By Jay Friedlander, College of the Atlantic (COA)
If you experience discord between the importance of sustainability to your business and the seemingly haphazard efforts to implement sustainable initiatives, you are not alone.
A recent report titled “Sustainability’s Next Frontier” from Massachusetts Institute of Technology and Boston Consulting Group found that while nearly two-thirds of business respondents felt sustainability issues were important, only 10 percent of companies were fully able to tackle them. Linking sustainability and business strategy was a key difference in whether or not companies were able to make gains from sustainable practices.
The Abundance Cycle (right) bridges the gap and makes sustainability strategic.
A case study: Creating abundance in one of the biggest industries on Earth
The auto industry gives us fertile ground to demonstrate the Abundance Cycle. For a sense of scale, if the five largest auto companies were combined their sales would be the twentieth largest economy on the planet. The industry employs millions around the globe and sells a copy of its product roughly every two seconds. For better and worse, the industry embodies the successes and failures of the industrial revolution as well as the sustainability challenges we are facing. Bankruptcies and government bailouts aside, the industry has undergone significant upheaval in the past decade. While companies large and small are redefining the auto industry, this article focuses on Zipcar.
Zipcar is at the forefront of companies using the 3p model (below). In just 14 years the company has grown exponentially from a few VW Beetles to igniting a $10 billion industry and serving over 810,000 members driving roughly 10,000 Zipcars in cities from Boston to Barcelona.
Step 1: Focus on your purpose
Your purpose is powerful.
Most companies are founded to solve a problem or provide a new solution, not to “maximize shareholder value.” As Conscious Capitalism has shown, having a reason you exist beyond making money motivates employees, draws in customers, offers a clear litmus test for management and results in superior stock performance. Articulating your purpose is key to aligning strategy and sustainability. With Zipcar, the purpose of the company is “wheels when you want them.” In other words, personal mobility when customers need it without the burden of car ownership.
Step 2: Identify your competitive strengths
Every company has its competitive strengths. Identifying these areas in the Abundance Cycle helps ensure that your sustainability efforts have the maximum impact on the 3Ps and tie directly to a company’s strategy. Inspired by car sharing in Europe, Zipcar eschewed the manufacturing focus of traditional auto companies. Instead Zipcar built a community of customers and created technology to make accessing a car as easy as getting money from an ATM. Furthermore, the wide distribution and many types of Zipcars “living” in people’s neighborhoods maximizes convenience. The Abundance Cycle below highlights Zipcar’s competitive strengths.
Step 3: Maximize your advantage using abundance tactics
While Zipcar gives people a new solution for local transportation, a casual observer may believe it is simply a rental car company. Though significant overlaps exist, in many ways Zipcar competes more directly with car ownership rather than car rental. Zipcar’s model, providing a solution for transportation using shared access, completely upended the financial equation for potential car buyers and current owners. Zipcar drastically slashed the upfront investment costs, eliminated long-term loan obligations, and removed the burden of maintenance, storage and insurance for customers.
Along with the sharing economy measures used by Zipcar, a growing suite of roughly a dozen tactics are creating new business models, reducing environmental impact and strengthening society. As you can see from the exhibit below, each of the tactics is being used in the global auto industry. Once a company has determined its competitive strengths, it can use these tactics to reimagine its enterprise. More information and examples of each tactic listed below will soon be available at the Abundance Cycle website.
Examples of tactics starting in the upper left: Vehicle to grid charging station, Relay Rides; Walmart Advanced Vehicle Experience or WAVE fuel efficient truck; London’s SkyCycle bicycle highway; the Bullet Train inspired by a hummingbird’s beak, Abu Dhabi’s pod car; Philippine’s Clean Engine, Tata’s compressed air car; Fiat’s crowdsourced car Mio; Portland Streetcar in Portland, Ore.; Tesla; Citibikes in New York City.
Step 4: Communicate with your language and implement
Once you are set to embark on a plan, align your communications with the language of your firm and your customers. Language is a serious barrier, and many sustainability efforts fail because the executive team and/or the customers don’t understand the value these initiatives create for them. When seeking to build momentum create a track record of success by starting with the easiest projects with the highest impact.
For example, in lieu of customer communications extolling Zipcars relieving congestion, enhancing the local economy or reducing greenhouse gases, Zipcar focuses on how their service improves customers’ sex life and places customers on technology’s cutting edge. These messages perfectly fit their digital savvy, educated, urban clients.
Step 5: Measure, report and repeat
As you prepare to implement, capture stories and create strategically relevant metrics that integrate business performance along with environmental and social gains. Internally, Zipcar’s technology platform gathers extensive financial, usage and other data allowing them to build a replicable model.
As with all companies, Zipcar continues to evolve, investing in peer-to-peer car sharing company Relay Rides and being acquired in 2013 by Avis for roughly $500 million. It remains to be seen if their abundant framework will spread to the rest of the $2.5 trillion automobile and transportation industries. However, judging by the explosion of innovation outlined above, entry of car manufacturers into car sharing and the growth of companies like Uber, we are at the beginning of a wave of change.
Start building abundance in your company
Follow this five-step process and download the Abundance Cycle canvas to gain a new perspective and discover opportunities for abundance.
Charts courtesy of the Abundance Cycle
Advertisements courtesy of Zipcar
Professor Jay Friedlander is the Sharpe-McNally Chair of Green and Socially Responsible Business at College of the Atlantic (COA) in Bar Harbor, Maine. COA has been repeatedly cited as a leader in sustainability and Jay’s work has been covered in Fast Company, Princeton Review, CNN, Chronicle of Higher Education, Christian Science Monitor and Money amongst other media. Jay has been a frequent presenter at conferences in the United States, as well as New Zealand, Australia, and the European Union on sustainability, enterprise and innovation. Jay can be reached at email@example.com.
About the College of the Atlantic’s Sustainable Business Program: In the sustainable business program at the College of the Atlantic, students experience how environmental and social strategies bring about positive change in the world, while also strengthening the enterprise itself. Students in the program start companies, consult with enterprises and use these strategies in ventures ranging from alternative energy and advocacy to food systems and the creative economy.