Sustainable Business Learning Community Conversations, Mar 2016 - Apr 2016

Sustainable Business Conversation, April 28, 2016 Topic: Communicating Sustainability in the Collision Repair Business, Part 2

Click on chart to enlarge

Continuing our case study of Mike’s consulting project to help collision repair shops with triple bottom line planning.

We began with identifying the types of shop owners (potential clients for Mike’s consulting) and the types of people who need a car repaired (potential customers for the bump shop).

• Arbitrarily we are guessing that 10% of each bell curve is made up of true believers in sustainability and going green. We gave those a green dot.
• Then we guess that 60% of each curve is made up of people who say “what’s in it for me?” and are willing to listen to new ideas. We gave that segment an orange dot.
• Then we guess that 30% of each curve is made up of those who don’t want to be bothered about sustainability and are unwilling to listen for whatever reason. We gave that segment a red dot.

Next we created a chart (right) which helped us think about each of the three types of shop owner and how each of these types would communicate with each type of customer.

• Some communications are easy – a green customer will be happy to find a green bump shop, but they may want to have metrics to verify that the green claims are backed up in reality.
• Some categories are not worth the effort in the early stages of a new consulting business – for example the green dot bump shop would not focus on marketing to the red dot potential clients as a priority.
• Note that the orange dot types are the most numerous – there’s potential for a lot of business and they tend to be willing to listen. (This reminded us of political campaign strategies which target likely voters and those who need encouragement to vote.)
• Although each shop needs to work with all three types of potential customers, the green shop owner may want to start with green dot customers and get some good success stories.
• Orange dot customers need to be helped to see the potential benefits they could get from a green dot shop (higher quality work, great communication).
• There needs to be learning – and hopefully movement of more folks into the green dot category.

There’s also a psychology to the collision repair business.

• People are often traumatized when they come in. They have just been through an auto accident and are likely to be upset.
• Mike notes that it is often a woman who brings the car in for repair and the atmosphere in a collision shops may be uncomfortable for some women.
• It could help to make a comfortable waiting area, provide a place for children and be genuine to people.
• Customer service training can help. People skills matter.

Sustainable Business Conversation, April 21, 2016 Topic: Communicating Sustainability - Collision Repair Business

Attitude of your target audience when talking about sustainability (see chart below):

1. those who ask “what’s in it for me?”
2. those who don’t want to be bothered about sustainability
3. those who are true believers and very committed to these ideas (about 10% usually).

When communicating to customers about sustainability it’s important listen: remember that not everyone thinks the way we do.

As a case study we are looking at Mike’s project to help collision repair shops with triple bottom line planning.

• Collision repair shops are typically independently owned local businesses.
• Much of the work results from auto accidents and insurance companies pay for the work.
• The number of independent shops is down by almost half in recent years.
• Shops with annual revenue from $1mm to 3mm per year are the likely clients for this project.
• Mike is aware of one collision repair shop in California that seems to be a sustainability true believer and is a certified B Corp (for-profit company meeting standards for social, environmental performance, accountability and transparency).

Attitude of shop owners: Mike has found when he talks to shop owners that many see the value of repairing cars instead of throwing them away. This is less wasteful and provides work for people. However, shop owners tend to be fiercely independent and often want nothing to do with the EPA or the environment and have a negative reaction to “sustainability”. Even if the owner is negative about these ideas, there may be others in the company (younger generation?) who may be more interested.

The car owner and his/her "baby:

• People often have a strong relationship with their car (do they give it a name?)
• In addition, having a car accident can be very traumatic.
• The insurance company has a lot of influence but the car owner can choose the shop.
• Is there an opportunity to tell the story of a car's repair? Maybe a photo of the car before repairs and then leaving the shop looking good again (Betsy got fixed!).
• The shop could make use of social media to keep the owner posted on where the car is in the repair process – pictures tell a story.
• Many people don’t even know that there is a possibility of choosing a green collision repair shop.
• Some people want their car to last a long time. This is counter to the usual trend of new car culture especially prevalent in Detroit. Chrysler has a 100,000 mile club for their cars – they send you a license plate ring when your car turns over the magic number.

Sustainable Business Conversation, April 14, 2016 Topic: Communicating Sustainability to Others

Question: How can we effectively communicate sustainability to customers, clients, colleagues?

• The El Moore Lodge has been using word of mouth and personal contacts to spread the word. But since its listing on Trip Advisor, the reach of marketing has been vastly extended. El Moore Lodge achieved platinum level status as a Green Leader on Trip Advisor and is now marketing internationally online. The Lodge rapidly (within 2 days) became the top rated bed and breakfast inn in Detroit on Trip Advisor. This was because 9 of the 11 B&B listings at the time were actually out of business, and the first online reviews for the Lodge were excellent.

• Bar and Restaurant Business: One member of our group is in the business of supplying compostable food containers and beverage cups, and collecting appropriate waste from restaurants for composting. Most bars and restaurants are interested in sustainability, especially those located near universities and with customers in the Millennial generation. But just labeling a business “green” while still relying on plastic salad containers and Styrofoam cups isn't sustainable. Yet he finds that a lot of restaurant and bar owners as well as customers are interested in sustainability. Using signage in a restaurant to let people know that a soft drink is made in Michigan, for example, makes a difference in sales. People want to know the stories and will want to come here because of what they’re offering.

Typical distribution of the attitudes of your target audience with regard to sustainability and the environment

• Leeds Becket University on Communicating Sustainability: The Respondeco website is maintained by the Centre for Responsible Tourism at Leeds Beckett University in England. Their focus is specifically targeted to the hospitality industry, but can be applied to other businesses and the site includes several lessons about how to communicate sustainability.
  • They make the point that some people think that “green” businesses are just intending to be cheap - that a hotel, for example, just wants to save money by offering less soap and fewer towels.
  • As a business owner, you should be communicating that sustainable products are of a high quality and that your customer can have a better experience at a “green” establishment.
  • Respondeco estimates that only 10% of potential customers are highly motivated to take care of the planet and would be willing to pay extra for a product or service just because its “green” (see chart). If sustainability is your passion, sell to that market segment and tell the sustainability story in depth. It’s better to have a map of the location of your local suppliers and/or a story about the supplier and the human side of what they do. Good reviews on your website or testimonials on social media mean a lot.
  • Millennials tend to distrust traditional advertising. It can take a long time to build the base. Take time and be there to answer questions.
  • The story of a family owned business is powerful. People have a relationship to history and they appreciate authenticity. ** Maybe you have an ethnic restaurant and decide to have belly dancers in the evenings. What is authentic belly dance? In America we expect revealing costumes and jingling belts. In the Muslim community, belly dancers may wear modest, non-revealing clothing and perform beautiful dances. Which style is authentic? What specific culture is being represented?
  • One of our group saw an organic dry cleaner in Ann Arbor. What is organic dry cleaning? What does it really mean? Although organic food products are regulated and certified, the term “organic dry cleaning” has no exact definition and can be used a number of different ways.

Sustainable Business Conversation, April 7, 2016 Topic: Sustainability and Numbers

Comments from last week's conversation about Payback (business term often similar to ROI - return on investment):

• Business schools train people to calculate payback for a proposed project.
• Usual calculations often discourage sustainability projects - deemed too expensive.
• However, these calculations are often optimistic about rates of financial return and leave out important risk factors.
• Additionally, there are things that cannot be quantified (social impacts, large-scale environmental issues) that are left out of the payback calculation.
• Boiling complex things down to a number simplifies things for the end consumer – but there is a real danger in over-simplifying and dumbing down society.

Topic today: Sustainability and Numbers:

It was Andy's job at a big telecom company to make forecasts of how many customers would move into certain areas of a city in order to help locate large switching stations for future growth. It was clear what upper management wanted, and that influenced how the numbers were weighted.

Auto companies make a big investment in new vehicle programs and need to sell a significant number of cars to get a good payback. Analysts know that projections need to reach a certain volume number to justify what top executives want. In contrast, the Taurus model was developed based on customer surveys and targeted actual customer desires. The Taurus did very well for some time. In 1970 there was a Dodge Dart that was purple and sold well. Unfortunately, those first cars rusted very fast. The paint was a new formula and had some problems. They added a primer and improved the paint and things got better in later years. How many people will come to buy tickets and see a certain theater production? Marketing projections are needed to draft the budget for the production, but those numbers are not hard and fast. If there is a major snow storm, people may not turn out. The budget will reflect the number of seats in the house and the number of nights for the production and the ticket price. Setting a ticket price too low can be a mistake. The consumer sees a higher ticket price as a higher value. At Goodwill we measure success as how many people are placed in jobs. It’s a number that shows success. But are there more layers to the issue? When people find work, does it work out over the long term? What effect does it really have on the community you’re trying to uplift? How can we deal with change and create a forward journey? We don’t want to lose what we have that is good. Going slow can be a good thing. Getting the timing right is important. The people who get a new thing out to market first (early adopters) often fail. Those who stand back and watch and figure out why things failed at first (fast followers), often do better. In my lawn service I’ve learned to buy the best equipment with good motors. When the equipment is in the shop, I make no money. I’ve learned that having some commercial customers really helps the business. I need at least 10 residential customers – more is extra. The payback to the customer is a green yard and the relationships you build. There’s a financial bottom line but also a community bottom line and a relationship bottom line. Sometimes we need to sit down together and solve problems as a team – yet we are rarely taught about teamwork. When I’ve taught community college, students almost always hate team projects – but I think those projects are one of the most important parts of the class. Developing one’s leadership skills in teamwork is very valuable. Not always easy, but worth it.

Sustainable Business Conversation, March 31, 2016 Topic: Sustainability and Payback

Comments from last week's conversation on Detroit Tokyo Japanese Restaurant: Common wisdom is a good starting point for problem solving. Through the power of the group, we were able to make a complete list of energy users in a typical restaurant. It was really helpful to have a real life example to discuss.

Payback: When talking about sustainability, why does the idea of "payback" always come up, and how do we answer that?

• Many of us wonder how to talk to others about the triple bottom line and how to measure results.
  • Leeds University has a project focused on how to communicate effectively about sustainability concepts (see April 7 conversation).
  • In our weekly Sustainable Business meetings we tend to be preaching to the choir.
  • It can be difficult to talk about sustainability with people not familiar with this vision. You may have to figure out ways to reach certain people.
  • Sometimes it is wiser to change the subject or walk away from someone who is extremely resistant.
  • It helps to take a big issue (like energy) and make it into bite sized problems.
  • Some things take longer than you expect – there are so many layers of decisions. Getting something right may be more important than getting it done by an arbitrary deadline. You want to manage the quality of the decision making process. Paul Saginaw of Zingermans said, “Nothing that is good in business happens fast.”

Packaging on an LED light bulb will specify a "payback" for your having to spend more up front for the purchase

• Payback: What does this even mean?
  • When you talk about sustainability or eco-friendly products, people always ask what the payback is – and they have no idea what they’re asking.
  • If I talk about my marriage, no one asks what the payback is. If I buy a luxury car or a piece of art, no one asks that question. This question has become a habit of society, but it is not a valid question. This habit is related to just going forward with no critical thinking.
  • When you buy a LED lightbulb at Home Depot, on the packaging it will tell you how long that bulb will last and how long it will take to payback the extra cost. If I go to buy an electric drill at the same store, there is no information explaining why one drill is more expensive than another and what the "payback" is.
  • It's all about relationships. There is no payback calculation for taking a friend or family member to dinner, and it would be rude to ask someone, "So, what's the payback for taking you dad out to dinner?" We have relationships with our family and friends. Don't we also have a relationship with the earth? So isn't it also absurd to ask for a payback calculation on taking care of the earth? Who do they think is getting paid back? Are these calculations ever valid? We can't put a dollar value on relationships.
  • Some paybacks are negative. The unfolding tragedies in Flint are payback to General Motors and decisions dating back decades. By calculating paybacks there may be greater awareness of the cumulative effect of all these decisions. Is the sum total of paybacks to industry sustainable? When calculating payback – what should be the numerator? What should be the denominator?
  • We frequently talk about payback with regard to higher education. Studying engineering and computer science has a clear payback in job opportunities and pay these days. But why does society not value education in English, Art or Philosophy? Corporations are funneling money into schools to emphasize the STEM courses these days. There is a social view of people as little machines. The majority of life is not about payback. Payback is an illusion.
  • When you look at the world solely through the lens of dollars, it is a closed system with many risks offloaded to society or the planet. Your only risk is isolated to what comes back to shareholders, and a lot of real consequences are off the table and off the balance sheet. Closed system analysis puts society at huge risk of failure.
  • When you’re thinking of open systems, you become aware that everything in the world is changing, in flux. Our most important decisions are based on soft numbers and payback calculations fall apart. However, risks go way down if you include the planet and society in decision making. Why can we get our heads around a payback number – but can’t get our heads around a concept like clean water? Payback thinking is a crutch to critical thinking.
  • Money needs to be recognized for what it is and what it is not. Michael Braungart (one author of Cradle to Cradle) said that we are losing intellectual capacity to financial markets. Our best and brightest people are being attracted to jobs where they can earn big money – in finance and investments, but not to the kind of work that can really make a difference.
  • Going “green” is cool. But are green metrics meaningful? You can use numbers to justify anything if you really want to.

Sustainable Business Conversation, March 24, 2016 Topic: Ideas on Energy Efficiency for Geoff and Fumie's Japanese Restaurant

Detroit Tokyo Restaurant

Geoff and Fumie are planning on opening an authentic Japanese restaurant, Detroit Tokyo, in the North End neighborhood of Detroit. Our group came together to identify areas of energy use in a typical restaurant to which energy efficiency ideas might be applied.

• They have leased a 6,000 sq. ft. building, single story with 20 foot high ceilings and a mezzanine. The building was previously used for light manufacturing.
• They are planning a 100-seat restaurant serving lunch and dinner.
• They expect to have about 15 staff in house at peak periods.

Restaurant Energy Use Exploration - click on image to enlarge

• In order to do energy efficiency planning, first you need to understand the use of the building. Restaurants tend to use a lot of energy and are #1 in energy use for a list of various building types.
• On average, the cost for electricity and gas in US restaurants is $4 per square foot per month. In comparison, the energy costs for gas and electricity at Green Garage (office use) are about $0.14 per square foot per month.
• An energy information database is maintained by the US Energy Information Administration (EIA) and can be viewed here.

Figure out the types of energy uses in your business and focus on those areas using the most energy first (see our chart at right). Then the hierarchy is:

1. Reduce energy needs through passive design strategies such as super insulation,
2. Look for renewable energy applications that make sense, and
3. Look to high-efficiency carbon-based energy uses.
4. Also understand the energy profile for each application and look for timing that matches up. For example, waste heat from ventilation over stoves and ovens probably happens at the same time that lots of hot water is needed for dishwashing. If the timing does not line up, it may not be practical to capture waste heat.

In restaurants the highest energy users (according to EIA) are:

• Stove/ovens/fryers 24.4%
• Heating, ventilation and cooling (HVAC) 23%
• Refrigeration 16.4%
• Hot water and dishwashers 15.7%
• Lighting 9.8%

Focus on the highest energy use types to achieve meaningful savings. Here are some things that can produce heat energy:

• Sun (solar thermal)
• People (body heat)
• Temperature of the earth at 50 degrees F (geothermal)
• Refrigeration equipment throws off waste heat
• Ventilation over cooking areas throws off waste heat
• Thermal envelope. A dark roof can add heat. Air infiltration into a building may add heat in summer
• Thermal bridging – metal beams conduct heat.

Indoor air quality standards for commercial buildings require certain rates of air exchange which involve bringing in makeup air from outdoors. There may be opportunities to use waste heat from certain operations to pre-heat makeup air. ASHRAE (American Society of Heating, Refrigerating and Air-Conditioning Engineers) provides meaningful standards in this area.

Sustainable Business Conversation, March 17, 2016 Topic: Your Business Identity

On the diversity of peoples' points of view in a changing society:

• Diverse points of view make our community stronger and deeper.
• There needs to be a social process to get to a sustainable future.
• It’s all about adult learning.
• Business is a living thing – it does not stay the same from one day to the next. We must be able to learn in order to adapt to the inevitability of change.

A Japanese tatami room

Topic for today: Your Business Identity

The El Moore:

• The purpose of the El Moore Lodge is to experience sustainable living in a Detroit neighborhood.
• The Lodge is intended to solve a connection problem – linking people up who are interested in Detroit, visitors and residents.
• Identity is an active process: who we are is going to evolve.
• Identity forms based on interactions with networks and groups. Be aware of how you connect. When we meet someone what are we selling? Or are we helping them?

Mark's landscaping business:

• Mark reports that his business "is not just about cutting grass. It’s about what can we do to make your living space better. I’d rather not use chemical fertilizers."
• There are simple things to do that can work in Detroit: asking customers what they really want; asking myself, what do I really want to do?
• Because Mark has conversations that build relationships with his customers, they come back.
• He says, "I want to be a soft business that listens to people and makes the community better. I sometimes do consulting with no fee. We’re somebody you can talk to."
• According to Mark, your business intent needs to reflect your core – who you really are. When you negotiate with a customer you need to be clear about who you are and who you aren’t.

Geoff and Fumie's Japanese Restaurant:

• Their new restaurant, Detroit Tokyo, is intended to honor Japanese authenticity and be a blend of two cultures.
• They want to create a fun and social place that respects the environment.
• They also emphasize the importance of treating employees well and giving them opportunities.
• Good financial stewardship is basic.
• They will have a classically trained Japanese chef who will need to train and interact with all kinds of people.
• They expect that many people will come into their restaurant with no knowledge of Japan.
• Omotenashi is the Japanese art of service and hospitality. Attention to detail is very high for food service in Japan, even in a McDonalds. This includes establishing rapport with customers, and precision and beauty in all things.
• Their employees will need to be curious about a new culture and understand what Geoff and Fumie are doing with this business. Otherwise they will not be a good fit as employees.
• The special atmosphere in a tatami room creates an experience.

Goodwill’s identity is evolving.

• The mission is to help people with employment challenges (social, physical or mental challenges) find work.
• Those served by Goodwill need to find ways to flip the script, learn skills, create a resume and find a job.
• Does Goodwill do enough to help people succeed after they have landed in a new job?

As company’s identity involves different points of view: management, customers and employees. If there is misalignment between these viewpoints – there are consequences. You need to foster alignment at all levels. Otherwise costs, quality and morale all suffer.

Audra (De-Tread) reports:

• "I have an identity as a tire nerd and bring a lot of knowledge about the global issue of tire waste and how to move forward differently. I want to achieve positive visions for Detroit."
• She is also a woman who fosters collaboration.
• She decided she needed to have a non-profit company aligned with a for profit company in order to meet various needs.
• It wasn't helpful to her to have too many assumptions about different types of organizations: for profit/governmental/educational/non-profit. She believes that to create the future, we may need hybrid organizations.
• One big question revolves around what to do with profits: Pay the owner or shareholders? Invest in the community?

Kimberly and Simply Well Communities:

• Naming the company reflects what you’re doing. Her company is Simply Well Communities. What does wellness mean?
• A beautiful place makes you feel good and feeds your soul. It also sends a message and nurtures others in your community.
• An ugly building rehab is an insult to the neighborhood.
• Kimberly wants to lift up neighborhoods. She's learned to trust her gut. If something doesn’t feel right, then let’s not go down that road.

What is the quality and nature of your work? What are you passionate about? The work we have done to create a certain environment at the El Moore seems to be on the right track. When something lands right you can feel it. Money alone can’t create that feeling. The residents love being there and want to never leave.

Sustainable Business Annual Anniversary Party!

Every year we gather to celebrate another successful year of learning, growing and camaraderie! Here are a few pix from the event...

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Sustainable Business Conversation, March 3, 2016 Reuse, Recycling, Extending Life

Discussion on cars:

• Will the sharing economy change the model of constantly buying new cars?
• Is it possible to minimize the complete disposal of automobiles by repair and repurposing?
• Around 1925 General Motors design center made the decision to change car models annually in order to sell more cars. Consumerism at its finest.
• Metrics:
  • In the Great Game of Business, it’s important to make everyone aware of the costs involved in the business. You can’t make good decisions without good metrics.
  • Auto companies are aware that they need to make and sell a certain number of cars each year to justify investment in a manufacturing plant.
  • The average life of a modern vehicle is 11 years on the road.
  • If a company is run by makers with a craftsmanship mindset, they are likely to be more interested in repairing things.

Making things last:

• Printer Potty is a European company that keeps printers running for a long time by cleaning out an ink reservoir and extending the life of printers.
• Also, dust is the enemy of computers and sometimes vacuuming the inside of a computer can fix problems.
• Installing a Linux system can also help.

It can be difficult to get people to see the world differently, example, recycling:

• Livonia is asking people to pay $75 for a recycling bin which seems like a lot. Is this a way of discouraging recycling?
• What if the garbage truck weighed your non-recycled waste and charged more for more garbage?
• The price of new raw materials tends to be very low, which makes it hard to work the economics of recycling.
• Product designers need to maximize the use of recycled materials such as plastic and cardboard.
• Mitten Bites package re-design is doing that.
• Being aware of our waste builds community and connectedness.
• Going to Recycle Here! is fun – you see your neighbors and friends.