Five Lifes to Fifty

By Neil D'Souza and Jim FavaBusiness

Five Lifes to Fifty episodes

February 02, 2024Episode 6, part 3: Launching your sustainable product, eco-claims and avoiding delays
In the final part of a three-part series on embedding sustainability into the stage gate process, Neil, Jim and Shelley discuss the launch phase of a product. From voluntary reporting to confidential disclosures to avoiding delays, there are a number of important final hurdles to clear as you approach the finish line.
Listen back to parts 1 and 2 of episode 6 to follow the stage gate journey from beginning to end.
In this Episode
Shelley: The launch phase is when you are getting ready to take your product to market. Neil let's start with you. What kinds of things does a product manager need to consider at this phase? [00:04]
Neil: The first thing to consider is this is the combination of all the effort that you have put in until now. You've got a great innovation, whether it's a product or it applies to an entire portfolio. Maybe you've created new packaging, or more product efficiency. Or across the portfolio, maybe you've invested in green steel, or switched materials to something more sustainable across several products. [00:37]
There are different ways to communicate this, but the framing is around whether you are B2B or B2C. In B2B your customer is very technical, and they use this information to decide whether to buy from you. They are more educated on this topic than a typical B2C. Therefore, the messaging on these products is to be catered to that customer.
That’s the most basic thing to keep in mind, and it's more so for sustainability because not everybody wants to know whether it's sustainable or not. What sells this more sustainable product is the goal. It's not about telling the customer that it is more sustainable.
Also, different markets geographically are more perceptive to different kinds of messages. In Germany, for example, people are looking for things that have claims of environmental sustainability, whereas in other regions this is meant to be assumed.
Some require you to make a claim about the sustainability value of your product. CBAM is a recent one that is specifically related to the carbon content of products that you import into the European Union. Here you do not decide how to communicate because you send this information to the government and the lower the carbon value, the less tax you pay. There's a consequence of using accurate data. You could use average information and pay full price, or you can be as specific as you can and if there is a saving compared to the benchmark, then you pay less. If you're importing in the hundreds of millions, that's a significant tax saving.
In other regimes, you're looking at safety of the materials that you've put into your product, whether its REACH regulations in Europe or Prop 65 in the United States. These are things that you need to get in order before you go to launch.
Another consideration is voluntary reporting. You have type one, two and three environmental claims. You have labels like Blue Angel here in Germany, but there are other similar agencies who will assess your product and give you a stamp. Type two declarations are self declarations where you can write a report, make a claim, and have it validated by a third party. Type three claims are environmental product declarations - an agency principally tells you how to calculate environmental performance or the characteristics of your product and you share this depending on whether you are a B2B or B2C company.
Type one claims are typically suited to B2C products, whereas type three claims or EPDs are more related to B2B products. And then type two, which is a self declaration, is neither here nor there; you could use it for both. For example, on Microsoft's website you can see the environmental characteristics of the laptop you are buying. This is a highly successful model that many companies are using to help sell products. And it's not an environmental label.
It is important that when you are making a public claim, it is verified. Last year, Europe launched anti greenwashing regulation with hefty fines, so it's very important to follow the guidance information provided by the government.
Third is confidential disclosures that you don't make public. You sign an NDA with your B2B customer, and you share information. BASF, for example, does this. Last year they created environmental footprints that are specific to the product for a large portion of their portfolio, and they only provide this information to their B2B customers, which helps their customers with their own disclosures and make better decisions about how they're designing their products.
There are lots of tools available to product managers that I described to position the product and the value created through the eco design activities in the previous stage gates in the best possible way. It is super important to leverage this. This is not the place to go cheap or to take shortcuts. Make sure that it is clear and used as a differentiator to sell more of your product. The goal is not to talk about great stuff, it is to sell more of this great stuff.
Jim: Launch is when you've done the analysis, collected the data, and you put a stake in the ground about what you are going to communicate to your specific consumer and why. You have to make those decisions before Launch; you cannot wait to the very end. [07:37]
During discovery and the business plan stage you've got an initial perspective. You might know you sell to a B2B – like a homebox store - and the consumer who buys from that B2B is not concerned. Maybe they just want the power drill that can go faster or run for 8 hours.
Know upfront the specific market standpoint, so when you reach Launch, you know what the messages are, the data is documented, and analysis is done. If you need an external review, that's done. You can't wait a week or month before launch and then try to do all that.
I’ve been in the sustainability/lifecycle business for 30 years, and too many times we get a call from someone who says ‘I'm launching this product in a month. Can you give me a LCA to do ABC?” It's just not possible. Maybe some new artificial intelligence might be able to do it, but in my experience you can't. So, from the beginning of the stage gate process, it's important to look at the three or four areas you think you can make a positive sustainability statement and then be able to collect the data.
If you're using an LCA, you must follow ISO 14040 and 14044 standards. And there's FTC in North America and the EU has eco design and sustainable product requirements coming out. You need to know these are out there.
Neil: There's one more thing to consider in the B2G in Europe, which I think is going to proliferate everywhere – it’s the kind of things where you can't put a product on the market unless you disclose information. There's ESPA, for example, which is a new European regulation, which brings the product passport into context. Every product on the market will have a QR code or a reference to an ID where you need to deliver sustainability information or environmental product information. [10:43]
In three to five years all these products will be activated and regulated. If you've got half a million products, it’s not something that happens in a month. As you build new products, embed a system of evaluating the environmental consequence of making a product in a particular way, in a particular design, in a particular location and documenting this and building this inventory of information, because this takes a lot of time.
A lot of companies have set science-based initiative targets. The first years when you set the target, it's all great. But after year three, people are looking for how are you doing on these targets, and the targets are harder to meet by just buying carbon credits and stuff like that.
Management comes to departments in companies and asks can we build products or a product portfolio that has lower carbon impact? Or they'll go to procurement, and ask can we buy materials that have a lower carbon impact? Either way, this is your job and at the end of the day, this is specific to the product you're making.
Tons of companies started preparing for this five years ago: inventorizing all the activities and impacts. I think you will not be able to put products on the market in the next five years unless you can make claims about environmental performance. If you combine this with things like CBAM, the coarser the information, the higher the cost.
Jim: Once you've launched you think the job is done, but that's not the case. When you think about the funnel we talked about, its narrow at launch, but after Launch it begins to expand again because you almost do another discovery and scoping stage, because now you're looking at market changes like government requirements, customer expectations, improvement in availability of technologies or data and tools. That's from a market standpoint. [14:10]
The second thing is procurement. When you launch the product, your suppliers not only have to provide the parts and material based on the agreement, but they must make sure they maintain environmental and social performance requirements that you put into their contract.
The third piece is what happens at the end of life and in the example of a battery, who's going to have responsibility for collecting, recovering, reuse, and to disassembly? As a product manager you have stakeholder relationships, not just for launch but over the post launch period. Monitor and work with them to make sure they follow through and do their roles.
We talked to a product manager the other day and they said when they go to senior managers right now, the two things they are concerned about are 1) end of life, and 2) depending on whether it's B2B, B2C, or B2G, the senior managers are committed to sustainability as a corporation for overall performance. You must be able to translate for a particular customer or market. The interaction with senior managers is changing drastically in the last few years.
Neil: Launch is a hectic thing. Enablement is required. Partners need to be notified. There's a long time to push the message out through the different channels. [18:07]
The context of what happens to the product after you've sold it has become more popular in the last five years or more because of the kind of regulations that we're seeing and the kind of visibility that you have for products that are creating harm after their end of life. I think it's about making sure you give yourself enough time to prepare for these things. The sooner you start the better.
Just so you know, if you wanted to do a comparative study – let’s say you're making laptops and you want to say my laptop is greener than the competition - there are rules about what you're allowed to do and you need to have a study according to an ISO standard. This then needs to be verified and certified and a verification can take as long as twelve months.
I've often seen product managers say we built something amazing. We know it's better than the competition, but we can't claim it because we can't get the verification done in time. making claims, make sure you have a good amount of time in advance to make the preparations.
Jim: We've been approached within a month or two of product launch by the marketing people who want to go public, and they’ve already communicated to senior managers. At the time I’d say you can't do that because we don't have the information to make those claims. But if you did the study earlier and you find out months before launch that you can't make those claims, the marketing people haven't shared that with senior managers. You can manage that and ask what can we say? [20:16]
Shelley: I'd like to hear from both of you, one or two final ideas about how a product manager can be prepared not to miss any of these important steps, so they don't find themselves too late in the launch phase to make an environmental claim that they want to or something else that is important for them to think about in this phase. [21:34]
Neil: The process of eco design and eco innovation starts right up front. Don't slack on those early stages because that's what's going to help you now. You don't want to be greenwashing, which is a thing of the past. Make sure you're working on quantifying the thesis you develop early on and keep validating. There are always going to be changes. But make sure you are keeping that consistent model, that digital thread, of how this information changes. This is one thing that I would recommend any product manager to invest in. [21:58]
We learned this the hard way and we went from CAD designs to PLM systems and PLM systems to the concept of a digital thread. It is for exactly this. You want to document this as early as possible so that you don't have to discover all of this at the end.
The second, is make sure you know the kind of claims there are, and because you're developing hypotheses, what kind of claims you can make. You can talk to specialists and sometimes even within your own company. Finding this out during the hypothesis phase is super important because it'll help you prepare and, for example, get a verifier in advance. We have customers where they've waited eight months to find a verifier that had the time to certify their results.
Jim: It’s the realization that launch is just the beginning of the product's lifecycle. And that means that the company - the product manager and his or her extended team - must make sure they can identify changes and if those changes will have an impact on their product. If so, they collaborate to deal with it quickly. It's not rocket science, just a recommitment to teaming with your trade association, supply chain procurement managers, or your extended product management team. But you've got to do it in a way that’s ongoing and you can gather that information, understand it, and be prepared to make the changes necessary so you can stay competitive in the marketplace. [24:07]
Neil: It's a bit of a tangent, but I see this a bit as debt. You take on a debt to invest in a product and you want to see the realization of that investment. In the engineering world there is technical debt: these kinds of shortcuts you take in order to get the product to market. And I see a third kind which is evolving now, which is sustainability debt: all the shortcuts you take in terms of what you need to do to make your product sustainable. This accumulates, and you have to think of it as sustainability debt because people are counting this information at a company level. So maybe you'll get away with it this year. You sell fewer green products, but you'll get more product out and get some revenue. As you take a product to market, you say it's done now. But keep in mind what debt you've taken on when you take that product to market. [25:36]

Links to Things We talk about
The Coordinated Activities on the Safety of Products (CASP) - https://op.europa.eu/en/publication-detail/-/publication/130df18a-4e6f-11ec-91ac-01aa75ed71a1/language-en
Carbon border adjustment mechanism - https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en
Proposition 65, California - https://oehha.ca.gov/proposition-65
REACH, European Chemicals Agency https://echa.europa.eu/regulations/reach/understanding-reach
Blue Angel, Germany - https://www.blauer-engel.de/en
Environmental Product Declarations (EPDs) - https://www.environdec.com/all-about-epds/the-epd
Federal Trade Commission (FTC) Green Guides - https://www.ftc.gov/news-events/topics/truth-advertising/green-guides

Who’s talking?
To read about who you are listening to, visit fivelifestofifty.com and click on our bios.

We want to hear from you
Do you have a story about how you are using what you heard?
Is there a question you would like answered?
We want to know! Write to us at [email protected].
28 min
January 19, 2024Episode 6, part 2: How to embed sustainability into the business case, develop, test & validate stage gate
In the second part of a three-part series on embedding sustainability into the stage gate process, Neil, Jim and Shelley discuss what comes next after the discovery and scoping phases. Is the proposal technically viable? Is there a valid market opportunity? Are you asking all the questions that need to be asked?
As the funnel narrows, it’s time to gather more information and more detail. Can you make a justification for what you’re proposing?
In this episode
What is unique about sustainability at the Business Case stage gate? What kind of trade offs might a product manager consider here?
Neil: During this phase, you're building the case for the hypothesis that you've created in the Scoping stage. This would mean something like, can we make a battery for a car that would take it to 1000-kilometre range? [00:48]
First check the viability from a technical perspective. Is this technically viable? What would it mean from a cost perspective? What would it mean from a risk perspective? After doing some preliminary exercises on potential benefits of this innovation during the scoping phase, what is the feasibility of this innovation? [01:20]
On the other hand, what does this mean in terms of market? There are three things to typically look at. 1) Does it provide access to new markets? That is, can I reach customers that I couldn't reach before. 2) Can I win more customers? And 3) is profitability. Typically, sustainable products are associated with the high end of the market, where price premiums are more prevalent. Even though you start small with this innovation, you end up with much higher margins. [01:40]
Look at the portfolio level too, if you want to improve the performance of the entire company. Because a lot of what you do is not just building new products, you sunset products that are no longer viable or not providing the business value to sustainability value ratios that are acceptable to the company. The idea here is to transition to something, you also need to transition out of something. BASF did interesting things in this space with their sustainability approach Triple S - Sustainable Solutions Steering. [02:25]
Jim: The whole stage gate process is a funnel. At the top, you have a wide issue at discovery and scoping, then you narrow down the issues and hotspots. Using the automotive battery as an example, things like social responsibility of the suppliers; environmental issues associated with the extraction of cobalt and lithium; and the chemicals used. [03:14]
Coming out of the business plan process, you've identified initial targets, like these hotspots but also the key goals - recognizing the corporate goals in these hotspot areas, including the goals the product team must meet before it gets to the Launch phase. [04:22]
Another part of the business plan is to identify the key internal and external stakeholders, including who you will have to compete with or provide information to. You need to have them part of your team right at the beginning, not towards the end. [04:44]
You lay the foundation in the first three stage gates with lifecycle thinking. Then in the Develop, then Test & Validate phase, you dive into more detail. And in the Launch phase even more detail. Because if you want to make a claim that uses lifecycle information, you need to have more information. There's a cascading level of complexity and a level of detail that you look at as you go through the process and bringing this together in the business plan is one of the most key parts of the whole stage gate process. [05:05]
It's critical to deal with the end of life of any product earlier in the process. Decades ago, it was a linear process. You develop, sell, and then a product goes to landfill. Now you look at circularity and being able to reuse some of those materials. So, at the business plan phase, you need to identify who the internal and external stakeholders are to reach out to for the rest of the stage gate process? And if it's a hotspot, figure out who the trade associations are, who might be the material recovery companies in that area. It’s a very critical part that can't wait to the end. Many of our clients would wait to the end, then they have to do a study, which takes time because they didn’t think about it in advance. [05:45]
Neil: This is the point where understanding the implications over the lifecycle of the product that you're building or the innovation that you're making is crucial, not just because these are hotspots, but now they need to be taken into account in a business plan. [06:45]
The kind of materials you use will determine the amount of tax that you pay when you put this product on the market. The energy that this product consumes will determine what kind of rating you have with the energy star rating. These are implications to be accounted for in the business plan, just like end of life. With extended producer responsibility programs across Europe, and now even in the US, these are now part of the business case. It may make sense to spend more money during the manufacturing process with the materials that you use so that these costs can be mitigated as you move downstream in the development process, but also onto the market. [07:00]
Jim: The expectations of the investor community, governments, customers, consumers, in the last five years has changed drastically. This is why the business case is critical and why stakeholder assessment is so critical at the beginning. Because your business plan is what you’re going to do, and you need to have external stakeholders be part of the team. It’s one of the things I don't think we've done as much of in the past, but in the last five years, the regulation and activity has accelerated. So, it's an important part of the business case. [07:48]
Shelley: Let's move on to the Develop phase and walk us through what happens from the Business Case to the develop phase. I know I've heard you say this is where the idea meets reality, and we end up putting resources into developing that idea. So, what shifts for the product manager here? What do they need to think about in terms of sustainability when they get to that stage? [08:35]
Neil: The traditional approach to developing is trial and error. Even today, even in the largest companies. One thing that typically happens is there's an idea where you expect a synthesis into something real and you just don't find a way to get that done. Maybe its the wrong material, maybe the wrong process. [08:55]
I'd like to combine this with the Test and Validate phase, which is the next step. Where you take this to the market and assess through market studies, customer studies, whether this is going to work. There are many ways to do this. You can use the Internet to test this with a broad number of customers and they will tell you what they like and what they’re willing to pay for it. [09:20]
The Develop, Test & Validate phases are a cycling process and it's no longer only a question of does it work. There are other hypotheses developed during the early stages based on the hotspots that you found and its key to not stray too far from these hypotheses. [09:40]
Here’s an example. A company that wanted to change their packaging from cardboard boxes to something more organic, recyclable, and reusable, to reduce the amount of impact. They started innovating and tried a different organic material, which couldn’t be form fed into a hard object, so then they made it a bag, which then needed to be redesigned to fit the product. They kept innovating to the point where they realized the final product just didn’t solve the problem of packaging because they couldn't stack it, the product would be damaged during transportation and so on. [10:06]
It’s important not to forget what you were trying to test through the Develop, Test & Validate cycle. When things become too complicated, we simplify the problem into does it work? But the question is now broader than it was before. It’s not just across the lifecycle, but across these different criteria that we need to consider – e.g. end of life, how its used, impacts on logistics and transportation. Is it going to technically do the job? How expensive is it going to become? Is it going to be compliant? Will I be able to sell it in the markets? Will customers like it? And so on and so forth. [11:15]
Jim: If you think about this funnel, it's getting narrower. There’s a pivotal point it goes through under Develop and Test & Validation, to dive down and answer some of the questions. Part of the questions are that some of your customers are concerned about the social behavior of your suppliers. You're going to have to work with your procurement to define what you are looking for. Maybe initially it's just a series of questions you ask your suppliers about what they're doing and how they're performing to get the information, which could use as a screening level. [11:44]
When you think about the concept of LCA, you have some hotspots in the goal and scope definition, but in inventory, you dive down to get data and information. In this case, you may not need to get all the detailed data, but you need to build relationships with suppliers, so that coming out of the Launch phase you’ve set up a contractual relationship with your suppliers that say they must perform in such a way on social behavior or how they deal with the extraction of their material. You come out of the strategic plan and business plan with some concrete data and information that will allow you to develop goals as you go forward. [13:00]
During a rapid prototype project a few years ago, we looked at lifecycle thinking at the beginning, lifecycle screening in the middle (which is where we are now), and if you're going to make an environmental claim about the product in the marketplace, you need a more definitive LCA to be able to justify that. So, this phase is in the middle where you're now trying to gather more information and detail and interacting with your suppliers. [13:50]
The other side of the equation is what happens at the end of life. In terms of screening, you're reaching out to actual stakeholders that represent end of life. It could be recycling companies, reuse companies, that whole circular economy that people are beginning to do business in. Begin to reach out to them so that at Launch you can say you are going to engage with company A, B or C to help solve the recovery recycle problem when the life of this product passes its maturity in 10-15 years. Gather the data and information that will give you enough confidence to launch with the right message and the right stories. [14:20]
Neil: I think that's an excellent plug for that last stage, which is Launch. All of this is a lot more work than what you would typically need to do to solve a technical problem. It's not easier and if you don't do it, there are consequences in terms of market access, profitability, win rates, the common things of what businesses really care about. [15:04]
One of the most recent regulations is for anti greenwashing. You can't just claim this is green. You need to back this up and be specific in terms of what you mean by green. And if during this stage you've not done your work to quantify and collect this information so you can make those claims, the effort may not deliver the kind of success that you're looking for. It’s not just about developing the product, but also developing the evidence that you need to be able to make the claim that this is actually better. [15:30]
Jim: The product manager’s goal is to have a product that's out in the marketplace, but there's a lot of accompanying information. It's the whole ecosystem around that product that's critical and you got to put all that together. [16:02]
Shelley: It sounds like there's a lot of overlap between the Develop and Test & Validate stage gate. Is there anything final and specific we can say about the Test & Validate stage that would be a salient for a product manager to know about? [16:24]
Neil: Very often product managers, at least at large companies, are looking at an existing customer base where you understand the market and there's a product that you develop based on that understanding. But I think we're at this cusp where there's a whole generation that is going to enter the market as buyers in the next five years. The problem is there's very little understanding on what their preferences are beyond the fact that we know they prefer more sustainable products and are willing to pay more money for it. [16:39]
In the Test & Validate stage, it's important to keep in mind that you're not designing a product to sell this year, but you're designing a platform that you will be selling over the next couple of years and the customers that you will have will be fundamentally different. Usually, these kinds of generational changes happen every decade and I think we're at that cusp now. [17:18]
Jim: Using the battery as an example, to me it's testing and validating the life cycle of how long does it last. They do aging tests to evaluate durability requirements, charging and discharging efficiencies or even user experiences - how people used it in pilot projects - and then just long term product reliability. Based on what we talked about in the first four stages, this is when you got to have some data. You have to have data to justify your recommendations and changes that you're going to use to go to market. [17:37]
Neil: There are things you need to consider when you're testing and validating in a more competitive, regulated, and less forgiving environment, which probably weren’t as critical in the past. It's no longer do you like it? and does it work? and would you pay money for it? But is it compliant? Which markets will I be able to sell it in? Were there significant changes from the initial hypothesis to the final design that would now limit my accessibility to market or win rate or the premium that customers would be willing to pay? I think if you're looking at compliance, is this going to get a certification? Is this a vetted supply chain? Does it embed risks, more long-term risks into the products’ viability for the future? [18:29]
There are so many different things that make it way more complex to do this Test and Validation today than it was 15 years ago. You need to look at different tools to help do this and access the information that simplify the process and allow you to understand the trade offs during this phase. This is the multi criteria view. If I make this change, how much is it going to cost? Would I become noncompliant? Does it move me away from my initial hypothesis? These kind of trade offs need to happen a lot faster. And unfortunately, given the complexity of the environment that we're in, it's becoming slower. So, you need to switch this with smarter tools and more data. [19:25]

Links to things we talk about
BASF’s Triple S - https://www.basf.com/global/en/who-we-are/sustainability/we-drive-sustainable-solutions/sustainable-solution-steering.html

Who’s talking?
To read about who you are listening to, visit fivelifestofifty.com and click on our bios.

We want to hear from you
Do you have a story about how you are using what you heard?
Is there a question you would like answered?
We want to know! Write to us at [email protected].
21 min
January 09, 2024Episode 6, part 1: How to embed sustainability into the discovery and scope stage gate
You’re at the beginning of product design and need to embed sustainability. But how?
In this episode we answer how to use sustainability as a lens for discovering opportunities in the discovery and scope stages, which are the initial stages in product development. We also cover the importance of being quantitative and how hot spot analysis and life cycle thinking can help.
In this Episode
What is unique or specific about how to embed sustainability at these two stage gates?
Neil: When experts think of sustainability, what they’re trying to do is understand the implications of different decisions across the entire lifecycle of a product. It manifests in different ways in reporting, communications, and for marketing. [00:44]
For a product manager you need to pivot slightly differently. It is, what are the decisions across the different stage gates of product development? And how do you use sustainability as a lens to look at those decisions so that you can make better choices.
You cannot have the same level of complexity considered by a product manager across these stage gates. It’s central to provide information in a way that enables them to make these choices and that's different from what typically happens in the world of experts in the field of sustainability.
Jim: the biggest difficulty in the sustainability field is being able to translate the outcome or the significance of the impact into a language for the decision makers, and in a timely manner, over their six stages; whether it's greenhouse gas, biodiversity, extraction water, wastewater, etc. [02:23]
It’s about translating the results for the decision maker because at each stage, they got to pass a series of tests before the next stage. You’ve got to work together and begin to work on that translation.
In the future, people in the sustainability field, are going to be translators – able to translate the outcome so that the decision makers have the information at the right time to make a decision as they go through the stage gate process.
Shelley - What else should a product managers consider about making tradeoffs or the translation that they need to be making? [04:13]
Neil: I think the trade offs are happening not in-between stage gates, but within stage gates. And the tradeoffs come second to a different and broader perspective that you're using to make those decisions. [04:30]
Using batteries as an example, how do people look at the discovery phase? This is the first stage of the stage gate process where you're looking for ideas - what to build? What new product? How to improve an existing product?
Sustainability has never been a source of these ideas until recently. The idea is to use sustainability just like we use technology, new demographics, regulations, and geopolitics to create new products and new supply chains.
How does sustainability become another key criteria to instigate an idea? I give an example in batteries. If you look at what happened in the automotive space in the last five years, everybody's racing towards e-mobility. They're trying to transition their powertrains from internal combustion engines to at least hybrids, if not complete electric and alternative fuels like green hydrogen and so on.
When people are constrained on what they're allowed to do and not do when they're creating products, this creates new ideas.
There are regulations that are becoming more important as idea generators. The regulations in the US, for example, around the Inflation Reduction Act. It's a big thing in the automotive space right now, where it makes a lot of sense to produce in the US. One of the reasons is geopolitics, but another reason is sustainability.
Through the lens of sustainability, identify the different opportunities to create new, successful products. This is the first thing that often happens very late in the development process. Before the automotive revolution of green mobility came about, this wasn't something many product managers in the battery space thought about. Now people have built new mines, new supply chains, and looking at changing factories. Knowing what the opportunities are through the lens of sustainability is a key thing to understand and develop ideas around.
Jim: We've been using the term lifecycle thinking/ hotspot analysis in our podcast. When I think about the hotspot analysis or a simplified lifecycle of an auto battery through the various stages of the battery you can identify the issues. Now you have cobalt, lithium and a variety of other things related to the extraction of the raw materials, and the suppliers who are providing those materials. [08:05]
Early on in the discovery and the scoping stage, begin a hotspot analysis and identify things. How are the suppliers relating to the environment? How are they treating their workers from a human rights standpoint? There could also be aspects related to the use of chemicals.
You want to get to the point where you are flagging those hotspots early on and using them. Not from a negative standpoint, but by asking how you can use those hotspots to create innovation and new ideas around how to change your product or redesign your product, so the materials you use are environmentally safe and does not have a supplier that uses child labor. This is a critical stage to get clarity on what those impacts are and then that drives scoping and subsequent stages.
Neil: Exactly and look a little downstream. The fastest growing automotive segment in Norway is e-cars where they have nearly 100% green electricity. The environmental impact of your car is not just in the production, but it's shifted to the use phase. An electric car in Norway has a different life than an electric car in China, India or the UAE. The kind of battery you design, and the kind of car you design for those areas is very different. This is where opportunities come in. [09:55]
There's a saying in German, we all cook with cold water. Its key to understand how you will create an added advantage by understanding how this product is going to live over its lifetime. This is an extremely valuable driver for ideas. What can you do differently? Looking at the automotive space and where you're selling this car makes all the difference of whether your car is going to be successful or not. The lifecycle perspective forces you to think of this.
Jim: In Costa Rica 99% of the electricity is generated from renewable sources. They're beginning to have electric vehicle charging stations around, but the barrier is getting enough charging stations up and normally people buy older cars, which don't fall in that category. So it's going to be a challenge to move towards the electric vehicle because there are some barriers to slow it down. [11:57]
Neil: I don't think it will slow it down, it's going to be delayed. There are certain economies where people can't and don’t buy new cars. The secondhand market is pretty big. When these e-cars reach their end of first customer life, they'll be sold forward, and this is where there's huge opportunity. [12:37]
This comes to the second stage gate, which is scoping, where you're developing a hypothesis exactly like this. Should we design cars that have second lives? And there are some manufacturers who don't do this. Should we look at different kinds of powertrains for a different portfolio of cars?
As a product manager, you’re trying to minimize the number of moving parts to maximize the applications. You don't want to create a new battery for every single kind of car. You want to try and standardize as much as you can. It's not always possible, but the hypothesis is going to be things like, can we get a 1000-kilometer range? Can we get 20 minutes charging? How many years can this car run? This requires lifecycle thinking as we described.
As a battery manufacturer, the person who's making batteries is not the same as the person who's making the power tool or making the car. You're designing for something where you may not know where this battery is going to end up. And that's where lifecycle thinking helps consider the different scenarios and the hypotheses that you're creating.
Shelley - I like this point that I hear you both alluding to, which sounds like, use sustainability as a lens for identifying opportunities. [14:41]
What is one other point you can highlight to our listeners about what is essential to take away and think about for these stage gates and how to embed sustainability?
Neil: In these two cases, one of the best tools is to be quantitative. I have an opinion around paper straws. While a paper straw reduces the amount of plastic waste, across every other environmental criterion, whether it's water or total volume of waste or carbon or energy, it's actually the poorer option. Being quantitative about what your hypothesis is and what you want to test is key. [15:05]
One of the best quantitative tools we have is the lifecycle approach. It's not just giving you the breadth but also the mathematics that allow you to test - is this going to work? Is this the more viable option or not?
The other aspect of lifecycle thinking, and I'm saying lifecycle thinking, not lifecycle analysis, is costs, compliance, and safety, all require this kind of thinking. Its a very good frame that has come from the sustainability and the LCA community that is available I think is scalable now for product managers to use.
Jim: The thing I think is critical is to know who the stakeholders are both internally and externally. Initially the focus was about materials, parts and building and selling the product; other people took responsibility further down the product lifecycle. But now product design must deal with what happens when the useful life of the product is over. So, at the beginning you need to identify who will be your partners going forward so there's a company in place to manage the recycling and material recovery. Identifying stakeholders goes hand in hand with the environmental and social impacts that are identified in these early stages. [16:13]
Shelley - Great points to leave our listeners with. Be quantitative; figure out who your stakeholders and partners are; and use sustainability and lifecycle thinking to be the lens for how you discover opportunities. [17:28]

Links to Things We talk about
Inflation Reduction Act: https://www.whitehouse.gov/cleanenergy/inflation-reduction-act-guidebook/

Who’s talking?
To read about who you are listening to, visit fivelifestofifty.com and click on our bios.

We want to hear from you
Do you have a story about how you are using what you heard?
Is there a question you would like answered?
We want to know! Write to us at [email protected].
19 min
November 09, 2023Episode 5: California’s SB 253 and why product managers need to care about corporate GHG reporting
Episode Notes
In October 2023 California’s Climate Corporate Data Accountability Act (SB 253), which directs the State Air Resources Board to develop regulations requiring corporations that do business in California, with annual revenues over $1 billion, to publicly disclose their GHG emissions, was signed into law.
In this episode, we discuss what this legislation means for product managers and individual products. Are we going to start to see product-level impacts become enterprise-level reporting? And what steps can product managers take to align product-level impacts and reporting to corporate goals?
Listen to find out more.
In This Episode
In a moment we're going to look at California's new Climate Corporate Data Accountability Act which includes scope 3 greenhouse gas reporting starting in 2027. But first, I want to explore the difference between corporate level reporting and the environmental impact reduction and reporting that happens at the product level. [00:05]
Neil: A good frame to do this is the what, the who and the why. And if you look at how companies take raw materials, create products and sell it, there's many standards and different aspects you need to report on that are covered by the Sustainable Development Goals. You have standards like the GRI and SASB and so on that are out there that help create the construct on how to report on the operations of business. [00:51]
To understand who's the audience for these kinds of reports, it is typically governments where you're reporting into a kind of platform when it's regulated. Investors that look at these reports when you're looking at investor reports or sustainability reports and NGOs take particular interest in too. Customers, indirectly, through the brand that you create and how you position yourself as a company in terms of being sustainable. [01:25]
The reason why companies do this is it provides a platform to operate. Sometimes - it is around regulations - if you did not report you would not be able to operate in that particular jurisdiction. It’s a way to control how businesses operate in a jurisdiction. [02:05]
On the product side of things though, it becomes very direct. If you look at what a company is, it is about making products and making them better than competition and selling them for a price that customers will buy. And in this case a product level declaration from a sustainability perspective addresses that product and how it can be positioned against competition in a better way. [02:25]
If you're looking at who's the customer, there isn't any regulation to date that covers product regulations. I think there are some. When you're looking at the digital product passport in Europe, the recycle content in packaging in several places in the US. But there's nothing broad that operates at the scale that you typically see corporate reporting standards and regulations. They are very dedicated to customers. They're creating a differentiation against competition so that customers choose your product as opposed to others. Therefore reporting in terms of EPDs or lifecycle assessments or ecolabels are a key differentiator there. [02:46]
I think it is important to keep in mind that for the vast part, product managers have never had to worry about corporate level reporting because this is something that sustainability teams and investor relations teams take care of. Whereas a product manager needs to care about product level reporting, because typically this comes out of their budgets and their accountability. [03:34]
Jim, do you have anything to add to that? [03:58]
Jim: I think there are different purposes. The purpose of corporate reporting is really to look at the overall carbon footprint or broader perspective to comply with regulations or stakeholder brands. There is a lot of interest in the investment community now in some of that. [04:01]
But when you get into the actual individual product, you're dealing with collecting early information, in this case greenhouse gases on the entire product footprint from raw materials, acquisition through use and some kind of end-of-life management. So, there is an entirely different focus between the two activities which as Neil said, is not really tied back to a reporting requirement. But it is tied back to customer and consumer expectations in terms of what are they looking for in the products they buy based on a reduced carbon footprint. [04:18]
There are differences. Both are important. And as things evolve, we're going to see them come closer and closer together, where the product manager and the activities in the innovation and stage gate process are going to have a greater role to play in helping the company at the enterprise level meet their corporate greenhouse gas reduction targets. [04:48]
The product component and the product manager's role are pivotal to help the company meet their greenhouse gas reduction targets in some of these requirements that we're seeing but also lay the foundation for improving the overall performance of the company. So that's what I see between the product and the enterprise level. [05:32]
Neil: To add to that, traditionally scope reporting has been about the operations, and if you look at GHG, there's a GHG protocol that breaks this down into scope 1 and 2. So, scope 1 is things that you burn gas on in a CHP to produce electricity and heat. Scope 2 is you're using electricity to make something. So, you're buying energy from someone else who does that burning of fuel for you. And then there is scope 3, which is all the materials that you buy; the non-energy related stuff you're buying like steel, copper, plastics. [05:52]
This is where scope 3 comes in and where product and corporate start meeting is this realm of scope 3 because your scope 3 impacts are primarily determined by the products that you make. And this is where you see the bridge coming back between product and corporate. [06:36]
Jim: Scope 3 has both upstream and downstream, but the upstream is your suppliers. When a product manager and the product manager's team lay out a new footprint for a product, they're going to have to pick materials and then suppliers. So now procurement is going play a key role in helping the company understand their whole greenhouse gas emissions on scope 3. But even more importantly from the product level is that product goals are going to be based cradle-to-cradle, cradle-to-grave lifecycles. [06:54]
Neil: And even if you didn't care so much about the materials that you're using, scope 3 has got 15 categories and one of them is largely driven by your products and how they're used in the world. If you're oil and gas producer, there's no real impact in extracting oil from the ground because the major impact actually comes from burning that. And now scope 3 plays into that because you need to now report on it. And this is where product managers and their role in creating products that are more energy efficient and have lower impacts also becomes public information through scope 3 reporting at the corporate level. [07:35]
Let's look at this in the lens of the new legislation that California just passed. In October of this year, California introduced the Climate Corporate Data Accountability Act, essentially requiring businesses with over revenue of 1 billion to report their greenhouse gas emissions, starting with scope 1 and 2 emissions in 2026 and adding scope 3 emissions in 2027. What is the relevance of this legislation for product managers and individual products? [08:18]
Jim: The significance is that now you've got a requirement in the state of California that says to do business in my state, you have to report and meet these requirements. And I think that's impactful. But people have always said when we work internationally in Europe or in other places around the world or even in other states, is the influence California has had in laying the foundation or setting the stage for environmental or sustainability directions by these other states or countries. They've never adopted California's rules by any means. But what California does sets a vision and leadership perspective. It has an impact in leading as an example, as a benchmark for other countries to look at to tighten their own environmental or emissions rules. So, with greenhouse gas emissions reporting now coming out of California, I think other countries are going to see that and certainly other states are going to see that, and maybe we call it the California effect - it is going to have a major impact across the US and across the world. [08:44]
Neil: It's not to be underestimated what 5000 companies mean. That's a significant portion of the most powerful companies that operate from outside the world but operate in California. And so whether the rest of the world follows or not, or the rest of the states follow or not, it doesn't matter. The fact is they will have to comply with these regulations if they do enough business in California. [10:28]
But I think it's important to keep in mind why this is so serious. There have been scope 1 and 2 regulations that have been in place. The European Carbon Trading System, the ETS system has been in place for more than a decade now. This focused on scope 1 and 2 emissions from factories. But in the US, for the first time, you have to start reporting in 2027, but based on 2025 data for scope 3 data. [11:00]
What you also need to keep in mind is that this needs to be verified by a third party. This is not something you can write yourself and publish, like what companies have done in the past when it has been voluntary. This is public information that you will put into an online website that people can search and compare against your competition and against others in the industry. [11:38]
Why this is so serious is it takes 24 months to set something like this up for a large company. I've done this for the last 15 years and it's not trivial to set up a reporting system for scope 1, 2 and 3 for a large organization. And it's a 500K fine for misreporting and while that doesn't seem like a lot of money, this goes on your public profile. [12:16]
The same thing is going to happen just like what the SEC did for financial reporting in the 1930s, where the whole world now moves around, and our business plans are catered to the report that goes public. [12:55]
It is important for product managers to care because they control the lifecycle of their product that is then translated into the scope 3 report of the company. So, for the first time in history, I would say a product manager now needs to start caring about what's happening in the corporate report. And I think for the first time, people will start looking at the product manager to say, hey, what's happening here? And how do you make this better? Because we see how the others are doing too, in competition. [13:45]
This is this principle I like to get people to think about. If you were to live in a house made of glass, you behave very differently in what you do and how you react. And that's what this regulation is doing for product managers and for companies. They're putting everyone into this glass house. [14:14]
What steps can product manager take to anticipate this growing focus on scope 3 emissions and how they need to care or align with corporate reporting that we're seeing here? [14:39]
Neil: I think scope 1 and 2 will be covered by sustainability teams, investor relations teams within companies. I think the GHG protocol started with a scope 1 and 2 standard in 2001, so almost 22 years now. I would say there is not a lot of chaos that will ensue from this for scope 1 and 2. [14:54]
But in terms of scope 3, this is relatively new. The standard was released in 2001 and not a lot of companies have done this well because there's a lot of flexibility that is provided and there's a cascade according to the level of granularity that you need to use to be able to create an adequate scope 3 report. The first is you need to know exactly what the product is and what the supply chain is and it's called activity-based modeling. So knowing what is happening in the supply chain or in the value chain of your products that you're selling. The second is if you don't have this information, for example, you don't have data from suppliers about the environmental impacts of the products that you're buying, then you could use average data. And then when you don't have data for this, even when there is no database that allows you to estimate what the impact of a particular raw material is, that's when you can use a spend based approach. As you imagine things become fuzzier and less useful as you go down this hierarchy. As a product manager, your only lever for change is if you understand what's really going on in the supply chain. [15:15]
Product managers will not just have to look downstream of their product, but also upstream and mapping out this supply chain and understanding how their products react downstream. The use-stage of a product is going to be key for them to improve. I think average data as well as spend-based data do not help product managers change anything. The only thing you can do is buy less and sell less, which nobody wants to do. [16:47]
Jim: When I first got involved in the lifecycle field years ago, there was some initial work that demonstrated that during the product design and development stages, traditionally when decisions are made (the materials selected and where they get the materials) created and addressed 80% of the product's total lifecycle cost or impact. [17:23]
As Neil said, scope 1 and scope 2 are primarily related to manufacturing and operations. They found that 80% of the time, management efforts were spent in manufacturing and operations, which only represented 20% of the value creation/impacts. 80% of the opportunities is upstream where you can look at all the suppliers, materials, and where they come from and then the downstream aspect of it. [17:55]
That's why I've been focusing on the stage gate process, product design and product sustainability, as opposed to corporate sustainability because it's at the product manager level, it's at the design and development level that the company can identify where the hotspots are, both upstream and downstream. [18:40]
In terms of driving corporate sustainability targets or greenhouse gas targets, you need to know what each product lifecycle greenhouse gas footprint is; and that can be rolled up to be able to meet corporate greenhouse gas goals. The product lifecycle related to greenhouse gas measurement and reduction is going to drive the ability of a company to meet the corporate goals they have. [19:11]
Product goals are going to be a major enabler to help the company conform to their total greenhouse gas corporate goals. And the product manager is going to serve as an enabler to manage changes throughout the stage gate process to reduce greenhouse gases. They are going to provide 80% of the data that are required based on the product impacts both upstream and downstream. [19:50]
Going forward, I see the product manager having a pivotal role to ensure the company can meet the overall and individual greenhouse gas goals to create a competitive advantage. It's an opportunity for companies who are leaders and for others to get on board and become more proactive in the sustainability and greenhouse gas field. [20:25]
Links to things we talk about:
EU Emissions Trading System (https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets_en)
Who’s talking?:
To read about who you're listening to, visit fivelifestofifty.com and click on our bios.
We want to hear from you:
Is there a topic we didn’t discuss enough, or you think we missed entirely?
Do you have a story about how you are using what you heard?
Is there a question you would like answered?
We want to know!
Write to us at [email protected].
22 min
September 27, 2023What gets missed when designing sustainable products?
Episode Notes
It's not enough to just make a product more sustainable. At the end of the day, you also need to capitalize on that sustainability improvement because it’s an investment.
In this episode, we answer how understanding the six stage gates to developing any product is essential to leverage sustainability improvements. We also discuss using single sustainability scores, trade-off and decision-making hierarchies in organizations, and why life cycle thinking is essential to not lose customers in today’s market.

In this Episode
Neil, as a product manager, how have you seen sustainability embedded into product development?
Neil - I have been a product manager for software. So, it's slightly different than when you're looking at physical products. But I think more of my experience has come from my work with product managers and engineers in the manufacturing space and that kind of formalized itself into a bit of a product management structure that I think would be good to explain to answer that question. [00:36]
If you look at the toolkit of the product manager there are six stage gates to developing any product. It starts with Discovery, where the goal is to find ideas. You could be looking at new technology on the market, demographics (who is buying what). There is a big green trend that has been going on for the last 20 years and is increasing. [1:01]
Product development is a messy process. There is no straight line. But I’m trying to create these buckets [stage gates] that describe this process, starting with Discovery, where you have an epiphany that could help your product or business. [1:30]
The second stage is desktop research [Scoping phase], which is done mostly on your computer. You are trying to build hypotheses (will it work, is it going to be better, is there a different market to address, is it a bigger market, is it viable?). There is not a lot of team activity at this stage. [1:48]
When you are looking at sustainability at this stage, you might do some crude life cycle assessments (LCA)s. [02:14]
Example - Consider a new kind of battery that is low weight, high power for an e-scooter or for a more sporty vehicle. Would you be able to create the battery for a vehicle with 1000 km range? You're trying to create hypotheses and ask are people going to buy it? Is this even technically viable? Have people done it before? [02:25]
There's a lot you can see about what is already available in the Scoping phase. It doesn't make sense to create a new battery if your main market segment right now is the Middle East or China. These things are not obvious. You may say it's a battery, it must be better, but that's not always the case. When you look at it from the entire lifecycle, the biggest impact from a battery comes from the use of it when you charge it, and the kind of grid you charge it from impacts the overall performance of that product. Using a lifecycle perspective at this stage allows you to understand and rule out some of these hypotheses that do not make sense. [02:50]
The next stage is Business Case. You are looking at it from both a technical perspective (will it work) and from a market perspective (if it were to work, will it make business sense). You might ask: Will it be twice as expensive? If it is a new market segment, will anybody buy it? How big is the market segment? If it’s a new geography, will you be able to address that geography? [03:27]
When creating the business case, it is pivotal that you look at the portfolio of products that you're responsible for, and not just an individual product. Because unless there is a big impact to the top or bottom line, you will not get much attention to take this project from the business case to the next stage, where you need to put resources into developing that idea. [03:51]
The fourth stage [Develop phase] is where you put resources into developing the idea, and the idea meets reality. When they start to build, many Product Managers realize the materials don't work, the processes that they have or the machines they have don't work, they can't find suppliers for certain materials and so on. [04:22]
What's important to consider here is not to stray too far away from those initial hypotheses [in Scope phase], because you have informed those things with lifecycle assessments and with looking at what has been done before. Very often we find product managers will look to solve a problem that they identify, but then forget about the consequences of making that change. [04:44]
The next stage is the Testing and Validation phase where you test the hypothetical benefits from taking that product to market and you would test this with market studies. Many companies also look at the stage gates for compliance and sustainability. Do they meet the criteria that would allow them to take the product to market? Both externally from a regulatory perspective but also internally from a company perspective. [05:15]
You're doing more robust analyses, slightly more detailed than in the early stages. This is where it becomes more realistic based on the suppliers that you would be using, and what are the real final materials that you would be using and so on. [06:00]
The last stage is the Launch phase and it's how you take the work that you've done and position the product in a way that it was envisaged. If this product is using 50% less water or has been created out of 30% more recycled content or is part of a producer responsibility program; these are things you need to quantify, verify, and they become part of the go-to-market. [06:24]
This is the frame in which product managers typically look at how they can embed sustainability into products. Sometimes it doesn't have to be a new sustainable product. Sometimes it's just a new innovation or an iteration of an existing product that makes it more sustainable. [07:02]
But it's not just about making that product more sustainable. At the end of the day, you need to capitalize on that sustainability improvement. You need to consider how to leverage that because at the end of the day it is an investment. Otherwise, you probably would not have put in that time. So, what is the additional benefit that you get? And I think that's how each of the stages give you the opportunity to be able to leverage that work. [07:23]

Neil, you have mentioned in the past that the product manager may not be responsible for the sustainability aspect in each stage gate. What might be relevant to consider for walking a product through its stage gates and how that sustainability metric or responsibility gets passed to different product managers? [08:00]
Neil -The product manager's ultimate goal is to make trade offs, and trade offs happen at different product levels. Products are also typically seen in the context of which portfolio they fit into. Large organizations who are not just building a single product tend to be more complex, and so the products also belong to a bigger portfolio of products. This is where I would say you have different hierarchies of product managers that are making decisions at different levels. [08:37]
Should I use material A or material B is one such thing. Should I choose to make this kind of product that is part of my portfolio or cycle it out of that portfolio is a completely different question to answer. And that's above certain people's pay grades. I think the only way to do this is to set the right goals and have the right mechanisms of measuring improvement at any of these levels, and Jim has a lot of experience in this field. [09:10]
Large companies right now, especially in the automotive space, are transitioning more of their portfolio to electric and alternative fuels, and they're reducing their Scope 3 environmental emissions for the entire corporation. Not by changing existing products, just by adding new products to the portfolio and cycling out old products. This is one way to improve sustainability of an entire organization without changing an existing product at all. [09:39]
You also see companies fixing the products that are currently in the market because that makes the most business sense. These are different levels of decision making that typically are not in control of an individual product manager. [10:11]
The other aspect of this is some decisions are very operational. What kind of material you use will decide what kind of manufacturing process you can employ. If you're using machining or if you're using a casting, the amount of material you need compared to the amount of waste you produce for each product step is hugely different. Often product managers stay out of this because you have engineers to solve this problem and they give recommendations on what's the best way. [10:25]
The recommendation I have is to use the same metric across all decision-making processes, whether this is carbon, water, or recyclability. There are even aggregated metrics, normalized metrics, called single scores, that allow anyone in the organization to evaluate any decision they make across this single score. There are several companies in the consumer goods space and in the automotive space that are trying to do this. [11:00]
Water and carbon are two distinct metrics that are used more often than others. Look at any product decision across the entire lifecycle and ask, ‘what is the carbon impact of this change across the entire lifecycle?’. You can use this same decision metric across any level described until now. And its important to have that same metric so you can compare a decision: should I change a screw, or should I rip out the entire chassis? And I think the difference to the sustainability impact will be determined by this metric at any of these levels. [11:33]
Jim, with your experience with sustainability and setting the right goals across an organization, did you have anything you wanted to add to that? [12:14]
One thing when you look at setting goals is to look at the consequences and the benefits of meeting those goals. [12:24]
One client who was part of Product Sustainability Roundtable, was very interested in getting a position in the green building sector. But they didn't believe that the green building sector was going to add sustainability or environmental metrics to their decision-making for selecting suppliers. They just didn't think it was the time, it wasn't relevant to them, and they ignored it. The consequence was they lost that work. [12:51]
The product manager and the people who are interacting with the customers need to understand those issues and the decision-making criteria that the client is using to make decisions. In the example where they lost a customer, they could have increased their positioning with the customer by adding sustainability metrics to their innovation process. [13:21]
There's a chemical company in Germany we worked with and for quite a few years they had been a leader in the sustainability area with eco efficiency, with sustainable portfolio analysis and looking at sustainability issues associated with the products, materials and chemicals they sell. A lot of times they were ahead of the time; only a few customers asking for it, but they would promote it. But now that clients are beginning to want sustainable, lower carbon footprint chemicals or to use less water, they are well positioned because they've got the tools. They've done the embedding. They've done the training to get the innovation team and the engineers fully aware of what the lifecycle sustainability metrics are, and the value they can bring to the table. This is an example where being prepared, building the tools and building the understanding of how the tools are used, and how the information can be used in decision making are all tied back to their overall target. [14:00]
One of the dilemmas trying to move forward and being innovative in the innovative stage gate process is resistance to change (e.g. I've been doing it one way for 20 years). When new technology and new material come out, someone who has been in the field for 15, 20, 30 years, are used to dealing with certain materials. So, you need to see how that impacts that person's resistance to change. How does it impact his or her actual performance and job or bonuses? So, you can bring it to that level of connectivity. [15:20]
Another issue is the complexity of implementation, and the whole decision-making process. Who makes the decision? Is it a product manager? Is it this department over here? Is it another department manager over there? It is a very complex situation in big organizations, whereas in small organizations, there's three or four people and you can sit around and talk. But when a vice president has 300 people, another one has 500 people, it's an elaborate conversation about how you make those decisions and who makes those decisions on a product. [16:41]
Neil – Because -it’s interrelated. If you choose a different material or a different supplier, it affects the other business units as well, or could affect it. That's what overcomplicates these discussions and debates very often. [17:14]
Jim – 100% right. To give an example we had two clients: one was a supplier of cleaning material for buses, the other one was New York City Transit, which provided buses across the five boroughs of New York City. They had to clean the buses and were currently buying 20- or 50-gallon barrels of cleaning material. The alternative from the supplier was to provide a 500-gallon tote where you didn't have to manage the movement of barrels back and forth and you could clean the buses directly. The dilemma was that the first cost to purchase the 500-gallon totes were high, and the procurement people didn't want to buy it because it reduced their budget and increased first costs. On the other hand, the operational cost was a different manager. And it took a long time to go both up both sides and get to the point where the total cost of ownership of having the tote was better for the company than doing it the old way. [17:30]
This is a good example of how the complexity in bigger organizations create time and effort. And in innovation, you don't always have that time. You need to make those decisions quickly. That's why having tools out there now that allow people to get information quicker and understand what the outcome is, is a very valuable process. [19:06]
Jim, suppose there aren't incentives for organizations or a product manager to include sustainability. Can you describe some of the reasons that ignoring sustainability could be detrimental to a product’s success? [19:40]
Jim -A lot of it comes back to the business value. If you don't have a sustainable product, you're going to lose customers. If you don't have a sustainable product, you're going to create a negative brand image. [19:54]
And right now, there are a number of environmental and social regulations that are surfacing in Europe, North America and Asia-Pacific on products, not just on the operational side. You're going to be out of a market if you don't understand what these are and comply. The US recently put a proposal out that they're going to purchase environmental and sustainable products and services and it's going to be impactful. Neil: the US government – the largest single buyer in the world, is going to mandate sustainable procurement. [20:10]
Jim -The sustainable product procurement proposal is as equally as strong as the EU's Green Deal program. So, there's two regions of the world that have committed - and it's not just a business-to-business conversation now it's actually the government, which are huge procurement buyers - to buy greener, more sustainable products. That's probably one of the biggest benefits to embed sustainability into the stage gate process: you're going to be well positioned to compete in all those marketplaces as you go forward. [20:52]
Neil -Ten years ago, there weren't so many examples of companies that lost out. There were lots of companies that gained from sustainable products. You had entire brands that were created around sustainability, and they did really well. Five years ago, in Germany the bio-based products and organic product lines across different brands were the fastest growing segment out here in Germany and Europe. [21:35]
But in recent years you're seeing customers losing because of it. And if you look at how people think it is, if I can avoid losing money, I will pay attention to you much more than if I told you I could make you twice as much more money. And I think this is what's happening more and more. [22:07]
We had a customer where they lost not a couple of million, but hundreds of millions of euros just in a single year to competition who could position their products better and who did a better job of communicating what the sustainability value of their products were. And a lot of product managers are learning this the hard way by losing out to the competition. And that's a very easy way to teach product managers you cannot ignore this anymore. When you lose hundreds of millions, it becomes very easy to make the case that it is no longer about whether you have the right incentives to do it. It is you will lose if you don't. And we see this happening more and more now. [22:29]
Incentives was a problem five years ago and I think in certain places it may make sense where the market is not as demanding, like the consumer goods space, or whenever you have public procurement playing a huge role in a company's future. Or in B2B businesses, where you have a big split in terms of the end consumer who is willing to pay more money for sustainable products or who would go out of their way to buy more sustainable products. Maybe there's a bigger split there. But if you're looking at B2B, there is more pressure - sometimes self imposed, sometimes based on the industry itself - on companies, large companies. Think of the big brands - Apple and Microsoft - and these kinds of brands where they have immense pressure to demonstrate sustainability and therefore, they show that in what they buy. [23:19]
If you are a customer of these kind of mega brands, you will lose out if you do not have the more sustainable product, or at least can demonstrate that you are working towards sustainability in your products. And this is what has changed in the last three to five years, where this pain has become much more than what was before. It was previously just an opportunity. Now they're starting to become pain. [24:14]
Jim - Following up on the example I talked about in the Chemical company. They were prepared to get the internal know-how and experience and understand what sustainable metrics are related to their products. And they got some uptake. But it wasn't until the customers started asking (and the situation was B2B) that they were able to respond immediately because they had the internal tools. [24:42]
There's being proactive and not waiting for it to happen, but being proactive and anticipating is another activity. And we've seen this a lot with companies as part of their strategy: we're ‘just going to be a compliant’ strategy and do whatever the government tells me to do. But then all of a sudden, the government requires you to do all this stuff to be able to sell in the country and you're not prepared. Or you say, I'm going to wait for the customer. But you don't look at it proactively. You don't have a system in place to really check with customers about what they're doing. [25:08]
Neil - We see this so many times. If you are going to address the situation when a customer asks for it, then you've already lost that customer. Because the answers to these questions don't come from one day to the next. It takes a couple of years to get things in order so you can respond to a customer. I think in B2C this is different - you need to have it in advance of the product going to market because it determines how you position it and how customers buy it. But in B2B, it's a salesperson. It's an account executive that is responsible for positioning that product with a customer. And if that person doesn't have the information they need to win that deal, then you've lost that customer. [25:40]
This is one of the reasons why the same customer – and I think I know who you're talking about - they are killing it in the market right now, because they're just ready with it. We speak with customers who are more downstream from the chemical producers, and not all of them but several of them, are not considering manufacturers that cannot give carbon footprints of their products. They will keep their existing contracts because they need to. But think of this – after five years to cycle out old products (that's usually how long it takes) - imagine you're not doing business with this customer anymore. It takes that long to create your new product and to communicate about it and to position yourselves in that way. So, if you are not doing it now. It's almost always already too late. [26:23]
Jim - The thing is a company doesn't have one product manager. It may have hundreds, thousands, depending on how big they are. And there are some customers, as Neil talked about, who are going to be very aggressive and proactively looking for sustainable products to purchase. [27:18]
There are other brands or markets which aren't as advanced. Companies who are leadership companies, and particularly in the B2B space, are beginning to look at portfolio sustainability assessment: how to look at the whole range of products, and the various product managers, with some kind of overall corporate process. [27:33]
Clint Eastwood’s ‘the good, bad and ugly’ is not exact terminology, but the products that are really good from a sustainability standpoint are the ones where customers want it; and some are in of middle of the road and some may not be a good sustainability performer. If you begin to put your products into those categories, it helps the senior managers, decision makers, and product managers, with what kind of emphasis to add to the innovation process for sustainability of a particular product. So, they're not doing it in a vacuum but in recognition that they are a part of a corporation where we have portfolio analysis. [28:04]
Another direction that is happening and that requires some consistency among the various product managers, is looking at the same basic criteria, particularly in the discovery and scoping stages. When you're beginning to look at what are those hotspots. What things are meaningful to my particular product, which may be different than my buddies’ over there, which is an entirely different business unit. They may have different hotspots, but we can share that information as part of this portfolio assessment. [28:45]
It's exciting because companies are beginning to say we've got to look at an entire portfolio, we just can't just look at one product and ‘we're a green company’ because we have one green product. It's the whole portfolio. You want to get to the point where you're driving more and more of your products towards sustainability, and the ones that aren't sustainable or don't have a market, customers and companies are saying maybe I should get rid of that or I need to change that. They're managing the products in an entirely different way. [29:22]
I'd like to bring in the idea of lifecycle thinking. This is something I've heard both of you mention before, and I'm wondering if with the successes you're seeing, this is something that is being embedded in these organizations, that they're thinking more in a lifecycle thinking way? And for our listeners, if they don't know what that is, Jim - I know you've done a lot of work in your career on this – can you describe what that is and its relevance right now? [29:50]
Jim -We've been using the terminology: always use lifecycle thinking and apply lifecycle assessment where it makes sense to do so. [30:14]
In the ideation stage, and particularly in discovery and scoping, companies are beginning to look at hotspot analysis, looking at what are the core key criteria to think about this particular product. It's looking at a broad perspective: where you're looking at lifecycle issues associated with raw materials acquisition, things related to energy and from production, manufacturing, things related to distribution, use and end of life management. But you're doing more lifecycle mapping. You're not looking at it strictly from input/output like you would in an LCA. You're beginning to map this out and look at issues along the critical life cycle stages. [30:24]
Lifecycle thinking is a powerful tool for promoting sustainability by providing understanding of broader issues without getting into the traditional input/output analysis that you would have with an LCA. It does give you a good perspective. [31:34]
We often get asked ‘what does lifecycle thinking mean to me?’ One thing the specifier looks at is to ask the supplier, what have I done to move from a negative to positive impacts (e.g. water or carbon)? A supplier, on the other hand, can look at customers concerns, corporate concerns, and begin positioning -from a lifecycle thinking perspective - for what material might help meet the customer needs. The engineer -from a lifecycle thinking perspective - can look at what tools and information will allow me to embed life cycle information into my process to help inform decisions and choices. So, it becomes a powerful tool to inform decisions based on best available knowledge, understanding the lifecycle systems and the lifecycle stages and the relevant hotspots associated with that product. And it is used over and over again across many roles within a company. [31:55]
Neil - I'd like to add to this idea of thinking about where your product is going to be used and what will happen after that. So, think of a screw. If you want to put up a painting on a wall, you can make this screw out of steel. It's a good material, easy to find, cheap, it's a little heavy, but it's one of the best materials you can use to put up a painting on a wall. [33:21]
If you want to put a plane together, you should not make it out of steel. That screw should be made of a very light material. You are a person making screws. Depending on what is the use and purpose of that product - it could be the same dimensions and specifications - just choosing a different material will decide whether you should use it for a plane or should use it on a wall. [33:47]
I think this is not always obvious. As a person making a screw, you don't think what the screw will be used for. So, it becomes very complicated when you think in this context, but it's super important because the impact could be the complete opposite of what you're thinking, simply because you're thinking of it in the wrong phase. You may make a small battery because it's the lowest impact, the lowest amount of material, the lowest amount of energy you need to assemble it together. But when you put it into a car, you need to drive that car for 300,000 km, which is the lifetime of a car. I need two or three of these batteries. Therefore, I need to repeat that three times, as opposed to a single battery that I would create that is just bigger and lasts the entire lifetime of a car. [34:06]
Thinking about it in this way allows you to understand the implications of environmental impacts, because unlike money that you pay for gas, electricity, raw materials or for labour, it's here and now. But a lot of the impacts that are embedded into the making of a product happen far upstream and far downstream of that activity that you have, and you have control over it as a product manager. And this thinking is important when you're looking at it from a sustainability perspective because you may not be paying for the gas that drives the car, the electricity that's used to charge the electric vehicle. But the way you designed your battery will determine that. [35:26]
Jim - The things that I'm seeing now in the marketplace as you start hearing about solar panels and batteries - 10, 25 years later, once the product has been on the market – is there's an end-of-life management issue and a landfill problem. They knew 25 years ago that the lifespan was 25 years. But you can address that in the innovation stage by flagging that as a hotspot to be managed and get to the point where you've identified the right parties and stakeholders who could manage the end of life for that particular product early on and establish business relationships. So, when the product's useful life is over, there is infrastructure and ability to recover, reuse, and recycle; whatever the right end of life management solution is for those particular products. [36:06]
This post-launch aspect is another element that complicates innovation. What happens when the useful life of that product is over and how and who manages that? It is another whole conversation. But it’s happening because we're getting examples of products who've been on the market for a while and their useful life is over, or at least for that particular model. So, that's becoming part of many, many conversations right now - how to best handle that. And it needs to be, from my perspective, handled as part of the innovation process. [37:02]

Links to Things We Talk About
Scope 3 Emissions, Corporate Value Chain (Scope 3) Standard by the Greenhouse Gas Protocol
US Government announces sustainable procurement
EU Green Deal Program

Who’s talking?
To read about who you are listening to, visit fivelifestofifty.com and click on our bios.

We want to hear from you
Is there a topic we didn’t discuss enough, or you think we missed entirely?
Do you have a story about how you are using what you heard?
Is there a question you would like answered?
We want to know! Write to us at [email protected].
39 min
July 25, 2023What is a sustainable product?
Episode 3: What is a Sustainable Product?
It is crunch time for the climate, and you need to create a sustainable product. But what is that? And is focusing on carbon enough?
In this episode, we answer what is a sustainable product and why your “sustainable” product may not be sustainable tomorrow. We also discuss why narrowly focusing on carbon is an oversimplification of sustainability and what could differentiate a great product manager from a good one.

Episode Notes
What is a sustainable product?
Before you can understand product sustainability, you need to know what sustainable development is. It’s more than just an environmental and carbon issue. Recall the Brundtland Report in 1987. [0:50]
Product sustainability minimizes the negative impact of a product over its lifespan. And it’s about translating product sustainability (social, environmental, economic) into business value for the decision-maker, such as improving the brand, growing revenue, reduce cost. [2:23]
Governance is foundational in a product sustainability program. You need sustainability metrics that are critical for the category embedded into the innovation/product development process, and the product manager plays a key role. [4:20]
A sustainable product is something that you should be able to produce in perpetuity, and there is no such product because what is sustainable changes over time; things like the availability of resources change, society and customer’s values change, and technologies change. [5:19]
The definition of a sustainable product today may not be sustainable tomorrow. For example, diesel versus electric cars. You also cannot forget about the aspect of where a product lives across its lifecycle. [6:45]
Carbon is not a de-facto standard of what sustainability is. Carbon is a simplification and an approximation of sustainability. But there are things it cannot cover in its approximation, such as societal damage, regulations, and harmful substances put into products that could be detrimental to health. [8:20]
It’s important to understand the multi-criteria view of sustainability, and because sustainability changes over time, it’s better to define products as a more sustainable option rather than a sustainable option. As Jim has been known to say, “There is no such thing as a green product, just a greener product.” [9:00]
What is the risk of narrowly focusing on carbon as an approximation for sustainability? [9:45]
Some things are correlated to carbon, and others are anti-correlated. [11:00]
Carbon behaves differently across the lifetime of a product – from the way it’s manufactured, used, and at the end of life - so looking at carbon across different stages is crucial. It’s more than just looking at one parameter but looking at it across the lifetime of a product. [11:30]
For example - using cars and lamps as how a product used by two different people in two different countries will have a different life, and the tradeoffs are different. [12:10]
Neil – India did not have consumer packaged goods, and then overnight, they were introduced from Europe and the US, and there was no concept of what to do with the packaging, and India became a big polluter. As a product manager, you need to consider how your product will live when it goes into the market and consider that in the design phase. [13:47]
When you listen to the global conversation on climate, you hear questions about resource consumption or water use and what happens at the end of life. Things are being missed if you only focus on carbon. A recent CBS news article shows that solar panels and windmills are now ending up in landfill. We knew these would need to be handled at the end of life 25 years ago when they were being designed and brought to market but reducing carbon was the priority; not handling these materials at the end of their lifecycle. This is an example of the risk of only focusing on carbon. We missed a series of impacts that are a problem today. [14:40]
Is not knowing 25 years ago an excuse? Or is it someone else’s responsibility in the future? No, it’s insufficient and inadequate to think this way. You need to start thinking about what and who to talk to, to put the infrastructure that is needed in place to deal with products at the end of life. [16:40]
The product manager needs to consider this at the beginning, but the responsibility is not 100% on them; it is also about product and producer responsibility. They need to identify where the problems might be in the future and reach out to multiple stakeholders to build an understanding and to identify what will be the future infrastructure needs and business models. [17:40]
It is crunch time, and the advantage we had in the past of having time to find a solution to the problem is gone. But the roadmaps that countries have are more evolved than they were 30-plus years ago, and if you look at them (e.g., EU, USA, China), they will give you a good picture of what key priorities your products need to consider in the future, such as water. There are simple frameworks too – Sustainable Development Goals, PEF (Product Environmental Footprint) - to give more direct guidance to manufacturers and product managers to help decide whether one design is better than another and will be more successful today and tomorrow. [18:40]
Good product managers think in terms of successful products, and great product managers think in terms of successful product lines. What is the next product going to be in this direction? That is the bet you are making. If you use the roadmaps (of countries) and juxtapose them with what your long-term product roadmap, it will give you an advantage. [21:30]
Innovation is already starting with these roadmaps, and many cradle-to-cradle examples are more accessible now with social media and AI. [22:00]
When a Product Manager goes back to work this week or next week, what is one key shift in thinking you want to leave them with? [24:15]
Jim – To begin to do things differently and scale product sustainability, they need to ask broader questions that relate to the social, environmental, and business values of each stage and decision, and there are frameworks for that. They also need to understand what the roadmaps are for the product and category and who the stakeholders are in that value chain that they need to build relationships with, and those could be internal or external to the company.
Neil – I was a product manager for a large part of my career, and most of the time, I wasn’t a great one. Most of the time, I was looking at this year’s roadmap, and at best, I looked at a three-year roadmap. A good exercise is to ask what product you will want to take to market five years from now because that is how long it is going to take to make it. This is when the inception starts. You need to try and predict what the world will look like five years from now in terms of demand, regulation, competition, and what is important to society. Is the priority still carbon, or is it now water? We now have countries putting vast sums of money into addressing water. What are the key design criteria of that product?
Jim – One more thing on the product line aspect is to ask, who are the additional people you need to collaborate with inside or outside the company; because it’s not just design, it’s also who you need to collaborate with to make all this happen.

Links to things we talk about ⬇️
Our Common Future, Brundtland Report
CBS News Article (May 1, 2023): A black eye for green energy? Renewable energy growth brings mounting waste challenge
EU Environmental Footprint Methods, including PEFs

Who’s talking? ️
To read about who you are listening to, visit fivelifestofifty.com and click on our bios.

We want to hear from you
Is there a topic we didn’t discuss enough, or do you think we missed it entirely?
Do you have a story about how you are using what you heard?
Is there a question you would like answered?
We want to know! Write to us at [email protected]
30 min
June 14, 2023 Unfreezing the Frozen Middle
Sustainability needs to be a key design factor in product design. But even if a company has sustainability goals, why is it hard to implement? This episode discusses the barriers in middle management, multiple decision factors, and translating information to meet your audience.
33 min
May 12, 2023 The Role of the Product Manager
The next 30 years will redefine product winners in the marketplace and speed and interdisciplinary awareness is key. Product Managers are central to bringing all the elements together and ensuring sustainability is embedded into product design.
25 min

About Five Lifes to Fifty

From the publisher's feed

The average product has five innovation lifecycles to 2050. We discuss the intersection between society, business, environment, and technology and how to negotiate the path to sustainable products.

Share Five Lifes to Fifty

Sign up to save your podcasts

Five Lifes to Fifty

Five Lifes to Fifty episodes

About Five Lifes to Fifty