SC JOHNSON- CSR Initiatives’Testing the Base of the Pyramid Protocol

INTRODUCTION SC Johnson is an leading manufacturer of household

cleaning supplies and other consumer chemical in US.

It is known for its practices in sustainable development.

Company based in Racine, Wisconsin focused on 4 areas of sustainable development:

-advancing social progress and public health

-using earth responsible raw material

-preventing insect-borne diseases

-reducing energy consumption and green house gas

emission.

Johnson Family Enterprises includes:

-Johnson Financial Group

-Johnson Diversey Inc.

-Johnson Outdoors

Its well known product includes:

-Ziploc bags

-Glade air freshener

-Raid insect controller

-Vanish toilet cleaner

-Scrubbing bubbles automatic shower cleaner

Corporate Goals

SC Johnson had two important corporate goals:

-growing its brand across the world

-achieving the company’s environmental and social

responsibilities

BOP PROTOCOL

It was a part of the company’s attempts to advance social and public health objectives.

Through this protocol company aimed:

-to reach underdeveloped market and consumers

-to encourage the use of the environmentally friendly materials

GREENLIST

It was a part of the company’s effort to be earth responsible.

It classified the raw material according to the impact they had on the environment and human health.

It helped SC Johnson to phase out environment ally-unfriendly raw materials and substitute them with environmentally-friendly ones.

In June 2006, SC Johnson was conferred with the US Presidential Green Chemistry Challenge Award.

OBJECTIVES

SC Johnson aimed to :

-prevent insect borne diseases across the world.

-lessen energy consumption and green house gas emission.

-reduced use of fossil fuels.

Background Note•In 1886, Samuel Curtis Johnson (Racine Hardware

Company’s sales representative) purchased the

company’s parquet flooring business.

•Company renamed as Johnson’s Prepared Paste

Wax Company (Beeswax-based polish was

developed)

•In 1900, he introduced paid holidays for its employees

•1906, business was renamed as SC Johnson and Son.

•Introduced Group Life Insurance

Expansion First International Venture established

in Britain in 1914

A subsidiary was opened in Australia in 1917

By 1919, firm had more than 200 employees

Johnson’s wax became a popular brand in the US and Britain

Herbert Fisk became the president in 1919

Opened a subsidiary in Canada in 1920

By 1928, the company had grown in a $ 5mn business

During 1930s, Herbert Fisk Jr. managed to steer the company through the rough times without any lay-offs

He introduced new products including Glo-coat, a self-shining polish, Glade Air Freshners, and pledge, the first sprayable polish for furniture, raid insecticide and off-bug repellant

In 1955, SC Johnson water based aerosols that minimized the adverse impact on the environment

By 1975, they completely removed CFCs from its aerosol products

In 1979, announced a policy to donate 5% of pre-tax profits to charity

In 1985, introduced childcare centers for children of the employees

In 1990, SC Johnson introduced a centralized environment and safety policy

Developing safer and cleaner products

Recognition In 1991, it received Presidential Citations for

environmental quality management

Its environmental practices were recognized in many other countries;

Japan, Canada, Argentina, Mexico, Australia

The other Awards it received were:

World Environment Center’s Gold medal

The Business Ethics Award for best practices in social responsibility

Lifetime Atmospheric Achievement Award from US EPA

In 1984, Cornell University’s Graduate School of Management was renamed SC Johnson Graduate School of management

Professor Stuart L Hart joined this center as a professor

His association with the center led SC Johnson to actively participate in the creation and testing of the BOP Protocol.

BASE OF PYRAMID PROTOCOL

Pyramid Protocol-Structure Base of Pyramid: Hart and Prof CK Prahalad

BOP Protocol- launched in 2004

BOP: people who earned

less than US$1500 per annum.

BOP: comprises 4 billion people

Out of 4 billion, 1 billion earned-less than US$1 a day.

Top of the pyramid: Earnings above US$15,000 a year on an average.

75-100 million ‘top of the pyramid’ consumers.

Middle of the pyramid: Earnings US$1500-15000 with 1.4 billion people.

Financial support by SC Johnson, DuPont, Hewlett-Packard and Tetra Pak as a collaborative effort of Cornell University from Michigan, The world Resources Institute, and The Johnson Foundation.

Objective Identify and develop sustainable new products

and business models in association with BOP communities

Business co-creation: Marriage

A formal business process which consisted of 3 phases.

Interdependent phases

Specific business outcomes

Generating value for the company and the local communities.

BOP Protocol- 3 PHASES

1st Phase-Opening Up Facilitating idea generation

Learning process-2 way

4 processes

Team formation & preparation

Immersion & engagement

Needs & asset identification

Idea generation & evaluation

Cross-functional team

Carried out at selected locations

Community activities

1st Phase contd…….. Community needs identified

Assets and resources possessed by community were also found

Identify own assets to apply to community activities.

Gaps with the resources were identified

Final step was idea generation where ideas to build sustainable partnerships and businesses were worked on.

2nd Phase-Building the ecosystem Relationship between the company and the community was

establishes.

1st process-

Resource and capability assessment

2nd process(Partner selection and Network formation)-

Network partners were identified.

Location of operation of company to be identified.

Resources and capabilities provided for the venture.

3rd process(Business plan development)

Plan and model developed for proposed venture, team formed to garner support from community for the venture.

Feedback also collected from the community.

3rd Phase-Enterprise Creation Venture formalized through- pilot design and testing .

Pilots designed to cover the community.

Tested in stages.

Feedback obtained while testing.

Promising pilots were retained after testing.

Business model evolved

Business & Governance structure established.

Learning from venture to generate a new value proposition.

To expand its opportunities and find out new businesses for existing BOP customers.

Also expanding into other BOP markets .

S C Johnson and BOP protocol

BOP in S C Johnson S C Johnson involved in BOP even

before this term was coined

Herbert Fisk Jr went on 15000 mile expedition from Wiscosin to Brazil searching for Carnauba wax

BOP protocol was also tested in Kenya for the usage of S C Johnson’s products

Pyrethrum Farmers in Kenya

Pyrethrium an active ingredient

Insect control products like

Raid and Baygon

Found in Chrysanthemum plant

200,000 farmers were involved in cultivating chrysanthemum in Kenya

Pyrethrum Market Share in Kenya

Market share went on reducing due to decrease in production and inadequate processing facilities

Coupled with increased competition from synthetic pyrethrum producing and poor marketing

S C and Pyrethrum

S C Johnson purchased 70 percent of pyrethrum in Kenya

Only 12 percent of farmers irrigated their land which led to low yields of the crop

Natural chemical degraded on exposing to sunlight and by the time it was transported to sourcing center quality of crop deteriorated

S C and Pyrethrum

In July 2004 SC Johnson approached a NGO named KickStart for pyrethrum

Project aimed to provide micro irrigation

Reduced the usage of pyrethrum and more of cultivating other crops

Contests on pump challenge were involved

Pumps gave higher yields than pyrethrum

Testing BOP Protocol in Kenya

JAN 2005:6 students from different universities in the US ,went to Kenya to field test the BOP protocol.

Divided into 2 teams.

Tested in slums of Kiberia in Nairobi and Nyota in Nakura.(1 million people lived).

Identifying business opportunities for the company in partnership with local communities.

The Action Undertaken Started with the task of immersion and engagement .

Voluntary Team: Community clean up in Kiberia-to know the community better.

Helped in building rapport and also showed the team’s commitment to the BOP program.

Volunteers stayed in the homes of the poor for a month ,living like them ,carrying out tasks like them: milking the cows and making “Mandazi”, a Kenyan bread.

Methods to improve the tasks were suggested.

..continued the Action An appraisal meeting after the home tasks –idea

generation.

SWOT was done and the resources available and potential income generating activities were found.

Meeting attended by 250 people in Nyota: including community members, NGOs and employees from SC Johnson to create mutual value for company and community and create businesses that were sustainable.

Taka Ni Pato

Group members of Carolina for Kiberia involved in the waste management program “ Taka ni Pato(Trash in Cash)”.

Under this program, the volunteers collected waste from slum and segregated it into recyclable and compostable waste.

Use the existing resources of “Trash in Cash” groups. These groups became SC Johnson’s partners in developing a new channel to market insect control and home care products to BOP consumers in Kenya.

Building the Ecosystem

Next phase called for establishing a permanent relationship among the NGOs,the groups, and the company.

3 partners: Carolina for Kiberia, Trash in Cash groups and SC Johnson, Kenya.

The company provided the groups with training and marketing support which led to pest control, air freshening and cleaning services too.

Success of the Ecosystem

Nairobi-community based cleaning companies.

BOP customers were receptive to the idea: Used Windex to clean their houses while others used Baygon.

Even Premium products like Pledge furniture cleanser also found many takers.

So services extended to 2 more slums in Mathare and Mitumba –home maintenance services were also provided.

Workshops

In Nyota- organized workshops with the farmers where farmers came out with ideas to convert manure into dried fertilizer.

NGOs financed the venture.

Proposal for community level organic farm that would train locals and also provide them with seeds of good quality.

Through these initiatives employment level raised and income level too increased.

Win-Win Proposition Cleaner ,pest free and healthy homes.

For SC Johnson this was launch of a new Business model and the company found a new market for its products.

Relationships between the company and the people in that area helped in targeting new consumers and develop cost effective products.

BOP Protocol team expanded their contacts- Egerton University, Ministry of Agriculture, CARE..

Several other programs launched-Healthy Children Healthy Homes

Benefits of BOP Protocol

SC Johnson introduced new low cost items with customized designing and packaging for BOP consumers.

For example: In Mexico it was found that use of electric mosquito repellant was not high, though it provided more protection as compared to coils because of high initial cost of plug-in heater. So as a sampling program SC Johnson provided

plug-in heater and four refillable mat free of cost.

After the program people started buying refillable mats which priced affordably.

The BOP brought together communities, NGOs, and the

companies.

Protocol team ensured that the local communities derived value from their efforts by conducting workshops, training programs and developing relationships with MNCs and NGOs.

People came up with several ideas like starting an organic fertilizer company, community level organic farming and fruit processing.

After successfully establishing the BOP model in one market, it planned to replicate in other markets across the world.

Company did not derive instant business but demand for its products expected to grow as BOP consumers began earning higher incomes.

According to Scott

“We always take the long view in our decisions. We’re very patient. And I can see that the working base of the pyramid is going to test our patience.”

GREENLIST

Introduced by SC Johnson’s in year 2001.

To evaluate adverse effect of chemical on environment and human health.

Several criteria were used to evaluate chemical.

Biodegradability

EU classification of chemical

Water coefficient

Effect on aquatic and human life

Vapor pressure

Other

RATING SYSTEM OF GREENLIST

Three, best

Two, significant

better

One, acceptable

Zero rating, only when no substitute is

available

Company targeted to achieve rating of 1.41 by end of 2007, but achieved mile stone in 2005.

To attain rating of 1.41 company phased out production of chlorine based external packing material

Company also phased out production of bottles made of PVC and bleached paperboard that uses chlorine as bleaching agent.

Greenlist program received a patent.

SC Johnson planned to license program to other companies without any royalty.

Companies getting license must set goals to improve environmental footprint & publish report of the progress made against set goals.

SC Johnson – Other BOP Incentives

In 2004 company launched Malaria prevention program known as “Healthy Children, Healthy Homes” in S.A..

Program was initiated in three provinces in the country with high incidence of malaria.

Children from 300 schools in each province were taught about preventing from malaria.

Interactive material was distributed in six different languages

Company sponsored mosquito trap in Ghana from 2003-2005

Trap was put in Tafo, village near Ghana.

Result showed that incidence of malaria reduced after trap was introduced.

THANK YOU

SAMTA WADHERA

RIDDHI PAREKH

PANKTI SHAH

RAMKUMAR VENKITESWARAN

PRAKASH KRISHNAMOORTHY

RICHA MAHAJAN

SAHIL SALEEM

SADAF