Kodachrome, marketing nostalgia.

Today, the last roll of Kodachrome film was developed into slides in Parsons, Kansas, at Dwayne’s Photo, the last store in the world to process the film.  This story brings to mind the Season One Finale of Mad Men, the famous Carousel scene, when Don Draper speaks about how “technology is a glittering lure, but there is the rare occasion when the public can be engaged on a level beyond flash, if they have a sentimental bond with the product… a deeper bond: nostalgia; it’s delicate, but potent… In Greek nostalgia means the pain from an old wound.  It’s a twinge in your heart far more powerful than memory alone.”  He then goes on to show images of his family taken with Kodachrome film.

In the months leading up to today, people flocked from all over the world to Dwayne’s Photo in Parsons, Kansas to get their film developed.  This is the reverse of a story like the release of the iPad, or a new iPhone, because Kodachrome is nostalgia personified.  Unlike the new smartphones, which will be outdated in a few years, Kodachrome managed to stick around for 75 years.  Paul Simon wrote an unforgettable song about it.  The nostalgia which Don Draper talks about is indeed potent.  In fact, nostalgia is under-appreciated when it comes to marketing sustainability.  While technology increases in leaps and bounds, it can overwhelm us; the simplicity which will be necessary to shift towards sustainability is channeled through nostalgia.  Nostalgia is the long letters we used to write, the joy we used to find in our communities, and the pleasure of making things for ourselves.  Nostalgia is the emotional key to our collective hearts.  The folks who flocked to Parsons, Kansas certainly felt it.


With tax bill, Congress restores biodiesel tax credit

In October, I toured Newport Biodiesel, and spoke with its founder, Nat Harris.  Newport Biodiesel is a remarkable local business that takes Waste Vegetable Oil from restaurants across Rhode Island and converts it to ASTM certified Biodiesel, which then heats homes and powers automobiles across New England.  When we met, Nat talked about some of the difficulties many in the biodiesel industry faced when the $1/gallon biodiesel Federal Tax Credit expired in January 2010.  However, Nat Harris and the rest of the nacent biodiesel industry are undoubtedly celebrating the retroactive extension of the tax credit through 2011, which will become official when the President signs the tax bill.

Why is biodiesel important?  I wrote about it here in detail, but for a quick primer, biodiesel emits fewer pollutants when it is burned; because it is created from waste products and plant matter, it has less than 50% of the life cycle carbon emissions than petroluem-based fuels.  This is not ethanol, it is an Advanced Biofuel that can be blended with petro-fuel to work year ’round.  More importantly, this is a domestic industry that takes material out of the waste stream and resuses it.  Biodiesel is sustainability.  And for President Obama, it is another victory in a Lame Duck session that is surprisingly bountiful.  The Senate may even have enough votes to repeal “Don’t Ask, Don’t Tell” this weekend.


A Purple Cow in Rhode Island

This weekend, while visiting the Wintertime Farmers’ Market in Pawtucket, RI, I stopped by the booth of New Harvest Coffee Roasters, a local roaster of whom I am a loyal customer.  I typically pick up their packages of Whole Bean coffee when I shop at Whole Foods, but often I will savor a cup of their Pour-Over coffee while I idle around the Farmers’ Market.   On Saturday, I approached the booth, and asked the barista for a cup of Kenya AA Gaturine Estate, a coffee I had not seen previously at Whole Foods.  The barista carefully prepared my cup, then handed it to me.  To quote Agent Dale Cooper in the seminal television program Twin Peaks, it was a damn fine cup of coffee.  I asked the barista why I never saw this coffee at Whole Foods.  He told me that Whole Foods is very careful about what types of coffee they want.   A post card explained:

SOURCE DIRECT: How to connect coffee consumers with coffee growers

A DIFFERENT WAY

Source Direct is an alternative to Fair Trade.  As artisan roasters, we need to connect with small producers to develop the highest quality coffee.  This is difficult under the Fair Trade model, which is based on very large cooperatives that produce huge mixed-lots of coffee.  It treats coffee as a commodity.  We consider coffee to be an artisan food, and Source Direct is a way for us to achieve new levels of quality with our farmer producers.

THE MODEL

Source Direct is not a certification.  It is commitment to do what it takes to create real collaboration between New Harvest and small coffee farms.  The most important element is communication: farmers need to know what we want and we need to know what their challenges are in meeting our needs.  Usually it means visiting the farms at least once a year, checking up on the picking and processing practices, tasting coffee with growers and comparing notes.  Sometimes it involves purchasing a crop months before we receive it.  Occasionally, or barista trainer will find himself training 30 Costa Rica farmers at a Tarrazu wet-mill.

At Whole Foods, New Harvest sells 4-5 varieties of coffee that are all Shade Grown, Fair Trade, and USDA Organic certified.  Yet, at the farmers market, New Harvest was promoting a variety of coffee with none of those certifications, but instead under a new program where the company pledges only to “do what it takes.”   New Harvest’s Source Direct program, a brand new initiative from the local company, represents a potential paradigm shift away from Fair Trade.  The example of these two types of coffee, sold through two different distribution channels, speak to the complexity associated with the Fair Trade label as it continues to grow in volume; estimated worldwide sales of Fair Trade products increased 187% between 2004 and 2007.

Valery Bezencon, a management consultant and Peruvian business professor, in his thesis The Fair Trade Journey: Conciliating Romance and Strategy, examines the Fair Trade market as a whole, specifically comparing the growing mainstream distribution growth with traditional alternative distribution, and identifies the different motivations of customers who purchase Fair Trade products.  Bezencon’s analysis provides context for the New Harvest Source Direct program, as well as prescriptions for marketers and managers of Fair Trade products.

Fair Trade’s continued growth and relevance hinges partially upon the manner with which it is marketed to consumers.  The Fair Trade label that consumers see on products serves as an instrument to provide information to consumers, and to convey the underlying values of the company that sells the product.  Fair Trade products are not competitive on price with non-Fair Trade products, so the Fair Trade products must provide an added value.

Consumers approach Fair Trade products for different reasons, but for Benzecon, it all comes down to the level of “involvement,” or motivation, to seek out Fair Trade products; that involvement can originate from the product itself or from the Fair Trade certification.  Benzecon coins a term to describe the latter consumer involvement: Fair Trade adhesion, the extent to which consumers buy Fair Trade products because of their underlying Fair Trade principles.   According to Benzecon, increasing the Fair trade adhesion will result in greater sales of Fair Trade products.  However, New Harvest Coffee, a local roaster popular with foodies who appreciate both Fair Trade and good local food, is marketing a new product that runs in direct opposition to Fair Trade.  Why would they do that?

New Harvest took the initiative to communicate about its new product, directly to its most ardent consumers.  In one sense, Source Direct is, in the frame of Seth Godin, a Purple Cow.  However, New Harvest makes an important claim about the Source Direct coffee: it tastes better.  According to New Harvest’s marketing material, Fair Trade coffee is a commodity sold in mixed lots.  For a company that continues to sell many pounds of that Fair Trade coffee, that is a bold strategy.  According to Benzecon, the folks at New Harvest may be onto something:

Hedonic value is a weak predictor of Fair Trade decision involvement.  This means that taste is hardly an argument to prefer Fair Trade over conventional coffee.  Indeed, Fair Trade products do not at present differentiate themselves with better quality or taste.” (Benzecon 86)

According to Benzecon, the biggest indicators of commitment to Fair Trade products are Fair Trade adhesion, concentrating on empowering small farmers and improving their working conditions.

New Harvest emphasizes in its marketing material that Source Direct “is commitment to do what it takes to create real collaboration between New Harvest and small coffee farms.  The most important element is communication: farmers need to know what we want and we need to know what their challenges are in meeting our needs.” New Harvest is taking the most important aspects of Fair Trade that appeal to consumers, and repackaging them around their own Purple Cow: finer tasting coffee.  In fact, New Harvest seems to be reading right out of Benzecon’s playbook.  He recommends that the communication strategy for a company to increase Fair Trade’s revenues “should be focused on the dimensions that exacerbate a differentiated identity in order to nourish consumers with additional signification related to Fair Trade values, adding competitiveness to the products.” (Benzecon 89)

Despite New Harvest’s Purple Cow, Fair Trade products are growing in availability.  It used to be that consumers could only find Fair Trade products at specialty shops, and at grocery stores like Whole Foods.  Now, most big grocery chains have organic sections with a wide variety of products; even Wal-Mart sells Fair Trade products.  How can Fair Trade avoid becoming a meaningless, ubiquitous seal, whose standards of excellence are swallowed under the pressure of greater market share and revenue?

Most companies just throw the Fair Trade label on their product and leave it to consumers to judge.  An artisan coffee producer like New Harvest has the luxury of communicating more directly with its customers than a global behemoth like Starbucks does.   Benzecon has a strategic recommendation for any company that wants to increase sales of their Fair Trade products: know the market, including its consumer segments, and communicate directly to those niches.   Benzecon surveyed 433 consumers of Fair Trade coffee in Switzerland, and discovered some important insights.  He found that younger and less educated consumers buy Fair Trade products for different reasons than older and more highly educated consumers.  For example, the taste of Fair Trade coffee is very important to less educated consumers.  The Fair Trade market is much more complex than previously understood, and communicating with it effectively and efficiently will require more than a simple seal – it will require tailored communication.

However, despite their foray outside the Fair Trade universe, New Harvest is a model for communicating with its customers.  New Harvest baristas treat their coffee like fine wine, and empower their customers with knowledge. When New Harvest says they are committed to doing “what it takes” for their partner farms, their customers believe it.  The Starbucks of the world can learn a lot from New Harvest.

 


Reframing consumption choices: a paradigm shift

As the last two years of the Obama Administration have made clear, crafting effective policy is complicated, difficult, and divisive; the proverbial comparison of the process of crafting laws with that of making sausage still rings true.   However, the challenges which our President confronted in the first two years of his Administration, health care reform chief among them, pale in comparison to ‘Mount Sustainability,’ as Interface, Inc. CEO Ray Anderson likes to call the change required to make our consumption patterns, and more broadly, our lifestyles, sustainable.  Sustainability is not an academic exercise; as the throughput of resources in our economies continues to grow, as those resources become more scarce,  and as the ability of the Earth’s ecosystems to provide services like fresh water and carbon sinks diminishes, we are confronted with a huge challenge: in a world of inequality, how do we craft policy that will help to move us onto a path of sustainability?

In the United States today, environmentally friendly choices are framed as the “Green” thing to do.  However, Americans like to frame these decisions around choice; each individual is free to make their own choice, to live their own lives as they see it.  As a result, sustainably-minded businessmen and policymakers provide information to consumers, and empower them to make their own decisions.  Companies like Seventh Generation make the case that their products are the better choice because they use less toxic chemicals, or use recycled materials.  The growth of these types of products, and the efforts of multi-national companies to begin to “Green” their products is undoubtedly a good start.  However, when it comes to toxic chemicals and the harm that they have on human lives, there is much disagreement.  It becomes difficult for the consumer to know what the responsible decision is, for their family’s health, for their community’s watershed, for their planet.  We don’t fully understand the impact of certain carcinogens, or products like cellular phones, on long-term human health.  As Barry Schwartz writes, too much choice can confuse consumers, and make them feel unsatisfied:

“So whereas a life without any freedom of choice would not be worth living, and whereas giving people choices enhances their freedom and their welfare to some degree, it appears not to be the case that more choice means more freedom and more welfare. Indeed, a point may be reached at which choice tyrannizes people rather than liberating them. And we may be at that point. The significant implication of this news, both for individuals andfor policy makers, is that even if wealth is a proxy for freedom of choice, it does not follow that wealth is a proxy for well-being.If well-being is what we ultimately care about in setting social policy, we will have to look elsewhere. And if we can’t assume that we can make people better off just by giving them more to choose from, we can no longer avoid addressing difficult questions about what enhances human welfare by throwing options at people and letting them find their own answers.”

Schwartz argues for a kind of “libertarian paternalism,” whereby consumers would face simple choices, with information about the impact and benefit of each decision.  Clear and common-sized information about the impacts of our economy and our consumption on resources is certainly needed.  For example, water and fossil fuel use could be provided for each product sold on the marketplace, in a standardized, visible format.  Communities should mandate home energy inspections which provide consumers with a clear indication of the costs of their resource use, where resources are being wasted, and how investments in insulation and more efficient systems could help consumers save money over time.  States and cities should publicly finance installation of renewable energy systems, so that the long term cost and benefit of those systems can be passed onto a new homeowner when a house is sold.

Efficiency is not enough, though.  As resources become more scarce, there will be economic pressure on consumers to reduce their consumption.  People will eventually have to live closer to their workplace, and to live more simply.  Today, when many Americans still believe that exponential growth is a guaranteed right, it is difficult to get them to make decisions and investments for the long term.  The challenge to policy makers is to change that paradigm.  It is not enough to simply be more efficient, we need to maximize the benefit we get from the resources we have.   Consumers need to realize that the choices they make today will impact the way we live in the coming decades, and the world that their grandchildren will inherit.


Eaarth and Carbon Nation offer pragmatic, clear solutions.

On the cover of Eaarth, Barbera Kingsolver writes that the reader should read through to the end, that “whatever else you were planning to do next, nothing could be more important.”  One of my classmates advised me not to pick it up until after our Fall trimester is over next month. With what I know of Bill McKibben an his 350.org campaign, I figured this would be a depressing read.  McKibben confronts the fact that we very likely live on a planet different than the one that human civilization prospered on:

“The Earth has changed in profound ways, ways that have already taken us out of the sweet spot where humans so long thrived.  We’re every day less the oasis and more the desert.  The world hasn’t ended but the world as we know it has – even if we don’t quite know it yet.  We imagine we still live back on that old planet, that the disturbances we see around us are the old random and freakish kind.  But they’re not.  It’s a different place.  A different planet.  It needs a new name.  Eaarth… This is one of those rare moments, the start of a change far larger and more thoroughgoing than anything we can read in the records of man, on par with the biggest dangers we can read in the records of rock and ice.”

McKibben offers plenty of quantitative and qualitative evidence describing our new home, but this is not a dense tract; in fact, it is refreshing in its readability.  I read it over a week before bed, and found his writing to be concise and clear.  While the subject, our future on this rock he now calls Eaarth, is a serious and grim, McKibben offers some great recommendations for how we can live on the new planet.  He singles out growth as enemy number one, along the lines of ecological economists like Herman Daly and Robert Constanza.  McKibben doesn’t think that an ecological New Deal, as recommended by Thomas Friedman and others, will be able to prevent the planet from continuing to change:

“The next decade will see huge increases in renewable power; we’ll adopt electric cars faster than most analysts imagine.  Windmills will sprout across the prairies.  It will be exciting.  But its not going to happen fast enough to ward off enormous change.  I don’t think the growth paradigm can rise to the occasion; I think the system has met its match.  We no longer possess the margin we’d require for another huge leap forward, certainly not fast enough to preserve the planet we used to live on.”

McKibben recommends some words that encompass the future we will need to live on our new planet: durable, sturdy, stable, hardy, and robust.  McKibben argues for smallness instead of bigness, smaller national purposes:

“So the first point is simple: the size of your institutions and your government should be determined by the size of your project.  The second point is more subtle: The project we’re now undertaking – maintenance, graceful decline, hunkering down, holding on against the storm – requires a different scale.  Instead of continents and vast nations, we need to think about states, about towns, about neighborhoods, about blocks.”

At times like this one, McKibben sounds closer to the Tea Party than the modern environmental movement with his talk of small government.  The one distinction, of course, is that the Tea Party supporters largely deny climate science; they believe growth can save us again and again, with the planet providing no inherent limits.

McKibben calls for communities to get closer together, to develop local solutions for energy and food.  “If the eaarth is going to support restaurants, they’ll need to look like the Farmers Diner” (in Quechee, Vermont, a favorite destination of m wife and I).  McKibben doesn’t just recommend local commerce, but sharing and connecting with neighbors, a lost tradition.  Eaarth is a useful book for this moment, because it appears that a price on carbon will not be set anytime soon.

Along the same lines, in a different vein, the upcoming documentary Carbon Nation, which I recently watched, offers useful solutions for tackling our problems with carbon, in a slightly more optimistic manner.  Peter Byck‘s new film has an intriguing tagline: A Climate Change Solutions Movie (That Doesn’t Even Care If You Believe in Climate Change).  The argument is simple: there are actions that we can all take, that are already being taken, that can begin to solve the problem’s we face.  The film’s argument makes financial sense; in fact the clip above is representative of the film in general, optimistic, aimed at an audience that includes conservatives.  One of my professors, a rock ribbed New Hampshire conservative, thinks the film will be generally successful in communicating to conservatives. Carbon Nation offers some solutions that we would be wise to listen to.  Even the Shell representative who appears in the film says that a price on carbon is crucial to our future.  However, the film discusses issues that range from traditional alternative energy, to biofuel, soil conservation and cover crops.

Carbon Nation premiere’s in New York in January, but screenings are occurring now across the country at conferences.  Eaarth is out now.  Both offer pragmatic, cohesive solutions about the reality we face, and the steps we must take to survive on this planet.


Annie Leonard, Ben Bradlee, and an iPad walk into a bar…

How do you sell a newspaper in the 21st Century?  Well, The Washington Post is on to something with this new iPad app and campaign.  This video blends the past successes at the Post, personified by Bob Woodward and Ben Bradlee, with the contemporary moment.  Here you have Bob Woodward, typing away on a Watergate era typewriter, interrupted by some young reporter with an iPad.  He doesn’t know what to do with it, and in that moment Bob Woodward is like a lot of us, how exactly could you use this fancy new product?  Bob walks by some folks using the app, and I have to say, it does look intuitive and appealing.  Woodward asks Bradlee, the old lion of journalism, how does the iPad fit in to the Washington Post?  Bradlee, sagely says to Woodward: “These kids think tweets twit themselves.”  Brilliant.  This is very effective marketing for the iPad.  However, my enthusiasm is tempered this morning by the latest from Annie Leonard.

The Story of Electronics examines what happens to electronics before and after their useful life.  In the context of the iPad, I wonder, what is its useful life?  If I could count on daily use for at least 10 years, that would be a start.  However, given the shelf life of cell phones these days, I am not so certain that it will still be useful in 10 years.  The MacBook Pro I am typing on is 4 years old, and I hope to get at least two more years out of it.  What if the iPad was designed so that critical components could be upgraded in the future, easily?  That way, I could take the costs of the iPad production, in water, resources, and waste, and spread them well into the future.

What toxic chemicals are used in the production of the iPad?  What will happen to those chemicals when the device breaks? Apple does take back old products, which is good.  All electronics manufacturers should follow suit.  The recycling should be incentivized at purchase, so that consumers have it in their best interest to return the device to the manufacturer for safe, effective recycling, instead of throwing it out in the trash.


Ecological economics: the next logical step

The American economy, and much of the world economy, is organized around principles of neoclassical economics (NCE).  Neoclassical economists consider perfect markets without any outside interference the ideal means to build an economy with. Those economists believe that NCE principles create the most efficient allocation of resources throughout the economy.  The goal for neo-classical economists is growth; economic growth signifies the distribution of market goods and services, and in the minds of neo-classical economists, economic growth is a proxy for consumer satisfaction.

While NCE is the dominant paradigm, ecological economics (EE) offers better framework during a time of ecological constraint.   Many of the resources that through their abundance created the conditions for the Industrial Revolution and the rapid economic growth of the last two centuries are becoming scarce.  Ecological economists recognize that Earth and its ecosystems are not subsets of the human economy, but rather that the human economy is a subset of the Earth.  As such, ecological economists are concerned with the question of scale, what the appropriate and sustainable size of the economy is relative to the ecosystems that support it.

Both NCE and EE recognize the concepts of marginal cost (the additional cost of producing a market good) and marginal utility (the additional satisfaction one receives from a market good), and seek out the optimal scale whereby the greatest marginal utility is achieved at the most efficient marginal cost.  However, NCE only considers these concepts in terms of the microeconomic and not the macroeconomic level; EE examines the optimal scale of the larger macro economy.  By looking at the big picture, ecological economists examine the throughput of the human economy, and recognize a conceptual flaw in NCE.

Neoclassical economists look at the economy as the whole, and the natural capital that the Earth and its ecosystems provide as a mere subset of that economy.  The NCE view of the economy is a circular one, between production and consumption: businesses and consumers interact to create supply and demand.  The circular flow model that neoclassical economists use to illustrate those relationships is simple, but like their view of the economy as the whole, it does not properly recognize the natural capital that allows the economy to operate.

The NCE model creates the illusion of a perpetual motion machine, which is impossible.  The Second Law of Thermodynamics identifies that any closed system degrades through entropy.  In the case of the macro economy, this means that resources cannot be recycled completely.  The throughput of the macro economy is enormous, and growing.  However, this enormous throughput occurs on a finite planet, with finite resources.  Specifically the fossil fuels and minerals that drive the macro economy, nonrenewable on a human scale, are finite.  The capacity of the Earth’s ecosystems to provide water and waste services is finite.  Ecological economists recognize that growth is not sustainable, but differentiate growth from development.

That distinction between growth and development is helpful when considering how a business might operate through the principles of ecological economics.  Minimizing the throughput of resources is crucial on the finite Earth.  A business might consider offering a service instead of a product, and designing the materials to be provided to customers with their entire life cycle in mind (through a Life Cycle Assessment).  Interface, Inc. designed their modular carpet tiles with those very goals.  Interface will replace individual tiles when they become worn, and recycle those tiles as much as possible.  In fact, Interface works continuously to minimize the amount of petrochemicals in their product, and the ecological footprint of its supply chains.  By offering a service instead of a product, a business can maintain customers over the long term instead of trying to sell as many products as possible while cutting costs to maximize profit margin.  On a finite planet, that behavior is simply not sustainable.

While EE principles are appealing, they do present limitations, especially within the dominant NCE paradigm that defines the macro economy.  First of all, a business must consider optimal scale carefully; long supply chains are not sustainable over the long term in a finite world.  Second, finance is a quandary, especially if the business is for-profit.  Investors and stockholders will demand healthy and steady profit margins, which are difficult to maintain when competing against businesses that consider growth as the primary goal.  Finally, the concept of providing a service instead of a product is difficult in terms of modern accounting practices.  Interface, for example, whose customers tend to pay through capital expenses, are sometimes reluctant to shift those costs to current expenses.   However, EE provides a growing framework for sustainable business that is already evident in developments like the B Corporation.  In a finite world, ecological economics provides a necessary course correction to neoclassical economics.