How scaling back could help you scale up.
The logic that we’ve been taught in business school would tell us that growth is at the core of any successful business. We prioritize growth so that we can create new jobs, satisfy stakeholders, and sometimes even give back to the community. It all makes sense, and it’s the way we’ve always done things, but there are those that believe rapid growth is not a positive thing. In fact, it may be the downfall of our economy and environment.
Activists labelled as ‘degrowthers’ are people who suggest that a critical step in saving our world from environmental deterioration would be for consumers to buy fewer unnecessary goods. They are a growing group, as more consumers adopt a degrowth strategy for their spending, which entails buying less products overall and focusing on quality that will stand the test of time for the items you do purchase.
Naturally, many businesses are being criticized for their role in the excessive production and promotion of these unnecessary goods. Research suggests the effects of advertising on consumption drive up consumer carbon emissions by a third. But despite what the term ‘degrowth’ may suggest, it is not ‘anti-growth’. A degrowth strategy for businesses is about reducing waste, reallocating spending, and investing in longevity so that they may appeal to modern values and play a role in the future of sustainability.
If a degrowth strategy still feels counterintuitive, consider the following arguments for why it may be beneficial for your business to help reach today’s eco-minded consumer.
Opportunity for Loyalty
Recent research found that 70% of people in middle and high-income countries believe that over-consumption is putting our planet at risk. A buy-less, own-less lifestyle is gaining traction across North America. As far as we see it, this is the future of consumerism, and this sentiment will only continue to grow as the effects of climate change become more dire.
So, what does this mean for brands? Those that can focus on ‘selling enough’ with a commitment to sustainability will be rewarded with customer loyalty.
IKEA recently launched its much anticipated second-hand furniture program around the world as part of the retail giant’s goal to go fully circular by 2030. Since offering up consumers the opportunity to sell and buy used furniture in an effort of degrowth, they have seen the potential for record-breaking profits.
Globally, 85% of people say they have shifted their purchase behaviour towards being more sustainable in the past five years, which means that companies must adhere to new standards if they want any attention. Fortunately, restrictions have always been an accelerator for innovation. By placing itself within a new set of standards, such as sustainability goals, quality benchmarks, and production limits, a brand will be forced to innovate new solutions.
The company Fairphone, for instance, started producing modular phones that are easier to repair, upgrade, and recycle. They brought innovation to an industry that was getting known for short-lasting and expensive products – essentially the opposite of degrowth. This approach doesn’t rely on consumers buying a completely new phone every time one breaks which has earned them recent success.
If the other arguments haven’t been convincing, perhaps the bottom line will be. Investing in sustainable operations could help reduce costs of operation in the long run. In addition, we now know that most consumers in North America are willing to spend more on sustainably made products. It’s because people are willing to invest in a greener future, and being part of that should be a no-brainer.
Interface is a carpet manufacturing company that has been adopting a degrowth strategy for quite some time. Guided by principles of sustainability, they invested in energy-efficient solutions, waste reduction practices, and closed-loop recycling, which not only enabled them to achieve their Mission Zero goal but also to save a lot of operating costs in the long term. Now, they have their eyes set on even larger sustainability goals with their Climate Take Back initiative.
Despite its negative connotation, degrowth does not simply mean making less money. It means refining your operations, updating your strategies, and taking on some initiatives that will not only appeal to modern consumers but play a role in reducing our carbon emissions on the planet. Degrowth for businesses will soon be necessary to remain competitive amongst this growing sentiment, and we suggest brands take it into consideration when developing plans for the future.
About the Author
Daniel Pozzebon works at the cross-section of data and culture in an everlasting effort to make sense of the world around us. He’s particularly keen on seeking out modern signals and how they ripple into the future. Outside of work, you’ll find him in the woodshop or enjoying a movie at the local cinema.