THE BLOG
07/14/2014 04:39 pm ET Updated Sep 13, 2014

If Business Leads, Will Consumers Follow?

Let me start with a caveat -- I first met Andrew Winston on the book tour for Green to Gold and have peripherally been connected with him over the last eight years. Since that best-selling book, a lot has changed in our world and our understanding of the issues it -- and we -- are facing. And Winston's easy style and accessible approach from G2G is even more evident in his latest offering;The Big Pivot.

The first reason to read the book; while climate science and social injustices (addressed to a lesser extent in The Big Pivot) are complex subjects, Winston wastes little effort trying to convince the small but vocal minority that question the scientific method, measurement or the evidence of the world around them. (Perhaps he realizes that they're not likely to pick up a book subtitled 'Racially Practical Strategies for a Hotter, Scarcer and More Open World' anyway.)

Warning Signs
Instead he focuses on the warning signs that we are experiencing today -- including record storms, droughts, higher average global temperatures, etc. and compares them to high cholesterol which is a precursor to heart disease which is itself a precursor to a heart attack. Just as most of us have learned to pay attention to our cholesterol numbers and not wait until there's a shooting pain down our arm, he believes the lesson is clear. "The whole impetus for this for me is I think we're fundamentally out of time," said Winston during a recent conversation.

Second, The Big Pivot is vintage Winston -- instead of laying out Capitalism 2.0 he talks about what it would mean for what a company does, and he does so with a very readable approach to strategy, theory and practice.

Change for the Better Isn't a Sacrifice
On the phone he pointed out that change is not always about giving up something; or at least not giving up something important (and valuable). "It's a 'sacrifice' to make change -- it's a 'sacrifice' that you can't eat all the French Fries or Ice Cream all the time and sit on your couch and watch Netflix all the time," He conceded. "But what you get out of it is; this better lifestyle, being healthier, living longer, seeing your kids grow up. There's a whole host of better things you get for it."

Perhaps that resonated with me because in the last two years I have taken up cycling and lost weight and have, without drugs, lowered my cholesterol levels to the healthy range. I also sleep better, feel better and have more energy that allows me to do more things with my family that increase my quality of life.

Third, he accepts that it is not simple or easy and that there are tensions within the framework of the book that reflect the tensions in the reality. I asked him about the concept in the book that business ought to "inspire consumers to use less." He was quick to state that his is not an austerity message. "When I say use less, I mean using less of the (things that are) bad (for the environment). And more of the things made from the right kind of materials, produced with renewable energy, etc."

He went on; "We have to figure out a way to grow (opportunities for those things) that serve a purpose and that give people a quality of life and shrink the (environmental) impacts. And that's a big challenge," he agreed.

Will Consumers Buy on Value vs. Cost?
I challenged him about the consumer market for products that might cost more. He quickly made a distinction between the 'at the cash register' cost and cost of ownership over the lifetime of a product and asks the question; "Is it a premium to pay more for a Patagonia pullover that is made better, lasts longer, has a lifetime guarantee, was made from recycled materials and can be recycled?"

A company like Patagonia (and there are others as well) is doing well in the market because there is a group of consumers who will always focus on value purchasing and consider the environmental impact of the products that they buy. And as was mentioned in an earlier piece (link) consumers will buy these products from companies that they feel live these values all the time.

But getting the majority of consumers to act has been -- and remains -- an unfulfilled promise of sustainability efforts.

Do Business to Business Companies Offer a Model?
Winston finds a lesson in business-to-business companies, many of which are already engaged in the value-not-volume conversation with their business customers, asking 'how can we use less and shop smarter'. A key learning from that segment is that companies that help save their business customers money, reduce the customers' environmental impacts, etc. are giving their customers what they want and have an advantage in the marketplace. "If you're going into these customers and trying to sell them more and more goods, you're not listening to them," he told me.

On the consumer side, he suggests companies must work in partnership with people, and cites the example of Marks & Spencer 'shwopping' where customers bring back used clothing to the store (which M&S then recycles into new products and sells). This makes a connection and starts a conversation with consumers about how they can close the resource loop, gets them thinking about how much we use and waste and raises their awareness of the consequences of their purchasing decisions -- all while making them feel good about giving back.

He maintains his idealism while exploring practicality. "That's the premise behind the Unilever promise to double sales and halve their environmental impact -- they absolutely need consumers to buy on value, not just price."

Can Businesses Designed for the18th Century Address 21st Century Needs?
Fundamentally, I think Winston is asking the key question; What would business look like if people were designing businesses today rather than attempting to retrofit sustainability into their existing models?

Because the world has changed since businesses began incorporating. So, if one were building a business to last for generations (rather than make it to the next quarter, collect one's bonus and get out before the inevitable collapse), what would that business look like? That is the fundamental premise behind the 'The Big Pivot.'

Is Short-term Thinking Baked In?
This short-termism is a favorite topic of mine, and others. But he cites examples of family-run businesses and two CEOs talking about how they made the decision to go to solar power a few years back when it was a 'six or seven years' payback (it's much shorter now). "But I'm going to be here in six or seven years," Winston recalls one CEO saying, prompting Winston to ask me; "Why are the big public companies not acting like they're going to be around in six or seven years?"

I speculated that it might have something to do with the fact that -- as Yahoo! Finance recently reported -- the average tenure of a Fortune 500 CEO is less than five years. After all, it takes a strong level of leadership to see that their responsibility is to put the long term needs of the company ahead of their own compensation."

Perhaps that is the biggest pivot of all, if company leaders didn't have to -- or didn't feel that they had to -- chase short term gains to satisfy the desires of the stock market, "they would have more freedom to explore things that might cost them in the short term but have much larger long-term payoffs," Winston noted.

After all, if those who are flipping stocks really aren't interested in the businesses long-term success, perhaps it is time to realizes that they're not really stakeholders?