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What Your Dirty Dishes Are Telling You: A Lesson in Business Fundamentals

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Are dirty dishes dampening consumer enthusiasm for environmental responsibility?

That's what The New York Times and popular bloggers are wondering. In recent days, they have reported on a growing uproar over new dish detergents, which have been reformulated to comply with legislation banning the use of phosphates. While effective for cleaning pots and pans, phosphates pollute waterways and cause health problems. So phosphate-free soaps are now the law in 17 states.

Many consumers, even environmentally minded ones, aren't happy about the change one bit. With their pots streaked and their glassware spotted, they have taken their complaints to the Internet.

"I had known about the phosphate ban, but I didn't realize what problems I was going to have!," wrote one customer on Proctor & Gamble's consumer reviews page. "Is it better for the environment that I have to run the load 3 times instead!?!," wrote another to Environmental Leader. "I wish these things were thought out ahead of time before changes are enacted!"

So now does P&G, one of America's oldest and most successful consumer products companies. Normally a flawless executor, the Cincinnati-based company overlooked a simple but vitally important rule this time: in order to succeed in the marketplace, companies must produce products that are both excellent and relevant to consumers. Designed to help protect waterways, many reformulated dish soaps deserve points for being relevant, but not for being excellent--at least not yet.

This isn't the first time that environmentally sensitive products or services have failed in this regard. Take foam recycling, for example. While virtually everyone agrees it's a good idea to recycle polystyrene, the truth is that most plastic put in recycling bins ends up in the garbage. The reason? There simply is not enough excellence in the collection, compaction, melting and transportation process to make it viable for most communities. Similarly, there are many people who love the idea of reducing water usage, but not at the expense of a good morning shower. This is why so many poor-performing, low-flow shower heads have been replaced with old-fashioned "fire-hose" faucets.

Hoping to avoid a similar fate, more companies are trying hard to make their environmentally sensitive products both excellent and relevant. In 2005, Wired Magazine showcased the efforts of American Standard to perfect the perfect low-flow toilet--another product that was relevant but not excellent when first unveiled. In the article, engineer Ashish Kulkarni labors to get 24 golf balls to move smoothly through various low-flow designs. After much trial and error, Kularki succeeded. His research helped in the creation of the American Standard Compact Cadet 3 FloWise, this year's top-performing, water-saving toilet, according to Consumer Search.

P&G is also working to make its environmentally-friendly dish soaps as excellent as they are relevant. It is perfecting new techniques and reaching out to consumers for their insights. "We would like to better understand exactly what is happening, and what may be causing [problems]," it wrote on its review site after hundreds of complaints poured in.

Given P&G's track record, it's a safe bet the company will solve its dishwashing dilemma. But what about others? The fate of companies who fail to master excellence with environmentally sensitive products is not good. Electronics giant Philips learned this the hard way when it unveiled an energy-efficient, compact fluorescent light (CFL) bulb in the 1990s. The "EarthLight" was over-priced and incompatible with standard lamps, and thus languished on store shelves before Philips redesigned the product.

The lesson here is simple: you need both excellence and relevance in order to succeed. While pursuing one or the other might attract media attention or customer interest, it will not produce long-term, sustainable success. Eventually interest will wane or customers will defect.

Conversely, pursuing excellence and relevance simultaneously can produce surprising benefits. Take Trex, a manufacturer of household decking materials. The company was founded by a chemical engineer who thought he could make money recycling plastic bags. Initially, his ideas were put to use in picnic tables and stop sign posts. But when his company realized that consumers wanted a decking product that was both easier on the environment and lower on maintenance, it creating the now-ubiquitous Trex decking board. Unfortunately, early designs disappointed early customers, who eventually asked for refunds. Over time, however, Trex improved its products and saw its fortunes blossom.

Could pursuing excellence and relevance simultaneously do similar things for your company? You never know until you try doing both.

Inder Sidhu is the Senior Vice President of Strategy & Planning for Worldwide Operations at Cisco, and the author of Doing Both: How Cisco Captures Today's Profits and Drives Tomorrow's Growth. Follow Inder on Twitter at @indersidhu.