What happens when your business is way ahead of the curve and then copycat companies catch up with you?
The answer to that question — which many execs face — is what I wanted to find out from Interface CEO Dan Hendrix. His Atlanta-based carpet company embraced green practices in the mid-1990s — about seven years before its industry woke up to them.
Can you maintain your competitive advantage by being first? Or after others adopt some of your ideas, do you lose your edge?
“We’re authentic,” Hendrix replied, which is what I expected he’d say. Without naming names, he said some companies are involved in “greenwashing,” meaning they’re creating an environmentally friendly image that exaggerates their actual practices.
But even if that’s the case, we’re talking about difficult-to-understand scientific principles. The difference between talking the talk and walking the walk aren’t easily communicated in marketing materials.
Hendrix, 56, conceded that, but then explained that the way Interface became green helped it combat the potential issue.
Ironically, Hendrix wasn’t sold on adopting environmentally friendly practices when Ray Anderson, the company’s founder and then-CEO, decided to go in that direction in 1994. For starters, it meant substantially reducing the company’s use of a key raw material used to make carpet — oil.
“You had 5,000 disbelievers in the company, including the CFO, which was me,” Hendrix said.
But it’s one thing to come up with a new game plan in a vacuum, which Anderson didn’t do. It’s quite another when the architects and interior designers of the office buildings you’re targeting for your carpet tiles are requesting more progressive practices. They were Interface’s most important constituency since they recommended the carpet used by their clients.
Anderson transformed Interface for more than pragmatic business reasons. He became an environmental zealot who tried to incorporate green practices into everything the company did.
That meant using less energy in the plants (down 43 percent in 15 years), different types (eight of nine plants use green power like solar) and diverting waste from landfills (228 million pounds in 15 years) by reclaiming old carpet and recycling it into new products.
It means one other thing — lots of R&D. And that’s where Hendrix felt uncomfortable, given his numbers-crunching background. The return on investment was taking longer than he thought it should. But he learned if he were patient, the payback could be huge — not only in terms of green practices, but in new products that saved energy (carpet tiles, for example, that weighed less but had higher quality).
Still, Hendrix made it clear that Interface didn’t grow to nearly $1 billion in annual sales by selling green products in office buildings. It expanded from the office market into health care, hospitality, retail and education. And it’s now going after consumers in a bigger way by opening retail stores in different cities. Atlanta’s opened last week.
Interface also has been expanding internationally.
“If you don’t have the design, service and quality … then you’re not going to sell only on green,” Hendrix said. “But if it’s a jump ball, then you will.”
- Henry Unger, The Biz Beat
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