What does it take to grow and profit in the immensely competitive household and personal products industry dominated by giants Unilever and Procter & Gamble? And how can sustainability be the lever that provides revenue growth and product differentiation?
Ask Seventh Generation, the nations’ leading brand of household and personal care products that help protect human health and the environment. Since its founding in 1988, the company has committed to its customers that Seventh Generation products will contain non-toxic, renewable materials.
Case In point: Seventh Generation’s 2010 “Fields Not Factories” initiative continued the company’s commitment to using only botanical fragrances in its cleaning products. Why? Seventh Generation customers expect sustainable, non-toxic ingredients. With customer concerns about phthalates and other synthetic fragrance ingredients, the company saw natural fragrances as a market opportunity and a natural part of its mission to protect the planet and its customers’ health.
But what did it take to succeed? Making Fields Not Factories succeed required transformation in Seventh Generation’s innovation process and throughout the company’s extended supply chain. Botanical fragrances are more costly than synthetics and the chemistry is more challenging: Natural fragrances are not as easily manipulated to deliver persistence and they are less water soluble. Consequently, finding the right fragrances and integrating them into products is more difficult.
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Natural fragrances present supply chain and cost challenges as well. Fragrance suppliers are reluctant to reveal their formulations. This required Seventh Generation to convince fragrance suppliers that consumers expect ingredient transparency.
The key was Seventh Generation’s ability to meet customer demand. This meant delivering #1 performance, #2 cost and #3 health. It also meant communicating the benefits of these products to consumers — especially overcoming the perception of many consumers that “green” products don’t perform. With customer acceptance in hand, Seventh Generation was able to drive its supply chain to deliver. By demonstrating that natural fragrances are feasible and represent value for customers, Seventh Generation represents an important “lead customer” — one who is blazing the trail for future competitive direction — that suppliers want to work with.
What was the outcome? Fields Not Factories has had a strong market reception. In 2010 company revenue grew by double digits, and natural fragrance products now comprise more than 50% of Seventh Generation sales.
How can you apply some of the insights from Seventh Generation’s experience at your company? Martin Wolff, Director of Product Sustainability and Authenticity at Seventh Generation recommends:
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“Define what sustainability means for your company and its customers.” Seventh Generation has developed and sustained an ambition-driven vision of sustainability that decouples short-term and long-term decision making (the “seven generations”). “If you ask for the business case for sustainability, you’ll never get there!”
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Design products to achieve this. This may require, as it did for Seventh Generation, incorporating new sustainability-related innovation techniques such as green chemistry, biomimicry and Cradle-to-Cradle® thinking.
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Grow the company to flourish within this space defined by this sustainability-driven customer value proposition. The right price/performance balance is paramount!
Take a page out of Seventh Generation’s book: Sustainability is not a constraint or a barrier to innovation. In the right hands it is a necessary ingredient and powerful lever for driving differentiation and revenue growth.
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Published May 10, 2013 8pm EDT / 5pm PDT / 1am BST / 2am CEST