Business Blog: Hoover’s Business Insight Zone

Today I was lucky enough to attend a lunchtime talk sponsored by Fast Company that featured Angela Nahikian, manager of global environmental strategy for Steelcase, the world’s top maker of office furniture. After the attendees had chatted over lunch, Nahikian spoke for a little while about Steelcase’s environmental commitments, then fielded questions from the audience. Afterwards I got to talk with Nahikian, and with Fast Company senior writer Chuck Salter, who moderated the event. I came away impressed with Steelcase’s actions.

Nahikian’s talk focused on how Steelcase has shifted environmental responsibility from being a “core belief” to being an “intentional behavior” that drives the company. She said that for many years Steelcase has taken serious steps to improve environmental practices in its manufacturing operations, but that only in the past few years has it started to publicize those efforts, not only in terms of promoting environmentalism to the outside world, but also to guide the thinking of its own employees toward more sustainable business practices.

This process of employee engagement hasn’t happened overnight. As Nahikian put it, “Embedding sustainability requires a shift in thinking.” In particular, the company has gone beyond its initial goal to “minimize impact” on the environment; it now takes on the more ambitious task to “restore and replenish” the environment. And instead of being satisfied with the nebulous task to “do more” on the environmental front, Steelcase now ties environmental goals into its business metrics.

In this process, Nahikian’s own background as a self-described “math geek” comes in handy. Trained in electrical engineering and architecture, she worked for years in architectural consulting, product development, marketing, and strategy before assuming her current role. Her current job allows her to bring together this diverse background in systems thinking to “understand where the levers are” as Steelcase continuously works to improve its environmental practices. The challenge of her job, in a nutshell, is to answer the question, “How do you change a system?”

The answer, for Steelcase, is to focus on three major areas of endeavor:

1. Materials chemistry. Nahikian made the excellent point that, at bottom, making environmentally friendly products goes all the way down to the literal molecular level. She drew a laugh from the audience when she told us the refrain from her in-house meetings: “It’s the chemistry, stupid.” Steelcase is developing “exit strategies” for reducing the presence of toxic chemicals — what it calls “materials of concern” — in its goods. But to get there, it has to know what goes into its many product lines. So for starters, the company has performed rigorous materials assessments on hundreds of categories of materials that go into its chairs, tables, cubicle systems, and other furniture. Doing this hasn’t just been out of the goodness of their hearts, either: Nahikian told us that two years ago 20% of RFPs from Steelcase customers requested information on the materials content of products. Today, that number is 95%.

2. Life cycle assessment. As with individual materials, so with components. Nahikian and her colleagues have studied all aspects of the life cycles of their products, from sourcing, through every part of the supply chain, out to the customer, out to the end of a product’s life. This has led them to several interesting — in some cases startling — observations. For one thing, it’s clear to them that “end of use” is not a synonym for “end of life”: like other heavy-duty durable goods, Steelcase wares can last for years after they are removed from the offices where they did their initial duty. Another key point is that the greatest environmental impact of many Steelcase products comes not from their materials and not during their manufacture, but from the transport of parts and finished goods. So the company is working to reduce these impacts as well.

3. Recycling and reuse. According to Nahikian, Steelcase is also increasing its focus on “design for disassembly.” For example, the company’s popular “Think” chair — the first-ever product to attain “cradle-to-cradle” certification — disassembles in five minutes. (It also contains no PVC and is more than 98% recyclable.) The company now has 23 “cradle-to-cradle” products, a distinction that indicates the ability of a product’s components to be reused completely in other applications, rather than producing waste when its useful life is over. Steelcase also runs donation and refurbishment programs for used furniture — not just its own, but even competitors’. Nahikian said that the company recently collected 1940s-era Steelcase seating as part of the program.

She also pointed out an interesting ripple effect created by the company’s focus on recyclability: after Steelcase worked closely with its suppliers — and put high demands on them — to create the environmentally friendly “Answer” cubicle system, some of its suppliers told the company that the experience had convinced them to launch new product offerings of materials free of toxic chemicals.

The effects of all this work have been large. From 2001 to 2006, Steelcase reduced its greenhouse gas emissions by more than 40%, its water consumption by more than half, its energy use by nearly half, and its emission of volatile organic compounds (VOCs) by 95%. Nahikian said that the company has even more ambitious goals going forward, such as eliminating all PVC from its products by the 100th anniversary of Steelcase in 2012.

The last slide in Nahikian’s presentation drew another laugh from the audience. On it was a famous quote from the Star Wars Jedi master Yoda:

Do, or do not.
There is no ‘try’.

Geeky though the reference may be, it was impressive to hear Nahikian — a trig, softspoken Midwesterner — talk about how this principle informs the work that she and her team does. “Trying doesn’t count,” she said. Once you stop saying you’ll “try,” you hold yourself truly accountable. “You take away your excuses that way.”

During the question period, Nahikian addressed several topics.

• As to how the company has been able to hew to this course for many years now, she credits the stability of Steelcase’s leadership.*
• It’s great that Steelcase analyzes its own materials, but how does it keep tabs on outsourced components? Nahikian noted that the company is more vertically integrated than most manufacturers, meaning that it makes more of its own components. While this gives the company more direct control of its product life cycle, Nahikian stressed that “All roads lead to the supply chain.” The company uses third-party materials testing to ensure that its goods meet its standards, regardless of where individual parts come from.
• One man with a knowledge of building materials expressed surprise that the company has had such success in reducing the PVC content of its products. Nahikian noted that it’s “sometimes about asking the question.” For instance, once Steelcase asked its suppliers to use non-PVC-wrapped wire, the suppliers joined the hunt to find it.
• Another audience member who works in product development expressed surprise that Steelcase was able to carry out these initiatives with so many hundreds of product lines. Nahikian acknowledged that this is a challenge, and said that one of the company’s long-term initiatives is to pare down its product portfolio.**
• One woman wondered whether Steelcase isn’t opening itself up to product liability charges with its public focus on eliminating “materials of concern.” While admitting that Steelcase’s lawyers stay busy weighing questions like this, Nahikian said that, if bad materials were in the products and Steelcase made no effort to find out about them, that could expose the company to even worse liability. Beyond that, the company is eliminating chemicals like PVC that are perfectly legal to use, and that pose no threat to customers while the products are in use, but which create environmental problems during either manufacture or disposal.
• Finally, Salter pointed out that, in embracing such transparency, Steelcase and similar companies are revealing more than they ever have about their practices. Does this create competitive problems for Steelcase? Nahikian pointed out that Steelcase bases its competitive position on “application insight” — in other words, the know-how to assess a customer’s furniture needs and then to provide a tailored set of products to match those needs. That knowledge would be hard for any competitor to duplicate. As for sharing materials IP? Yes, it’s a challenge, but Nahikian believes Steelcase must do so as a point of ethics.

Based on Nahikian’s presentation today, Steelcase has apparently taken away its excuses and buckled down to the hard work of remaking a manufacturing company into an environmental leader. After her talk was over, Nahikian told me that “We’re doing some things we feel good about, but we see a lot more to be done.” Seems to me they’re well on their way.

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* This would seem to be another argument for building a deep leadership bench within the company.

** Patagonia has done something similar in recent years, for the same reasons.