By Brian Kilcourse, Managing Partner
6/24/2008
The effect of human activity on the global climate has become the big news in 2008, after years of percolating. In fact, a new Bush administration report on recent extreme weather says that human-caused climate change is making storms more intense. Its twin hot topic, energy consumption, is close behind in garnering top headlines. These two issues are a big part of what many call the "green" movement, but for many businesses, its called “sustainability” – and it’s neither new nor a fad. In fact, blue chip technology giant IBM lists energy conservation as a key element of its “Global Citizenship” initiative.
Last year, IBM published a document entitled 2007 IBM Corporate Responsibility Report that stated, “There is little debate today that the impact of environmental degradation is real and quantifiable… To preserve our resources requires the development of new systems to monitor environmental impacts and new solutions to limit them.” [1] So, in the context of what we at RSR observe and analyze, the obvious question is, “What does this mean to IBM’s retail customers?” As we saw in our recent benchmark report, What Can Green Do For You?, retailers who have shown a strong commitment to employing greener practices and selling greener products have done so with an eye on elevating their brand-identity. Because consumers are placing increased emphasis on ‘green’ issues, there's growing pressure on retailers to show that the environment is high on their agenda.
IBM’s presence as a technology provider for retailers is pervasive, and so to understand how the company is helping retailers meet the challenge, we had a conversation last week with Juhi Jotwani, IBM’s Vice President - Marketing and Strategy, Retail Store Solutions. Juhi is responsible for worldwide strategy, including IBM’s focus on growing their retail presence in emerging markets, so she gets to see a lot of the world and how different regions are addressing the compelling issues that green encompasses. According to the VP, “IBM has been working on this for the last 25 years, but last year a big initiative was announced that said ‘corporate responsibility is real, it’s important, it’s the trend of the future, and IBM will invest $1B a year for the next 10 years to drive innovation in technology to bring green technologies to market’. A few months later, we announced what we call the ‘Retail Green Initiative’ that includes ‘product stewardship’ – a process that ensures that our products are the greenest in the industry.”
The executive team in every division at IBM frequently meets to discuss what their products are going to be made up of, what they will look like, what features they will have, and what trade-offs they going to make. According to Juhi, “Green is an essential part of the decisions that we make. Specifically, we look at upgradeability to ensure that the products and the components of the products have such a long lifecycle that you do not have to throw them back into the environment every few years, as the PC industry has trained us to do.” The company also focuses on the use of recyclable materials, and claims that 80% of its point-of-sale equipment and customer kiosk technology is made of recyclable materials. “Believe me,” says the IBM’er, “every Tuesday from 8-11, we discuss how we can take that further.”
Of course, IBM isn’t going to have a problem convincing U.S. retailers to extend the useful life of their POS platforms. As one CIO recently said to me, “My POS system is old enough to drink.” That may be true in mature markets, but according to the IBM executive, “My travels overseas have really made me think that some retailers, especially in India and China, are growing so fast that they don’t know what seven years ahead looks like. So we’re seeing a much quicker replacement cycle. There’s a huge opportunity in emerging markets, where ‘unorganized retail’ is moving towards ‘organized retail’. People who are running these retail companies are people who grew up in the PC era. At first, they emulate companies like Wal-Mart, but after a few years they become tech savvy, and then we get a lot of competition from PC companies. But after a few years, they realize the difference between POS and PC’s, and they go back to companies like IBM and NCR.” IBM’s message is essentially twofold: first, that retailers can have a POS platform that can withstand the rigors of the store environment for years, and secondly, that it can also be an ecologically responsible decision.
There’s much more to IBM’s “Retail Green Initiative” than POS technologies – too much to cover in one Retail Paradox Weekly column. The question is, from IBM’s perspective, how global is the global green movement in retail? “Europe is clearly leading the charge with green,” says Juhi. “It’s a corporate mandate for many, many retailers, and not just the large ones. In the U.S., there’s a lot of talk about it, but there is more that needs to happen. We’re getting very good traction in China and moderate traction in the Middle East. In Eastern Europe only the big retailers are focused on it. In India, we’re getting a moderate response. In Latin America, they’re not quite there yet.”
A question RSR asked in the What Can Green Do For You? study, and that IBM ponders, is whether retailers have revisited their processes and architectures and “crossed the chasm” to make green really viable across the entire enterprise. Retail winners are going to “do it” because it’s the right thing – and by the way, they’ll make money doing it. As the study results show, ‘green’ can translate into “cost savings,” and so the opportunity to be more efficient and be socially responsible is a message that resonates with retailers, and companies like IBM clearly are aligning to that.
[1]2007 IBM Corporate Responsibility Report, © 2007 International Business Machines Corporation, p.28
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