Green to Gold

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Green to Gold

How smart companies use environmental strategy to innovate, create value, and build competitive advantage (2006,2009)
By Daniel C.Esty and Andrew S.Winston

I feel that this is quite a comprehensive reading, as it highlight the issue of environmental factor for businesses. If you think you only need to take care of your own business at home, you are wrong. The world is interconnected and consumers think it is also your responsibility to know about your suppliers.

In the weeks before Christmas 2001, Sony’s entire European shipment of PlayStation game systems was blocked by the Dutch government as it contain a small, but legally unacceptable amount of toxic element cadmium in the cables of the game controls. Sony had to rush to replace the tainted wires.

Environmental missteps can create public relations nightmares, destroy markets and careers, and knock billions off the value of a company. Even the best companies can be surprised by environmental issues. The environment is not a fringe issue – it can cost businesses real money. Smart companies seize competitive advantage through strategic management of environmental challenges.

Environmental leaders see their businesses through an environmental lens, finding opportunities to cut costs, reduce risk, drive revenues, and enhance intangible value. They build deeper connections with customers, employees, and other stakeholders. Their strategies reveal a new kind of sustained competitive advantage that we called Eco-Advantage. There is a set of strategy called “Green to Gold Plays” in which according to the book that smart companies uses to convert environmental and sustainability thinking into profit.

The Green-to Gold Plays

Cost
1.¬† Eco-efficiency. Improve resource productivity example Chipmaker AMD modified a “wet processing” tool to use fewer chemicals, and ironically, less water to clean silicon wafters. The process once used 18 gallons of water per minute, and now it’s fewer than 6.

2. Eco- expense reduction. Cut environmental costs and regulatory burden. Using certain chemicals or going above an emissions threshold can trigger additional requirements.

 

3. Value chain eco-efficiency. Lower costs upstream and downstream. Many companies have found ways to lower value chain costs by cutting costs by cutting the environmental and financial expenses of product distribution example fill your trucks as full as possible. For example, Dell has upped its average truckload from 18,000 to 22,000 pounds and worked with UPS to optimize delivery strategies.  By using smart packing, it saves up to 15% on fuel per item Рa striking Eco-Advantage.

 

 

Risk
4. Eco-risk control. Manage environmentally driven business risk. Study environmental and social trends to identify potential dangers to the business.

 

Revenues

5. Eco-design. Meet customer environmental needs example Tiny Seahorse Power Company in Massachusetts make a new kind of trash can called BigBelly. This solar-powered high-tech container automatically compresses the garbage, reducing the number of trips trucks have to make for pickup.

6. Eco-sales and marketing. Build product position and customer loyalty on green attributes. Marketing the green aspects of a product can be a tough proposition. Most successful green marketing starts with traditional selling points – price, quality or performance – and only then mentions environmental attributes. Green should not be the first button to press.

 

7. Eco-defined new market space. Promote value innovation and develop breakthrough products. Example Toyota Prius. Customers not only pay a price premium for the Prius, they often wait months to buy it.

 

Intangibles
8. Intangible value. Build corporation reputation and trusted brands. Positioning a brand as environmentally friendly only works if it’s true.

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