In an economic downturn, leaders are faced with the challenge of responding to demands for sustainability while simultaneously trying to cut costs. Ann Fudge, former CEO of Young and Rubicam, explains how to strike a balance.

Topic: Sustainability in a downturn

Ann Fudge:  The way I like to think about sustainability in business is that anyone running a business has to think about the business both in the short-term and over the long-term and we always have those pulls and tugs constantly in terms of business strategy.  In terms of sustainability, it is something that we’re going to all be dealing with on a planet where resources are sort of shrinking.  We know we’re dealing with issues around air quality.  We know we’re dealing with issues around water.  We know we’re dealing with climate issues.  Whether you agree or disagree there are climatic changes that you have to manage.

And so one of the things, even simply if you can’t make major changes, you can even start with just helping your employees from an education and understanding of how their actions can impact where we are in terms of sustainability.  One of the things that we talked about a lot was how do you build in the opportunity for flexibility at work?  And that links so much into less people in cars on the road, just overall operating expenses for your office building, whether you need that office space, how often you use it. So I think we tend to think cap and trade and some of the other big things that are overarching that yes, for some medium to small size companies become a bit challenging, but everybody can help to make a difference. I think that is one of the things that we’re trying to do in terms of communication about everybody’s role in dealing with sustainability, both on a micro level and a macro level.

I think everybody is approaching it and obviously learning while we’re doing.  I think you can look at a GE and what they’ve done with Ecomagination and how they linked elements of programs that were happening in different business units, whether it was around locomotives, whether it was around healthcare and said, “Okay, where can we make a difference in helping to improve sustainability?”  You see it even in consumer products companies like a Unilever and how they are looking at reduced usage of palm oil, what they’re doing in terms of packaging, how they’re thinking about the kinds of ingredients that are used in products, what they can do to work with their suppliers to help them to be more conscious about sustainability. So it’s really a trickle effect and I think sometimes we tend to make these big frameworks in which people have to operate, when the truth of the matter is every company from the smallest to the largest can do things that are going to make a difference.

Question: How do you maintain the value of a brand while cutting costs?

Ann Fudge:  It’s very interesting.  I have to smile because everybody talks about cost cutting today.  I’ve been in business since the seventies and there was a focus on cost value back then and what could be done.  Obviously it takes a whole different level of interest given the fact that the economy is weak, but looking at cost and we talk about it as productivity, how you can improve productivity in your company, has really been an ongoing element of running any business and trying to improve profitability.

So how I would tend to position it is not, “Okay, this is something that we’re doing that’s drastically different now because we’re dealing in the economic environment,” but to our employees it’s something that’s smart business.  It’s smart business to think about costs.  It’s smart business to figure out how to do things more efficiently.  It’s smart business to think about do you really need to spend this money? Do you really to take this trip?  I have to tell you that a lot of employees that I talk to are pleased that the level of business travel has diminished because I think it sort of went a little bit on the upside. It’s always good to have face-to-face, but I do think that sometimes if we step back and say, “Where do we need that face-to-face?”  “Where does a phone call work just as well to have a conversation, just to know that there is a touch point?”  And I think that that’s where the opportunity is.  How do we think differently about work?  And so again, I tend to stay away from that whole cost cutting idea and say how can we work smarter, better, more effectively and obviously we can bring down our cost in the process.

We really have to rethink how do we make those connections? When do we make a trip? How many people do we bring together when we have a meeting? If you think about how you work from day-to-day. We’re all like, “Why do we have so many meetings?” And if we step back and are smart about how we work I think we can begin to reshape and reframe what is important and what we do and how we use our time in that business day.  I think it’s fascinating that some businesses are saying we can go down to being in the office only three days a week or four days a week.  You think about how effective people can be working from home and there are a lot more people.  My daughter-in-law is a case in point. She works for a very large consulting company and has managed to have that flex time and work from home and be incredibly successful in the process.

Recorded on September 3, 2009