Alex Bogusky, Crispin Porter + Bogusky

John Winsor, Crispin Porter + Bogusk

Most brands and most companies have one big hairy monster. That one big issue in their relationship with consumers that keeps them up at night. It might be an aging customer base. It might be CO2 emissions. It might be excessive use of natural resources. It might be labor. It might be service. It might be quality. But whatever it is, pretty much everybody has a big hairy problem with how they do business—and these days pretty much everybody knows about it. There are no dirty little secrets anymore. Just dirty stories, and there is nothing more difficult as an organization than to turn straight into those issues and take them head on.

Back in 2005, Wal-Mart was in a bit of a bind. While they had become the biggest retailer in the world, they were suffering from multiple PR hits that were blowing up into bigger issues. At the heart of things was Wal-Mart’s perceived practice of scorched-earth global capitalism by focusing solely on lower costs without considering the environmental or human costs.

At Wal-Mart, to even bring up words like “environmental impact” must have seemed like a PR nightmare. But Wal-Mart’s CEO, Lee Scott, laid out an ambitious vision of transforming the company to become more environmentally sustainable and along the way achieve two other goals: improve the companies bottom line and improve its reputation.

To some it seemed a radical thought. By being more sustainable, Wal-Mart could be more profitable. But to designers familiar with sustainable systems, it actually makes perfect sense. Wal-Mart has embraced its one-time enemies and asked for input at the same time that they’ve demanded more accountability and innovation from their suppliers. It would be easy to say, “We don’t make the stuff. We just sell it.” But Wal-Mart didn’t. Instead they used their clout to begin to fix their business.

Imagine the power in Wal-Mart, the world’s biggest retailer, demanding more accountability from its vendors. For instance, Wal-Mart mandated that it would only sell concentrated liquid laundry detergent. Forcing their suppliers to change, Wal-Mart saved its customers more than 400 million gallons of water, 95 million pounds of plastic resin, 125 million pounds of cardboard, and 520,000 gallons of diesel fuel over three years.

“Lee pushed me,” A. G. Lafley, chief executive of Procter & Gamble, told the New York Times in 2009, and “we totally, totally changed the way we manufacture liquid laundry detergents in the U.S. and, now, around the world.”

Another example has been fluorescent bulbs. Wal-Mart sold 100 million of these bulbs in 2007. For folks like General Electric, that means making a bulb that lasts longer and needs to be replaced less often, resulting in fewer sales. But, when Wal-Mart suggests something, even suppliers like G.E. transform the way they do business.

While these and other examples have been good for society, they’ve also been good for Wal-Mart’s bottom line. When they simply changed the design of their delivery trucks, they made them 25 percent more fuel-efficient, saving the company an estimated $500 million in fuel costs over the next 10 years.

Wal-Mart has learned that by doing good they’ve done well, being only one of two stocks on the NYSE to rise in 2008. As Lee Scott was quoted in the same article in the New York Times saying, “It wasn’t a matter of telling our story better. We had to create a better story.”

They designed a new vision beginning with their perceived biggest weakness and working out from there. It’s in the very early stages, but it has already made a difference in some very practical ways, and it has even begun to make a difference in how people who formerly rejected all things Wal-Mart are seeing the brand. In a single brilliant flanking move, Wal-Mart has let Target be “the designer big box” and begun to reshape themselves as “the greener, more sustainable big box.” If they follow through, they will not only capture Middle America but the coasts, too, because truly sustainable business models will ultimately capture the high ground in all categories. For the sake of the planet, we all have to hope they stay with the plan. But it might be time to begin to get your head around Wal-Mart being cooler than Target.

Excerpted, with permission, from Baked In: Creating Products and Businesses that Market Themselves (Agate, November 2009), by Alex Bogusky and John Winsor of Crispin Porter + Bogusky.