Achieving Net Positive Impact as a Business with Andrew Winston
Andrew Winston is one of the world's most widely read writers and leading thinkers on sustainable business. His books on sustainability strategy, including Green to Gold and The Big Pivot , have sold more than 150,000 copies in seven languages. Winston has also written cover stories for Harvard Business Review and published hundreds of articles in HBR, MIT Sloan Management Review, and other top publications. He was recently selected for the Thinkers50 Radar 2020, a list of 30 thinkers to watch out for in the coming year. His views on strategy have been sought after by many of the world's leading companies, including 3M, DuPont, HP, Ingersoll Rand, Johnson & Johnson, Kimberly-Clark, Marriott, PepsiCo, PwC, and Unilever.
Helping companies learn how sustainability will be at the forefront is one of Andrew’s key missions. He recently joined me on the Outthinkers podcast to discuss:
Kaihan Krippendorff: Andrew, thank you so much for spending some time to be here with us. ?
Andrew Winston: I'm glad to be here. Thanks. ?
Kaihan: We have so much that we want to cover the three books that you've written on the work that you've done, the speaking that you do, the chance you get to interact with so many large enterprises that are thinking about important stuff.?But I want to open with two questions I ask everyone. The first one, just to get us to know you a little bit better personally, could you complete the sentence for me: If you really know me, you know that...??
Andrew: If you really know me, you know that I am an acapella nerd and was a semiprofessional singer in my earlier life. That one doesn't come up too often in the professional world. Spent my college days singing. ?
Kaihan: Where did you do that? ?
Andrew: Well, I went to Princeton and was in a group called The Tiger Tones. Looking back, I got an econ degree, but I really feel like I majored in singing and traveling with them. It was a huge part of my life there. My wife was also in a singing group. We met in New York in this semi pro group of people in their twenties a while ago now, but we performed at clubs in New York and it was great. It's part of why I'm comfortable on stage. I do a lot of speaking in front of?big audiences and that's part of it.
Kaihan: That's great. I don't know why, I actually should have done the research to know that you went to Princeton, but as soon as you said a cappella, in?my head I immediately went to Princeton. I don't know why. I was at Penn and our a cappella group was a pretty big presence on campus, but for some reason I immediately thought Princeton.
Andrew: Yeah. The Ivy's, they're all over, and since the Pitch Perfect era, since those movies came out made it, I think, cooler. Not cool exactly, but, you know. I love Pentatonix, and these guys who are really, really successful in a cappella. Just love the sound of it. Kind of off topic. ?
Kaihan: But, kind of like sustainability, not cool is cool.
Andrew: I like that. That's true.??
Kaihan: Alright. So you do work within the area of strategy. I know that part of your career you were at BCG, so you've been doing strategy for a long time. What's your definition of strategy? ?
?Andrew: It's a really interesting and tough question. I think if I boiled it down, I'd say strategy is defining a core purpose, your reason for being, and understanding what you really do for customers and for the world, and then figuring out how to organize and mobilize to serve that purpose. I think strategy has always been a combination of the big picture idea and the tactics. And when I say what you really do for customers, I mean, what's the need you're actually filling? Because you could do that potentially in lots of different ways. The classic example is people want a room that's lit. They don't care if it's a light bulb, it could be a room that's designed to have natural light. What's the real product here? I think that's part of strategy and gets you down to some innovation paths and maybe avoid some of the risk of becoming irrelevant, you know, like in the famous Blockbuster example. If they knew their purpose was movies and not discs, maybe they would have made it.
"Strategy is defining a core purpose, your reason for being and understanding what you really do for customers and for the world, and then figuring out how to organize and mobilize to serve that purpose."
Kaihan: Right. That's a great point. Yeah. It makes you less susceptible to those substitutes that will appear when you know what job it is that you're there to do.?
Andrew:?Because you might come up with them. ?
Kaihan: Yeah. Exactly. ?
Andrew: In the Clayton Christensen thing, you'll eat your own lunch, and you'll replace it. And that's what you see in my arena of sustainability, clean economy, the few companies that have shifted from being oil and gas companies to offshore wind. They've made the switch. To providing energy but doing it in a way that's future friendly. ?
Kaihan: Yeah. So what got you interested in strategy? But then what got you interested in this area, particularly? ?
Andrew: Strategy is a good question. My father worked at IBM for 35 years back when you did that, and he has this thing called a pension that no one probably knows what that is anymore. I would go visit him at his office and use colored pens on the board. I remember we were always in a business household. So I think I just kind of assumed business. My older sister's both got econ degrees. I got an econ degree. It just seemed like what we did. But I've always had this real interest in just the big picture and what's really causing things. What's behind it? You know, I didn't always have the language of purpose or sustainability, but that's what was always interesting me. And it's a longer story how I got into this, but I spent the first part of my career in strategy jobs. I was at Boston Consulting Group, then I was in media companies doing strategy, marketing, biz dev. And then during the dot com crash, everything was crazy, and I kind of took a related right turn and said, how do I match my business background with my values and this interest in seeing how the world really works? And I just started studying this thing called sustainability and went back to grad school. That was 20 years ago. I made a whole career out of writing books and speaking and consulting on this aspect of business, which is now arguably the central aspect of business, you know, how do you navigate your way through society? That's fundamentally the work that I do, what is the role of business in society, and how does it manage it?
"Twenty years ago I made a whole career out of writing books and speaking and consulting on this [sustainability] aspect of business, which is now arguably the central aspect of business, you know, how do you navigate your way through society? What is the role of business in society, and how does it manage it?"
Kaihan: So 20 years ago, it wasn't the central question for business, now it increasingly is. What has changed? Why are these externalities internalities? Why do investors care? Why do companies care now when they didn't some 20 years ago?
Andrew: There are a lot of reasons, and this isn't a lot of what I talk and write about, but I think the last two or three?years, there's been more change in this than in the 20 that I've been in it. It's just accelerated dramatically. And a lot of it is, everyone's all of a sudden interested. Investors really weren't for all these years and now they are. People get lost in this discussion of ESG and anti-ESG and the politics, but ESG is an investor thing. It's not the full agenda of sustainability, which is your environmental and social impacts. And I think in the end, the reason this is moving quickly now is because the megatrends that have been driving it, have been building for years like climate change or inequality, or generational norms, younger millennials, Gen Z wanting values, and their work life. The killing of George Floyd, bringing race kind of into the center of business. All these things, they're not models or ideas to debate; they're happening, like climate change isn’t some model in a spreadsheet, it's here. So we could have a lot of political wrangling, but this sustainability thing is going to continue because the problems that are driving it are here now and getting increasingly expensive. ?
"Climate change isn’t some model in a spreadsheet, it's here. So we could have a lot of political wrangling, but this sustainability thing is going to continue because the problems that are driving it are here now and getting increasingly expensive."
On the good news side, things are really accelerating now because a lot of the solutions are exponentially cheaper than they were a decade ago. And that makes it easier. Let's face facts. Renewables are now cheaper than pretty much every form of energy, so of course companies are leaning in and buying mostly renewables. Same for building technologies. We're going to have fleet technologies, all of it. AI is gonna make our systems smarter and quicker. ?
A lot of the solutions are coming also at the same time. It's becoming clearer and clearer that the clean economy, the new economy, is the source of growth now. If it was the Internet for nineties, two-thousands, now it's this. It's decarbonizing the world. It's making it more equal and just. These are the big problems of the day. And solving big problems is what companies do for a profit. That's what a business is. Right? ?
"It's becoming clearer and clearer that the clean economy, the new economy, is the source of growth now."
Kaihan: Yes. So the cost of not doing it rises. The cost of doing it comes down. Just explain the argument, I heard you say that this is a smart place to invest right now. What are the proof points of that? ?
Andrew: I mean, it's the same idea that the cost of inaction, and I talk about this in my latest book, the cost of inaction is higher than the cost of action. That's true at the societal level, truly and obviously, but it really is at the business level, too. There are just massive shifts happening in sector after sector. Multitrillion dollar markets are in play to redesign how we make buildings, how we get around, how we manufacture things, how we create our food, huge changes in food and agriculture. And it's just a matter like it always is with major shifts in technologies or norms. Are you playing in the right direction? Are you in the right side of the field or whatever metaphor you want to use? This is where the money's going to be and is. You're seeing more and more government money thrown into it like the Inflation Reduction Act in the US, just more and more capital being deployed from the PE world from institutional investors, all of it. It's just become a business imperative. If for no other reason, I think maybe the most important factor is that younger people norms thing, like once we have a change in what's expected on something, it's kind of permanent. New ways of thinking are coming into being and the workforce is going to be dominated by Millennials and Gen Z. It already is, but it is gonna be entirely. Boomers are almost out. Us Gen Xers are aging, you know, unfortunately.?It's just a difference in opinion about what the world's about and what's important.?They're not debating a lot of these things. ?
"There are massive shifts happening in sector after sector. Multitrillion dollar markets are in play to redesign how we make buildings, how we get around, how we manufacture things, how we create our food, huge changes in food and agriculture. And it's just a matter like it always is with major shifts in technologies or norms. Are you playing in the right direction? Are you in the right side of the field or whatever metaphor you want to use? This is where the money's going to be and is."
Kaihan: Got it. You talk a lot about the need for a mindset shift. Is that what you're describing now that there's kind of a generational mindset shift for leadership? ?
Andrew: I think there is. Absolutely. We can talk about this in multiple ways, but the fundamental mindset or story that business has been in for roughly 50 years has been the neo liberal economic model. This idea from Milton Friedman and others that the purpose of business is to maximize shareholder value right now this quarter. The purpose of an economy or the government is to maximize GDP and the stock market. And that's it. That's the one metric. And that always was flawed. That always didn't make complete sense. Right? I mean, you don't have one metric on your own well-being. You don't have your cholesterol number and then you don't care about anything else. So it's always been a strangely narrow way of looking at things, and I think it's breaking down because it had its purpose in some sense. It brought us kind of huge growth in some ways, but also created really existential challenges. I think this story is the core of what the older business crowd thinks versus the younger one that polls just show repeatedly that if you ask them about social and environmental issues, they don't see it at odds with profit. They don't understand why companies wouldn't be taking part. The Edelman Trust surveys they do every year. The latest one is unbelievable. You ask if you think CEOs should speak out on climate, inequality, whatever. It's like 80, 90 percent of people globally. So, there's just a different expectation. And that's a different story about what a business is supposed to do. ?
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"If you ask [younger generations] about social and environmental issues, they don't see it at odds with profit. They don't understand why companies wouldn't be taking part."
Kaihan: Yeah. And then going back to your definition of strategy, strategy is about deciding what your purpose is. That purpose is created by the people in it, the people who lead it, it's sort of self fulfilling or self creating. In the trends, you didn't mention the pandemic. How did the pandemic impact this trend toward the future you described?
Andrew: You know, it was really interesting because I've been in this long enough now to have seen a few big economic cycles like the '08 crash. And I have colleagues who have been doing the sustainability thing for another 20 years. And in the past, any major economic or demographic shift, whatever was kind of shaking up the world, you know, dot com, etc., sustainability took a backseat and people would get fired. The departments would shrink. But during the pandemic, it didn't. It accelerated.
I think there were a lot of reasons, like I said before, the problems we're facing are real. People are feeling the real pressures. The pandemic itself, it made companies take a non short-term profit view of things. Very quickly. Right? They had to figure out how they were going to treat their employees and keep paying them or not. Were they going to take care of their health? Because some of them were actually dying. Were they going to help their suppliers and customers? There was a test. And you had companies like Medtronic, that medical device maker that released the designs of a ventilator so that car companies can make them. You just had very non short-term shareholder maximization stuff going on. There was a sense of for the common good or survival.
"The pandemic itself, it made companies take a non short-term profit view of things. Very quickly. Right? They had to figure out how they were going to treat their employees and keep paying them or not. Were they going to take care of their health? Because some of them were actually dying. Were they going to help their suppliers and customers? There was a test."
And I think that it almost like activated a gene or something. It's kind of made us realize, and in a related way, companies learned how fast they could go. There were changes they made. I had one client who said, we had things we thought we'd change over years that we just had to do in a few weeks, in the way their supply chain worked or the way they made things. I think that opened up a lot of possibility to go, oh, maybe we can decarbonize faster than we think. Maybe we can do this by 2040, not 2050. It gave us a sense of potential. And I do believe even with all the vitriol and politics in the US and in lots of places on vaccines and masks, we had maybe the first time in human history a global thing that we were all dealing with at the same time. Right? We're all walking around with masks. We're all that home or we’re the workers that have to go out and deliver food. And it just was a way of bringing us together, not to be all kumbaya about it, but I think it did show the connections.?
It showed the connections and showed the supply chains were all interrelated because some of them fell apart. It brought awareness of the scale of the things we're doing. ?
Kaihan: Yeah. And that it?could really have an indelible marking on the psyche of everyone who lived through it. ?
Andrew: It also showed we had a lot of money because governments released 20 trillion or so to fight it. So, we have trillions if we want to fight climate change at scale. ?
Kaihan: True. I hadn't heard that before. That makes sense. ?
Andrew: We can come up with the money if we need it. That was the other big lesson. Yeah. inflation, there's been issues, but trillions of spending. And I think it helped. That's what macroeconomics is about. That's Keynesian economics. You gotta start spending in the government.
Kaihan: Yeah. It showed what we do when we face really big problems. Maximizing shareholder value is not really a big problem. There are bigger problems. ?
Andrew: It's a metric. It's an important one. It's not the only one. ?
Kaihan: Right. I'm thinking about how to pivot to this question, but I'm just curious about it, so I won't think of a good transition. Tell me about UPS trucks.??
Andrew: This is one of the oldie but goodie stories in the sustainability world, and this is the one I've probably told the most. I used to have it in every talk for a decade. It was in multiple books that I wrote, and it seems to sit with people. They remember it. ?
The quick story is that it's a number of years ago now, the UPS stopped taking left turns in cities, which sounds crazy at first. And the reason was that if you're waiting to take a left turn, picture like a grid like New York city. You're waiting for traffic. You're idling. You're wasting time, energy, and money. So they design their routes to go around the block using right turns and when they deliver to hit just one big right turn path. And it saved a hundred million miles, ten million gallons. It was all these huge numbers that they even just stopped measuring because it was just clearly better. They weren't the only company that figured this out, but it was using the fairly new satellite data GPS. They used it all, and it was a huge way to cut carbon emissions, fuel, and it just shows that there are different questions to ask. And I always joke picture that first meeting where someone said, hey, why don't we stop taking left turns? And it probably sounded insane, like all really good innovations, but it was right. ?
That's the way of questioning that I propose companies think about and really dig into what things they take for granted about the way things work. What if they didn't work that way? What if you did it a completely different way? And that's how you get to more robust leapfrog changes instead of just incremental. They didn't just say, okay, let's cut a couple miles out. Let's save a few gallons. It was a pretty big change. ?
"That's the way of questioning that I propose companies think about and really dig into what things they take for granted about the way things work. What if they didn't work that way? What if you did it a completely different way? And that's how you get to more robust leapfrog changes instead of just incremental."
Kaihan: And a clear choice that could be cascaded down. Another question I have for you, we didn't prepare this question, so I don't know if you have an answer, but we had Chris Marquis on. He talked about universal ownership theory, and that is what brings some externalities into the marketplace. So you can talk about the value of investing in companies that are less exposed to the climate costs of their consequences or they own an insurance company in your portfolio so that you care more about those externalities.?
Then we had Bruce Usher , and he was talking about the investing in the technologies like green energy, alternative energies. I'm thinking that you maybe could talk about that because you give speeches across lots of different sectors. If you took agriculture, which you mentioned, what does the future of agriculture look like? And therefore, where should a company in ag be investing? Or it could be a different sector.?
Andrew: I love talking about food and ag because it's really at the heart of everything. In a way if we don't solve climate energy resources and food and ag, we don't make it. By some measures, a third of global emissions can be tied back to food and ag industry. That includes all the fossils and fuel and nitrates and fertilizer, but also the cows and their burps and methane, all of it. I think the future of food and ag, some of it's going to look really different. It's already getting much more technological. There's something called precision agriculture that uses GPS. A John Deere machine used to just be an engine, now it's a supercomputer. There's tons of data and precision agriculture allows you to drop the right amount of water, right amount of fertilizer, moment to moment, space to space. And that is radically more efficient. I think AI is going to really speed that up too. ?
There's going to be a focus on food waste. Because we throw out about 40 percent of the food and that's an incredible waste of money, let alone emissions, water, such a waste. So there's going to be more of that. I work with some companies that are in that chain and logistics and the cold chain, you know, keeping food fresh, all of that.
I think we're going to have some really interesting conversations in the coming years about what do we eat? How much meat do we eat? What if it's lab grown, which is getting cheaper and cheaper? Does that count? If you're a vegetarian, it has a much smaller footprint. There's also those starting to build regenerative agriculture where if you run a farm right and you run cattle right, you actually sequester carbon. It's a net positive thing to buy food and be from that farm. So we're going to have, I think, this huge range of options of some really interesting ways of doing things that really it's a benefit to buy from that farm. And then there's going to be the normal industrial stuff that I think we should avoid, right, for both financial health and moral reasons. It's going to be at the center of the discussion. How do we feed what’s going to be nine million people? And how does it affect land use? It touches everything. It really does. ?
Kaihan: True. Yeah. And, arguably our most fundamental human need. Excellent. So I've got a bunch of other questions that I'd love to ask you, but we're reaching the top of our time with you. So let me just ask you 2 more questions. First, what advice do you have for strategists? Where should they start when they're looking at enforcing their organization??
Andrew: I think the starting point like in most things is just figuring out where you are and in the sustainability realm, there's some really important data to get a handle on and to understand, and find out if the organization already has knowledge of this, which is really: What is our impact? What is our footprint? What's our emissions? What's our human impact? You know, human rights issues? A whole range of topics. And what are our impacts on our supply chain, our customers? What's the value chain? Some of this is easy to get, some of it's not. Companies are on a journey to figure this all out. A lot of it's getting more regulated that you have to measure this stuff. But I think there's some other gathering of looking around and figuring out what do stakeholders expect of you? And talk to your employees, talk to your peers, talk to your customers. What do they expect of you in this environmental and social realm now and what are they going to expect of?you fairly soon? That gets you kind of a handle on where you are, and then it allows you to start to ask, okay, what are the big hurdles in the way of us being radically more efficient, decarbonizing? And it gets you to deeper questions about partnerships and who should we be working with, and who do we need at the table? That's the order of battle. ?
"I think the starting point is just figuring out where you are... in the sustainability realm, there's some really important data to get a handle on and to understand: What is our impact? What is our footprint? What's our emissions? What's our human impact? You know, human rights issues? A whole range of topics. And what are our impacts on our supply chain, our customers? What's the value chain?"
For the website, for my book, Net Positive , we have a readiness assessment of 24, 25 questions that are these kinds of things just to go through and think about how ready are we for change. That's at netpositive.world , which is the book site. I think that helps people get a starting point.?
Kaihan:?Great. We'll leave a link for that also on the show notes definitely. Thank you. I know we've only scratched the surface of your work. People should definitely look at Green to Gold and The Big Pivot . You're all over YouTube and podcasts. Where else can people continue to connect with you and follow you? ?
Andrew:?I have my site. It's simple andrewwinston.com . I've got a, I guess we still call it a blog. I don't know. I post things. Not too often. It's not that burdensome, I write for Harvard Business Review and other places and then I repost and write some original stuff. And that's usually where people can just hear what I've been thinking about. And LinkedIn, you can follow me on LinkedIn because it's kind of my only social media now. I've really reduced the Facebook and Twitter. For many mental and health and moral reasons. So LinkedIn is where it's at. I would say, like, that's the real non vile part of the Internet. So come find me there. ?
Kaihan: Awesome. Well, thank you for the work you do for sharing it with us and spending some time to unpack at least some of it here with us today. Thank you, Andrew. Thank you.
Thank you to our guests. Thank you to our producers, Karina Reyes and Zach Ness, our editor and the rest of the team. If you like what you heard, please follow, download, and subscribe. I'm your host, Kaihan Krippendorff. Thank you for listening. We'll catch you next week with another episode of Outthinkers.?
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