Green Giants: A book review by Bob Morris

Posted on: September 1st, 2015 by bobmorris

Green GiantsGreen Giants: How Smart Companies Turn Sustainability into Billion- Dollar Businesses
E. Freya Williams
AMA COM (2015)

How and why purpose and profitability are not mutually exclusive. In fact, they tend to be interdependent.

To what does the title of this book refer? E. Freya Williams focuses her and her reader’s attention on nine billion dollar businesses that combine both social purpose and organizational profitability: Chipotle, Unilever, Whole Foods Market, Natura, Tesla, IKEA (Products for a More Sustainable Life at Home), GE (Ecomagination), Nike (Flyknit), and Toyota (Prius). Their combined annual revenue is $122.09 billion. “While the Green Giants are the focus, the book also features some next Billions — companies that display characteristics similar to the Green Giants but have not yet reached the billion-dollar benchmark, though most are well on their way.” Featured Next Billions include Warby Parker, Airbnb, The Honest Company, SweetGreen, Patagonia, and Method Home.

“Note that Green Giants and Next Billions are not boring, crunchy granola companies or obscure B2B suppliers. They are some of the most vibrant, sexy brands out there today…Together, they prove that businesses predicated on sustainability and social good aren’t just a viable alternative to business as usual. They are more profitable and more sustainable financially.”

In this context, I am reminded of the term “gazelle,” one that refers to the classic entrepreneur of myth and reality, someone who starts a new business venture (or a new way of doing business) and aims for it to explode into a white-hot phenomenon such as Home Depot, Facebook, Jenny Craig, Netflix, Under Armour, and Instagram.

The term “gazelle” was coined by the economist David Birch. His identification of gazelle companies followed from his 1979 report titled “The Job Generation Process” (MIT Program on Neighborhood and Regional Change), wherein he identified small companies as the biggest creators of new jobs in the economy. In 1994, however, Birch revised his thesis, isolating job-creating companies he called “gazelles.” Characterized less by size than by rapid expansion, Birch defined the species as enterprises whose sales doubled every four years. By his estimates, these firms, roughly 4% of all U.S. companies, were responsible for 70% of all new jobs.

The gazelles beat out the elephants (like Walmart) and the mice (corner barbershops). When you hear politicians say, “Small businesses create most of the new jobs,” they’re really talking about young and growing firms. They are talking about gazelles.

These are among the several dozen passages of greatest interest and value to me, also listed to suggest the scope of Williams’ coverage just in Chapters 1-5:

o The Business Case for Sustainability (Pages 8-11)
o The Six Factors of Green Giant Companies 11-14)
o Meet the Iconclastic Leaders (20-25)
o Anatomy of an Iconoclastic Leader: The 4 Vs (26-47)
o Techniques for Winning with the 4 Cs (47-50)
o Defining Disruptive, and, Delivering Disruptive Innovation (54-84)
o How to Do It: The Five Stages of Disruptive Innovation (84-93)
o Why Does Business Exist? (99-102)
o A Battle for the Soul of Business (102-105)
o Purpose in Action (111-116)
o Why Purpose Drives Profits (116-123)
o Find Your Purpose (123-130)
o Criteria for Selecting a Purpose (130-132)
o The Six Structures (139-168)
o Strategic Philanthropy (168-171)

I commend Williams on her patient and thorough examination of what separates current and imminent Green Giants from those with whom they compete for admiration as well as sales and profits. For example, in Chapter 2, she identifies and discusses five principles that guide and inform the disruptive innovation initiatives of a Green Giant:

1. Make it better, not just greener
2. Embrace the counterintuitive
3. Bet on yourself
4. Engage the problem solvers
5. Cultivate pervasive innovation

Obviously, each is more easily identified than implemented. One of the biggest challenges is to get people to think innovatively about innovation. Williams also explains why purpose drives profits in Green Giant workplaces: Purpose = plan, Self-motivated people, and Loyal customers. Commitment to the purpose will sustain the plan as well as sustain active and productive engagement by all stakeholders. In Chapter 6, Williams explains the need for what she characterizes as a “new behavioral contract,” one that has three pillars: Pre-responsibility, Truthparency, and Experimental Collaboration. Details are best revealed within her narrative, in context.

Robert Sher has much of value to share in Mighty Midsized Companies: How Leaders Overcome 7 Silent Growth Killers. Sher is one of the first business thinkers of whom I am aware who focuses entirely on midsized companies: those whose annual sales are between $10-million and one billion dollars. The almost 200,000 midsized companies in the U.S. account for about a third of the U.S. GDP and a third of all U.S. jobs. He wrote this book for those who are leaders in these companies to help them face unique challenges. He duly notes that their nature may be essentially the same but the extent (i.e. scale) of each challenge can differ significantly for those leading companies with $10-million in annual sales companies than for those leading companies with one billion dollars in annual sales.

Not all leaders — indeed only a few business leaders — who read this book will be able to transform their organization into a Green Giant. That’s not the point. What all business leaders who read this book can do is help make their organization much “smarter” in terms of how it creates and then sustains purpose and profitability that are interdependent. In her book, E. Freya Williams offers an abundance of information, insights, and counsel that can help leaders in almost any company — including those that Sher and Birch discuss — to achieve that admirable, albeit elusive objective.

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