Stay ahead of the commoditization curve

Dell’s Bruno Sarda says the CR innovation comes down to three strategies: (1) Drive the business (2) Mitigate risk (3) Advance the brand

By Bill Hatton

(Bruno Sarda is the director of Global Sustainability Operations at Dell Inc. and works out of Phoenix. He also serves as a consultant at the Walton Sustainability Solutions Initiative, Global Institute of Sustainability, Arizona State University, and as an adjunct at ASU in the School of Sustainability. Bruno sat down with me for a wide-ranging conversation on the profession in June at the Sustainable Brands conference in San Diego.)

Bill Hatton: Talk to me about your approach to sustainability.

Bruno Sarda: At Dell we work on sustainability across some key dimensions, including a socially and environmentally responsible supply chain; efficiency in our own operations; what materials go into our products and packaging; energy efficiency during the useful lifetime of the product; responsible takeback and recycling once the product is no longer in use. It’s also about helping our customers get more from their technology. Whether in the data center or at home, we aim to give customers the power to do more with their technology with a smaller overall footprint.

Bill: Can you help me to understand how these roles work in the company? It seems to me that for a lot of actions, you wouldn’t need the word “sustainability” to sell it internally, correct? For example, how we can reduce waste and save money on packaging—the business case is right there. You don’t need to call it sustainability.

Bruno: I often say part of my role and mission is “How do we make sustainability sustainable?” And part of how we do that is to make it so that it’s no longer a thing.

It’s kind of like diversity. At some point it’s no longer a thing—it’s just what we do because it makes sense. When you have a diversity of backgrounds and opinions and lifestyles and everything, you’re just smarter, you know?

Packaging is a great example of this. We have a packaging team at Dell that figured out that sustainable packaging can makes business sense including options such as cardboard from wheat straw and plastic from captured greenhouse gases. A lot of this started with customer demand for less packaging, to help them reach their own zero waste to landfill goals More local governments are also establishing zero waste goals. So this makes business sense because we’re meeting the customer need, which is expected to continue to grow.

So, if you step back, the way we’ve reframed sustainability over the last couple of years at Dell is kind of going to the heart of the question you asked, which is, “what are we about?” And we, meaning the CSR team, do three things: help drive the business; help mitigate risk and ensure business continuity; and help advance the brand. That’s what we do.
How we do it is through all of these programs that we call sustainability initiatives. But we measure success not just because we’ve just accomplished a new sustainability goal, but rather because we’ve helped to either drive the business, or mitigate risk, or advance the brand – or often it’s all three.

So when you look at what we do, we’re really interfacing with the sustainable procurement initiatives and that helps a lot with how we help drive sales growth. Things like cost reduction, whether its energy efficiency or cost of materials, it certainly helps on the bottom-line side. There is also a ton of stuff we do on the risk mitigation and business continuity. Some is very tactical, such as conflict minerals and making sure we have compliance with all of the tracking, the reporting and the disclosures.

For enhancing the brand, it is asking questions like: How do you inspire and activate your employees around the purpose and the values of the company and how do we translate that externally into some of these outcomes? How do you do the same with your customers?

Whether it’s how we look into our supply chain, to our product materials, things like packaging materials, how we deliver sustainability as a feature to customers. We’ve been measuring the impact of all of the energy conservation measures that we build into our products and systems managements. Last year for example, we reported that we saved our customers about half a billion dollars in electricity costs compared to what our products would have consumed two years prior.

Bill: Who do you report to?

Bruno: I am part the corporate sustainability team that reports up to the VP of Corporate Social Responsibility. We have a head of sustainability, David Lear, to whom I report. On the team we also have an environmental strategist, a social strategist and someone focused on sustainable logistics. We also have virtual team members with whom we work closely on things like marketing and communications.

Bill: And you’re all in the same department.

Bruno: We don’t all necessarily report to the same people but our goals are aligned. And we coordinate with others across the business, for instance, on supply chain strategy.

Bill: Trisa Thompson is your VP of Corporate Social Responsibility. Who does she report to?

Bruno Sarda: To our Chief Marketing Officer, Karen Quintos.

Bill Hatton: Okay. So you’re in the marketing department.

Bruno Sarda: Yes. CSR rolled under the CMO about five years ago now, which is where strategic marketing is driven from. This includes corporate brand and purpose, customer insights and CSR. .. All the operational marketing teams reside in our business units, and many of these use sustainability in their campaigns, as well.
Bill Hatton: So you’re working on the marketing strategy and how sustainability fits in, but you also have a role in proving operations, it sounds like. Which is a little… odd. Well, not odd –

Bruno Sarda: To ensure alignment and engagement across the entire organization, we also run what we call a sustainability operating council, which is kind of like Knights of the Round Table but without the cool table or the swords or anything.

Bill Hatton: Less bloody, too.

Bruno Sarda: Each business unit has a champion for sustainability within their division, so whether it’s packaging, operations, procurement, logistics, HR, legal, government affairs, and so on it’s about 30 people I guess who collectively collaborate on how we set goals, and how we drive these goals. There’s a lot of collaboration on what are your plans, what are your struggles, what are your hurdles, where do you need help, and how can we influence what you do? Because ultimately, how you source this one material has a big impact on another area, such as recycling, or even product design, so whether a battery is glued versus bolted versus whatever. So there’s a lot of collaboration that happens, but ultimately there’s functional ownership within all of these functions. And that incorporates sustainability if you will, but the function our team owns is sustainability, we don’t directly oversee any of those business functions like procurement or operations.

Bill Hatton: Say I’m a national sales manager. How can you help me sell? Or do you not do that? You hinted at it when you talk about how Dell products can save customers’ electrical costs.

Bruno Sarda: There are different ways we do that – part of what we do is what I would call is reactive. There is some kind of trigger on the customer’s side, where the customer either as part of their RFP process or as part of their supplier vetting process says we need to better understand how your company manages sustainability- related issues. Most of the time our salespeople can answer the first couple of questions customers have. I often get involved, or as part of a small team who helps. Sometimes, it’s a questionnaire. Sometimes, they want a series of disclosures. More and more now customers actually want meetings and presentations: here’s what we do, here’s how we do it, here’s why we think it matters, here’s how we think it adds value to you as a Dell customer.

Bill Hatton: So you’re actually there as a sustainability team in the sales presentation. And you have the presentation and you have the data ready.

Bruno Sarda: Yes. Whether it’s documents, whether it’s sometimes just helping complete questionnaires, and then sometimes you complete the questionnaire and then after that they ask questions. A lot of customers ask for our Eco Vadis disclosure. We actually score in the top 1% of all Eco Vadis’s rated companies. Just in the last week, I’ve had two separate customers say hey, we just got your Eco Vadis disclosure, sounds like you guys are doing great, and we’d love to better understand if you’d be willing to share best practices, because we’re trying to get on this train, too.

Sometimes, it’s not directly stating, “Here’s what you get when you buy Dell.” Instead it is part of this symbiotic client-customer relationship. It’s more like, “Here are things we’ve learned from that we can help you figure out.”

You look at the list of our large corporate customers especially, and we know these are companies that often have energy reduction goals, emission reduction goals, all kinds of sustainability goals, and what we’re trying to do is to do a combination of customer profiling and sales outreach to show that sustainability can be a valuable tool in constantly re-earning their customer’s business.

For a long time, it was about Green IT – making sure we had greener IT and that remains important – but now we are also talking a lot about ‘IT for green’: What is the role that technology can play in helping other organizations achieve more sustainable outcomes through the use of technology? We’re engaging some of our large customers to do highlights and measurements studies; we have a large one going on in healthcare for example. We manage a lot of digital medical records, there’s a good business story, but it is also a good sustainability story – how we help our healthcare customers understand that by embracing digital medicine they’re not only reducing their carbon footprint, reducing the use of things like paper or x-ray or cardboard boxes or courier services, moving stuff around, but it’s also actually improving patient outcomes and improving the speed of care and reducing the cost of care.

We’re trying to be a bit more proactive in bringing that conversation to some of our larger customers—to get them to see that there’s a conversation worth starting there as opposed to waiting to be asked. So the measurement is still very anecdotal there. I don’t have great metrics in terms of being able to say we’ve helped generate an extra x billion dollars in revenue in the past year because of this, but we are working on better measurement.

Bill Hatton: Do you think it will, though? Not a billion. But do you think –

Bruno Sarda: I don’t think a billion is a big number at all. Can I tell you that a customer will choose Dell over somebody else just because sustainability? No. Just like price is never the only driver. Some of our products are pretty differentiated; some of our products are not.

Sometimes you have to say, “Well, what else do you get?” Maybe it’s the quality of service, maybe it’s the reliability of the product, maybe it’s the intangibles – like whoever is the partner – more and more there a lot of perceived risk with supply chain issues, both in terms of social things but also actual potential business structure issues.

When you look at what happened in the hard drive business four years ago when Thailand flooded. Turns out a large percentage of the world’s hard drives were
in Thailand and basically our whole industry came to a halt for about three weeks because nobody was shipping hard drives.

Some of those things are starting to come up again – not a lot, but when we can talk about we’ve already done on the Dell side, like full water risk map across our supply chain – where are the water hot spots, how does that overlay with where our key supplier hubs are and kind of how we assess risk related to that. Customers are impressed when they hear that, they haven’t seen that from somebody else, that gives them a sense that we are being thoughtful about these questions. So, again, intangibles.

Whether that allows us to claim a sale or not, there’s enough traction around these things that we see positive feedback from the customers but also from the sales organization. The sales people love that because we’re being recognized and singled out, we’re winning preferred supplier awards – those kinds of things. But I can’t put a hard number next to what that’s worth today.

Bill Hatton: You’re adding value to the organization. This question is probably premature, but is there any risk of sustainability being commoditized itself, everyone expects this – this is the thing that we already expect – how do you add value from there?

Bruno Sarda: I think so. I think in some ways we’re already there in some areas. What could be once-upon- a-time perceived as innovative and differentiated now is industry standard. Reporting is one example. It used to be impressive if you had a pretty well-developed sustainability report. Now, if you don’t, it’s a problem. If you do, it’s you and everybody else. Sometimes it’s a sector thing – we’re in a sector where our key competitors are pretty advanced in this space, too, so it’s not just us, right? So when we map ourselves competitively, in some areas we stand out, and in some areas we are middle of the pack. So it’s also a little bit of a competitive positioning thing. Overall though, I think it will be a long while before most organizations have matured to the point that sustainability is completely integrated and they don’t need experts guiding them in this direction.

We know whether it’s on the client product side or on the enterprise server side or on the networking or security side, there are lots of progressive companies there. I think in some industries, that happens less than at the forefront of this movement. If you do some things, you stand out. In our case, a lot of what we used to do five years ago that were considered differentiators are now considered standard. That’s not necessarily a bad thing.

Bill Hatton: Well, it’s a good thing for the overall economy – the overall state of the sustainability marketplace. You know, like anything else, it requires constant innovation.

Bruno Sarda: And it’s not a bad thing because frankly – we hardly ever get asked “why do we do this?”. Back in the day, there was concern about disclosing all of this information in our CSR report when it wasn’t required. Nobody asks that anymore – it’s expected, it’s understood. A lot of the stuff we do in supply chain and operation and renewable power are now understood as inherent to running a good business. So it’s becoming more and more mainstream, but that’s just kind of what you do, you know?

Going back to things like diversity, it’s the same thing. It’s no longer considered “cool” to have a diverse workforce; it’s considered a problem if you don’t. So some of these things just kind of shifted a little bit. And that means if you try to be innovative and if you try to be differentiated, then you have to think, so what are you going to do? Packaging, for us, has been one. Everything we do around take back and recycling is a big differentiator for us. We’re by far the most developed program in that space and our customers value it.

For example—we offer take back and recycling in 78 different countries of all brands actually, not just Dell.

And then in 40 countries now we have more of a service – asset resale and recovery services where we work with our large customers on how to help them manage the waste flows, that they’re replacing their PCs, let’s say, every three years – what happens to those PCs. In many cases, they have residual value, so we help them manage the resale for everything that’s still good and working. We also ensure data destruction, which is particularly important to our commercial and government customers. We have tight processes and strong partners to ensure privacy and security—getting these products into a second life and actually flowing the revenue back in a responsible way.

In the end, we believe sustainable business is better business, and I find it very rewarding work.
Posted August 13, 2015 in 25115