On Halloween 2007, a room full of employees waited for a secret announcement. Two men emerged at the front of the room dressed in bee costumes and revealed news that would alter the course of two companies.
The men in the bee costumes were a senior vice president from Clorox and the general manager of Burt’s Bees. They were announcing Clorox’s acquisition of Burt’s Bees for the cool price of $925 million. The beloved all-natural products brand was joining the ranks of a company known for its chemicals.
Was Burt’s selling out?
The sale seemed to come out of left ﬁeld, but both companies had been deliberate about the partnership and had thought the strategy through carefully.
The new CEO of Clorox, Don Knauss, was interested in creating a more environmentally sustainable company. In addition, Clorox was turning 100 years old that spring and the executive management wanted to craft a forward-looking strategy that would reﬁne, and to some extent redeﬁne, what Clorox stands for. Knauss commissioned a study to assess how Clorox could respond better to its customers’ needs as well as to the needs of the environment.
The research indicated that consumers are very concerned with their health and wellness and that of their families, and though they also value sustainability, it is of secondary concern. And Clorox customers cared more about their own home environment than the environment at large. That is to say that they prioritize the safety of their children in their daily routines at home over concerns about the impact of products on the environment. If a product will have a positive impact on the environment—or less of a negative impact—that’s considered by most a nice plus. After studying the research, Clorox decided to place a new focus on creating healthier and more environmentally friendly products, which they had determined would differentiate them from their competitors and increase their market share.
One move was to create the Green Works product line of all-natural cleaning products. The company also wanted to invest in and acquire companies that aligned with the new strategy. Burt’s Bees was a good candidate. The company was growing fast and Clorox knew that its massive distribution and marketing capabilities could greatly accelerate that growth. But the bigger question was mission alignment.
Would this acquisition alter the composition of the Burt’s Bees product from natural to non-natural ingredients? Culture was another concern. There were many employees in that room on Halloween that were very concerned about how things would change after this small startup was acquired by a huge multi-national. The questions and anxieties were certainly present. Was Clorox going to stay committed to this mission that they had established? Will Burt’s Bees get diluted over time as it becomes part of a larger company?
Though there was some trepidation from the Burt’s team, every- one was certainly aware of the potential for growth and expansion of the brand after acquisition.
Given the new resolve to be a sustainable company, and upon the acquisition of Burt’s Bees, the Clorox CEO thought it was important to establish an internal ecostrategy ofﬁce. He tapped an internal environmental champion, Bill Morrissey, to lead the newly established ofﬁce. It wasn’t rocket science. Bill looked at how Burt’s had been operating since its inception and very quickly came to the conclusion that Burt’s could serve as an internal exemplar for sustainability at Clorox.
Clorox was just setting up the Eco Team, and they had spent a good deal of effort reaching out to sources outside the company to learn best practices. But Burt’s Bees would prove to be an especially valuable resource.
One example of how Clorox has learned from Burt’s is in adopting a practice Burt’s uses to reduce the waste it sends out into the world. Since 2010, Burt’s has sent zero waste to landﬁlls; the company is recycling, repurposing, or composting all of its waste. Clorox has taken a page from its book in working toward its own waste-reduction goals.
At 9:00 a.m. on a weekday, the Clorox Fairﬁeld Bleach plant is usually humming with activity, in full-on production mode. Yet, this morning, not an employee was in the building. They were all in the parking lot, a crowd was gathered to watch as the dumpsters of the plant were upended and the nasty, smelly contents spilled across the parking lot. The employees, clad in coveralls and gloves, dove into the waste with vigor.
The “Dumpster Dive” was a long-standing established tradition at Burt’s, and Clorox has adopted it. On Dumpster Dive day, all the employees sort through the trash in the parking lot to separate out recyclables and waste that can be composted. This one-day event is a tangible and effective tool that sensitizes the employees to become experts in waste management, all pulling toward the goal of zero waste to landﬁll. The average employee tends to be surprised at how much can be diverted from landﬁll, how much can be recycled, and how much can be composted.
But it is also essential that these events are not just one-off events, and the next day have life return to normal. So the employees meet that same day to devise action plans for further reducing waste. In the Fairﬁeld plant, the employees had the idea of placing big recycling bins in seven different parts of the plant to make it convenient to sort the recyclable material and keep it out of the dumpster.
Every Clorox factory that has implemented the Dumpster Dive has seen an immediate 50 percent reduction in waste to landﬁlls. Clorox has made a commitment of operating a dozen plants at zero waste to landﬁlls by 2020. Currently, half a dozen are very close to achieving that goal.
A MORE SUSTAINABLE SUPPLY CHAIN
Another way in which Burt’s has helped Clorox advance its sustainability goals is in bringing expertise in a natural supply chain management.
Clorox knew this was an area that they needed to improve on. In 2006, prior to the Burt’s acquisition, Clorox had already dialed up its focus on sustainable sourcing. But they still had a long way to go in that area. By acquiring Burt’s, they were acquiring one of the world’s leading experts on sustainable sourcing.
One of the initial personnel changes after the acquisition was moving the sourcing manager from her role solely working on the Burt’s Bees supply chain to her new role as a shared resource between Burt’s Bees and Clorox as a whole. So she acts as a sort of internal management consultant to help reshape the sustainable supply chain practices across the company.
Prior to the addition of the new responsible sourcing manager, the primary focus of increasing sustainability in the Clorox supply chain was focused on how Clorox’s own factories could be more sustainable in their production practices—the operational footprint, manufacturing, distribution footprint, and product portfolio. The question was how could Clorox make sustainability improvements to their products and production. Clorox began to make strides in that direction.
Clorox has been extremely efﬁcient on its own manufacturing sites. “When you consider water and energy usage as well as green house gas release. At Burt’s we actually started adopting the rest of Clorox’s goals in those areas because they’re quite aggressive,” says Paula Alexander.
The predominant attitude across the industry had been to take responsibility for what and how a company was producing their product, but to not ask too many questions about what the upstream suppliers and vendors were doing. Burt’s Bees had never been satisﬁed with that standard and committed to taking responsibility for not only its own activities but how its suppliers and vendors were acting.
Companies like Burt’s and Clorox are fundamentally formula- tors and marketers in consumer products. “People think of us a chemical company,” says Morrissey. “We’re not a chemical com- pany. We buy our chemistry and our plastics from other supplies upstream, but our responsibility doesn’t end at our loading dock; we need to assume responsibility for the holistic product footprint from raw material to store shelf.” Clorox has followed Burt’s lead by making a commitment to ensure that its upstream suppliers are operating and sourcing in a sustainable manner.
The company started setting new goals to mandate a set of sustainability standards known as the Sustainability Vector for their top 200 suppliers, with the goal of the improving the sustainability of their suppliers by 80 percent. Additionally, Clorox is considering exchanging less-sustainable ingredients for more suitable ingredients in their products.
“So I would say that Burt’s has been a great inﬂuence on sustainable sourcing,” says Morrissey. “We have adopted a strategy that’s maybe not as robust as theirs, but its head and shoulders over what we’ve done in the past. We all know the sustainability journey is long. In the next six, seven years we can make great strides here, and that’s our commitment.”
LEARNING FROM THE BIG GUYS
The learning has also gone the other way. As the Clorox Eco Team continued to work toward the zero-waste goal, they determined the company should set a standard that 90 percent of the company’s waste would be recycled or composted. And after hearing about Clorox’s new standard, Burt’s Bees decided to apply a stricter standard in its own plants.
This virtuous cycle of sharing best practices, adoption, and reﬁnement is a great model for social enterprises that are acquired into larger companies to follow.
Burt’s has beneﬁted from the Clorox acquisition in other ways as well, and management has been careful to adopt practices and tap the new resources in ways that are true to the original mission. After the acquisition, Burt’s was granted a great deal of autonomy. They knew the company could learn a great from Clorox, but they also knew they couldn’t just copy and paste from the conglomerate. So, the team created a framework for evaluating how they would consider changes to make, called “Adopt, Adapt, or Invent,” which set forth the following guidelines:
Adopt—practices that are a good ﬁt for their company and can be adopted as is from Clorox to Burt’s. Many of the supply chain practices could be adopted directly and Burt’s was able to take advantage of the economies of scale and systems in place for sourcing and manufacturing.
Adapt—practices that are helpful, but need to be adjusted to meet the particular context. Some practices have a strong core concept, but cannot translate well from Clorox to Burt’s Bees, so the team had to spend time adjusting and adapting the practice to meet their context. Most of the marketing practices were adapted for Burt’s.
Invent—when practices exist, but completely do not work in the given context, Burt’s had to invent its own processes.
BECOMING MORE INNOVATIVE
Burt’s has a goal that by 2020, 99 percent of the ingredients in the products will be natural. Clorox has helped the company work toward this goal by creating an innovative evaluation tool for making decisions about the sustainability of everything from ingredients to packaging and manufacturing.
Their “One Sustainability” program calculates a sustainability score for every new product. It allows the product development teams, at both Burt’s and Clorox, to get hard data about the impact of all materials, ingredients, and packaging, and to compare their options on an apples-to-apples basis.
Burt’s has also beneﬁted greatly from the research and development resources and expertise Clorox has provided. The Burt’s R&D team has been able to tap into technology used by Clorox to do some incredible things, such as adopting a technology used in making Hidden Valley salad dressings to make better skin lotions. Natural lotions are notoriously very liquidy, which inhibits their ability to moisturize. The Burt’s Bees R&D team was able to tap into liquid salad dressing technology to create a good 24-hour moisturizing cream.
The focus on R&D and the sharing of knowledge between Clorox and Burt’s Bees has also made the Burt’s Bees products more natural. According to Paula Alexander, director of Sustainable Business and Innovation at Burt’s, “over the past ﬁve years we’ve actually only grown more natural in our products. From 2009 to 2012, we went from 97 percent on average in terms of all natural to 99 percent. We now have almost 60 percent of our products at 100 percent natural. Our packaging is only getting more sustainable as we push ourselves with more ambitious target setting.”
There is often a negative response when a Colgate comes in and buys Tom’s of Maine, or Unilever buys Ben & Jerry’s or when Clorox comes in and buys Burt Bees. There have been examples of the social and environmental impact being diluted or completely stripped out. In taking over Burt’s, Clorox understood that its customers expect a natural product that is sustainable.
This not only makes sense from a purpose perspective, but also from a proﬁt perspective. It’s simply good business for Clorox. As Morrissey says, “We have been nothing but supportive of getting Burt’s Bees to more natural, because that’s their brand, that’s what they are about. That’s what they are going to be successful.” The results have been quite successful indeed. Burt’s Bee’s revenues have grown by double digits every year (except for 2009) since the acquisition.