by The Udall Legacy Bus Tour: Views from the Road
Home Depot Solves a Customer Eco-Problem:
[Via HarvardBusiness.org]
Home Depot announced this week that it will collect and recycle compact fluorescent light bulbs (CFLs) in nearly 2,000 of its stores. This is great news since it eases the transition to low-energy bulbs by solving a big customer problem: what do I do with this bulb when I’m done with it? Home Depot is the not the first – IKEA and local stores have CFL recycling programs – but it brings a bigger scale and reach to solving the problem.
First, bravo. Home Depot is, in part, taking responsibility for the “end-of-life” of one of its products (in wonky terms, this is “extended producer responsibility” and it’s the law for some products in some parts of the world, such as electronics in Europe). But in the New York Times article on this program, one quote really struck me. Ron Jarvis, the company’s SVP for environmental innovation (cool title) said, “We’re trying to do the right thing…Some of the things that we do are for the community and not for the bottom line.”
The belief that doing something for the community, such as going green, is not for the bottom line usually comes from not properly valuing the entire production chain. In this case, not only is doing something for recycling good for the community, it is also good for business.
I’m always a bit frustrated at a slightly sheepish explanation for a green program that costs some money and might impact the financial performance of the company. Of course it will affect the bottom line. But I think it will help it. No doubt Mr. Jarvis meant what he said, but may be wrong, and here’s why. When are people most likely recycling a bulb? I’m going to go out on a limb and guess that it’s when they need a new one. Why wouldn’t they buy it while they’re at Home Depot recycling the old one? And what about that mop or plant or lumber they’ve been meaning to get? Solving a customer eco-problem can drive business.
Office stores do this when they recycle ink cartridges. It helps businesses to do the right thing when doing so actually helps everyone, including the companies. It will become obvious that a company’s influence and concern does not end when a product is sold. If done well, and with real purpose, this can have a tremendous effect.
From a strategy perspective, Home Depot is utilizing a critical eco-advantage mindset and approach: thinking about the value chain. Here’s how I’d recommend finding these kinds of business and green opportunities. To oversimplify…
- Think about – and measure if possible – the full value chain impact of your products. Where are the big impacts for energy use, water, toxic waste, and so on?
- Look forward in the value chain (after thinking about upstream opportunities as well). What issues do your customers face? In this case, you might hear two complaints: A) Boy are my energy bills going up; B) I have no idea what to do with my old CFL bulb.
- See if you can solve their environmental problem. Solving A is easy: sell them CFLs (and insulation and better windows and on and on). Solving problem B is harder but possible with scale: start a recycling program.
- Reap the benefits of a closer relationship with your customer who now thinks of you as a solution provider (and if you’re Home Depot, sort of apologize for it)
I think part of the apology stems from current circumstances, when the market does not fully value all the production costs of so many goods, including the cost for recycling. In a few years, this will not be necessary.
Technorati Tags: Economy, Environment
