You’re a founder of a new enterprise and one of your top priorities is social and environmental responsibility. Your management team, however, can’t think of anything but the balance sheet. By year’s end, your bottom line is healthy, but you don’t feel your new enterprise has contributed much to society.
It’s a common dilemma that comes down to a core disconnect that many founders don’t think to look for when pulling together their C-suites. But compatibility surrounding worldview, ethical issues, and dedication to social responsibility can be as important to the success of a business as professional qualifications.
Gustavo Mamão, SF ’11, founder of the Brazilian startup Flourish, which guides entrepreneurs in the creation of mission-driven organizations, has always focused on businesses that demonstrate how a company dedicated to a better world can also be profitable. But it’s an ethic, he says, that the whole management team must get behind. “The extent to which a business embraces sustainability and environmental goals is something that should be decided among founders and investors in the earliest days of the enterprise.”
Don’t think that digital tools can bring you closer to nature? Elif Buluç SF ’08, might be able to convince you otherwise. Buluç is CFO of Anadolu Etap, Turkey’s largest fruit producer and distributor. The company processed 162,000 tons of fruit last year purchased from 150,000 farmers in 3,000 villages across the country. It’s also the first Turkish agribusiness executing its operations within the framework of sustainable agriculture principles.
Buluç says that software innovations are making it possible for Anadolu Etap to disclose the specific origins of every piece of produce it brings to market. “The only way to better know the provenance of a piece of fruit is to pick it yourself,” she says. The company worked with a digital development firm to create a revolutionary new enterprise resource planning (ERP) software system that gives the company the ability to monitor every aspect of the growing and processing of fruit.That traceability means that the company—and its consumers—are able to learn where and how the fruit or fruit product was produced.
“Knowing the origins of what they’re eating is important to today’s consumers,” Buluç says. “They worry about safety—especially the safety of the fruit, juice, and baby food they feed their children. Every step of our growing process is digitally recorded, so we can vouch for the full life cycle of every single piece of fruit. That makes full disclosure possible and gives our customers a sense of comfort.”
Monitoring the life cycle of a piece of fruit
The ERP system integrates information from three business units: operating plantations for the growth of fruit (more than 100 varieties), producing processed fruit for the makers of fruit juice and baby food, and selling fresh fruit for consumption. The analysis it generates informs management about the production of every piece of fruit at every plot at every Anadolu Etap plantation as well as the costs and outcomes of production, how much labor was used to produce each crop, climate conditions, and other essential metrics. “We can compare and contrast the success of various methods of planting and processing and quickly course-correct when necessary,” Buluç says. “We learn something every day that allows us to maximize our harvests, boost our productivity, and design new plantations with those lessons in mind.”
Buluç says that she has new reasons to be excited every day about the advances Anadolu Etap is able to achieve because of the continual flow of digital knowledge. “When people think digital, they think it’s a substitute for the human factor. But our digital tools have everything to do with the human factor. They connect the entire Anadolu Etap family, from climate scientists and agronomists to workers in the fields and processing plants. Everyone is part of this network—including the consumer. It’s now possible for us to draw a direct line from the farmer to the consumer. When someone eats a pomegranate that we grow, they know exactly which little rural farm brought it to life.”
Read more about Anadolu Etap’s digital quality control system.
Patricia Winand, SF ’13, Senior VP of Sales & Marketing, Americas at Close the Loop, first started ruminating about loops when she studied system dynamics (SD) as an MIT Sloan Fellow. “For me, SD was love at first sight because I am a very spatial person, and my brain responds best to visual stimuli. The graphic explanation of a complex problem makes it so clear.”
The beauty of system dynamics, Winand says, is that it is a wise combination of simplicity and analytical power. But although she enjoyed learning the technique, she wasn’t sure she knew how she might use the tool in the real world. “The professor who taught the course was a master at the subject, but my million-dollar question was: how can a mere mortal do it?”
After graduation, Winand realized that, indeed, system dynamics could be second nature. She found that the course had changed her mindset and that she was using SD automatically when analyzing problems and identifying their root causes. Then she joined an Australian-based company called Close The Loop (CtL), which seemed like kismet, given that it was all about loops—in this case, the recycling loop. CtL turns used printer cartridges into other products.
The prevailing misconception toward the green-oriented world is that sustainable practices are something of an ideological luxury. Organizations are quickly coming to realize, however, just how wayward that myth is. The U.S. Postal Service, for example, saved $52+ million in 2012 alone with green initiatives. CEO of the USPS, Megan Brennan, SF ’03, says that the economic success of those efforts illustrates that sustainability can be as much a financial boon as an environmental benefit when tackled strategically.
With a 25% decline in mail volume over the last decade or so, the USPS has seen a severe cut in revenue. Even the federal government has gone over to e-commerce. To make up the shortfall, the postal service has been aggressive at cutting costs—and many of those savings have been driven by comprehensive facility energy projects.