THE CEO WHISPERER … an excerpt from the book, Force of Nature by Business Book Summaries
Authors: Humes, Edward
By age 30, Jib Ellison achieved a reputation as one of the top river rafters in the world, and he built a network of current and former corporate chiefs who sought him to lead their company-sponsored river expeditions. He got corporate leaders away from their offices and spreadsheets and out in nature where they could see, first-hand, the impact that their businesses were having. He also taught executives how to change corporate culture to foster innovation, teamwork, and communication, and he helped companies solve problems and manage crises.
In 2000, Home Depot, which was facing mounting pressure to address its enormous environmental footprint, enlisted Ellison to help create a program for obtaining and marketing wood certified as harvested in an environmentally responsible manner. Home Depot’s CEO agreed with Ellison that embarking on a sustainability initiative could bring Home Depot new business and market opportunities, in addition to making it a much greener company. This Home Depot experience proved to be a turning point in Ellison’s career. It cemented his belief in the notion that communities, companies, and whole countries need to live within natural limits, taking only those resources that nature can replenish, and limiting harmful waste to amounts that nature can safely absorb.
Through his lens of sustainability, Ellison saw the business argument in favor of going green, an opportunity that almost no business leader was seizing. Business leaders were not interested in talking about eco-efficiency because they thought it meant complying with onerous regulations, not blazing new trails voluntarily. Their assumption would turn out to be false. Ellison knew that those who were willing to embrace a “sustainability revolution” now would gain an enormous advantage in the future, and it was Ellison who would show Wal-Mart the way.
DOING THE MATH
Ellison had one shot to prove that all this talk about profit and planet could lead Wal-Mart to the sweet spot where environmental commitment and rising stock prices go hand in hand. That chance came in the form of the corrugated cardboard box holding a toy car and truck set. Reducing the size of the box led to $2.4 million in annual savings for shipping the toys and meant some 4,000 fewer trees would have to be cut down for cardboard. About a million barrels of fuel would also be saved due to the reduced shipping volume. Ellison’s next task was to figure out where else this could be done. Because business growth and stock price were the first and foremost of Wal-Mart’s demands, any initiative had to consider return on investment first-sustainability was no exception to this rule. Ellison had to come up with a series of quick wins. It would take months of planning to figure out what those quick wins might be and to convince the company to pursue them. Ellison would have to burst the “Bentonville Bubble” where outsiders with new ideas are viewed with suspicion.
Data indicated that 90 percent of Wal-Mart’s impact on the planet comes from its supply chain, so any meaningful sustainability initiative would have to involve the company’s suppliers early on. Ellison recruited evangelists in the company for his cause. He arranged for Claire Watts, the executive vice president of apparel merchandising, to meet with cotton farmers in Turkey where the material for many of the clothes and other products Wal-Mart sells originates. The conventional cotton fields resembled a toxic wasteland, while the organic fields were beautiful and a pleasure to walk through. Affected by what she saw, Watts began working to commit Wal-Mart to buying organic cotton products. Within a year, Wal-Mart became the single largest purchaser of organic cotton in the world.
Teams of Wal-Mart managers were paired with outside experts to craft sustainability goals. Each team tried to find efficiencies in a different part of the business: energy, transportation, suppliers, waste, food, and packaging. As they looked at their operations with different eyes, they found and adopted the most efficient, least wasteful, most planet-friendly alternatives. Scott would argue that sustainability fit Sam Walton’s prime directive of efficiency and cost-cutting.