Tuesday, June 12, 2007

A tale of two motor companies

Guest blogger: Debbie Dickinson


I noticed in passing last week that
Toyota triumphantly announced sales of their innovative hybrid car – the Toyota Prius – is excess of 1 million. Moreover, they’re aiming for sales of 1000 per year within the next few years.

Largely branded as the world’s first mass-produced eco-friendly car, the Toyota Prius has moved from the marginal into an ever increasing mainstream, both in terms of sales, and also in broad social currency: the idea that a hybrid car is a realistic option has made a significant (perhaps intangible) influence on the market.

In parallel news, today I saw that Ford are expected to make some anticipated “official announcements” on the fate of two British models, Jaguar and Land Rover. Over here in the UK (where I’m based) this has generated a fair bit of media interest. Ideas around factory closures, asset stripping, Britain’s manufacturing industry, and off-shore production are dominating the opinions of those most affected by the expected sell-offs. Employing around 20,000 people in Britain’s midlands, the alleged closure will certainly impact many.

But I also wonder about comparisons between the two motor companies. One is well positioned for the future, whilst the other is at a tipping point of uncertainty. Rewind 5 years or so and both Toyota and Ford were waking up to the urgency of sustainability and corporate responsibility. Ford focused on internal sustainability impacts and went about implementing operational changes – green rating offices and the like – whilst Toyota looked towards their biggest sustainability impact and attempted to improve the impact of their cars.

Take us back to today, and we see the success stories of a company that took the risk and tackled its biggest sustainability issue head on. Toyota are now standing well positioned to future carbon-constrained climates and have the brand reputation of innovative eco-solutions.

I wonder if tales of factory closures, brand sell-off and social disruption through job loss (a-la Land Rover and Jaguar) are the continuing evidence of a changing business climate, and perhaps a tale of what happens by failing to incorporate material sustainability risks into core business. Looking for a business case? Seems Toyota found one.

9 comments:

Stephen said...

Debbie

You identify an interesting distinction in how companies approach sustainability -- either internally through their operation practices, or externally, focusing on the end impact of their product. I'm intrigued and opens some new thought to ponder.

However, in regards to the Toyota/Ford situation, perhaps it is a case of how well they implemented their vision rather than the vision itself? Forgive me, I'm not entirely up to date on my knowledge of the two companies, but hasn't Ford been aggressively targeting the hybrid market as well? Their hybrid version of the Ford Explorer comes to mind -- a version that was virtually identical to the regular Explorer in performance except for the obvious improvement on fuel efficiency. I found this to be a bold move and one with potential to bring hybrids into the mainstream -- and in the SUV market segment to top it off.

Debbie Dickinson said...

Thanks for you message Stephen,

You are indeed correct, Ford has (successfully) been targetting the hybrid market as well. And indeed great to see in the power-guzzling SUV market.

I suppose my initial ideas were more around the idea that Toyota integrated sustainability right into the core of product creation at an early stage where the commercial successes of hybrid models were uncertain. They took a risk. Perhaps others (eg Ford) entered the hybrid market on the tail of Toyota's successes? And maybe they entered for commerical reasons (hybrid cars proved popular), and not as an outcome of integrated sustainability planning.

To me, I don't mind which hybrid car is on the road (if they're replacing conventional cars then the more the better!) But I am attracted to this case study as it's an interesting story of where one company is now experiencing long term commerical gains on the tail end of risk taking at a time where mainstream hybrid cars were a dream. To me, it shows that understanding and managing your sustainability impact is not just sensible, it makes good business sense.

But perhaps it doesn't matter how hybrids are brought into the mainstream? What do you think Stephen? What do others think?

Looking forward to hearing back!
Debbie

Stephen said...

Debbie

Thanks for the clarification -- I agree, ultimately both are achieving the same end goal, but it is those progressive companies (such as Toyota) that are better positioned to reap the benefits as they are leaders in the field.

It reminds me of an interesting change I noticed in the climate change debate between 2003 to 2005. I had been away in Mexico for 2004 and somewhat out of the loop. When I left in 2003, everyone was debating the science of climate change, whether Canada should ratify Kyoto, etc... When I returned in 2005 I went to a symposium attended by several senior managers of large company and hedge funds. In one year the dialog had completely changed -- everyone there was looking towards the future. It was no longer a debate, but rather a discussion centered on the fact that climate change was happening; what risk does this present for us, how can we mitigate this risk, and how do we need to change our planning? An interesting shift in thinking -- I was very impressed on the changes that had happened in just one year.

On that note -- I'm glad the GRI 3 added the EC2 Indicator: "Financial Implications of Climate Change." However, my gut tells me it will still be awhile before most companies are reporting on this indicator.

Cheers,
Stephen Albinati

Debbie Dickinson said...

Hi Stephen,

Great analogy on climate change and how the discourse evolved so rapidly in such a short time frame. Couldn't agree more.

Pleased you welcome the G3's addition of EC2 (financial implications of climate change). Actually, we're currently working on a research paper on your precise prediction (exactly how organisations are using EC2). We're expecting to release this publication in just a few short weeks, so stay tuned!

Be interested in hearing your thoughts when it's released...

All the best,
Debbie

Stephen said...

Yes, I'd be very interested in seeing how EC2 is implemented. When I first saw it, I was quite impressed that it was there, however, I must admit I rolled my eyes and figured that it would be asking a bit too much from companies -- but I guess that is the GRI's role, to continue to push the boundaries of reporting.

I'd love to review the paper. When will it be released?

Stephen

Debbie Dickinson said...

Hi Stephen,

You're right - it may be challenging for organizations to report on EC2 (financial impacts of climate change), but I agree it's an important part of "raising the bar".

The GRI's research paper on climate change will be released very soon-in a few weeks or so. We'll do a public release, but feel free to check back in in a few weeks if you miss it.

Cheers,
Debbie

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