Marketing Sustainable Design Services

What can be done to more effectively promote sustainable design? This was among the questions Interface Engineering, on behalf of the U.S. Green Building Council, sought to answer in surveying a sampling of building practitioners who attended the initial Greenbuild conference in Austin, Texas in 2002. The results were presented at a session at the most recent Greenbuild in Pittsburgh. Independently, Building Design & Construction magazine surveyed this same group for its white paper on sustainability, which was also presented at the conference. BD&C’s respondents gave more weight to independent cost information and less to case studies and training—the major areas cited as lacking by the Interface survey. Both surveys, however, revealed that green practitioners want better information for product selection and better overall green building marketing materials, setting forth a clear agenda for groups, such as USGBC, whose goal is market transformation. But where does a marketing manager start? With the classics.

Classical diffusion theory

Everett Rogers, in his Diffusion of Innovations , established five types and traits regarding those who adopt new technologies: innovators (venturesome); early adopters (respectable); early majority (deliberative); early minority (skeptical); and laggards (traditional). Additionally, Rogers posits a normal distribution of innovation adoption, which leads to a mean time of 10 years or more to reach 50% of the available market.

In applying this to sustainable design, and the LEED program specifically, issues include:

• Relative advantage (still being debated for green buildings).

• Compatibility with existing methods (generally the case for sustainable design).

• Ease of trial at relatively low cost (not the case for new building technologies).

• Observability by those who would try it (definitely the case for green buildings).

• Simplicity of use (which is not the case for LEED and sustainable design at this time).

Of these factors, economic advantage is the major driver.

In further applying Rogers’ theory to sustainable design, four key factors affect the rate at which this innovation spreads:

• The nature of the innovation itself, including its relative advantage.

• Communications channels used by subsequent market segments.

• Time for the decision to innovate, the process of adoption to occur (including training in how to use the innovation) and additional adopters to learn about it.

• The social system in which the innovation is imbedded, particularly the social barriers.

Translation: At this time, LEED has gained perhaps 10% or more of the institutional market for new buildings but scarcely 2% of the corporate market, according to BD&C’s white paper. So, for the private sector, the client base is “innovators,” but for the public market, it is more likely “early adopter.” But, many project managers within the latter category could be characterized as “late adopters.” They will need mandates from upper management.

However, the advantage of green buildings and LEED has yet to be shown in either of these markets, given higher capital and certification costs. Certain benefits, such as energy savings, are already a standard part of payback analysis on conventional projects. Benefits appear greater for long-term owner occupants of buildings, but many of the reported and putative benefits are harder to measure, notably soft costs such as employee productivity and improved morale.

Anecdotal evidence is in abundance, but not enough to overcome hurdles of cost perception. Since the green building market is “project-based,” it may take some time for perceived benefits to find appropriate projects. Oftentimes, adoption of innovation is incomplete. For example, a technology is acquired for desired outcomes such as LEED certification, but is not deployed into general use. This has been called the “acquisition gap” and has been found in a number of technology diffusion studies.

In light of the current state of the market, independent cost and performance evaluations of green buildings are critical for building credibility and overcoming perceived barriers. In my own experience, the expectation of real benefits has to exceed the likelihood of increased costs by 20% or more.

Crossing the chasm

If green building is to enter the mainstream of the “early majority,” it must begin to take note of the problems of marketing new technology, well illustrated in Geoffrey Moore’s Crossing the Chasm. Moore demonstrates how difficult it is to go beyond the early adopters to the more general marketplace using the same marketing mechanisms and communications tools as for the more specialized, risk-tolerant group. The argument here is clearly on the side of simplifying the LEED tool, minimizing annual changes and feature updates and addressing the risk-aversion of the early majority. A good example might be the update schedule for Microsoft Windows, which now appears to be more on a five-year timetable to avoid upsetting the business marketplace.

Another good source is M. Gladwell’s The Tipping Point, whichdiscusses how epidemics and fads spread—a topic of great relevance to the diffusion of innovation, especially in the areas of understanding the roles of communications channels and social networks. Basically, Gladwell posits that innovations spread fastest: A) through the work of a relative few with developed social networks; B) when they “stick” in the emotional effect of memory, myth and metaphor; and C) when they are disseminated among people we know, trust and like.

In other words, green building adoption will spread most rapidly through well-connected individuals; people who widely and openly share their knowledge; and “persuaders” who have the ability to tell compelling stories. The green building movement has the first two categories in abundance, but the third in scarcity.

Most design professionals are against selling their services per se. But more importantly, they admit they are not very good at selling. This is a major barrier. Gladwell’s work argues for continued efforts by USGBC and others to prepare compelling sales materials, document the factual case for green buildings, tell the green building story in memorable terms and continue to document the stories of those who are moving its adoption forward. It also supports a renewed focus on local chapters.

Theory of competitive advantage

Most business schools teach some variant of the theory of business competitive advantage. This concept was first introduced about 25 years ago by Harvard Business School’s Michael Porter, whose classic work Competitive Strategy identifies three approaches to winning in the marketplace: differentiation, low cost and focus.

Differentiation. Seek to create a difference with attributes that make a difference to the customer. For example, a firm might want to sell itself as “leading edge.” This could limit markets, but it sharply defines the firm to buyers who value that attribute. In today’s commercial world, a major task for A/E firms is to create a brand that will incorporate those key differences. Of course, one can create differences for each market segment. Some might value innovation, others, low cost and others, specific technological choices such as photovoltaics or roof gardens.

Low cost. Given the tight budgets of many building projects, the ability to compete on price is a valuable asset. In projects with a design-build delivery system, for example, lower costs to achieve specific defined sustainability goals may provide a winning edge.

An architectural firm that is really good at managing the process of integrated design might be able to design a LEED gold-certifiable building at the same fee and capital cost with which a less capable firm could only design a basic certified building. Likewise, the ability to be creative with green building value engineering for energy and water savings, along with high levels of indoor air quality, might help an engineering firm create far more valuable green buildings for the same fee as a more conventionally oriented firm.

Low-cost advantages might be more sustainable than even branding as a way to compete in the marketplace. Take Southwest Airlines as an example.

Focus. Know which markets to compete in and which to shun, which clients a firm wants and which it doesn’t. Points of focus can include:

• National vs. regional strategy. Many smaller firms compete nationally by narrowing their focus to one target market, such as museums, libraries, zoos and the like.

• Specific client types. This can include smaller clients, psychographic profiles such as early adopters, or those distinguished by strong green cultures.

• Specific vertical markets.

• “Signature” green measures. This can include a reputation for incorporating photovoltaics, Living Machines or green roofs on each project.

• Project size. Such a strategy allows smaller firms to fly under the radar of larger and more capable competitors. An example might be a focus on smaller retail stores or even green tenant improvements.

Of course, a certain “sell” also has to be done externally to help marketing efforts. Two immediate targets should include an effort to reduce the number of changes introduced annually into the LEED system; and second should be the creation of a cadre of USGBC-certified building assessors who can provide certainty about the certification process and help define costs that can be included in initial project budgets.

In summary, there is no one competitive strategy that is right for every firm. Much has to do with the clarity, capability, capital and character of the firm. Nevertheless, a conscious choice among strategies is vastly preferable to having none, for that assures only a steady diet of crumbs from the table of more decisive firms.

Green Marketing Do’s

Practitioners need to understand how their marketing must evolve in order to compete effectively:

Pick a strategy that incorporates high levels of differentiation or low cost, with explicit focus on particular market segments. These might include geographic, project type, owner type, psychographic profile, project size or even technological approach or signature green measures.

Reinforce this strategy internally and externally so that it becomes recognizable as a brand identity of the firm. Internal reinforcement includes training and certification of employees as LEED practitioners. External reinforcement includes activities to increase the visibility of the firm and its key professionals, including speaking, lecturing, networking, publicity for successful projects and similar measures.

Consider developing proprietary tools for measuring sustainabililty as part of a branding approach. Along with these tools, firms should develop methods to successfully execute LEED projects without additional design fees.

Implement multimedia and other modern sales tools more aggressively to increase the emotional “bonding” with green building stakeholders and final decision-makers.

Generate more demonstrable information on the benefits of green buildings beyond cost savings from energy/ water conservation.

Provide case study data, with solid cost information, including initial cost increments.

Provide comparative cost information, within and across building types, as to the full costs of LEED certification, including documentation.

Generate and publicize personal stories, by both designers and owners, about the costs and barriers to completing LEED-certified projects.

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