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How Seventh Generation Made Sustainable Cleaning Products Mainstream

Meghan French Dunbar July 4, 2015
Seventh Generation is arguably one of the most recognizable mission-driven brands in the world. The company makes a wide range of products, from household cleaners to diapers to body wash, all with the mission of inspiring “a consumer revolution that nurtures the health of the next seven generations.” The company has expanded to over $250 million in annual sales, all while remaining private and staying true to its core values. In contrast to similar brands in its field, the company has taken a different approach to scaling its impact. Rather than focusing on being acquired by a larger, multinational brand, Seventh Generation has opted to create its own social venture arm, Seventh Generation Ventures, to begin acquiring smaller brands to help them scale their own impact. We had a chance to sit down with John Replogle, President and CEO, to discuss this innovative new direction for his company, the collaborative economy, and broken public markets.

Could you talk about the beginning of your career and your transition to Burt’s Bees and then to Seventh Generation?

John Replogle: Starting earlier in my career, I had the great opportunity to lead Guinness both in the UK and the US. I was already a bit deeper into my career and really looking at my life. I had kind of the perfect life, in a way. I had a wife and two young daughters, living in a nice home in Connecticut, running Guinness beer, and, at the same time, was working on my personal mission. If I had to borrow a term from one of my great mentors, Ray Anderson, I had a “spear in the chest moment.” It occurred to me that what I’d been on was a self-endeavor that was all about moving myself forward; but what was I doing for the world around me and, in particular, for my daughters’ world? What would they inherit, and how was I creating value and benefit to make their world a better, safer place? I remember it like it was yesterday. It was at that moment that I realized I needed to change my career. Within a few months, I had left Guinness and moved to Unilever. It was there that I got to work with some great colleagues on the Dove Campaign for Real Beauty, where we really thought deeply about the stereotypes of what beauty is and the impact on women, and, in particular, on the self-esteem of young girls. So we launched the Dove Campaign for Real Beauty, as well as set up the Self-Esteem Fund in partnership with the Girl Scouts, and I felt like I was moving closer to my personal mission.

Over my time at Unilever, while I loved it, I also realized even more fully how much I loved building companies and businesses, and the natural products market was really exploding. It was at that time that the phone rang, and there was an opportunity to come down to North Carolina and lead Burt’s Bees. Again, it was a very clear decision for me, because I knew it would move my work into greater alignment with my life goals. So I gladly accepted the opportunity to move to North Carolina and to work in a place where the mission of the company was all about the greater good. It was an incredibly dynamic time in my life and my family’s life. I felt like I had the chance to really build something that was meaningful and impactful and began to become a beacon for the way business could both do well and do good. After the business was sold to Clorox, I thought about what the next great opportunity would be and had the good fortune of having lightning strike twice, and was invited to come to Burlington, Vermont and lead Seventh Generation, where I’ve been now for four years.

“We are a mission-driven organization; we’re a founding B Corp with a long-term aspiration to remain independent and to be guided not by the maximization of shareholder profit, but by the creation of shared value for all.”

In contrast to other companies in this space that are looking to become acquired, you are actually raising money to acquire other brands. Could you tell us more about the philosophy behind that approach?

JR: Let me start with the context of the collaborative economy, which is all about creating an organizational culture that seeks to collaborate versus compete; seeks to create win-win opportunities versus zero-sum win/lose opportunities; that thinks not about the company itself as being contained within four walls, but literally a virtual company where the brand is connected with consumers; where you can actually roll up your sleeves with what are traditionally known as competitors to really think about how we can collaboratively grow an entire category. There’s an orientation that we’ve instilled within Seventh Generation that we believe in, which is all about thriving within the collaborative economy.

It’s this understanding that leads you to understand what we want to do next. Our mission is to inspire a consumer revolution that nurtures the health of the next seven generations. That’s why our company exists. We try to think about these overarching aspirations we have: things like Nurture Nature, and building communities, and transforming commerce. We think about the right strategy to enable those aspirations. As we think about transforming commerce, we know that we’re a very successful and scaled company at this point. We’re nationally distributed; we do over $250 million in sales; we’ve got a unique team with great capabilities; we’ve got positive cash flow; we’ve got an incredibly aligned and supportive board that has the resources to continue to support us independently, but also as a platform to enable the growth of other brands and companies. So, we’re taking a partnership approach to look for like-minded, mission-aligned brands that are growing and can use our organizational resources and capabilities to help them scale more rapidly, to do more good, to have greater impact, and to navigate the choppy waters of growth to help them succeed. So, over the long run, we see Seventh Generation as a portfolio of great brands, all mission-aligned, all about human health and environmental health.

The first manifestation of that was the acquisition of the Bobble brand. We moved into the water category two years ago with the acquisition of Bobble, a great, patented, design-led water filtration system that really replaces the needless waste of single-serve water bottles. In the US today, we consume over 35 billion – with a “b” – single-serve water bottles, 70 percent of which wind up in a landfill, which is just an egregious amount of waste. So Bobble’s aspiration is to make the single-serve water bottle obsolete.

Conventional wisdom would hold that being acquired by a large multi-national brand would allow a company like Seventh Generation to scale even larger and have more of an impact than it would have if it had stayed independent. Do you have any doubts about your current strategy and the effect it might have on your ability to scale even larger?

JR: The parallels are similar, right? Just as Campbell Soup Company will help scale Plum Organics, Seventh Generation looks to help scale other brands that are mission-aligned. The key thing for us and any partner that we would take on is that our DNA is absolutely clear. We are a mission-driven organization; we’re a founding B Corp with a long-term aspiration to remain independent and to be guided not by the maximization of shareholder profit, but by the creation of shared value for all. I have no doubt that not only will Seventh Generation’s brand continue to grow and succeed as more and more consumers come to really think about the impact of their purchases, but I think we as a platform for that kind of aligned growth are going to forge a new frontier in the world of B Corps and how business is done. I’m incredibly excited about what the next decade holds for our business, and our ability to scale and leverage this, and create a business unlike any other out there

“Business, one of the most powerful forces on earth, can be used to advance health and well-being.”

What are you looking at when you’re deciding whether to invest in a smaller brand?

JR: Oftentimes, the companies that we’re looking at tend to be founder-led still. Therefore the company’s and the founder’s vision are inextricably linked. So, we do look for people who have a clear determination to use the power of business to do good in the world. There has to be an alignment – the notion that business, one of the most powerful forces on earth, can be used to advance health and well-being, and that you can’t live a healthy life on a sick planet; business has consequences, and in that world, we have to act responsibly and sustainably over the long run. That’s the DNA check that we’re doing. We’re looking for true brands that are distinctive with the ability to scale. There are a great number of those brands out there.

What we’re doing right now is kind of methodically and thoughtfully approaching different brands and sitting with founders and talking about how we can enable their visions for accelerated growth, but also help them avoid the potholes. A number of brands, for example, get trapped in capital constraints, or have to raise outside capital from non-aligned investors; or take on debt, and then they go through an economic downturn, where they’re breaking covenants; or they may not have sufficient organizational capabilities to both run the operations and scale the commercial front end of the business. We can help them there. So there are so many different areas where, because we’ve been there, because we’ve done that and we’ve got the scale and the resources, we can help companies really unlock and accelerate their growth, and avoid some of the pitfalls that lead to so many of the great brands that we’ve seen disappearing over time.

What advice or insights would you have for mission-driven entrepreneurs who are just getting off the ground?

JR: First, know exactly what you’re in it for. Write down your mission, your values, and what your goals are, and be really clear and transparent on that. Make sure your organization understands them as well and align your organization around that.

Second, attract people who are aligned on a values basis. That’s not only your employees, but frankly, and incredibly importantly, your investors. Don’t raise capital from people who aren’t aligned with your mission and values. You’ve got to stay focused and supported by those people who are going to see you through, because there will be times where things will get thin, and you want to make sure that your board and your investors don’t blink.

Finally, always, always think about being a truly authentic and transparent brand. We live in a world of transparency today, where a company’s values and the brand values must be aligned. You’ve got to be true and transparent in all that you do in building consumer trust in your brand.

I think we’re getting highly valuable profits in that every dollar that we drive to the bottom line is building a more sustainable and just model for commerce.”

What insights do you have regarding quality leadership and building a highly functioning team?

JR: The CEO’s number one role is all about people and culture. Organizations have two great things – they have their people and they have their brand; you have to steward both of those things. For me, it starts with people. It’s about being very clear on what your mission is and what the purpose of your organization is and how that translates into an employee value proposition. So, what do you stand for? How can you create a relationship with employees where they can be part of that mission, and how can you create the right incentives and structures to create that long-term, enduring relationship where people can do their best work? And then, how can you wrap that in a culture that is reinforcing and supports the values of the organization and of the employees and brings the organization together to have its most positive impact in the community in which it’s based?

Second, it’s about the brand. It’s about aligning the company and the brand together and being honest and true about what the brand stands for. It’s about being clear on how you make decisions within an organization that support that brand authenticity, and then it’s about giving it the space and the support to grow – be it around collaborations or retail partnerships or investments in product development and quality.

How do you feel that being a conscious business and operating this way benefits or impacts your bottom line?

JR: I think we’re getting highly valuable profits in that every dollar that we drive to the bottom line is, frankly, building a more sustainable and just model for commerce. We’ve been very successful over the long run. The myth that you can’t do well and do good is being busted left, right, and center. There are over 1,200 B Corps out there today that are proving you can have it both ways. I think we’re on the verge of a whole new business model. Seventh Generation has been fortunate to be an early pioneer, and we’re going to continue to blaze the path for others to follow.

There is a difficulty, though, especially with publicly traded companies having to operate with such a short-term focus. Is this part of the strategy of why Seventh Generation is remaining a privately held company?

JR: The public markets are broken. It’s that simple. It is the relentless demand on this month and this quarter that leads to short-term behavior, which is the antithesis of building a sustainable enterprise. I watch it time and time again. It creates sub-optimization of long-term value. Sadly, today, if you really want to remain focused on longterm shared value, the single best way to do that is to remain an independent, privately held entity.

What metrics does Seventh Generation find to be most important, beyond financial?

JR: Your question assumes that financial is our most important one! I would say that it is one of a handful of key metrics for us. One that we really put first and foremost is around our culture, and whether we’re a great place to work. We benchmark ourselves every year in the Vermont Best Places to Work survey; we survey our entire organization. We listen closely for how we’re doing as an organization with our culture, and then we set out to work on continually refining and improving that. So, we’ve got specific goals and metrics in that space.

We’ve got goals and metrics in terms of the impact we have in our community by the way our annual incentives and bonus plans are tied to our service in the community, as well as our commitment to a program we call LEAD , which is all about going out and having a positive impact in our community. That’s another key metric.

We’ve got clear sustainability metrics about the elimination of waste, about the removal of plastics, around several different dimensions of how we perform as an enterprise from a sustainability perspective. That’s another core metric.

We look at how we’re doing with our consumers, and whether our brand is reaching more consumers. That’s a critical element of our success. We also look at our innovation pipeline and its health, and whether we have a strong, three-year product pipeline, and whether our innovation is resonating in the marketplace.

Then, of course, we look at our sales growth; how are we doing from a top line and a market development perspective? Last year was a record-setting year for us, with some of the fastest growth we’ve ever seen. So that’s been tremendous. And then we look at the bottom line, which is, are we delivering long-term value for shareholders? Is it reflected in our annual value, and is it reflected in our long range strategic plan – i.e., can we actually say that the value of the enterprise is growing each and every year? We measure the triple bottom line of people, planet, and profit.

“We need to be conscious, and we need to mobilize, and the only way that we’re going to effectively do that is by harnessing the incredible power of business.”

What is inspiring you right now or giving you hope for the future?

JR: Where do you start? My kids inspire me. I look at how they live and how they think, and they are just so much more intelligent than I was at their age. They’re thinking about their relationship to this globally interdependent world; they’re thinking from a systems perspective. They’re thinking about EQ and what it takes to be a responsible citizen in the 21st century. I look at them and their classmates, and all of the students – I go to college campuses, and business schools, and it is so inspiring to see how the curriculum has shifted. I graduated from Harvard Business School in 1993, and what they’re teaching in the MBA programs today is just a whole different form of responsible, ethics-based, sustainable leadership than it was 20 to 25 years ago. That gives me hope.

I think there’s more of a conscious realization that we share one planet. My own belief is that this planet isn’t ours; we don’t own it. It belongs to our maker, and we have to care for it. I hear more and more conversation on that front – not whether the climate is changing, but how do we protect our fate and care for this incredible, precious place that we’ve been given to be stewards of? I’m inspired by that conversation and all the manifestations, including the fact that, for example, solar has become economically viable in the United States. There’s hope springing everywhere. I think we are a long way from the Silent Spring, and I think that there’s plenty to be hopeful for, but there’s much to be done, and much to be done quickly. We need to be conscious, and we need to mobilize, and the only way that we’re going to effectively do that is by harnessing the incredible power of business. If we do that well, if we lead responsibly, if we can ensure that the largest and greatest organizations on the planet think holistically and systemically, then I think we will make a huge, positive leap forward for humankind, and for all of the shared existence of this planet.

Social Entrepreneurship / Stakeholder Capitalism
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