Green Standards is a company founded with clear social objectives: to divert waste from landfill and to aid non-profits and charities. When it launched in 2009, the Toronto-based firm brokered donations of no-longer-needed corporate assets, such as surplus furniture, equipment, and supplies, to non-profits that would benefit from those assets. This created three types of value: assets were re-used rather than thrown out, charities obtained needed in-kind donations, and corporations received a tax receipt for a charitable donation.
It seemed like a win for everyone, but after six months it became clear that the business wasn't scalable or profitable. The value for corporations of the tax receipt for the charitable donation had been over-rated, and while many companies were interested in the feel-good aspect of the program, they found it difficult to make the business case for the costs associated with it.
Despite the lack of market interest, Richard Beaumont loved the Green Standards concept of providing a service which was both sustainable and socially responsible. He got involved with the company shortly after its inception, while it was struggling to secure new business and retain current clients. The company almost collapsed and Mr. Beaumont found himself as the only full-time employee. With a background in entrepreneurship and business development, he began to rebuild.
The concept resonated with Mr. Beaumont because he realized that large organizations, such as Fortune 500 companies and government departments are constantly revitalizing their offices, which results in a lot of surplus furniture and other material assets. Further, as he explains, "most of this material ends up in the dump, even though that is out of sync with current corporate values of sustainability and social responsibility."
However, Green Standards was losing business to organizations that offered to cart the material away at a lower cost and corporate executives were telling him that his solution was just too expensive. He knew that he had to make it more attractive to them. He had to marry environmental goals, social goals and economic goals and come up with a scalable and profitable business model. How could he do that?
Starting in 2010, Mr. Beaumont embarked on a three-stage process to transform Green Standards. The first stage focused on reducing the price of his solution. In brainstorming and working with customers and potential customers, he repeatedly heard that the executives of major corporations didn't care if their entire surplus went to charity; they just wanted to keep it out of landfill. This realization led Mr. Beaumont to offer solutions involving a combination of recycling, resale and donation. Corporations can offset costs by recycling certain types of material – such as metal – that they receive money for, and also from reselling assets. However, managers didn't have the time to analyze how this should be done for each revitalization project. Green Standards figured out how to do this for them, to maximize cost recovery, and so was better able to offer competitive pricing.
The second stage of transforming the Green Standards business model was aimed at increasing the value of the solution. Through his discussions with customers, Mr. Beaumont learned that the corporate managers involved with these activities are essentially project managers who manage revitalization projects all over North America.
Although office revitalization isn't a core capability that enables corporations to compete in their market, it takes up a lot of corporate time, which can can be costly. Mr. Beaumont realized that companies would be interested in outsourcing these activities and so Green Standards started offering turnkey project management services. He learned how to assess the potential of different projects, bid competitively on them, and tell companies how to divert 100 per cent of their material from landfill. In taking on these activities, Green Standards evolved from being a transaction-based company getting rid of waste into an information broker and project manager.
The third stage of the transformation involved providing more value added services. Green Standards provides corporations with a way to report their results and tell their sustainability story. Customers receive an environmental impact report which feeds into the environmental reporting initiatives and certifications they often pursue. They also receive a community investment report, which feeds into their corporate social responsibility reporting, providing pictures and testimonials from the charities that have benefited from the donation of corporate assets.
Mr. Beaumont credits the success of the transformation of Green Standards to two factors. The first is the speed with which he learned about the industry. "As an industry outsider, I had to learn really quickly. By running to the market without hesitation, rather than standing back and analyzing it, I got continuous and valuable feedback from customers and potential customers."
The second factor is his relentless focus on keeping costs low. "By staying really lean as a company, I could quickly react to market feedback and pivot our tactics easily."
Green Standards has grown rapidly, with revenue doubling from 2011 to 2012, and tripling from 2012 to 2013. Mr. Beaumont has a staff of 22 and continues to keep Green Standards lean. He states that the company has diverted 20,000 tonnes of material from landfill, with a diversion rate of 99.5 per cent. The fair market value of all assets donated through Green Standards has recently surpassed $16-million in value. This track record of concrete environmental and social results is a huge differentiator for the company in acquiring new clients.
Despite these results, Mr. Beaumont continues to look for new opportunities to add value to his corporate customers. He says that the kinds of conversations he's having with clients now suggest there would be benefits in switching from a project-based model to a program-based model. "We can help companies establish corporate-level programs. Rather than working with, for example, an individual facility in North Carolina, we would be able to establish standardized services and corporate reporting everywhere our clients are."
In thinking through such ideas, he is following the triple bottom line perspective that underlies Green Standard's success to-date: his integration of environmental, social and economic objectives.
Becky Reuber is a professor of strategic management in the Rotman School of Management of the University of Toronto.
This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Report on Small Business website.