The "What if?" exercise (Episode Three)

So far we’ve seen what scenario thinking is about, and when it is suitable to apply this kind of technique. Last time I promised to go over the steps to be followed when building scenarios, so let’s get to it! The figure below shows the complete cycle… in this post I’ll present the first three steps.

Step 1 Focus on the main issue

If you look at the cycle represented in the figure, the first step would be choosing the topics we want to explore by using scenarios. Remember we’ll be getting into this process when addressing major decisions, so the situation to analyze will be probably something like how the future of a company is going to be fifteen years from now, or how a certain market will evolve over the next decade or so.

Say you’re an executive running a retail company operating in markets that are already developed. Of course you can’t ignore the fact that more and more people are choosing to shop online instead of stores… so you’ll probably want to find out what would be the ideal virtual-VS-traditional-store mix in the future.

If your company belongs to the energy sector, you’ll want to know what the future will look like in terms of the exploitation of different sources. What kind of renewable energies would you invest in? Is the region your company operates in going to switch to alterative energies, or will it stick to oil and nuclear? Are biofuels really going to play a significant part in the story? I find this example especially illustrative, because investments in capital intensive industries are really like the long term investments… it’s not only about R&D: you also need special equipment for obtaining and processing the products, a lot of trained people, a strong infrastructure for distribution, and so on and so forth.

What if you were in the service industry… say you’re a logistics company. It’s pretty clear that paperless processes are becoming more and more common, which is in theory bad news for your business. But it’s also true -forget about the crisis for a minute- that global trade has been growing substantially so, bingo! You have a major opportunity if you manage to offer a good overseas service. Since I’ll be developing the logistics case later in this series, let’s leave this here for now.

One last example: what if instead of being part of a company you were a government official thinking about the future position of your country in the world market? You probably know the world population is growing, and that people in some emerging countries are starting to have better life standards. Why not satisfy part of these new needs by producing food, for example?

I got all excited and this is only the beginning, but the thing is: whoever you are and regardless of the field you operate in, you’ll want to explore the possible shapes the future could take, and start to visualize the tendencies that are developing in the present.

Step 2 Identify the uncertainties

We already accepted that things are going to change ten or twenty years from now. If you’re lucky enough, some variables will be somehow constant or at least predictable, but some others definitely wont.

Going back to the retail-exec case, it’s undeniable that people are getting used to shopping online… perhaps most of your target consumers prefer this option nowadays. But is this tendency going to be sustainable? What is your competition going to do, have both stores and a website, or just one of them? Maybe a new competitor is going to show up, with a fancy online store and no “real” operations apart from warehousing and distribution. The latter would mean no cost for maintaining stores and paying employees working in them, which could translate into costs tat are lower than yours, and therefore that this new actor could sell cheaper products that would and steal your clients, or have a better profit margin.

So the outcome of this step would be a list of the variables that are significant for the future of your business, and whose behavior is particularly hard to predict.

Step 3 Investigate the driving forces

So far we have the tendencies and the uncertainties... but what are the underlying motives that could lead your stakeholders in one direction or another?

For instance, what makes people buy books in Amazon, or get their clothes online instead of going to a shopping mall? As an example, I have a friend living in Australia that always gets t-shirts from Threadless, a website that sells pretty unique designs. He told me that he prefers this option instead of going to regular stores because everyone in Australia has quite similar clothes and it’s hard to stand out (he’s kind of a design freak… I say it in a good way, Jxe :P), and buying online is cheaper than traditional shopping, even after paying the shipping from the US.

This step is crucial in the process: you basically have to sit down and determine why your customers, your suppliers, the government, and your competition would behave like this or like that; what they do today, and what they are going to do in the future, and why. Of course, the different combinations of these tendencies will take the shape of the scenarios.

How should you do this? I’d suggest trying to get as many different relevant voices as you possibly can, and engage these actors into workshops, focus groups or any other sort of meeting you can think of.

Having fun so far? Great, because we have five more steps ahead, and some examples of real usage of this technique... leave your comments and be back soon! :)

The "What if?" exercise (Episode Two)

Back in the first episode of this series I gave a very general idea of what the scenario thinking technique implied. If we go to a more detailed explanation, this method for planning is a structured process of thinking and anticipating the future, but assuming that the future is not predictable, determinable, or even able to be influenced in a major way. Instead, the objective is to identify the underlying driving forces that make systems evolve, in order to set the path for proper decisions. The outcome of the process is a number of narrative descriptions (the famous scenarios!) depicting possible ways the future could look like for some particular topic (or product, or market, or country, and many other ors); and based on these pictures of the possible future, a set of strategies to be implemented.

In simpler words, companies working this way would have a number of action plans that would help them act faster than those who don’t use this tool, no matter how the future unfolds. So far it sounds amazing, almost like magic: it’s like “Ok, our company can’t control the future, but no matter what happens we’ll be ready to be on the battlefield and perform fantastically well”. The bad news: first of all, building scenarios is not exactly simple (it’s not rocket science either, but it requires a lot of effort); and second of all, as any other tool, it’s not useful for just any case.

I found an interesting article on strategic planning in the McKinsey Quarterly written by Hugh Courtney, from where I borrowed the figure below:

What this figure represents are different levels of uncertainty a company -or any other organization or group of organizations: a particular sector or market, a government, a number of countries- can be immerse into when facing a certain situation. In fact, whoever we’re speaking about will be probably dealing with all four levels of uncertainty at the same time in different aspects of their operations.

Let’s take a company from the consumer goods sector as an example. If they have to buy copy machines for a new office, they can just study their consumption in the past years and decide based on those numbers and some estimations on whether the number of copies has been growing or reducing over the recent times. It wouldn’t make much sense to gather a group of specialists to interpret what are the underlying driving forces and making up descriptions and action plans.

We could assume that this same company is doing good in its market (that’s why they opened the new office): they have launched a product some months ago that the consumers are enthusiastic about, and their Marketing department has conducted some studies that indicate that in the near future the sales will keep on growing. In this situation, the company could be facing a crossroad: for working at a larger scale, they could purchase new equipment, work more hours, or outsource part of the production. This situation is clearly more complex than the one regarding the copy machines; still, a good decision tree seasoned with the opinions of some of the executives would probably be enough.

But now let’s say that this company is looking further than just the near future, and that they perceive some trends in the market. Like people wanting to consume healthier food, or expecting more from the products but paying the same price, or paying less for what the company offers today. These matters are way more complex, and probably less tangible or countable. What would be better, to launch a healthier line of products, or to modify the existing ones? To start operating in less developed markets, where the consumers wouldn’t expect so much from the products? And last but not least, what would the competitors do if the company decided to implement any of those strategies? (What’s worse, they could make the first move.)

I’m pretty sure you get the picture by now: scenarios are more appropriate for decisions belonging to levels 3 and 4 of the figure. Fantastic, now that we now when to and when not to use this technique, the next question is how to do it… find out next time!

The "What if?" exercise (Episode One)

This new series of posts will be based on some really interesting things I learned at one of the workshops during the WBD, “Future of Logistics 2025: Global Scenarios”… and as an original way of starting, I have an acknowledgement, a disclaimer and a confession.

Acknowledgement I’d like to specially thank Dr. Heiko A. von der Gracth, who was in charge of the workshop and kindly sent me a lot of material to share with you.
Disclaimer If you started reading this and you’re not very much into logistics don’t worry, because most of the things I’ll be writing about can be perfectly adapted to any other industry.
Confession I’m not that good for finance and economic forecasts, which is one of the main reasons why I love so much the techniques I’m about to share with you.

All that being said, let’s get started! Have you by any chance heard about uncertainty in these last months? I bet you did, and a lot. Leaving aside the reasons why the current financial crisis started and what are the best ways of fixing things, I prefer to concentrate on the most tangible aspects. Like, for example, the huge number of people losing their jobs, and the also huge number of people that are afraid of losing their source of income in the near future. For instance, we cannot tell until when companies will keep firing their employees; what are those people going to do from now on; until when they will prefer to save their money instead of consuming or traveling or investing or whatever. Let’s put it in a graphic way (since I’m terrible at drawing, I borrowed some of the images from the awesome people from The Value Web):

Some things are pretty obvious: although I depicted it in a very simplistic way, the point is that there’s the feeling that we’re in a descending spiral that needs to be broken as soon as possible. But let’s face it, it is very difficult to make decisions when you don’t have any clue about how the picture is going to look in the future. On the other hand, sitting and watching what happens next -and deciding in consequence- is not an option.

How companies cope with this sort uncertainty is a huge deal. The most sophisticated forecasts have been proved wrong or, at least, many companies have come to learn that making decisions based only in forecasts is not enough. We also have decision trees, but they can also be too structured and lead to partial approaches and therefore, to decisions that don't take some important factors into consideration.

So what if we could combine the “safety” feeling that numbers -undeniably- provide, along with the methodic, logical approach to problems we can follow when we develop decision trees, and add some “softer” factors, like social tendencies, expert opinions or human perceptions? That is an informal way of describing the scenario thinking, a technique that according to well renowned journals is absolutely in these days. Want to learn some more? Come back soon for the next posts!

Something old, something new, something borrowed... something green!

Today I started a seminar on Social Responsibility at my university... funny fact: the woman that is presenting the seminar opened the class with the video I shared with you in my Limits to Growth post, which was one of the very first ones here at The Integrated Challenge.

Anyway, we discussed some basic concepts like which areas are normally taken into consideration for CSR practices, and of course the environmental impact of companies was one of the mentioned. But companies are not the only actors in society: we as individuals and consumers also influence the changes in the environment depending on our habits. So she told us about a website that calculates our impact on the envirnonment based on the way we live, and that divides the famous footprint into four categories:

• Carbon emissions, which is related to the means of transport we use, how energy efficient the appliances at our houses are, and our energy-saving habits.
• Food, which basically has to do with how local the food we buy is (besides having a positive social impact, consuming goods that are grown or produced near your community eliminates transport), with the amount of packaging involved... and believe it or not, with how often we eat meat. The exact number depends on the source, but between 20% and 25% of greenhouse gas emissions is associated with the cows that become steaks!
• Goods and services, covering usage and recycling habits of the stuff we're surrounded by.
• Housing, for aspects like thermal insulation, building and furniture materials, eco-friendlyness of cleaning products, and water saving devices.

According to your answers, the quiz estimates the amount of land and ocean area required to sustain your consumption patterns and absorb your wastes on an annual basis. After giving the results, the site provides some tips for reducing the impact for all four categories. I checked it out and decided to "borrow" the URL and share it with you; if you have some time you can take the quiz as well and tell the rest of us about your results or thoughts regarding the questions asked, the info presented or any related issue. You can find it by going to

http://www.myfootprint.org/

I hope you learn and have fun!

Inverted commas

To all of the new people joining the blog: welcome! And to the ones that have been around before: welcome again, and thanks for coming back! I finally got to attend the 12th World Bunsiness Dialogue and let me tell you that it was amazing, way better than I could have ever imagined! I met wonderful people there, had the chance to exchange ideas and experiences and had tons and tons of fun! (Are there too many exclamation marks in this first paragraph? Can you tell how excited I still am?)

Anyway, I thought about keeping the blog alive for a while after the conference, specially for sharing some things we discussed there, and for linking these topics with some new articles I'm reading... and then I thought that a nice way of starting this new phase could be by presenting some quotes I remember from the Dialogue, and that impressed me for different reasons... let's get started!

"When the storm comes some build walls, the others build windmills."

Professor Dr. Herrman Simon shared this thought with us during his presentation on Quick Solutions for Beating the Crisis and everyone just loved it! I think I'll write at least one post about his keynote because I agreed to some of the things he said, was not so sure about others... but most of all he made me think, which for me is the whole point :)

"The Stone Age did not end due to a lack of stones, and the Oil Age will not end due to lack of oil."

I'm almost sure this was said by Christian Rast, the moderator for the Resources panel, although he's not the author. I found it very very interesting, even if I think that the shortage of oil will definietely accelerate the shift towards other technologies. Of course we can argue if there is an oil shortage in the first place, I've heard all sorts of opinions about this.

"Bill Gates wanted to go into the software for automotive companies segment... then he found out the required failure percentage for the industry!"

I don't remember the exact words, but Franz Fehrenbach -Chairman of the Board of Management at Bosch- made me laugh outloud with that story!

"Nothing is more powerful than an idea whose time has come."

This quote from Victor Hugo is my personal favorite from the wonderful week in Cologne, and it was written on one of the walls at the DHL Innovation Center.

Now it's up to you: do you remember any particular quote that you'd like to share? Don't be shy and post a comment!

Vox Populi (Final Episode)

Earlier in this series I told you about some benefits related to implementing Open Innovation, now let’s go to the challenges this represents. First important thing to consider: not all kinds of innovation can be obtained from outside of the company’s walls. According to Judy Estrin -veteran Silicon Valley executive and author of Closing the Innovation Gap: Reigniting the Spark of Creativity in a Global Economy-, some of the innovation required for designing a company’s next generation of products cannot be learnt from what customers claim, simply because they may not know what they will need in five years.

But let’s suppose that Open Collaboration(*) is suitable for a certain company, then what issues should be thought-out? A very important decision is what people to approach. Complex R&D problems like the ones DuPont may face, or delicate researches like the ones conducted in the pharmaceutical industry, demand for expert collaboration. When it comes to picking customers, a good idea can be to invite users that are active on blogs or online forums that rate the product, whether they are happy with it or not happy at all. The software provider company TechSmith chose this path, asking users what features they love and/or hate about their products, and what aspects can be improved.

Another significant point is to understand that customers participating in this kind of initiatives are not employees, and therefore managers cannot assume they will be always eager to devote their time to evaluating products. However, companies can offer a number of incentives that help attracting and retaining this outside resources; these incentives might go from a “material level” -by giving them free samples to try, or cash prizes for the winners of design contests-, to a more “emotional level” -related to the possibility of being part of a community, or even an almost-insider at a company customers love-. In cases in which there are intellectual property issues involved there are signed agreements, so the behavior of the experts is more predictable. Nevertheless, giving royalties to the developers seems to be a reasonable policy.

Finally, the participatory platforms must be designed in such a way that the companies can get the answers they want. By this I don’t mean that all feedback should be positive, but that questions should be asked in such a way that the comments are relevant for the goal to be achieved. The people who participate may really like the company or the product, but the way they express it may be very different from the language used by the employees. Involving members of the company in order to moderate the discussions or to clarify any questions can be a smart move.

Although it’s still too early to draw conclusions about whether or not these new practices will grow over time, some numbers make them seem promising. Some studies suggest that 25% of Western Europe’s Internet users now post comments and reviews about consumer products; user-generated media sites are growing in numbers of visitors and participants by 100% a year, while the increases for traditional sites is between 20% and 30%(**).

(*) Here I’m using Open Collaboration and Open Innovation as synonyms because I’ve found both expressions. If the people a company is addressing in these initiatives are only customers, another possible expression is Crowdsourcing.

(**) These numbers can be a little tricky: if you’re familiar with the curve that represents the life cycle of any product, service or technology, then you know that once the Introduction stage is over, Growth comes… these user-generated sites are probably going through this phase, and the real question that should be asked is how long it will take for them to reach Maturity (where traditional sites seem to be now). And if you’re not familiar with this lifecycle model you can go to the link below to learn more!

http://www.12manage.com/methods_product_life_cycle.html

Vox Populi (Episode Two)

In the first episode of this new thread I introduced you to Open Innovation, a practice that is rather new and consists of involving outsiders into the act of designing new products, or improving existing goods. Now, why would companies listen to what a bunch of people that is not part of the workforce have to say?

The most immediate reason is, perhaps, the fact that a company’s pool of talents can be expanded without enlarging the size of the workforce. In the last few years, consumers have been connecting through blogs and online forums, sharing their points of view on products’ features, rating them, telling about their experiences when using the products, and even recommending solutions they implemented when they found problems. So why not take advantage of all that energy and orient it towards the creation of new products or the improvement of a brand portfolio? It can be faster and cheaper than conducting focus groups or traditional polls; plus, blogs and similar applications can be used for creating expectation for upcoming launches.

This same phenomenon -groups of customers speaking their minds online- can be translated into another benefit: demand forecast. LEGO invited customers to create new models and then financially rewarded the people whose ideas proved to be marketable. Fluevog and Threadless are websites where members can submit shoes and T-shirt designs respectively, and the ones that get the largest number of votes are manufactured. Some consumer goods brands have designed marketing campaigns where customers could choose among possible flavors or scents for new products, and only the most popular ones made it to the market.

Customers are not the only crowd a company can turn to: in fact, professional and scientific online communities can be more suitable for certain businesses. The pharmaceutical industry is strictly regulated, and the researches that are carried out for the development of new drugs usually take several years. According to a McKinsey study on open innovation, scientists from five universities have accepted a sharing agreement that will let the Myelin Repair Foundation (MRF) retain the rights to license discoveries to pharmaceutical companies. This novel medical-research model is based on co-creation among a closed group of researchers who aim to develop a drug that will treat multiple sclerosis; and MRF hopes to complete its work within five years… 75% faster than the time required by current research models. DuPont, the global chemicals and health care company, is also taking advantage of online networks of researchers and technical experts, awarding cash prizes to people who can provide solutions for R&D problems.

So far, Open Innovation seems to be a fantastic thing: it can reduce the time that is needed to develop new solutions, reduce the uncertainty of demand and bring some new ideas to the table. Of course, it’s not as easy as it sounds to implement an Open Innovation program, but you can find some real-life cases on how and when to apply this practice… in the next post :)

Vox Populi (Episode One)

A couple of weeks ago I created tags for the blog, just in case someone is more in the mood for reading about one of the topics than about the others. Once I divided the posts into the different categories, I discovered that Resources and Customer Revolution have been in the spot for quite a long while, so this new series is on Innovation. Let’s get to it, as usual, with a question: have you ever wondered what do companies go through before they launch a new product? I’m not only talking about manufacturing, I’m going even backwards, to the very beginning of the product’s life: its design.

The traditional way of designing a new product is basically composed by four stages. First, the concept of the product is developed: what it would be useful for, who would buy it, what its basic architecture would be like. Once the outcomes of these issues are approved, it's time for planning: a market has to be created, a small-scale test has to be conducted, and investing and financing plans have to be developed. The third phase corresponds to the detailed engineering of the product itself and of the technology that will be used; ultimately, after testing the prototypes, the product is launched and the production volume starts to grow so as to achieve the commercial goals.

This process proved to be highly inefficient in some cases: a lot of time is wasted because a failure in one of the latest stages means that all the tasks that have been already completed need to be redone. This is why some companies started to implement the concurrent engineering approach: instead of working in series, the teams involved in designing the different features of the product -target market, general and detailed design, manufacturing infrastructure- work simultaneously and share the results of their tasks in real time. This way, any possible problems appear in the earlier stages of the process and are easier (and cheaper) to solve.

Some companies are going one step further by creating networks with suppliers, independent specialists and even customers. Now, if outsourcing some of a company’s processes to a specialized third-party is already complicated, why would anyone involve people that are not necessarily experts? It’s pretty obvious for cases like Wikipedia, TripAdvisor or YouTube, where most of the content is created by outsiders. But for companies in other industries -fashion, transportation, IT solutions- there are also a number of reasons… I hope you read the next posts to find out about them!

It takes two to tango (Final Episode)

I could use this last episode for making some comments about the benefits companies could potentially obtain from producing and selling eco-friendly products. I’ve mentioned one in the Starbucks case: raising the bar for competitors (or creating barriers… po-tay-to, po-tah-toe). Another one is getting into markets that are niches today, but are expected to grow strongly in the upcoming years... I’m not only talking about sales here, but also about shaping a new market so that the rules set by the first players are the ones the companies that enter later have to play by.

I could also speak about how eventually all of us will have to consume products that are not harmful for the planet because, breaking news, the Earth happens to be finite.

But instead, I came up with a list of What-To’s and How-To’s that companies could implement (or have already) in order to stimulate the consumption of eco-friendly products, and that are the product of all the reading and thinking and writing of these posts.

Knowledge is power There’s a curious thing about the awareness stage for green products: companies can educate consumers while getting into their minds as a possible choice. Sometimes the limits between awareness and interest are a little blurry, and a company will be saying “Hi, I have a product that could be suitable for you” and “My product has these benefits to offer” at the same time. So let’s say one of the benefits is that you can save energy by using the product, why is that relevant? Because you’ll save in your electricity bill, ok, but also because we all have to try to save energy and be more conscious about the usage of natural resources.

By now you should know I love to give examples: Wal-Mart and GE partnered for promoting the use of efficient light bulbs. Wal-Mart put the bulbs in the most desirable position in retailing -the shelves at eye level-, adding an educational display from GE so that the consumers could learn more about the product and about energy saving. What we have here is the best kind of availability you can get at a supermarket store, making the bulbs appear as an attractive option and informing the consumers about an important issue. Remember when in Association of ideas I spoke about the new role that companies have in societies? Educating consumers is part of it.

Engage, entertain, give a role to people This is a little Marketing 101, but it’s always more effective to send a message when you say things that are relevant and understandable for your target market. Maybe it was not so difficult for Timberland, but what if you need to address a customer that can’t easily see the link between your product and the impacts it causes in the environment? Well, there’s a number of things a company can do.

You can shape the message so that it’s entertaining. I have two videos that are excellent examples of this: one is from Epuron, a German company that supports large-scale renewable energy projects. Check it out here, I think it’s really sweet: http://www.youtube.com/watch?v=cQbl1c63Ofo. The other one is for inviting people to walk instead of riding a car, an initiative proposed by Do the Green Thing: http://www.dothegreenthing.com/actions/walk_the_walk.

You can also pick a messenger that is attractive to your audience; in the case of the Surf Excel add, the people from Unilever chose a famous Indian actress. Or you can show people how to be part of a change towards green, like Ariel’s Turn to 30 campaign.

The more, the merrier Even if a company decides to operate in a sustainable way and actually does, polls show that consumers trust more in nonprofits and environmental groups. It’s a respectable perspective, since reading “We’re sustainable” in a company’s website guarantees nothing. So why not inviting a competent third party? They add credibility to the company’s operations; plus, they have been in the “green business” for a while, so companies can learn from their expertise… Starbucks had a successful experience partnering with Conservation International. I know that it is not related to the environment, but Unicef joint efforts with a lot of companies, P&G and Unilever are two that I mentioned in this series.

Timberland did not partner with a nonprofit -at least that I know of-, but created a group called Earthkeepers, just like their eco-friendly line of shoes. This invites people to be part of their actions and gives a role to consumers, like I said in the previous bullet.

It’s not rocket science! It is absolutely true that consumers are more informed that they used to be, and that gives them the possibility of making wiser choices when they have to buy something. But this doesn’t mean that people should read an encyclopedia before buying every item on their grocery list! There are some products that have a clear sign on their packaging showing they are less harmful for the environment. A common example in the US is the Energy Star sticker that efficient appliances have, showing that the Environmental Protection Agency certifies they are true energy savers. I think this is great, because consumers shouldn’t need to solve differential equations to tell whether or not a light bulb or a heater will make them save electricity.

On the other hand, while writing these posts I checked the websites of some products we use every day I found a lot of environmental and social programs the companies that produce them have. Unilever is changing the fridges where their ice creams are displayed in Europe in order to cut climate change, reducing the use of energy and the waste of water in one of its frozen food plants in Italy, and implementing several packaging recycling programs in Brazil, among other examples. I thought it is too bad you don’t get to know these things until you visit their sites… Of course over claiming how fantastic your company is is not exactly a good idea, but a little information doesn’t hurt!

The good news for all of us, the younger generation: we have a lot of work ahead of us! :)

It takes two to tango (Episode Six)

Let’s say that a certain eco-friendly product went through all the first stages: it made it to the possible-alternatives list in the consumers’ minds, its features were relevant and interesting enough to generate desire. A number of people are willing to buy it (yay!)… what happens next? Well, there’s a huge chance it will be more expensive than the traditional version, and price does matter when we make a purchase decision.

There are two main reasons for the higher prices to happen. The first one is related to how young green products are if we compare them to their old equivalents: whenever a new service/product/knowledge/technology sees the light, it will be more expensive than the existent options. Maybe it’s because of lack of scale, maybe it’s because it’s exclusive and niche-oriented, but the point is that it takes a while for its price to lower and to make the good comparable to other possible choices.

The second reason could be simply stated as “It’s expensive to be sustainable”. Companies that are really committed to living up to sustainability standards have to invest a lot of money and time supervising their own operations, their suppliers’ and their commercial channels’. This might involve:

• Making sure their suppliers and distributors don’t have underage employees.
• Buying raw materials that are certified by competent authorities that ensure there’s not overuse of a certain resource.
• Modifying their production processes in order to reduce the amount of energy used, reduce their emissions, and treat effluents before discharging them.
• Redesigning distribution routes in order to reduce carbon emissions from the trucks.

... and so on and so forth. So it’s not that crazy that part of that cost is eventually transferred to the final price. There are people willing to pay a premium for this, but let’s face it, not all of us would. However, price is sometimes tricky and can include a benefit that can't be seen at first sight. Energy efficient lamps last way longer than the traditional ones, and help cutting electricity bill amounts down. This last feature is also valid for other appliances, such as efficient washers and TVs.

There is one more potential barrier: what if you go to the store looking for a particular item and you don’t find it? Chances are you’ll feel disappointed and buy a substitute, and perhaps won’t try to find the green option in the future. That turns you into a huge lost for the company, because you went through the whole purchasing process, and the lack of availability ruins it at the very end of it. It could get worse if you decide to tell other people what happened to you and they also feel disinclined to give green a chance. Bottom line: availability is just as important for eco-friendly options as for any other kind of product.

With this sixth episode we’ve gone through the whole purchasing or selling process, depending on where you decide to stand. I hope you enjoyed the ride so far, and that you come back for some final comments!

It takes two to tango (Episode Five)

In the last post I told you that making green products attractive is particularly difficult because people don’t think their quality and durability reach the “good enough” standards, and because they don’t always believe products are green at all. We have an explosive combo for this barrier: bad perceptions and lack of trust.

Apparently, consumers are more likely to trust environmental groups and scientists than the government, the media or the companies when it comes to these issues. Sadly, they are not so wrong because some companies haven’t been completely honest claiming their products were eco-friendly. Some “don’t do it at home” examples:

• Labeling a product as eco-friendly because it doesn’t contain a substance that is forbidden. The classic example is the one about the CFCs in aerosol cans that damaged the ozone layer… when CFCs are not used for this purpose since 1996!
• Making fallacious comparisons like stating that a certain SUV is greener than its competition because it makes more distance with the same amount of gas when, hello, SUVs are not exactly what we could call fuel efficient.
• Using complicated, pseudo-scientific terms that regular consumers cannot understand, and lead them to the conclusion that purchasing the product is not harmful for the environment.
• Giving figures that seem to be good for, let’s say, emission levels, but mean nothing at all if you don’t provide the legal standards as well. There’s this motto engineers use all the time, “You can’t improve what you can’t measure”… well, neither you can tell whether something is wrong or right if you don’t know how it should be in the first place.

Don’t panic, I have good examples too! You probably know Timberland, a brand that sells shoes for outdoor activities. A couple of years ago they started sticking a label on the boxes explaining the impact each pair produced, dividing it into three categories(*):

• Manufacturing, detailing where the pair was produced (factory and country).
• Environmental impact, explaining the amount of energy that was used for the production of the shoes, and what percentage of that energy was renewable.
• Community impact, showing the percentage of factories evaluated by Timberland against its Code of Conduct, and the number of hours employees volunteered in the previous year.

Remember this post and the previous one were about emphasizing products features for raising interest and creating desire? Well, Timberland kind of had an advantage because its target market is mainly composed by people who love to be out and enjoy nature, and therefore reducing environmental damage is relevant to them. They saw they could take advantage of that and went for it, so claps to them! And by the way, guess the word they actually used instead of impact: footprint. Accurate, yet a bit obvious…

(*) You can learn more about this by going to their site (http://www.timberland.com/earthkeepers/index.jsp)

It takes two to tango (Episode Four)

While I was writing these posts I started to pay attention to what points companies focus on here in Argentina when trying to raise interest in their products. Of course it depends on what is being sold, but some general concepts I thought of are:

For hygiene products -both personal and for the house-, performance. Dishwashing liquid will eliminate grease and perhaps take care of your hands. Shampoo will leave your hair clean and make it grow stronger, shine more, look frizz-free, or any other possible hair issue you want to solve. Cleaners for the home will remove all sorts of stains and sometimes kill bacteria. Detergent for washing clothes will leave them clean without ruining the colors.

For cars, performance, lifestyle and status(*). The general idea is to show how the vehicle’s features will make it fit into your familiar/adventurous/spontaneous/fast-lane/(fill-in-the-blanks) way of living.

For food and beverages… well, it depends. I’d say it’s mostly about showing that consuming the product is equivalent to adopting a way of living, whether it is you choose to be healthy or happy and positive or super cool or very exclusive and with a busy social life. Occasionally the product has an additional benefit -besides satisfying the specific need-, like helping you save money, or making your life easier because you don’t need to put too much effort into, let’s say, cooking.

For technology gadgets… it depends again. Some focus on the real-life feeling they provide, like flat screens. Some of the benefits are all about lifestyle, about belonging to an exclusive group... yes, I’m thinking about a certain brand that has become very popular because of its mp3 players and laptops and cell phones. Speaking of which, cell phones have the obvious benefit of making people reachable virtually 24-7; and then all sorts of additional features like cameras and music players and games. One more, digital cameras: what matters is the quality of the image and the versatility of modes (for different lighting conditions, for capturing motion)… a “more emotional” benefit could be the possibility of having captions of situations your life.

In the first of these posts I said consumers show concern about the impact the products they purchase have on the environment… then why haven’t I mentioned companies that emphasize eco-friendly features in their products? (I’m aware there are some, but I’m speaking in general terms). Because what people put first are performance, reliability and durability… I would add price because I live in a country where it happens to be a major purchase driver.

Let’s go a bit further… why is this the set of drivers? I would say mainly because old habits die hard: these are the things that have been important to people for decades, and purchase behaviors take a (long?) while to change. According to some articles I read, there’s another reason: the first green products that ever existed were not as good as the traditional ones. The first energy saving lamps didn’t fit properly into most normal appliances, took a while to turn on and did not provide enough light. The first cars that didn’t use gas had less power than the traditional ones.

We’re dealing with a very delicate issue here, consumer perception, which is extremely hard to change. And it gets even worse: people don’t only doubt the quality of green products, but how eco-friendly they actually are. How is it possible to make the products attractive and to create desire, then? Find out in the upcoming posts!

(*) Thanks for the expert insight, A :)

It takes two to tango (Episode Three)

Let’s go to the first barrier to be tackled, lack of awareness. Most of us don’t know about the eco-friendly options in products we use or consume every day. Of course I could go straight to how all of us should switch to more efficient vehicles -which is indeed important, because these emissions are the main cause for global warming-. But since changing a car is a pretty important decision and efficient technologies are still being developed, quite expensive and not even available in all countries, I prefer to focus on other products we all buy: consumer goods. I chose cases related to Unilever and Procter & Gamble because they are the two main players in the consumer goods market, and have been making efforts for a while to educate their customers on how they can make an impact by consuming their brands.

P&G’s Ariel is a brand of products for washing clothes, and a couple of years ago launched a campaign in the UK, for which the slogan was Turn to 30. The idea was to show people that they could wash their clothes at 30°C and still get great results by using Ariel Excel Gel. The numbers behind: 40% or more of the energy used in each load can be saved by washing at 30 degrees and that implies a double benefit, because consumers save on their energy bills and reduce their carbon footprint at the same time. I think this particular campaign should get bonus points for showing people how to get involved! You can check out the TV ad by going to http://www.tellyads.com/show_movie.php?filename=TA3446

In this same product category we have Unilever’s Surf Excel, which is sold in India. The brand changed their formulation and launched a campaign that aimed at tearing down the myth that more soap lather means cleaner clothes. More lather means more rinsing, and therefore unnecessary water wastes, which is particularly critical in dry states where the money people spent on the water was more than the money spent on the detergent. Although I can’t understand the words on the TV ad (http://www.youtube.com/watch?v=GL62PHbKK4g), the promise the brand made was that consumers would save two buckets of water a day without compromising stain removal. We have a win-win situation again: consumers save money, and less water is wasted.

I think these examples are very accurate for the awareness stage that I told you about: both brands got into the consumer minds as possible options for washing clothes. Their offers of saving money -whether on energy or water- are actually related to interest stage of the process, but sometimes it’s difficult to separate the steps from one another. Anyway, I found the results of the Surf Excel’s campaign: sales increased by over 50% in Tamil Nadu and Andhra Pradesh, two dry Southern Indian states. Not bad, uh?