Ep 10 – Conversation with Andrew Winston (Co-Author, Net Positive)
In this episode, Venkata and Jaideep ask some pertinent questions to Andrew about his latest book, Net Positive, that he co-authored with former Unilever CEO Paul Polman. Andrew explains the core thesis of his new book Net Positive and about Unilever’s sustainability journey. He then gives his take on the Private equity ownership of Kraft Heinz and their attempted takeover of Unilever and how eventually that takeover failed. We then hear Andrew’s take on Danone’s CEO Emmanuel Faber getting ousted and on short-term vs long-term views at companies regarding investment and sustainability. The interview then goes towards the growth vs consumption dilemma, big companies’ climate goals, and his views on greenwashing. The discussion then takes a turn towards why leadership, culture, and values matter in a company towards achieving Net Positive status. Building partnerships is identified as key to achieving climate goals.
Guest Bio
Andrew Winston is a globally-recognized expert on megatrends and how to build companies that thrive by serving the world. He is one of the most widely read writers on sustainable business in the world, with regular columns in Harvard Business Review and MIT Sloan Management Review. Andrew’s latest book, Net Positive: How Courageous Companies Thrive by Giving More than They Take (co-authored with renowned CEO Paul Polman), is one of Financial Times’ Best Business Books of the Year. Andrew was selected for Thinkers50 list of the top management thinkers in the world.
Key moments timestamps
[00:40]- Andrew’s sustainability journey
[02:46]- On the core thesis of his new book Net Positive
[04:55]- On Unilever’s sustainability journey
[07:26]- On Kraft Heinz and the attempted takeover of Unilever
[10:51]- Andrew’s take on Danone’s CEO Emmanuel Faber getting ousted
[12:53]- On short-term vs long-term views at companies regarding investment and sustainability
[16:22]- On growth vs consumption dilemma
[20:05]- On big companies’ climate goals and views on greenwashing
[23:41]- On why leadership matters for companies in achieving climate goals
[25:49]- The role of culture and values in a company towards achieving Net Positive
[28:50]- The elephants in the room to tackle for achieving a Net positive future
[31:15]- Building partnerships to achieve climate goals
[33:51]- If businesses are ready to tackle climate goals on their own
Quotes
“Once we call something “sustainability”, it gets this extra burden of proving it this quarter or we’re not gonna do it, ‘cos it must be anti-business. It’s just this assumption that it’s anti-business which we’re breaking down. I think I’ve been trying to break this down for 20 years, but I think it’s finally happening. There’s a broader view of the benefit of all this.” – Andrew Winston
“Part of this neoliberal model is we should not only maximize profits by selling things at the highest margin we can, we should squeeze government taxation down to nearly nothing, so we deliver the most to shareholders. But what does that do in the long run? …… So that disconnect is a huge problem and I think transparency is part of the solution and those disconnects are being called out increasingly by NGOs and by employees.” – Andrew Winston
Transcript
[00:00:00] Intro: Welcome to more with less the podcast that looks at how businesses balance financial growth with sustainability. I am Venkata Gandikota and I’m Jaideep Prabhu.
[00:00:24] Jaideep Prabhu: Our guest on this episode is Andrew Winston. One of the world’s leading thinkers on sustainable business and author of the recent book with Paul Polman, entitled Net Positive. Andrew, thank you for taking time to talk to us.
[00:00:38] Andrew Winston: Oh, glad to be here. Thanks so much. Thanks very much for having me.
[00:00:40] Jaideep Prabhu: Perhaps we could start with your personal and career journey.
How and why did you get into the sustainability space?
[00:00:47] Andrew Winston: It goes way back. I was a young man. Now it’s been a while, but I at one point was the young guy doing sustainable strategy stuff. I came out of school in college and worked at Boston consulting group. I did the typical thing you do when you leave a decent school and did consulting and then was working in the media business for a while, big media companies like Time Warner and Viacom. And it really came about during the.com crash. I had left big companies to be in a small the.com world. And I got there about three weeks before the two thousand.com crash.
We eventually, ran outta money, went under and it allowed me to step back and what I really was doing. And so I’ve met a lot of people where I think there’s big transitions. You’re seeing it now with the grand, the big resignation or whatever people are calling it. When there’s big transitions in the world economic usually I think a lot of people step back and say, what do I really want to be doing before I go back into this?
And I realized I thought business could be used for more than just, helping my company sell more stuff or whatever I was doing at the time. And I cared about the environment in a kind of very practical way. And it wasn’t so much the hunting and camping kind of thing. It was just that it seemed clear to me that the resource use couldn’t continue just, on a really practical level. And I started asking around like, how do you combine business and environment and heard this word, sustainability, read all these great books. And it convinced me, over the course of a month or two in 2000, 2001, that I needed to do something different.
So I ended up going back to school. I had an MBA, but I went and got a degree in environmental management. I worked with a co-author at Yale and we wrote Green to Gold and that came out 15 years ago and it really launched my career. It sold a lot. It still sells. It was one of the first big books on, that say, Hey business, this is good. This is easy. You’re not easy, but this is good for your company to take an environmental view of your business. And I, kept working and writing and working with companies directly speaking around the world, writing books and articles, and that’s been the last 15 years. And it built to what I hope is the biggest thing I’ve done so far, which is this new book with Paul Polman, which I’m sure we will spend some time on.
[00:02:46] Venkata Gandikota: Yeah, just taking up from what you just spoke about Andrew. Can you tell us a bit about Net Positive, your latest book that you co-authored with Paul Polman? So how did you come to write the book with Paul? And then can you also please describe what is the thesis of the book?
[00:03:01] Andrew Winston: I came to write it with him in part he asked me that was the the first step, but I, I didn’t, it’s funny. I didn’t say yes immediately. Partly because, I knew Paul, I didn’t know him. I had worked some for Unilever in the US, but of course, I’d written a lot about him and Unilever in my last book, the big pivot.
And, he’s obviously one of the true leaders in sustainable thinking from within a company as a CEO, really, I think the first, large company, public large company CEO to take this on in a serious way. But I knew what it took to do a book. If you guys have written books, it’s it was a big commitment and I knew co-authoring is actually really difficult.
So I took a beat, but decided two years ago in the fall of 19 that I would do this. And then we started talking and then we started meeting, having our conversations, the pandemic started and that kind of changed everything really quickly. And it meant I was home more, I wasn’t traveling anymore and I could focus on the book.
I think from the beginning, it was not meant to be, Paul’s personal story. I think there’s elements in the book of that, but he should, I think go off and write, his kind of autobiographical approach. He’s an interesting life. It’s meant more to be the story of how to build a company that, that serves the world that creates value for all its stakeholders.
And that’s the fundamental idea. Being net positive to us means solving the world’s problems. It means, creating value, profiting, thriving as a business, by solving the world’s problems, not by creating them and by improving the wellbeing of everyone that you touch, all your stakeholders, your employees your customers and consumers, your suppliers, communities and on.
And doing that for every product and service, every factory, every building, every country you’re operating in. So that you’re a positive impact everywhere you are. Now, this is the north star. It’s not like any company could claim they’re there. We’re not claiming Unilever is. Not close, but Unilever and other leaders have pieces of the story that they’re doing really well, that they’re getting there.
And the fundamental question in the book asks really is, is the world better off because your business is in it? That’s the kind of core philosophical question.
[00:04:55] Jaideep Prabhu: What makes Unilever so special and what’s special about their sustainability journey in particular?
[00:05:01] Andrew Winston: There’s a lot of elements, right? Paul came into a place. He was the first outside CEO. He came in ’09 and the company already had a lot of purpose based products or just a lot of purpose around its existence. And it started with health and hygiene and soap products, including Lifebuoy, which is one of their better known soaps and products that was from the very beginning, the 1870s.
But they were at the time when he came in, they were stagnant. They were not growing or even shrinking in parts of the world. They had lost their perch as like the largest consumer products company to, Proctor and Gamble. And they had done things that were sustainable.
They had been a leader in things like the starting the Marine stewardship council, earlier in the first decade of this century that took care of fishery stocks, so they could have, steady supply for some of their fish sticks, logical things, but were new, were new for companies to really do in a big way.
And then Paul came in and I really made it the core of the business. The short version that I’ve written in the past is that the sustainable plan, what they called the Unilever sustainable living plan became the strategy of the company, not the side thing, which is what it is really still today for most businesses, right?
It’s this side thing, they do a sustainability report and they talk about what they’re gonna do for the world.
Some of the charity they’ve done often, if they have a pretty narrow view of it and, it’s separate from the way the company sees itself as how it makes money. And I think Paul has tried to merge those two and they’ve been on this journey for the last, 10 he’s ,he was there for over a decade. And now the current CEO Alan Jope, they’re merging those two in a very real .Well, that takes time. Right. And I think they, they see them as integrated and they’ve accomplished a lot. When you see their results are real. They saved, hundreds of, millions of euros in cutting energy use.
They’ve moved to renewables heavily. Their supply chain work has been a very difficult path, but they’ve had some huge successes. They’ve had failures. There’s things they haven’t done enough on that. They’re working on now like plastics and packaging. But when you see really any announcement about any kind of partnership in that relates to anything consumer products would do, they’re always the first ones to sign. They show up repeatedly. And when you see rankings, Globe Scan does this, annual ranking, they’ve been ranked number one for 11 years. Rankings on even political advocacy by Influence Map they’re number one, like they just keep popping to the top. It’s just clear. It’s clearly a commitment and execution, you’d see with, apple and innovation, It’s just been a dominant performance in this space and clearly others are doing great work, but they put the whole package together it seems in the most consistent way.
[00:07:26] Venkata Gandikota: That’s great points about Unilever’s what they have been doing, but the Unilever story almost ended in a tragedy didn it because Kraft Heinz almost managed to take it over. Can you give your take on what happened there?
[00:07:39] Andrew Winston: Yeah. So I’ll give you the quickly, the take from me from the outside. I wasn’t, I didn’t know Paul well, and I was working with Unilever in the US. It was scary just as a sustainability person. I was doing the thing I do now, writing books and out there in the world telling people, “Hey, this is good for business and look at companies like Unilever “and along came a very traditional kind of model of consumer products that were really based. It was private equity owned Kraft Heinz. At that point, they had some big famous brands, but they really were focused on, cost cutting and private equity’s known for kind of squeezing value out, maybe tearing things up.
And that wasn’t just opinion. There were financial times articles saying, 3g the private equity firm was known for, cutting costs. That was their thing. And it would’ve been just the end of Unilever’s sustainability journey. And as part of the book research, I’ve talked Off the record with 3g folks and I basically asked them like the valuation you put on the company, which they offered a premium to the market, which you do when you’re trying to do a hostile takeover. I said, did you really value the sustainability stuff? And in essence, the answer was no, they were just valuing the brands and the value that Unilever created through sustainability, but they didn’t really, I think get it and, or see it as core to the story.
And even though some of the investors would’ve done better with a, immediate premium and the executives would’ve made a fortune, they usually do in these things, Paul still, I think, felt very strongly. This was not the right path for the company that he was in charge of and was supposed to shepherd. And the version that we opened the book with that story and people said it’s really compelling. That just says there were two fundamentally different models of business here. This was really in a way, the battle of that we’re still having in business. Is it the neoliberal shareholder first above all shareholder first in the quarter, in the short term, or is it a company that tries to create value in the long run, still looking for profits, but those profits come by doing other things first, by satisfying customers, by innovating, by doing all those things we’re supposed to do in business and not by purely trying to produce the profits you can report immediately. And that battle was, very scary for those of us in sustainability to think we could lose this great example.
And long story short, they did fight it off. It actually, it all happened very quickly. It was like a nine day kind of battle there’s I, I didn’t know, until talking to Paul, what happens in these grand takeovers. There’s a lot of public sentiment that comes into it. There’s calls to prime ministers and there’s, cuz this would’ve been, I think the largest takeover in history at the time it was a 150 billion, something like that. And would’ve created by far the biggest consumer products company. And there’s calls between famous people and there’s just this sentiment. And the part of the story that I think is really unique and really opens our book in a way, because of it was the support that Unilever got from unusual circles, like Green Peace and, those labor unions.
They felt like this company for all its flaws was doing right by them or was sincere. And they trusted Paul and other leaders. And they really came out, publicly and privately to say, let’s not let this business model get sucked into another company. And so they fought it off.
It was, the details of that are always hazy to me, like what happens in those boardrooms. But I think we tell the story in a way that gives you a sense. This was, I think this was Paul’s biggest moment. I would can answer for him, I guess this is his biggest moment, right?
As CEO, this was the biggest threat to and biggest decision, he had to face.
[00:10:51] Jaideep Prabhu: So Andrew, thank you for that. Another example Danone, recent celebrated example of a large global firm that took sustainability seriously, but their CEO, Emmanuel Faber was recently ousted by activist shareholders. What’s your take on what happened there? Was that old school shareholder capitalism fighting back or is there something else going on?
[00:11:11] Andrew Winston: I don’t know. I mean, Look, companies, especially big multinationals, they’re really complicated. they’re in operating in 180 countries. There’s a lot of different stakeholders. I can’t say no. Well Enough, honestly, it’s easy to say and I know the forces that are so skeptical of sustainability that, those core kind of shareholder value adherence. We’re like, look, see it doesn’t pay to be sustainable. I don’t know. We know that. I don’t think we know exactly what causes, I think there’s been previous cases we mentioned in the book briefly- a friend of ours who was, CEO of NRG, a big energy company, David Crane. He was out front in the energy business saying we gotta get outta coal. We gotta go to renewables. He was right but his board wasn’t ready. They blatantly pushed back hard and it was about that issue. Like you’re not, we’re not ready. We’re not going this sustainability route. I don’t think that’s as clear with Danone.
I think you could arg you could say, oh, did he take his eye off the ball of, some of the key metrics? A CEO has to operate and succeed on many levels. I think if some of the core numbers weren’t hitting what they wanted, then boards can sometimes say you’re not the right person right now.
I don’t know if that means really that the sustainability agenda will die out. If it does and it probably wasn’t integrated very well. And I suspect you’re not gonna see Danone slowing down very much on regenerative agriculture and renewables and cost cutting through efficiency. These are all just good business.
But it, if we’re gonna take seriously that, that this is becoming mainstream, which I really think it really has this year in many ways. And more and more companies, this is just a huge part of what they talk about as a business. Then some CEOs are gonna succeed and some are not within the realm of this is business.
And I think trying to chalk it up to any one thing is just really difficult. So I’m really hesitant to say, oh, because it was sustainability. I just have a hard time believing that.
[00:12:53] Venkata Gandikota: Andrew, companies are often focused on the short term. How can they take a longer term view? How should they think about how they invest and spend money?
[00:13:03] Andrew Winston: Yeah. I think that’s, there’s two really important questions there. I’ll say. it’s a long conversation about short versus long term. it’s throughout this book, it was the first core hurdle discussed in my last book. The Big Pivot and, short-termism is the problem really? We can get into a debate about stakeholders versus shareholders, but really it’s about short versus long because any company, if they take a longer term, Is gonna have to please stakeholders.
You’re gonna have to think about attracting and retaining talent and innovation and, living in a good way in the communities you operate in. So you’re welcome there, all these kind of stakeholder related issues, including shareholders. So I think it is the long versus short and we have a deep problem, right? I mean this model of shareholder supremacy and really short term and very narrowly defined metrics for both companies and countries for countries it’s GDP and the stock market, those have become, the metric for wellbeing of the entity. And that’s some of, that’s been a very concerted effort by economists since the Chicago school and Milton Friedman, it’s been 50 years of that’s the goal. And I think it’s obviously it’s a lot easier to tell yourself there’s one metric that you have to shoot for. That’s much easier as a CEO than realizing how complicated it really is. So I’ve thought for a long time and it’s one of my kind of pet peeves or things I love to get into.
That’s very wonky, which is about how we make investment decisions in business and the idea of return on investment or whatever metric you use. And in my, and my previous books I’ve talked about, I think return on investment or ROI is fundamentally broken as a tool it’s overused and not really used well, because we measure, we in the investment, the eye part really specifically, there’s this many millions that went into this project or to change the lighting in our factory for this, operational change. We’re not good at measuring the return at all. We measure it in dollars again. How many did we sell? How much did we save directly?
Where is the measurement of this provides some resilience to the business if we went to renewables, this provides some stability of prices in that example, which has an actual kind of cost and benefit, employee loyalty and retraction customer loyalty, license to operate, all these things that are not externalized value.
This isn’t value to the forests and to the polar bears. This is value to the business that we just don’t measure very well. So you see decisions that I think are just fundamentally wrong. When you take into account all of the benefits or they’re delayed too long, like companies going to electric fleets for trucks, they’ve waited till in some sense till the upfront cost of buying that electric truck is the same or better than the diesel one, which is really silly because operating that vehicle is much lower cost, right? It takes much less maintenance. It costs less to power. It’s more efficient. It has more technology in it for tracking. So it became from a fuller ROI perspective. It was a good investment long before you decided to make it.
So that’s lost opportunity. So I think we don’t look correctly at the return on investment. In some areas, I think maybe R and D that’s your, in the innovation area like you guys are so focused on and rightly there’s more understanding of that. There’s more understanding of this long ability to create value from an innovation or things that are hard to measure from that innovation.
But once we call something sustainability it gets this extra burden of prove it this quarter or we’re not gonna do it, cuz it must be anti-business. It’s just this assumption that it’s anti-business which we’re breaking down. I think I’ve been trying to break this down for 20 years, but I think it’s finally happening. There’s a broader view of the benefit of all this.
[00:16:22] Jaideep Prabhu: One of the things that keeps coming back to me. Is there a contradiction in terms between growth and consumption and being environmentally conscious? Can businesses that rely on consumption actually be genuinely environmentally conscious? Do we need to have businesses and business models that actually sell less and actually get people to consume less?
[00:16:43] Andrew Winston: Yeah, look, it’s the big question. It’s the hardest question. It’s the one I think we addressed in the book as best we can. Paul still believes in growth there’s as he always says, it’s hard to be in a business that people enjoy working in if it’s shrinking or declining. It’s also hard to do more and more good in the world, which is part of the net positive mission if you’re not growing. But the question is always what kind of growth and where, and these are the more difficult questions I think we want if there are products that companies like a Patagonia that make so many products with a full thought of the life cycle, Ikea, a lot of Unilever products, you want those companies and those products to sell more.
The ones that are on a path to being, more and more sustainable that are getting closer to circular and their materials being made by renewable energy, et cetera. You want more of those. You want them to displace others. And the products that are really tied in a very real way to their purpose and create value for the world through their existence, which is a lot of brands that at Unilever, have focused on being purpose driven, like Lifebuoy soap and the campaigns it does around the world on health and hygiene. It isn’t philanthropy for that brand. It’s how the brand speaks to the world, right?
We’re helping kids learn to wash hands around the world, saving lives. You want that brand to grow right? The bigger it is, the more events it does, right? The more it does to help kids and mothers new mothers learn to wash hands more and saves lives. So it’s you want growth of the good things.
I think it gets harder and, frankly, when you talk about Unilever sells like body spray, arguably nobody needs body spray and nobody needs lots of things we have in the world. So there’s a mix of what’s useful versus what’s part of our fun. We don’t need travel, but people want it, there’s lots of things we don’t need.
So I think there’s growth of the individual products and companies that are doing the right things but there is still this macro issue of the thresholds of the world. And that’s a huge component of our book, which is the outside in view says there’s only so much stuff.
There’s only so much clean air and water. There’s only so much stable climate. And we do have to operate within that at the full level, right? So all now 8 billion, what will be nine or 10 billion of us have to figure out a way to operate within that structure. So we do need new models and we knew we need more circular and regenerative models that repair.
And those are new businesses, new, exciting businesses, new ways to do business for the current players. And that these are multitrillion dollar opportunities coming over the next, generation. And yes, I think we need to use less of the things that are creating footprint needlessly, or, and I think there’s just a macro question.
And part of the answer we touch on briefly in the book and is how I try to square this circle is I think we do need growth. There’s gonna be a couple billion, more people that need to come out of poverty. They need more material wellbeing. We can leap frog technologies and they can use renewables, et cetera, but there’s still more stuff.
And so I think it’s a question. If we want to have the really hard conversation, it’s really what the billion of us that are at really the top tier of well above sufficiency have enough in life, up to the very, very wealthy, I think there’s a hard conversation coming with that billion about what do we really need?
And cuz we need the world to grow for the bottom few billion. But we still need to live within the means. So there’s a line we have in there from Gandhi, which is that “the rich must live simply so the poor can simply live”. That’s much easier said than done, but that’s really the macro strategy that I think we’re gonna have to pursue. Very difficult for companies to talk about that.
Just go to Wall Street and say we wanna shrink our sales to the rich people and increase it. We wanna do more frugal innovation. We wanna do more reverse innovation. All of that. It’s hard, right? It’s a hard conversation. So maybe it’s one that society has more than a particular company.
[00:20:05] Jaideep Prabhu: In an MIT Sloan article, you wrote about this disconnect between big company climate goals and what they or their trade associations do in terms of lobbying. So in your view, how seriously are large listed companies taking sustainability or is there just a whole lot of green washing going on?
[00:20:24] Andrew Winston: Yeah, I think part of my answer to this is always that companies are really large, really complex and they’re not monolithic. They’re not one thing.
For years. I’ll you know get questions, especially from younger people and speaking at a school or something at college. And, should I go to Walmart?
Aren’t they bad? Cuz if they don’t pay enough wages. There’s no company that’s perfect. And there’s ones with obviously serious problems that need to be boycotted and need to be, pressured or should go out of existence.
I mean, I kind of felt say when VW was in full fraud mode, right?
Convincing people, their cars were cleaner than they were. That’s almost like a life threatening kind of mistake. If you wanna put it that, at a company that maybe a company like that needs to go under or some of the, really more, maybe more to the point, like the big bank stuff on the mortgage products in the 2008 timeframe, maybe some of those companies needed to go under and some did, a couple did. So I, I think there’s a few cases where it’s just clearly it is greenwashing is an understatement for pretending your products, you know, really lying about it. I don’t think there’s as much greenwashing as people mostly mean it. I think what happens a lot is companies talk about stuff they’re doing and it’s real, but it’s just maybe not that significant, right?
It’s not really the biggest part of their footprint. My classic example is banks for years talking about we’re doing two-sided copying in the bank and it’s or even our buildings are this much more efficient. Great. But for the big banks, your footprint is where your money goes, right? It’s are you financing coal anymore?
And so you’re seeing in the last couple of years especially at the global climate meetings, the banks coming in with statements about their portfolios and coal, and they’re not enough yet, but they’re, we’re starting to get into the right conversations. But your question about the political disconnect is very real.
It’s really problematic. It’s big in the US. and it came up really over this bill. That’s still being debated, I think is gonna pass in the coming weeks to a spending bill. But that, and the question is not the spending. Nobody truly debates some of the things to spend in there. It will have the most spending on climate I think of any bill in the world. It’s about how to pay for it and they pay for it so it doesn’t add to the debt and deficit by rolling back tax cuts for companies in the very wealthy. And so you have companies that are really out front on climate and have huge aggressive carbon goals, but have been silent on this bill or at least the paying for it, part of the bill and have let organizations like the US chamber of commerce fight against the bill.
And that disconnect, I think is just truly unacceptable at this point, because if we need to make some big infrastructure investments so that the clean economy can come faster. Who’s gonna pay for that, right? It’s gonna be public private, but that includes public. That includes funding it through taxes.
This is like really basic stuff, but part of this neoliberal model is we should not only maximize profits by selling things at the highest margin we can, we should squeeze government taxation down to nearly nothing, so we deliver the most to shareholders. But what does that do in the long run?
And you’re seeing it in a country like the US, our infrastructure is not in good shape, where we don’t actually support the longer run interest of businesses by having really, first class roads, bridges, grids, internet, renewables, like all of it. So that disconnect is a huge problem and I think transparency is part of the solution and those disconnects are being called out increasingly by NGOs and by employees. I think that’s where you’re gonna see increasing pressure is from employees.
[00:23:41] Jaideep Prabhu: So it sounds like, things like leadership matter. Would you say that, that’s crucial here, the role of leadership in all this at different levels from what’s your take on?
[00:23:51] Andrew Winston: Look, this new book Net Positive, it’s written with a former CEO. So leadership is really at the core of the discussion. And I used to, I used to answer when people would say to me, even years ago, why is Unilever doing so much better at this?
And I just said it’s leadership cuz everyone wants to replicate what a company does. And my fear in all, this has always been, what if you just need someone like Paul, right? You have to have the right kind of leader. And I think there’s truth to that but what we, I think we’ve shown in this book is like the pathway to building those kind of leaders to building the organization that is that is welcoming of those kind of leaders and helps enable them and starts to build a purpose driven organization so it’s built increasingly into the culture and just the operations of the business. So you don’t need a single leader, right? That’s going back to Jim Collins, right? That’s building, the watch, not being a time teller, building the thing that lasts. And so we focus in the book early, really early on leadership.
And really the first step we have towards building this kind of business is starting with yourself. We have a chapter called how much do you care? And it’s just about, do you care? And do you have the kind of the purpose and duty and empathy about the world’s issues? Do you want to help solve them and fundamentally at core, do you have the courage to do something about this and fight those pressures? Like the short term pressure from investors and fight against the kind of urge to be in battle with government or NGOs, and actually start working with them in partnership in a real way, be open to partnerships, be humble. These traits are gonna be even more critical than they’ve ever been when we, as we continue to see the scale of our problems be just far beyond any one company or any one country so that you have to work in partnership.
It’s natural for some, but it, I don’t think it comes naturally to most and we’re not really taught to be right. Competitive advantage is the big thing. And it’s a dog eat dog world and we’re not taught about how do you work with others for greater good but still actually find often advantage by working together.
You can find advantage for your own company in solving some problems with others. Leveraging the solutions in your own way, in your own business. So it’s a different kind of mix of leadership now.
[00:25:49] Venkata Gandikota: The similar thing would be about culture and values. I think those are potentially linked. So what do you think about culture and values and how do you build a net positive culture, Andrew?
[00:25:59] Andrew Winston: It’s interesting. A lot of books start with culture. It’s one of the, kind of those first early steps in talking about the kind of business you want and leadership. And we actually, we put culture at the very end of the book as almost the result of the things you’ve done to build that culture consistently.
So the culture comes through the actions you’ve taken. We talk about it as, values in action in motion, values every day, like builds the culture. And Paul has a really interesting take on this, that culture, your values don’t shift. There’s that core ying yang from, built to last and, those kinds of books, but that culture can vary by country, by matching partly the mores of the places you’re operating in, the kinds of products you’re selling. And as you, in Unilever’s case, as they bought different startups or mid-size companies that were doing more sustainable personal care or food products, it started to change the culture. There was more entrepreneurial people running around when they had, when they bought like 50 to 60 companies under Paul alone that were in the, 100, $200 million range, maybe a little bigger, maybe a little smaller, that just starts to the business. So culture can evolve, but it’s gotta be based in these kind of core values and show those values through consistency. And we talk about in the book building the culture and it’s another way of saying embedding sustainability, which is long, been a topic in this field by making it, structurally part of, your M&A so that you’re buying more sustainable products.
You’re building that culture by making it part of R and D. So your innovation process, we talk in the book about some of the great examples of innovation to solve social and environmental problems that helped a product grow, right? That you saw innovation in that Lifebuoy soap I mentioned not just in doing these hand washing campaigns, but they realized, oh, we need to have hand washing be quicker. Kids that we’re trying to teach they don’t sit around still very long in the water. In some of these areas in the developing world, there’s not a lot of water. So they made a soap version of Lifebuoy that killed 99.9% of the germs in 10 seconds instead of 30. And it changed color in that amount of time so that kids knew they were done. And. that’s innovation, right? And they set different goals for R and D. And that’s partly how you build in that culture that are, their culture is we’re purpose driven. We’re solving problems for the world. We’re help helping build health and hygiene, so that the innovation is driven on that.
And that clearly creates more demand for the kind of people who wanna work in that place. A commitment as is, has become so important at companies now to diversity and inclusion. Bringing in people of multiple races, of different abilities, you start to get just a different culture of acceptance, and a multinational kind of look to your business. So, consistency comes up a lot in this book. And I think it’s probably, if you got Paul to get it down to one or two words about what makes for a good CEO, I think deep down, it comes back to consistency, showing it in all that you do and walking the talk that builds the culture. Cuz then people believe and then they want to act in those ways.
[00:28:50] Jaideep Prabhu: What are some of the big elephants in the room that companies need to address and be more open about if they’re going to be net positive?
[00:28:58] Andrew Winston: Yeah. So we have one of the other kind of late chapters in the book is called the Elephants in the room and this is the one that’s gotten the most attention that we’ve gotten a lot of feedback from companies. We’re not the first to write about trying to build a sustainable business. I think we have much more on the how than any most, pretty much anything I’ve seen before, including my own books.
And we have this one chapter that very few people have done this, where we said, look, if you really wanna be positive, there’s a bunch of things that nobody wants to talk about. That leaders, CEOs, the Boards don’t really wanna talk about. But if you’re honest with yourself, you gotta say, we’re not positive if we’re not doing these things right.
And that includes things like taxes, is your business actually paying taxes? Are you contributing to the society around you in that very direct, important way? And to the structure of the countries you operate in corruption, how are you disabling it around the business or helping your employees deal with the corruption and requests that come in from in different parts of the world that are just more normal.
And by the way we don’t say that’s just a developing or developed world. The US, where I’m from, we have legalized corruption. Like you can give limitless basically to politicians and effectively buy them. So it’s legalized, it’s not under the table, but it’s still corruption really.
And, taxes, corruption, executive pay. We say CEOs make too much money, right? What the ratio of CEOs to regular people in the business is way too high. So those kinds of things, right? The human rights issues in your supply chain, that the really broad, true kind of diversity and inclusion, we have, nine issues that we talk about that companies gotta take a hard look at and they’re hard.
But they really are ones that are only gonna all coming together. So there’s efforts now in taxes, right? To have a one global tax rate, the O E C D and president Biden’s gotten behind this, I think it’s 15% is what they’re talking about now. Just at least companies are all paying this base rate.
So there’s less of the, oh, I’ll just move my headquarters in name only to one particular place in the world. Cause it’s lower taxes. If you harmonize that, you can try, you can take away those games. So those are the kinds of elephants that we’re talking about that I think we start, we open that chapter with the story of the blind men who come upon an elephant, the famous, old
story and don’t know what it is and they’re describing.
And I, and basically, I, I wrote these elephants are ones that CEOs know what they are. They’re pretending they don’t know, like they actually, they’re not blind. They know what this thing is. They’re just ignoring it and we just can’t do that anymore.
[00:31:15] Venkata Gandikota: You talked about like really important things like leadership, culture, values and these elephants in the room. But how about partnerships? Like how can companies solve the problems of climate change and can they do it on their own?
[00:31:28] Andrew Winston: No. the short answer is no, you can’t.
The problems are too big. There’s plenty you can do on your own to just be more efficient and help people find purpose. We have a bunch of chapters on that internal work that you need to do. Purpose being the core of it, setting really big goals, building trust and transparency.
Those are choices you can make to release information about your supply chain. But when you get down to it, really, the book really builds to two chapters in the middle of the book on partnership and that the problems we’re facing now are so large that you can’t do it alone. There’s no company big enough, there’s no country big enough. Climate’s an issue for everyone. One example in the book is the sourcing of Palm oil. It’s this big, tough thorny problem in the world. It ties to all of our big issues because it’s the clearing of land from Palm oil is one of the major sources of deforestation in the world.
It makes Indonesia the fourth largest emitter in the world, and the big companies have been trying to buy more sustainable Palm oil and do, but they’ve affected the industry, not nearly enough, and barely. And that’s because Unilever’s the largest buyer of Palm oil in the world and they buy 3%. There’s still big unnamed kind of coalitions of buyers in India, China elsewhere that aren’t really caring about the sourcing and are just buying the cheapest thing they can.
So that the change that’s come about, where you’re now seeing actually for the first time in the last few years, actual declines in deforestation in Indonesia, like the numbers are there is coming from some of the kinds of projects we talk about in the book that bring together the big buyers, the wholesalers, and processors the farmers on the ground, the municipalities, the money, there’s the Norwegian sovereign fund has donated money to this project that’s working well now, finally, in Indonesia, they’re helping finance farmers to transition to better species, better practices that are, twice as productive. So they don’t need to go cut down the next acre if they’re getting enough out of their current and that kind of cross sector, all the players, civil society, the NGOs are at the table with really good, best practices and knowledge and data, civil society, business, and government.
That’s how we’re gonna get real systemic change. But even at the smaller level, if you just want to find some shared efficiencies, you and your peers, your competitors, you and your supply chain. So many opportunities for partnership. And we’re seeing, I think the beginning of what’s gonna be a golden age of working together in new ways that are incredibly productive.
[00:33:51] Jaideep Prabhu: So Andrew, when you step back and think ahead to the future, what’s your general sense? Do you think we can deal with these really tricky problems and can business really step up?
[00:34:03] Andrew Winston: Yeah, I don’t, I’m probably not gonna give a satisfactory answer cuz it’s yes and no. I get asked a lot, some version of, this question of, some people just say, are we gonna make it, or, and my answer is partly like who’s we? There’s 8 billion of us in very different circumstances.
Do I think the wealthiest are gonna make it? Yeah. Do I think we’re actually gonna make the planet unlivable for everyone? Not likely. I think we’re dumb as a species combined. We’re very smart individually, but not so smart combined in a way like a virus kind of overrunning its host, you know, but we’re not that dumb. And I think, we’re starting to move in very real ways. And the energy system is clearly heading to be completely clean. Transportation system is heading that way. We’re gonna get to all these solutions. We’re starting to address some of the hardest things like how do you make steel or cement with no carbon, the really hard stuff. But we waited too long. There’s parts of the world that are gonna be uninhabitable. And I think we better start not only just dealing with it emotionally, there’s I’ve heard people talk about the kind of emotions of climate change. There’s a lot of that going on in the world.
There’s a grieving in a way okay, we’re we are on track to kill at least half the species, to likely kill all the coral in the world. Taking away, not just something that’s beautiful, but something that provides, protein and food for a billion people, partly And provides protection to coasts.
We’re just gonna lose a lot of the abilities of the natural world to support us in a rich and vibrant way. That’s a loss. And I think we’re gonna have to start dealing with the fact that there are cities around the world, the low lying countries, they’re in trouble. And they’ve been at these climate meetings, pushing hard and begging for the big countries to move quicker.
And, I grew up in south Florida in the US, where Miami is I don’t think Miami exists in 30, 40 years in anywhere near the way it does today. There’s places that can do what Holland’s done for centuries and try to keep the water at bay and there’s places that just aren’t structured that way.
That just can’t do it. So we’re, there’s gonna be loss. But that doesn’t mean there’s a weird thing going on where you have the kind of climate denier community. They went from, it’s a hoax to, oh, it’s just, like it’s too expensive. That’s still one of their favorite ones. It’s gonna cost too much. It’s gonna destroy the economy to do something about climate, which is just ludicrous at this point. It’s clearly costing way more to do nothing already. The fires, the floods, it’s ludicrous. And they’re jumping to it’s gonna happen, so we better adapt. That’s really dangerous because we can warm the planet enough so that we, none of us survive, we absolutely could.
The planet will keep going and evolution will create many more species down the road. Like I said, I don’t think we’re gonna do that. But the people trying to slow this down are increasing the odds of making it uninhabitable for everybody. Or for, for such a small number that we just don’t survive as a society, right?
If we have to shrink numbers from 9 billion to a hundred million, in a generation like that’s not gonna happen. So I think the idea of caring capacity, the world matters and we’re over it. So we better innovate in a serious way, frugally and expensively in whatever ways we need to find a way to live in a circular, regenerative manner so that 9 billion people can thrive.
We have to. So I think we will solve these things, but not without some loss and some pain. And we just have to deal with that and do both the mitigation, the reduction of carbon and the adaptation. We have to do both.
[00:37:11] Jaideep Prabhu: Oh, thank you so much, Andrew. That’s been a really fascinating conversation, really insightful sobering, but also inspiring.
[00:37:18] Andrew Winston: I hope so. Not too sobering. It’s an opportunity, right? These are, this is, these are multi-trillion dollar markets at play that we’re seeing the change of every major sector. That’s exciting. It’s scary for those that lose out that’s happened before. It happens in technology all the time. My dad worked at IBM for 35 years.
He sold mainframes. They were big on in typewriters. There’s a bunch of things that don’t really exist or have changed dramatically since then. And that’s been generally a good thing. It hasn’t been good for some of the people in those sectors, but there’s transitions in economies and if we help those people, we give them retraining or pensions and help the transition happen.
Then I think it can be as painless as possible. But the technology is, as is relentless, right? we worry about cold jobs than we should, but there’s been way more jobs lost in retail in countries because of Amazon, because of, the digital ability or just the digitization of things. Everyone’s got their mini super computer in their pocket and it’s got a footprint and it takes energy and all that, but it also replaces like 10 devices that we all used to need to buy.
Those industries are not as big, they’ve shrunk, so it’s a time of incredible transition.
I think we’re in the fastest, I guess this is always true. It always feels this way, but we’re moving, I think as quickly as we’ve ever moved and arguably, we’ll never be this slow again, like we’re just, it’s just continuing to accelerate in ways that we can’t fully predict.
[00:38:35] Jaideep Prabhu: That’s a really interesting point.
[00:38:37] Venkata Gandikota: Yeah, because you talk about challenges, but also you present them as opportunities. And I hope that is also the biggest takeaway from this podcast, but for all of us as well, like we live up to those and rise to those challenges.
[00:38:48] Jaideep Prabhu: Thank you so much.
[00:38:50] Andrew Winston: Thank you.
About Us
Venkata Gandikota is a frugal innovation and impact investing evangelist and Prof Jaideep Prabhu is a Professor of Marketing at Cambridge University’s Judge Business School and co-author of an award-winning book on frugal innovation.
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