you are having a wonderful dinner at your favorite restaurant. The night is great, the food is inspiring, the company is pure joy. On the way out, you bump into a former neighbor of yours – a great guy you shared beers and football talks with. You exchange pleasantries and share a few updates about life and work. “How’s your marriage?” you ask amidst a flowing conversation. “Sustainable” – comes the answer…
Smiling out loud now, aren’t you? So, what is this smile about?
Sustainability – as a word in English language – can hardly claim the place on the list of most energizing and positive concepts around. It is simply not a good vision to strive for – as reaching sustainability does not make for a great achievement. We do not want marriages that are only sustainable. Similarly, building companies and societies that are merely sustainable is simply not good enough. We crave for a much more powerful and captivating vision.
No wonder our managers are having trouble getting excited about it. The failure of “green” movement to inspire and capture the minds of business majority can be explained by poorly thought out products and services. Yet, even if all the troubles we explored with our eco-shoe discussion would go away, the issue of language would be here to stay. Sustainability is simply not powerful enough. Our marriages, our companies, and our communities are better than that. We need an entirely new language – one that reflects an entirely new economy emerging right before our eyes. And that language is already here – moving beyond “green” into a much more alluring territory.