Models for Green Innovation: 

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Models for Green Innovation: Case Studies

Inverted Integration

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Jeff Stein 
(650)283-8172        jrstein@greeninnovationinc.com

Technology 

  • Green Plastics and Chemicals 
    • NatureWorks LLC, a subsidiary of Cargill, has achieved a technological breakthrough in developing a process that converts corn ethanol into high quality synthetic PLA fiber for use in apparel and home textiles.   It is also being used to make biodegradable food packaging and utensils
  • Information Technology 
    • TEXbase is a product development software firm that grew out of Patagonia's R&D department.  Leveraging this software the company was able to triple the quantity of new fabrics and performance garments developed each year, improving quality control, speed to market, all while maintaining the same size staff in the department.  With lower costs and timeline to develop new products, Patagonia could better afford to take the risks needed to push the enevelope of innovation in the outdoor industry.
    • Blue Sign is a Swiss software and consultancy firm that has developed sophisticated software that can track more than a thousand chemical inputs and other attributes that provide the most comprehensive product sustainability profile of textiles available.

Design 

  • Designing Consumer Relevant Products
    • The Toyota Prius was originally panned by the skeptics as technological breakthrough, but unlikely to make much traction in the marketplace with its higher prices.  Five years in the marketplace has proven them wrong, as the Prius remains Toyota's hottest selling car with six month long waiting lists.  The key was for the first time manufacturing a car that meets all the functional expectations of the consumer, offers a superior driver-friendly experience both inside the car and its handling on the road, sleek stylish design, and also happens to give consumers the best gas mileage available in the U.S. market.
    • Edun is a fashion brand launched by Bono, his wife Ali Hewson, and acclaimed designer Rogan, in 2005.  The brand's mission is to connect consumers with the places and people who make their clothes.  Sustainable principles are adhered to in using organic cotton and manufacturing garments in sub-Sahara African factories.  Turning conventional wisdom on its head, the impoverished farmers and factory workers produce products that Barney's of New York and Saks Fifth Avenue jumped at the chance to sell.  As a result, Edun is helping these Africans break the bonds of poverty.
  • Design for Elimination of Extreme Poverty 
    • Ignite Innovations addresses the problem that 1.6 billion people worldwide lack regular access to electricity.  The for-profit company, which is backed by some of Silicon Valley's most successful venture capitalists, manufactures a $30 LED light that holds a charge for eight hours and endure over 100,000 hours of use over its life.  It is recharged by turning its hand-crank.  As a result of regular night-time light, Indian fishermen and weavers are able to extend their working hours and significantly increase their families' income.  The Mightylight also provide a much safer and healthier alternative to kerosene lamps, which commonly cause fires and produce toxic smoke inside the home.  (See also recent feature article in Time Magazine).
    • Small-scale commercial farming can be a very profitable business in Africa, but it is difficult without irrigation. Since 1996 KickStart has been the leader in micro-irrigation technologies through the development and sales of its popularly known series of manually operated “MoneyMaker” pumps. KickStart is adding new pumps to the MoneyMaker line and continues to develop other money making micro-irrigation technologies. Between its  irrigation pumps and other pro-poor technologies KickStart has helped African entrepreneurs launch 41,000 new small businesses and earn $41 million in profits.  In Kenya, KickStart's technology products now account for 0.5% of the country's GDP.  (See also recent feature article in Time Magazine).
    • One Laptop Per Child is developing the world's first $100 laptop computer.  Its goal is to distribute 100 million laptops to poor children in developing countries across the world.  Innovative design has helped overcome major challenges, such as the lack of electricity, connection to telecommunications or Internet infrastructure, and even an indoor environment within which to work use the computers.  The laptop can be re-charged by turning a hand-crank.  School children can create their own internet community by taking advantage of the laptop's self-networking WiFi capabilities.  A black and white low-glare setting for the screen allows children to use the computer outdoors.  Rather than distribute the computers directly to consumers, One Laptop Per Child is negotiating purchase agreements through development aid agencies, the United Nations and education ministries of developing countries.  (See also recent feature article in Time Magazine).

 

Supply Chain Management 

  • Inverted Integration
    • In 2005, Wal-Mart, the world's largest retailer, formed a strategic partnership with Mavideniz, an organic farming cooperative in southern Turkey.  What is so unusual about this partnership is that the cotton is processed in six different stages over 15-18 months before the finished product, a baby-boy jumper suit, ever sees the store shelf.  Wal-Mart's new Baby George Organic line of eight styles is consuming as much as a quarter of the world's supply of organic cotton.  Therefore, Wal-Mart needed to ensure a long-term stable supply in order to meet its sustainability goals for apparel merchandise.  The partnership with Mavideniz also gives the retailer more visibility in the price structure of its garments all the way back to the raw materials, enabling them to produce organic cotton clothing that costs the same as conventional clothing.  The Turkish farmers benefit by having predictability of demand for their organic crop, a buyer for both their cotton and food crops, and a significant price premium over the conventional market prices.
    • Patagonia has partnered with Teijin, one of the world's largest producers of synthetic fiber and textiles, to produce the first cradle-to-cradle garment recycling program.  This program is first being applied to its Capilene line of underwear and base layer garments.  Patagonia will take back used garments brought to the store by its consumers and send the garments to Japan where Teijin will use advanced chemical recycling technology to break the polyester fibers down to their base chemical elements and regenerate fresh PET polyester fibers for new Capilene styles.  Recycling polyester helps Patagonia reduce the amount of petroleum-based raw materials it uses, reduces the greenhouse gas impacts of its manufacturing, and diverts waste from rapidly filling landfills.
    • In 1975, Hap Klopp, founder of The North Face, was one of the first Americans to travel to China to conduct business.  His company, The North Face, had established a reputation as the producer of some of the world's finest outdoor clothing and equipment.  Much of this reputation was due to the high quality goose down jackets the company made.  But by the mid-1970's there was a global shortage of goose down, and middlemen brokers began cheating customers by blending the down with dirt and other low-value substitutes.  This decrease in quality threated The North Face brand, prompting Klopp to go directly to the goose down producers in China and secure a long-term contract for all the goose down the company would need to support its growth over the next several years.  While The North Face was able to preserve its reputation for utmost quality in all its products, many of its competitors in the industry suffered by only being able to offer cheapened down jackets to their consumers.

Business Model

    • Agrocel at one time was one of India's largest sellers of chemical pesticides and fertilizers to farmers.  Seeking to adopt a more Ghandian approach to a profit-making business, Agrocel transformed itself into the world's second largest organic cotton companies.  As noteworthy as the environmental benefits are the socio-economic benefits the company's new business model has brought its contract farmers.  The farmers now receive a significant price premium over conventional market prices, a reliable long-term buyer for their cotton, and training in best farming practices.  Agrocel has also investmented in building new schools in its farmers' villages and bringing health care services to the farmers.  For its achievements, Agrocel was the first organic cotton project to earn fair trade certification.
    • Flexcar doesn't sell consumers the car, rather just the transportation.  Its urban customers avoid the hassles of finding and paying for parking, car insurance payments, maintenance and repairs, and visits to the DMV.
    • Instead of selling carpet, Interface leases carpet solutions.  Few people take much pride in the carpet they own, but everyone enjoys the functional benefits.  Interface's modular system lengthens the life of the carpet reducing long-term costs to the company's mostly business customers and minimizing the impact on landfills.  Interface has also been a pioneer in using recycled nylon as the fiber of choice in its products.  The next goal of the company is becoming the first zero-greenhouse gas emission company in its industry.