The millennial activist is now driving revenue growth in the American economy. Their quest for products and companies that are “cool with a purpose” is driving the revenue success of Apple, Google, Patagonia and Chipotle. They are also a key demographic group that is driving down the revenues of McDonald’s, Coca-Cola and your local utility. Figuring out how to successfully align with millennial activists is now the strategic challenge facing every business.
Millennial activists seek solutions
For 40 years the American economy has been driven by a boomer generation that demonstrated for peace and love during their teenage years but then, after Woodstock, “sold-out” to their personal consumption. It was the boomer generation that embraced fast food as America’s diet choice because it was tasty, fast and cheap. The boomer generation created suburbs of less energy-efficient homes, linked to their workplaces through an urban commute too often executed in full-size vehicles powered by V-8 engines. To fund their consumption, they made the working mom an economic reality along with credit card debt and unsustainably high mortgages. The unintended consequences of the boomer generation’s decisions include a national obesity and diabetes epidemic, pump/meter price pain driven by energy demand, and increased government regulations to address the human and planet health impacts from record levels of air emissions. Our economy now struggles to grow against the headwinds of costs and debt created from the boomer generation’s consumption decisions.
The millennial generation seeks solutions to the problems they have inherited from their parents. This is not a personal rejection of their parents. But it is a rejection of lifestyles built upon energy inefficiency, consumer debt and unhealthy food consumption. Led by pioneering millennial activists, the millennial generation is rejuvenating downtowns across America. They are choosing to live in more energy-efficient, in-town homes to gain the benefits of social participation, diversity and sustainability. They are adopting lifestyles built on healthy foods, walking/biking to work, sharing rather than purchasing and the adoption of digital technology to enable productivity while also reducing their environmental footprint. Influenced through millennial activists, the millennial generation is adopting a new culture built upon best practices that align value with values.
McDonald’s store sales just took another nose-dive. Global same store sales tanked more than three percent. One investment analyst entitled his analysis of McDonald’s prospective sales growth as “That’s not ketchup…it’s blood.”
The three stated reasons for McDonald’s sales declines were: competition; the company’s own missteps, including a TV story in China showing work associates mishandling chicken; and “shifting consumer tastes.” The harsh sales reality for McDonald’s and other fast food retailers is that consumers increasingly associate eating their food with being fat and unhealthy. For the millennial generation focused on being “cool with a purpose,” the eating of fast food is definitely not cool or purposeful.
Fast food schizophrenia damages brand equity
The marketing of fast food is schizophrenic. Fast food used to be well understood by consumers as being cheap, tasty and convenient. Now the same fast food restaurant chain will run simultaneous schizophrenic ads where it promotes a healthy chicken wrap in one ad and its supersized hamburger loaded with bacon and cheese in another. This marketing schizophrenia only serves to undermine the customer’s understanding of the chain’s core values. In comparison, Chipotle’s stock continues to soar to record levels based on its singular marketing focus of selling sustainably-sourced, good food.
Tesla Motors founder Elon Musk has once again demonstrated business leadership by offering a business solution to climate change. Musk’s act of leadership is to open-source his company’s invaluable intellectual property for building world-class electric cars to the global auto industry. Musk’s actions must look crazy to many business leaders and Wall Street “financial engineers,” and they must be questioning whether it violates Musk’s fiduciary obligation to shareholders. In fact, Musk has once again demonstrated real business leadership by creating a viable path to solving climate change that also holds the potential of accelerating his company’s financial success.
100 million fossil fueled vehicles per year is not sustainable
The global auto industry produces 100 million fossil fuel vehicles annually. (In comparison, the U.S. fleet of automobiles is approximately 250 million.) This is not sustainable in the face of climate change, continued sectarian wars in the Middle East, and the price of oil defined by its escalating and volatile pump price. Electric cars with their zero tailpipe emissions, especially if the electricity is supplied from zero-emissions renewable energy like solar and wind, is a solution. Musk’s vision is that the electric car can deliver exciting performance and cost-effective operations without damaging our planet or our health. Musk’s actions to remove the legal barriers to his company’s cutting-edge technology opens the door to realizing a sustainable car industry.
A demographic tumult is pushing America toward a sustainable economy. This demographic tumult is the nexus of an aging boomer generation, the emergence of the millennial generation as America’s economic powerhouse and the growing role of women. Each of these demographic groups has their own sustainability definition and focus. But with $10 trillion of combined annual buying power, these three demographic groups are collectively reshaping the American economy around sustainable best practices.
Who we are as a nation is undergoing tumultuous change. The boomer generation is downsizing past its previous role as the core of America’s economy. For example, because this generation overwhelmingly failed to save during their peak earning years, they must remain employed in often lower level job categories to maintain income levels beyond their limited social security payments. To make the most of their diminished earning potential, they are downsizing their homes, cars and expenditures.
The millennial generation is on the cusp of picking up the role once assumed by the boomer generation as one of the dominant economic forces in the world. In 2017, they will replace the boomer generation in terms of U.S. annual buying power. But unlike the boomer generation this generation is delaying the start of their families. In 1970 approximately 40 percent of American families were married couples with school-age children. Today that number is under 20 percent.
Women continue to grow in economic power. They influence 80 percent of household budgets. They have an estimated $8 trillion of annual buying power. Women are the majority in attendance and graduation from college. But women continue to confront economic and societal pressures. Approximately 40 percent of child births are to unmarried women. More than a quarter of working women who are unmarried with children have incomes below the poverty level. Women still make less money than men for comparable jobs. They continue to be underrepresented in upper management and in the boardroom.
Have you ever broken out into a smile from opening your electricity bill? I just did when I opened this month’s bill and saw I owed $4.91. At first I thought there must have been a mistake. But after much searching on my four-page bill I found a one-line item called the California Climate Credit that cut my bill down to less than $5.
This credit is the latest of California’s outside-the-box public policy ideas for addressing climate change: California is taxing climate changing pollution to fund credits on residential electric bills.
How the California Climate Credit reduces electric bills
The California Climate Credit is an idea enabled through California’s AB32 legislation that mandates a 29 percent cut in emissions below the levels the state is currently projected to produce in 2020. To achieve this scale of emissions reduction, California has adopted a free-market approach of taxing pollution called cap and trade.
Cap and trade is similar to a game of musical chairs. Each year California sets a lower threshold of permissible CO2 emissions — in effect, removing a “chair.” If you are a refinery or power plant, then you have to bid against other polluters to “sit at a chair” and continue to emit CO2. Like musical chairs, each year the number of chairs — or the amount of allowable pollution — is reduced. That means polluters either figure out how to pollute less or increase their bid price to buy a seat from the ever-shrinking inventory of available chairs.
The food industry’s revenue growth is now being driven by a consumer mega-shift from fast foods to healthy convenience food. This trend has catapulted Chipotle’s stock to more than $500 per share. It is reshaping your local 7-Eleven convenience store that now offers healthier food featuring freshly made sandwiches and fruits. And this consumer mega-shift is why the sale of the Coca-Cola Co.’s iconic sugary drinks are falling. Positive evidence on the health implications of Americans adopting a better diet is now surfacing with an encouraging report that the rate of diabetes for our youth is falling.
Natural Food Expo attendance explosion
I have been attending the Natural Food Expo West for years. It used to be a niche event held in a modest facility. The 2014 Expo was one of the most heavily attended events I have ever attended across industries (rivaling the solar industry for its attendance growth over the last few years). Healthy food vendors now fill several floors of the huge Anaheim Convention Center. The line to secure an attendance badge involved hundreds of people, stretched the length of the center’s main hall and remained that way for much of the morning. Healthy food has leaped from a marketing niche to a revenue growth engine for the food service industry.
Guaranteed lower electricity bills enabled by innovations in the financing and insuring of energy efficiency and renewable energy projects will soon be transforming the commercial real estate industry. These innovations enable zero-down financing. Project payments are tied to measured “negawatt” results. No “negawatts,” no payment made by the property owner. And most critically, performance insurance supplied by a creditworthy financial institution satisfies the risk of non-performance for the building owner and the bank that supplies project financing.
These breakthroughs hold the potential of dramatically reducing the 33 percent of operating budgets the commercial real estate industry pays to utilities. It could meaningfully reduce the commercial real estate industry’s greenhouse gas emissions that currently represent 20 percent of total U.S. emissions. The greatest potential from these innovations is their ability to fund net-zero energy buildings.
Women delivered a strong and very frank message to the business community at the Feb. 6, 2014, EPA hearing on carbon pollution standards tied to electric utility generation. Their message was that protecting the health of their loved ones is an absolute. And they see coal-fired power plants as a health threat to themselves and their families. Reinforcing their testimony was the more than 3 million messages the EPA received on the issue of carbon pollution standards.
Listen or face the business consequences
I recommend every businessperson seeking to win or keep women as customers reflect upon the following tweets shared by Moms Clean Air Force from this EPA hearing:
- “Clean air keeps our children in schools, and people on the job…increasing productivity.”
- “Clean air is vital to healthy women and healthy babies.”
- “A fossil fuel based economy is a bad business decision.”
- “We’re not buying the argument that strong, bold carbon regulations are going to hinder the economy”
This next tweet is one that should keep business leaders up at night if they source electricity from coal-fired power plants that represent the leading source of mercury pollution: “Who bears the costs of pregnant women w/ mercury in their bodies?” On a human level, what business or business leader wants to have this type of impact upon a mom and her baby? On a business level, what could the damage be to sales and profits if women hold this viewpoint toward a business based upon its purchase of electricity sourced from coal-fired power plants?
America’s commercial buildings are on the cusp of being radically redesigned into Prius-like hybrid energy centers. These buildings will create value by guaranteeing lower energy bills, plus increased worker productivity, while also delivering climate-changing environmental impacts.
Like hybrid electric cars, this is a global trend. The cost of enabling technologies is falling – driven by global economies of scale. In the U.S., the only question that impacts when “hybrid electric buildings” will be built in your town is tied to the pace of change in utility and regulatory policies that remove the legacy distinctions between energy solutions that sit “behind the meter” versus those supplied through the utility grid.
Hybrid electric building design
Today’s hybrid electric car uses more than 100 microprocessors to collect data that is feed into a smart operating system. These microprocessors integrate traditional gasoline engines with electric generators and regenerative brakes to achieve superior MPG results. The car’s microprocessors also feed information into dashboards, designed to be productivity tools that coach a driver on how their behaviors can reduce costs and emissions.
Hybrid electric buildings will mirror this design. Like hybrid cars, they will have extensive sensor systems – collecting big data that smart systems will use to optimize integrated design components – like rooftop solar, onsite batteries and load-controlling technologies – to achieve occupant comfort, electrical reliability and lower cost.
The top four business buzzwords used today define how sustainable businesses are winning customers in the 21st century. These four key buzzwords (in order) are:
These buzzwords are the building blocks upon which sustainable companies design products, operations and marketing. The following are best practices tied to these four business buzzwords that are proven to win customers:
In the six years since I published my initial research predicting a disruptive and distinctively green economic shift that I labeled the green economic revolution, the global sale of sustainable goods and services is measured in the trillions of dollars. The question is no longer whether a sustainable economy is developing. In 2014, the question is: Which companies will be the revenue growth winners?
20th century’s Commodity Economy hits revenue growth wall
The 20th century commodity economy, built upon commoditizing products and people, has hit a revenue growth wall. The information age has now raised consumer awareness to levels in which they expect products to cost less and mean more. Customers expect “everyday low prices.” Armed with unprecedented awareness through information age technologies, they also expect products to be healthy and responsibly sourced. The commodity economy’s business best practice of slashing prices to ever-lower levels by avoiding or undervaluing externality costs like human obesity and climate change is losing customers and revenues to sustainable best practices that deliver both value and values.
Ford is taking another huge leap toward filling the void created by our lack of a national energy policy with the launch of its new F-150 pickup truck. Ford is stealing the spotlight at the North American International Auto Show by engineering a full-size pickup truck with an aluminum body. This is a bet-the-company move by Ford. The F-150 is both America’s and Ford’s vehicle sales leader. It has been the U.S. truck sales leader for 37 consecutive years. Losing this bet will rank with the Edsel. Winning it will be comparable to the success of the iconic Mustang.
Easing America’s heartland into sustainability
The new F-150 delivers everything America’s heartland loves about pickup trucks. This is a full-size truck. It screams tough. Ford’s technology innovations underpin this visual impression. Its use of aluminum delivers “military grade” metal toughness. They claim their truck beds are now more dent-resistant than past steel trucks.
What an aluminum-alloy body also delivers is lighter weight. Ford claims cutting 700 pounds from last year’s F-150 without sacrificing size. Reduced vehicle weight means increased carrying and towing capacity. It also means higher fuel economy.
In 2013 corporate social responsibility moved from “do good” actions to a business best practice. The following five 2014 CSR game-changers will accelerate the links between profits, environmental responsibility and social good.
1. Climate change economics
Climate change remains the 800-pound gorilla in the room for CSR. The politics of climate change are unlikely to change in 2014. But the path to profits through deployment of proven best practices that cut costs and reduce emissions will accelerate.
Ford just launched a concept car called the C-MAX Solar Energi that is designed to recharge its batteries within 8 hours through the solar cells installed in the car’s roof. The car’s batteries, solar cells and Fresnel lens system are sized to allow the typical commuter to drive to and from work on free solar energy. If Ford is successful in commercializing this technology then the pump price pain of car ownership will be broken. It will also be a global technology breakthrough for reducing urban smog and greenhouse gas emissions tied to climate change.
Three Design Elements
The C-Max Solar Energi is the integration of solar cells, solar-concentrating Fresnel lens and smart software that allows the car to track the sun to optimize solar energy flowing to the car’s batteries. The foundational element in the car’s design is the installation of SunPower solar cells integrated into the vehicle’s roof. These solar cells deliver a higher solar capacity per square foot, can curve to the car’s roof contours and add only a few pounds of additional weight.
The second design element is a carport-like structure holding a Fresnel lens – a series of lenses that concentrate the sun’s rays – sending that solar energy onto the car’s solar cells when the vehicle is parked under the canopy. The third design step integrates the operation of the Fresnel lens canopy with the car through smart software that maintains solar energy focused upon the car’s solar cells as the sun travels through the sky. Working together these integrated design elements will, on-average, recharge the car’s batteries during an eight-hour day.
Corporate social responsibility made the leap in 2013 from being a “do good” corporate responsibility to a best practice for growing profits. During 2013 my articles on TriplePundit profiled businesses and business leaders that successfully won customers and cut costs by making a difference. In 2013, the top five CSR profit-making best practices were:
- Selling affordable, good food
- Winning customers with trustworthy behavior
- Turning trash into cash
- Gaining competitive advantage by deploying clean technologies
- Hiring women leaders
Here are some examples.