Published on March 31st, 2018 | by Matthew Klippenstein0
Business Lessons From A Radical Industrialist (#CleanTechnica Occasional #Bookclub)
March 31st, 2018 by Matthew Klippenstein
You may not have heard of the 2003 documentary The Corporation, but you probably know one of the memes it popularized – that if they were human, corporations would be considered psychopaths.
The late CEO of Interface, Ray Anderson, was in that movie, the lone “white sheep” among corporate interviewees. Here’s the clip:
His story is amazing – and, I believe, more inspiring than Elon Musk’s. Flame away with your Boring Company flamethrower if you want, but if you keep reading, I bet I’m more likely to change your mind. 😀
Yes, Musk is trying to get us off fossil fuels. His solution is to promote less-polluting alternatives (e.g. electric cars, solar panels). He’s also starting from the luxury end of the market (the less difficult end) and has openly mocked even-more-environmentally-efficient alternatives (public transit). He’s offering progress, but only a partial solution. That’s still fantastic, and that’s ahead of 99% or even 99.9% of the pack. But that’s not enough to be #1.
Ray Anderson founded a carpet company, Interface, which became the biggest modular-carpet seller in the world. Anderson didn’t just grow a Tesla- or BMW-style niche luxury player, he built an industry titan that became a titan and has stayed a titan by being competitive on price. Interface is the Renault-Nissan-Mitsubishi of its industry.
Then he had a midlife conversion to environmentalism. While he was the CEO of a public company. Back in the 1990s. Before it became respectable. The Kyoto Protocol hadn’t been signed, and some younger readers may not have even been born yet.
Instead of halfway measures and greenwashing, he oriented Interface to the singular goal of having no net negative impact on the environment, something it calls Mission Zero®. Bear in mind that carpets are made from petrochemicals and are energy intensive, so it’s not like he was in an “easy” industry to decarbonize. Interface hasn’t hit Mission Zero® yet, but that goal has been woven into the company’s DNA. He passed away years ago, but that vision remains integral to the company’s culture. (Come to think of it, an earlier book in this series was about corporate culture!)
In the timespan from roughly 1995 to 2010, Interface grew sales by two-thirds and increased profit margins, while reducing waste and water use by 80%. The company has now cut GHGs from its manufacturing by 92% … without the use of carbon offsets or credits. By 2014 it had sourced 49% of its raw materials from recycled or bio-based materials, and is on track to hit Mission Zero® by 2020.
Indulge me for a moment to repeat that: Interface, the world’s largest modular carpet company and a consistently-profitable firm that has consistently met unprecedented environmental targets, has put it in writing on its website that it is on track for its operations to have no net negative environmental impact by 2020. And the company will do it. You can bank on it.
I can’t think of a more-inspiring corporate achievement. Its goal after 2020 is to become a net ecologically-restorative company, which might as well be another dimension in corporate social responsibility. No other corporate titan is talking about this, because no one of similar size and global footprint has come nearly as far. Once Interface achieves this, it will be another “Roger Bannister moment” such as we talked about on CleanTech Talk episode 44.
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Now, this light-hearted (but hopefully insight-heavy) summary isn’t meant to be a replacement for reading the book, available on Amazon and all other booksellers. It’s more of a breezy attempt to pique readers into wanting to purchase a copy, or at a minimum borrow one from their local library, and is adapted from a document I wrote for our workplace business book club about eight years ago.
So, let’s dive in!
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Anderson says his book’s goal is to relate to readers what he’s learned from trying to transform his petrochemical-intensive business into one which does no harm to the earth, and which sells products which are renewably produced from the earth.
Ch 1: Mission zero®
Interface’s about-face on the environment in 1994 was met with skepticism (especially on Wall Street) so Anderson is pleased that the waste elimination measures put in place not only funded all the company’s environmental initiatives, but helped them weather the economic turmoil of the early 2000s.
He rubbishes concerns about the Kyoto Protocol being bad for business, by pointing at Interface’s track record. (See the introductory comments.) Its stewardship efforts gained it new business, and attracted employees who would never otherwise have considered making carpet for a living. As such, he concludes that when done right, sustainability doesn’t cost – it pays.
He also introduced his diagram of “Mount Sustainability,” a more in-depth version of which can be seen here:
The Seven Fronts of Interface’s “Mount Sustainability.” Source: Inhabitat
Ch 2: The power of one good question
Anderson relates that he started off by putting together a task force, and challenging it to transform Interface into an environmentally-restorative enterprise. It was on the brink of failure when one of Interface’s longest-tenured employees stood up and said that like everyone, he’d made a lot of compromises in his life, for family, for work, and other reasons. And that if Interface could achieve profitable sustainability, he felt it would make up for all the compromises he’d ever had to make. The words sank in, and the task force got to work.
(This book has a lot of chapters, so we’ll skip a few, such as chapter 3, which largely relates biographical details.)
Ch 4: Mountain climbing
After a few false starts, the Task Force identified seven fronts it would have to climb to summit “Mount Sustainability.” One powerful paradigm shift came from an employee asking why people call factories “plants,” because biological plants are part of a closed-loop system of nutrient recycling. Industrial factories, meanwhile, are part of a linear, take-make-waste system. This provided a vision for the company to aspire to, to turn its factories into plants.
Ch 5. Zero waste
In true Toyota fashion, Interface defined waste as any measurable cost that goes into our product that doesn’t add value for the customer. They then decided all fossil fuel for transport… was waste! And like Toyota, at least in the good old days, it paid people who made cost-savings suggestions a portion of the first year’s savings.
Ch 6. Smokestacks and other relics
This chapter discusses how Interface’s philosophy draws strongly from the work of the NGO, The Natural Step. Among other things, Interface put together a “benign by design” committee to convince its suppliers to cut toxins out of their materials, however great their properties might be from a carpet perspective.
Ch 7. Plugging into the sun
Way back in the days when solar panels were super expensive, some Interface employees wanted to install a roughly 100 kW solar PV array at a California factory. Accounting opposed the idea, seeing it as an unjustifiable cost, but marketing overruled them, arguing that they could create a new brand around carpet made from solar electricity. (e.g. if solar provided 5% of the plant’s electricity, they’d sell 5% of product as solar carpet.) The marketers won the argument, and market share too.
(More recent material I’ve read suggests that this product line may have been discontinued. Even so, it remains a brilliant idea.)
Ch 8. Round and round they go
This chapter discusses Interface’s efforts to recycle PVC carpet backing and the nylon fibers from the carpet. While these were huge hurdles to overcome, the payoff was tremendous, because Interface can now take end-of-life carpet (even competitors’ end of life carpet) and turn it into new product. It made carpet tiles, of all things, into a circular economy!
The secret to PVC recycling was to re-process old carpet backing at low temperatures (presumably under vacuum) to separate the PVC without damaging the polymers. And for nylon fiber recycling it secured a license from an Italian inventor. In both cases, it brought out new product lines. As of 2018, 50% of Interface’s carpets inputs are now either from recycled or bio-sourced materials.
Ch 9. Getting out of the breakdown lane
This chapter is about transportation emissions. To me the most interesting part was learning that air-freighting samples to prospective customers added a surprising amount to Interface’s footprint, so they now truck samples, unless the customer is in a big rush.
Ch 10. The circle of influence
In explaining some of Interface’s missteps over the years, Anderson suggests that nothing fails like success, because success doesn’t prepare you for adversity.
The chapter also notes that the best way to fix local problems is with local smarts, basically emphasizing the importance of letting people at all levels of the company try to improve things, and accepting that there’ll be a few failures along the way.
Ch 11. The final ascent
While at a seminar on biomimicry, an employee noticed that leaves fell on the forest floor in an aesthetically-pleasing, multicoloured, random pattern. And then asked whether Interface could do the same with carpet tiles: replace regular, colour-matched patterns with random shapes of varying colours.
By opening the design space, in one swoop, this employee nearly eliminated carpet waste! Having small differences between carpet tiles no longer meant failure, but success! The savings pushed up the supply chain, too: rolls of dyed nylon no longer had to be the exact same color for the carpet to look good. This meant Interface could take off-spec material (at a discount, of course) meaning its suppliers no longer “baked in” yield losses when quoting prices.
Interface’s “Entropy” carpet; random by design, and therefore (color-)defect-free.
(Ch 12 – 15 have other interesting content, but in the interest of word count, I’ll leave them as mysteries for the reader.)
Ch 16. Every reason for hope
In closing, Anderson brings us through the many successes Interface has enjoyed since its environmental about-face. He closes by suggesting that, whereas Paul Ehrlich and friends defined human impact, I, on the environment as I = P x A x T…
(P, A, and T being Population, Affluence and Technology respectively)
…the deployment of technology for stewardship could mitigate the effects of population and affluence. Technology would then go in the denominator, and the human footprint would shrink as our technology advances, or I = P x A / T.
You may remember that Bill Gates said he came up with this in a recent talk that post-dates the publication of this book by almost a decade. Well, Gates wasn’t the first, and Anderson probably wasn’t, either. But it’s a magnificent paradigm with which to interpret the progress we’re making on clean energy, clean technology, and sustainability. And as such, it’s the perfect note on which to end a book (and book review) about our lifetime’s most inspiring CEO and company!