Taking Advantage of Green Business

Taking Advantage of Green Business

We are hearing about green topics during the nightly news, when we are looking to buy a car and even on the political arenas. It seems like “green” is everywhere and businesses are all looking to have some sort of connection with anything “green.” While there is a peaking interest in green areas, the principles of being green have been around forover a thousand years. Recycling started from the necessity to efficiently use hard-to-find resources. Today, there is a strong emotional connection with recycling that goes well beyond the basic necessity. Many of us recycle because we feel guilty if we don’t. We have developed a certain level of personal accountability to do our part in being green and respecting those that are green. Today, there is a growing emotional marketing connection with companies touting green options and customers. So the question is: Can franchise businesses take advantage of green alternatives for real business value or just short lived marketing perks? Today’s business community has definitely taken a hold of green alternatives, but to what level of success? More importantly, are green alternatives just a creative way to market today?

Business Competitive Advantage Through “Green”
Can a franchisor actually create competitive advantages via green actions? There are three ways that franchise companies can take advantage of green initiates.

Green Washing
You most likely have noticed that for businesses to be in the “in group” these days they need to state their good intent on being green. This can range from doing some minimal effort at being green or creating a “six degree” connection with something related to being green. “Green washing” has been an early marketing attempt by businesses to take advantage of the consumer attraction to green. However, this approach only provides minimal value that will be short lived. In fact, there is a growing consumer trend that suggests that the practice of “green washing” actually does more business harm than good. As consumer knowledge of green areas improves, companies cannot simply add green to their names and think they are creating real value.

Value Proposition Enhancement
One way that franchise companies can take advantage of green alternatives is by redesigning the fundamental value proposition. This is creating a new approach to the old value proposition model that has been used for years. Currently, most companies look to carve out some competitive advantage by becoming a market leader within two of the three value proposition model areas (service, quality and price). To add a new twist tothis old model, franchise companies can create a more appealing value proposition by adding a new category called “eco impact.”
This new category looks to create a real and genuine connection with your target market. Expanding your value proposition with green options requires real commitment and a defined connection with eco-friendly options. Franchise companies that are successful in doing this are creating real competitive advantages and in some cases turning back the business life cycle. In addition, fundamental changes in industry structures are being driven by green options. With any value proposition, companies need to deliver the value proposition that they communicate. This approach is different from the “green wash” approach as it incorporates the strategic elements of the value proposition. Franchise businesses need to be able to identify and deliver what level of green commitment they have.

Business Model Improvement
The second area of creating competitive advantage through green initiatives is from the impact they have on the core business model and profit structure. A new trend that is occurring in green initiatives is the fundamental business value that can be created. The fundamental basis for green is the better use of resources. Fundamental business value can be created through the better use of key resources (efficiency) or improvements in the profit structure. For example, a recycle program can have an overall cost reduction benefit for a company or an energy program allows for more efficient use of energy resources. Both can have a fundamental positive impact to the overall business model. The level of ROIthat can be created will depend on the business model, but franchise companies can create long-term business model improvements and competitive advantages by having an overarching green perspective.

Green Business Process
If there is a way for franchise businesses to take advantage of green actions, then where do you start? The approach or way a franchisor gets green is a methodical process that starts with discovery and results in a managed program within the company.

The first stage in getting green is to assess your company to determine possible areas of opportunity. In this stage, thebusiness will look within to examine the key parts of its business model toidentify green opportunities. Key areas to examine in this stage include:

Waste that your company produces to determine recycling, reuse or alternative useproducts. Materials/resources used in your product or service. For example, does the franchise organization distribute marketing material and packaging material? What is your company’s usage of materials, such as energy, products, water, and so forth?

Travel policies for you company.Use of vendors that incorporate green practices. Employee benefits that encourage green practices.

In addition to a self-review, it is important for the franchise business to select a green champion to manage these company initiatives. As with any business area, there needs to be accountability and management of these areas.

The next stage in the process is to evaluate what green initiatives are going to provide the best ROI for your organization. This step is often the most difficult as it will be dealing with assumptions. To assist in this area, consider using a prioritization matrix. The goal of the matrix is to develop key metrics for your initiative list and place them into priority quadrants. As an example, the green prioritization matrix here evaluates green initiatives according to impact and connection within a business. This approach is creating a prioritization based on two areas that are core to an ROI assessment. This dual-level evaluation creates an evaluation process that starts to identify the best green options. The matrix uses a horizontal measurement of “impact” which should primarily be the financial return the green option provides. The vertical measurement is based on a strategic or tactical connection with a business. This area is more difficult to quantify, but as a general rule ofthumb, your company will want to identify green options that impact it entirely, such as franchisees and customers. The objective of this step is to evaluate your green options and be able to create a priority view of each (the top right quadrant).

Green Plan
Now that the green initiatives are prioritized, it is time to move them into a “green plan.” If your franchise company uses an annual operating plan for business initiatives, this step simply adds another business unit to your planning efforts. For your green plan, evaluate needed resources to implement green initiatives, identify a project owner and target implementation dates.

The next phase is to implement the green initiatives. Your company has completed the prep work and now it is time totake action. The most important aspect of implementation is having a personresponsible and accountable to making it happen. While most companies don’t have a dedicated sustainability employee, it is required to search out someone in the organization that is passionate about green improvements. This person would then manage the project requirements such as needed resources, key actions and so forth, for green initiatives that are part of the green plan.

The last phase of taking advantage of green options is to manage your performance. Just like other business areas, green initiatives should be measured and managed. If your goal is to divert wasteinto recycling channels, reduce energy usage or greenhouse gases, your franchise business needs to measure its performance. Company leaders also will want to fully understand the impact on the business. Franchise companies that take advantage of green options will learn that they are not only doing theright thing for the environment, but also for their business.

Shawn Lynam, CFE, is the co-founder and CEO for Hello Eco, a U.S.-based franchise company that assists businesses in identifying and implementing green initiatives. He can be reached at slynam@helloeco.com

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