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INNOVATION
OF GREEN
MAPPING
MapChange2010
™ M D ’s SUSTA I N AB IL ITY
L E A D E R S H IP PE R SP ECTIV E
In the race for market
leadership and differentiation,
forward-thinking companies
are looking to green
innovation as a key to future
profitability — and also as a
shield against commoditization.
This document is an overview of Maddock Douglas’ perspective on the business opportunity illustrated
by the MapChange 2010 quadrant study. We would like to thank all of the leaders (in all of the sectors)
who participated in the study for their interviews, insight and courage to deliver innovation that is good
for your bottom line and good for the world.
How sustainable are you?
And do your customers agree?
Corporations across North America To create the study, Maddock Douglas’
are adopting green innovation for green innovation expert, Marc Stoiber,
competitive advantage. and his Vancouver team partnered with
Climate Counts and Angus Reid Public
We expect that leaders who take full Opinion to survey and compare a sampling
advantage of this burgeoning opportunity of the top North American brands within
will drive long-term growth and increase these 10 sectors:
revenue (Reference: The Economist Intelli-
gence Unit: Business and the Sustainability
1 Food & Beverage
Challenge). Those who wait for sustainabil-
ity mandates to be imposed before acting 2 Apparel
will likely lose valuable ground.
3 Household
We believe in order to compete, companies
will need to generate “on brand” sustainable 4 Internet, Software & Media
innovation quickly and communicate it
5 Electronics
effectively.
6 Airlines
MapChange™ 2010 tracks both the
climate change actions of more than 7 Hotels
90 leading U.S. corporations and
consumer perception of those actions. 8 Food Services
The study illustrates that a significant
9 Consumer Shipping
disparity exists between the actual
sustainable activity of brands and 10 Banks
consumers’ perception of sustainable
activity of those brands.
www.futureofgreeninnovation.com 3
Quadrants & Recommendations
100
ACTUAL
THE
E BASHFULS THE LEADERS
PERCEIVED
0 100
THE
E LAG
GGARDS THE LUCKY
0
Each brand in the study received an “actual” and a “perceived” sustainability score
between 0 and 100. The MapChange Study then plotted the results on a classic perceptual
map. Although each brand’s situation is different, we believe quadrants share common
traits, course corrections and innovation opportunities as categorized by the descriptions
on the next page.
4 www.futureofgreeninnovation.com
THE BASHFULS THE LEADERS
(low perceived, high actual) (high perceived, high actual)
Brands not getting “deserved credit” Most influential brands in the market
according to the MapChange Study Organizations known for big-picture,
Highly accountable brands in need of whole-systems thinking
improved communications and/or more Seem to be consistently maintaining
green consumer-facing innovations green innovation pipeline and practices
based on consumer insight/needs
MD Recommendations: Showcase
green innovations as a core business MD Recommendations: Capitalize on
priority and create ongoing dialogue leadership position; replace/acquire
with the public to openly share your THE LAGGARDS and expose disparity
commitment to sustainability. between you and THE LUCKY (while
sharing/teaching the willing and worthy
THE LAGGARDS how to catch up).
(low perceived, low actual)
Least accountable brands according THE LUCKY
to the MapChange Study (high perceived, low actual)
Could be unaware that sustainability Brands enjoying “undeserved credit”
drives innovation and possibly short-lived benefit of
Might be living in the past; short-term perception
focused; resistant to change At risk of being exposed as not what
they seem in the eyes of the public
MD Recommendations: Develop short-
Could be unaware that sustainability
term and long-term green vision and
drives innovation
corresponding plans for prioritized actions;
begin deliberate transition to green MD Recommendations: Transparently
consumer-facing innovations as well as identify and disclose green realities in
measurable internal practices; be more the context of intentions and future
willing to look beyond where you are today (short-term and long-term green vision)
for what you will become tomorrow. consumer-facing innovations and
eco-friendly milestones.
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Food & Beverage
MD’s MapChange2010 Perspective
100
ACTUAL
PERCEIVED
0 100
0
6 www.futureofgreeninnovation.com
Food & Beverage MD’s MapChange2010 Perspective
Can your next drink or snack really change the world? Maybe not, but the
company that makes it certainly could. With tremendous distribution networks,
packaging needs and consumer demand, these companies have a large climate
footprint as a baseline and a lot of room to improve.
Some brands in this sector are setting new standards for business as
a whole, while others seem lost in the supermarket. All of them make
products known for casual times with friends and family; as a whole, we think
the sector needs work to avoid being known for being too relaxed about
green innovation leadership.
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Apparel
MD’s MapChange2010 Perspective
100
ACTUAL
PERCEIVED
0 100
0
8 www.futureofgreeninnovation.com
Apparel
MD’s MapChange2010 Perspective
Consumer wardrobes—and the fickle world of fashion—may change at
breakneck pace, but does it change the world? We think it can. The Apparel
sector has seen notable leadership on climate issues from some companies,
but no green innovation from others. The unpredictable nature of the category
suggests there is an opening for challenger brands and/or new product lines
from exemplary green leaders like Nike.
Unlike with other market segments, data suggests that green clothing appears
to be an incremental new category rather than intruding on the share
of traditional clothing (according to the nonprofit trade association Organic
Exchange). Consumers are apparently not switching to green clothing, but instead
are adding a few green items to their existing wardrobe (source: Mintel Green
Living, January 2009). Curiously, it appears the largest apparel manufacturer
in the world (and its portfolio of lifestyle brands with loyal enthusiast fan bases),
“should” be dominating with green innovation, but doesn’t look that way.
The supply of organic cotton appears to be lagging behind the increased demand
from leading manufacturers, which makes availability in preferred retail channels
spotty. While the entire sector has faced scrutiny on developing world labor issues
for years, we believe the time has also come for the industry to realize it has an
impact on climate change, environmental and sustainability issues, as well (e.g.,
pesticide and land use for cotton, supply chain and labor factor cost optimization).
www.futureofgreeninnovation.com 9
Household
MD’s MapChange2010 Perspective
100
ACTUAL
PERCEIVED
0 100
0
10 www.futureofgreeninnovation.com
Household MD’s MapChange2010 Perspective
Most of the necessities of day-to-day life fall within the Household products
sector. It appears that consumers (especially parents) align their basic daily
needs with values that relate to a safe, clean house and secure future — which
includes supporting companies that are addressing climate change.
That is why we think this sector is a very visible example of innovation being
good for the world AND the bottom line.
Consumers are ready to pay for sustainable innovations. Although they might
be overwhelmed by choice (especially in this sector), the majority appear
to believe that every choice can/should be a green choice — evidenced by
green cleaning products having successfully made the transition to mainstream
acceptance and widespread availability through retail distribution.
Consumers also have opinions on who’s making the effort. More often than not,
it’s the popularity of new products that will drive higher green perception scores.
We believe the market for green cleaning products will continue to outperform
conventional cleaning products and continue to grow. Accordingly, even
though commoditization is affecting both the industry leaders and the followers,
many companies in this sector are injecting innovation into everything from
their new products and services to packaging and social technology adoption in
order to stand out.
www.futureofgreeninnovation.com 11
Internet, Software & Media
MD’s MapChange2010 Perspective
100
ACTUAL
PERCEIVED
0 100
0
12 www.futureofgreeninnovation.com
Internet, Software & Media
Certainly, the flow of words, ideas and entertainment seems clean enough. But
Media companies, while perhaps best known for their role in worldwide
communications, are large conglomerates that have their hands in scores of
different businesses. With their astounding influence in the marketplace,
we anticipate this group will need to play an even larger role in delivering green
innovation across their portfolio and in providing substantive green information
to audiences that are ready for it. We believe the ones that take the lead will
do more good AND make more money.
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Electronics
MD’s MapChange2010 Perspective
100
ACTUAL
PERCEIVED
0 100
0
14 www.futureofgreeninnovation.com
Electronics MD’s MapChange2010 Perspective
Whether you are wired or wireless, you know the companies in the Electronics
sector well. The best of these companies seem to make sure the latest technology
is consistent with the most current thinking about corporate climate leadership.
They’re doing everything from reducing emissions in their production processes,
to offering new products that require less energy, to taking back products that
are obsolete and turning them into the next big thing.
The range of scores in this sector is intriguing. Most notably, this sector showcased
one of the strongest examples of a company with both well-aligned “actual” and
“perceived” scores (i.e., HP had a differential of only 10 points). It appears HP has
been producing sustainability-driven products since the 1990s — and a remarkable
communications campaign touting them as well. We think by acting early on this
future trend and sticking close to sound consumer insights, HP widened the
gap between the market leader and the followers. In short, HP has had more
time to fail faster — to develop processes, materials, practices and partnerships
(e.g., Sustainability Consortium, their in-house think tank).
In a category where many of the products are disposed of within their first year of
existence, we suspect companies view the endless life cycle analysis of their new
product pipeline as an immense challenge that takes the notion of real innovation
to a higher level. We believe that if you’re not already growing with green or
going there soon, you’re probably behind your competitors already.
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Airlines
MD’s MapChange2010 Perspective
100
ACTUAL
PERCEIVED
0 100
0
16 www.futureofgreeninnovation.com
Airlines
MD’s MapChange2010 Perspective
The airline industry runs on carbon-based fuels, plain and simple. It’s an industry
that requires innovation to drive growth and lead in the fight against global
warming. Note to airlines: “It’s hard to read the label when you’re inside
the jar.” We anticipate the first airline to get themselves “outside the jar”
(where they can see all the viable business opportunities) will reap the leadership
benefits. Maybe the open-minded innovators at Virgin Airlines are working on
this already.
It appears that a few of the airlines have made significant effort towards
improving the energy efficiency of their aircraft and are working to incorporate
their climate-focused programs into their overall business strategies and
innovation pipeline. But overall, we think the entire sector lags behind in actual
scores while decent perceived scores leave most of them grouped into
THE LUCKY quadrant. This is a dangerous place to be, considering it appears
that none has shown any leadership in supporting public policy relevant
to climate change, and they have only shown limited work in setting goals,
measurement and reduction of greenhouse gas emissions.
We think public relations efforts supporting flight offsets are the least they
can do, but we believe this is a weak attempt at planning for the future of
your business.
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Hotels
MD’s MapChange2010 Perspective
100
ACTUAL
PERCEIVED
0 100
0
18 www.futureofgreeninnovation.com
Hotels MD’s MapChange2010 Perspective
The world’s largest hotel chains seem to be seeking practical ways to address a
range of broad environmental impacts in their operations, from toxic chemical use
to indoor air quality to water. With its large number of “one-time-use” items and
water consumption emphasis, we think the hotel industry can see the potential
financial benefits of integrating green innovation into their future business strategy.
However, few appear to be aligning such actions as part of a larger and more
comprehensive carbon management strategy for competitive advantage.
Marriott has made significant changes to its massive supply chain by replacing
depleted inventories of supplies with newly developed green products, including
recycled plastic key cards and pillows made of 100% recycled material. But an
average sector score of 19 out of a possible 100 suggests the sector has much
work ahead and lots of opportunity for leaders to make progress.
We believe the brands that fall into THE LUCKY and THE LAGGARDS
quadrants are overdue to demonstrate tangible progress before the court of
public opinion makes its ruling. We suspect fixing this is a clear opportunity for
green leadership. As an example, some competitive chains offer smaller boutique
hotels that are completely carbon neutral.
Note: We need to see this sector innovate around getting much more serious
about energy use and greenhouse gas emissions reduction. The industry overall
has been struggling to adopt a certification program that can be applied
universally. Many of the forward-thinking hotels appear to be seeking special
LEED certification with the U.S. Green Building Council.
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Food Services
MD’s MapChange2010 Perspective
100
ACTUAL
PERCEIVED
0 100
0
20 www.futureofgreeninnovation.com
Food Services MD’s MapChange2010 Perspective
The Food Services sector is a fixture of every mall food court or freeway exit.
It’s the fast and convenient comfort food we see everywhere — in the form of
cafés, fast food chains and affordable, family-friendly restaurants. In the past,
the sector has focused on issues like packaging, animal welfare and fair trade,
but we think it is now under a spotlight for its impact on the planet.
“The public has difficulty discerning between sustainability and social innovation…
so perhaps Wendy’s’ healthier offerings have formed its image as a green
company.” — The New York Times, Green Inc. Blog 2.25.10. We anticipate that
there is an opportunity — particularly in this category — for a leader to control
the language and the rate of change.
www.futureofgreeninnovation.com 21
Consumer Shipping
MD’s MapChange2010 Perspective
100
ACTUAL
PERCEIVED
0 100
0
22 www.futureofgreeninnovation.com
Consumer Shipping
MD’s MapChange2010 Perspective
The consumer shipping industry — or the logistics/express delivery industry, as
it’s sometimes called — has a considerable climate impact. With so many packages
traveling by ground and air all over the world every day, the industry’s annual
greenhouse gas emissions could run into the millions of tons. The results for the
four leading shippers — DHL (and its parent Deutsche Post World Net), the U.S.
Postal Service, UPS and FedEx — suggests an industry that has begun to address
its climate impact, but has a long way to go.
Commercial shippers UPS and DHL score about equally well in how green
their actions are, but when it comes to consumer perception of the two brands,
It appears “Brown” delivers green to its competitive advantage — with much
higher perceived scores than DHL. These large discrepancies are common
throughout the study.
These gaps reinforce the need for individual brands to deliberately distinguish
themselves by constantly innovating — and proudly communicating their true
sustainability more accurately, more consistently and more transparently. We
believe there is no greater advantage than a rich innovation pipeline.
www.futureofgreeninnovation.com 23
Banks
MD’s MapChange2010 Perspective
100
ACTUAL
PERCEIVED
0 100
0
24 www.futureofgreeninnovation.com
Banks
MD’s MapChange2010 Perspective
By 2020, green practices will influence 66% of consumers when they choose
a financial service provider. (source: April 2009 Mintel forecast estimates that
in 2020, two thirds or “66% of U.S. consumers will be classified as True or Light
Greens, meaning that green practices will play a role in their choice of financial
services providers” — up from 51% in 2010). We believe those who are ahead in
complying with earth-friendly legislation and satisfying consumer preference will
fulfill the unmet needs in the market faster than the competition. They will likely
drive profit to the bottom line and take market share from others.
For those with a lower actual score, like Capital One (12), and higher perceived
score (57), we think the opportunity to infuse more sustainability practices into
innovative products, services and business models is just as large.
We believe the gap in scores doesn’t represent a glaring problem for most
banks, yet. Currently, it represents opportunity.
www.futureofgreeninnovation.com 25
“ The markets agree…
companies that embrace
sustainability have achieved
the highest share price
growth over the past three
years, whereas companies
with the worst performance
focused less on sustainability.”
The Economist Intelligence Unit, and Deloitte’s: “The Green Gap” 2009
26 www.futureofgreeninnovation.com
The 5 ‘C’s of Sustainability Branding
The 5 ‘C’s of Sustainability Branding
From the MapChange Study research 4. CONVERSATIONAL Sustainability
and five years of experience building and branding is more effective as a two-way
growing green brands, Marc Stoiber, conversation rather than one-way com-
VP of Green Innovation at Maddock Douglas, munication. Honesty and transparency will
created “The 5 ‘C’s of Sustainability go a long way with consumers. Disclosing
Branding,” a tool that outlines the five things what you’re doing well and what you
we think brand sustainability must be in could be doing better will instill trust. And
order to succeed. trust breeds loyalty. Inviting consumers
to participate in a conversation about
1. COMPETITIVE To compete, brands must your process will further strengthen the
innovate — and the best new innovations brand/consumer relationship.
tend to be sustainable. All other benefits
being equal, sustainability differentiates 5. CREDIBLE Sustainability strengthens
and provides tangible competitive brands. But greenwashing, even if
advantage. unintended, damages them. The key is
sequence. As long as sustainability efforts
2. CONSUMER FACING Get the most are in place, functioning and measurable
benefit out of new sustainability initiatives before being announced, they will be
by making them something the consumer viewed as credible. And proven, objective
will see. Consumer-facing changes will credibility paired with innovation and
have the most immediate impact on public communication is the key to sustainable
perception and, potentially, financial brand success.
performance.
www.futureofgreeninnovation.com 27
28 www.futureofgreeninnovation.com
Methodology Overview
Methodology Overview
The MapChange 2010 Study used two PERCEIVED SUSTAINABILITY
distinct methods to calculate actual To measure consumer brand perception,
and perceived leadership in addressing Angus Reid Public Opinion conducted an
climate change. online survey of 2,032 American adults.
The results were weighted to ensure a
ACTUAL SUSTAINABILITY random sample that was representative
To measure actual brand sustainability, of the entire adult American population.
we used Climate Counts’ newly released
2010 corporate climate scores. For the A “maxdiff” methodology was used to
past three years, Climate Counts has assist the respondents in evaluating the
audited the brands within all 10 sectors 97 companies represented across 10 dif-
using a scorecard that tracks corporate ferent sectors, meaning that respondents
climate action in four key areas: were asked to “choose the best and worst
measurement of impact, reduction of company in terms of their leadership in
impact, engagement on public policy addressing climate change” out of a random
related to climate change, and openness group of 3 to 6 companies (dependent on
and transparency with consumers on the number of companies in each sector).
corporate climate activities. The survey was divided into two parts, with
five sectors in each, to mitigate respondent
CLIMATE COUNTS SCORECARD fatigue and ensure the quality of the data.
Climate Counts uses a 0 to 100 point
For more of the MapChange Study
scale and 22 criteria to determine if
methodology and limitations,
companies have:
download the study at
MEASURED their climate “footprint” www.futureofgreeninnovation.com
REDUCED their impact on global
warming
SUPPORTED (or suggest intent to
block) progressive climate legislation
DISCLOSED (publicly) their climate
actions clearly and comprehensively
www.futureofgreeninnovation.com 29
After working with 25% of
the Fortune 100, Maddock
Douglas can say that
green innovation is just one
method of ensuring future
growth. You need to develop
and nurture a portfolio
of relevant new products,
services and business models
in order to solidify your
position with customers as
an innovation leader —
green or otherwise. This is
not simply hollow rhetoric.
30 www.futureofgreeninnovation.com
WANT YOUR BRAND’S
‘GREEN’ REPORT CARD?
RESERVE YOUR PLACE IN
MAPCHANGE 2011.
MapChange™ is an invaluable resource
for forward-thinking presidents, executives
and directors interested in aligning:
• Business objectives
• Innovation strategies
• Sustainability measures
™
it with someone else who can use
it — perhaps another leader who
runs a company interested in green
innovation or a writer who can
spread the word.
L E A D E R S H IP PE R SP ECTIV E
M D ’s SUSTA I N AB IL ITY
That way, this little book might just
make a good impact on our world.