In this episode of the Troubleshooting Innovation podcast, engineering expert Rich Berger talks about the ways a bakery can innovate sustainably, which leads to tangible benefits like cost savings and reduced waste … but also some intangible benefits yet to be considered. Hosted by Joanie Spencer, Commercial Baking editor-in-chief.

Sponsored by Shick Esteve.

Joanie Spencer: Rich, I’m happy to talk to you again today. We talked a little bit about your background last week, and while you have a lot of food and beverage manufacturing experience, I’m interested in the evolution of your career. Didn’t it start in offshore drilling?

Rich Berger: My career indeed started in in offshore. I managed new drilling platform projects in the Gulf of Mexico, followed by some consulting in the heavy industrial and utility sector, and then onto the food and beverage industry. Throughout my journey in my career, I experienced — and sometimes, quite frankly, struggled — with overcoming obstacles around sustainability. I’d be happy to share some of my experiences around them.

Spencer: Yeah, I’m really interested in hearing how your 30-plus years of engineering experience has molded your view of sustainability.

Berger: I learned that it’s important to balance your objectives between business and sustainable strategy. Perhaps “balance” isn’t the right word … maybe creating harmony between business and sustainable strategies is a better description. It’s really tough to set and forget your business strategy or your energy strategy. Both are going to evolve over time. So there needs to be a plan for that. And having clear goals is critical. I think that these goals will inevitably need to be aspirational, given that in some cases, the technology to achieve them is still being developed. In many cases, you’ll find — and I certainly have experience in — feeling like you’re sort of building the plane while you’re flying it. Right? But having goals provides clear direction for you strategically and for the team to be to be more effective, and it drives creative thinking. And it provides a great benchmark for ensuring strategic alignment.

I learned that cost doesn’t have to be a speed bump to sustainability. In fact, in most of my experiences, sustainable business practices have led to reduced costs. Organizations don’t have to choose between their environmental and financial responsibilities. These two demands are not conflicting, or in my opinion, mutually exclusive. In fact, the most successful organizations that I have seen are developing strategies that deliver both economic and environmental sustainability at the same time, working together to ensure that they are a sustainable business for the long term. So they recognize that strong environmental credentials are essential for future profitability. They also recognize that implementing low carbon technologies doesn’t necessarily require large capital investments.

Lastly, I recognized through my career journey that perhaps I never really addressed head-on, or let’s just say there was a degree of fear to address head-on, that cultural elephant in the room. It’s important, I think, to identify and resolve any areas where your existing culture may conflict with your move toward sustainability. For example, just kind of thinking through some experiences that I have had: If your people are currently focused on short-term deliverables, you’ll need to work to make it acceptable and celebrated to take longer-term views and act in a sustainable way. It’s important that your people understand that sustainability can’t wait until tomorrow.

You may not currently have all the answers on precisely how you’ll reach, for example, that zero [emissions goal]. And some of the technologies that are required may not even be commercially viable at the moment. Again, that’s back to sort of building the plane while you’re flying it. Or even better, building the plane while you’re flying it and still determining where your destination is, and navigating and advocating. Right. But sustainability to me is a marathon and it’s not a sprint. And if your teams are culturally empowered to make changes today, I think this can only accelerate your longer-term progress. So the advice that I can give is to keep learning and evolving. A finish line doesn’t exist. Finding that right balance during your sustainability journey is critical to ensuring your long-term plans aren’t undermined by the short-term difficulties.

Spencer: Right. Okay, so that is super insightful to think of it as “the finish line does not exist.” I love that. So now we’ve got to talk about the benefits. We don’t want to just focus on the end, we want to focus on the benefits and how we keep moving and evolving towards sustainability,

Berger: Which is a constant conversation, right?

Spencer: So for you, what would you say are the top five or six benefits of sustainability in manufacturing?

Berger: I think backing up to the spirit of the question, I absolutely believe that implementing sustainable manufacturing methods can directly benefit the business. So perhaps the most obvious reason for switching to more sustainable manufacturing processes is to meet the demand for them. And customers are actively seeking out brands with less damaging environmental impacts. They’re getting pretty smart about it, too. I mean, the days of getting away with a little greenwashing to make a product pure, more eco-friendly, I think our long gone. Customers are pretty savvy, and they’re putting in the research to make sure that they’re getting what they’re paying for. And they’re willing to pay more for it. A Nielsen report indicated that up to 77% of people are willing to pay a higher price for a product from a more sustainable brands.

So going back to our first episode, when we’re talking about how to use data and analytics to influence what we do in sustainability. So second, I think improving production efficiency — and this is coming from an operator like myself — can not only decrease your expenses for raw materials, but you can also reduce the expense of handling residual material that’s leftover. So less waste means less to dispose of. And that means less costs. So you may find that you’re able to save on disposal costs by switching to less hazardous materials for example.

Spencer: Okay, I’m just gonna throw this out there really quick. You could almost say that engineers are by design sustainable, because you’re all about efficiency. An engineer’s mind is always thinking about how can we do this more efficiently? How can we streamline this? So you have sort of an edge.

Berger: That’s certainly a trait of engineers like myself, for sure. And I would say that engineers like myself have that trait probably directed more toward a focus on costs. And I think the more challenging task ahead of us is to be thinking about that in a more broad sense; for example, how the operation can impact the local environment.

Third, speaking of materials, customers aren’t the only ones with an eye on environmental impacts of production. Local, state and federal governmental regulations continue to grow increasingly specific. I think making sure your methods are as eco-friendly as possible now, can spare you a lot of hassle and potentially even fines in the future. In summary, I think that the value of staying ahead of increasing regulation can bring incredible returns to the organization.

Fourth, while reducing staffing costs may not be as immediately obvious — especially given the the usual association of sustainability with eco-friendly processes — by creating an environment that encourages employee longevity and reduces turnover, you can build a highly skilled and dedicated staff that is not only more efficient than less experienced new hires, but also reduces the time, cost and even lost productivity involved in finding and training additional staff.

Fifth, well, government at every level is increasing regulatory pressures that make some of the traditional methods challenging. I think that you can also find government-sponsored benefits for switching to greener processes. So programs like the E3 challenge, which provides guidance, programs like that can really help make converting to sustainable processes easier for us in the short-term, as well as providing long-term benefits.

And finally, I would say business sustainability. Right? This is one that really stands out to me. Creating products that are eco-friendly, and doing so in an eco-friendly manner, isn’t the only end result of creating a sustainable manufacturing process. The entire goal of the process is for it to be capable of being continued in perpetuity, and it passes that stability onto your business. So when profits aren’t considered the sole metric of a company’s success, it becomes easier to see the health of other factors that contribute to your long-term viability: the stability of your workforce, the availability of unnecessary resources and even the support of your customer base.

So sustainability may initially look like a trendy marketing angle, but in truth, its benefits for your company can be considerable and long lasting.

Spencer: You bring up a good point that sustainability isn’t just the connotation that comes with it, but it’s the definition of what it means to be sustainable. And having that longevity for your company and the products.

Berger: Certainly a long-term view.

Spencer: Alright, Rich. So at the beginning of this episode, you talked about how your views have evolved in your experience. And you talked about how you’ve seen reactions to the cost that’s involved with sustainability practices. What advice do you have for food producers who still think it’s too expensive or too much trouble to start incorporating sustainability into manufacturing?

Berger: I have and continue to challenge myself with the same question, and it’s certainly a good one. And I think one way or another, the dissonance between cost and value, and even in various dimensions, I think it has been a long running debate throughout my 30-year journey in sustainability. I haven’t always been of the value mindset, admittedly. Okay. And as I have conversations with other leaders in the food industry, my overall perception is that many organizations still don’t see the value in developing thorough and meaningful approaches to sustainability.

I think this can be highlighted by many of the challenges that we face as operators, many of which I’ve experienced myself. The business case for sustainability is still either not recognized strategically, or in many cases, not even understood. This all reinforces the contention that sustainability is often perceived as a cost center, right? Rather than a value center.

Let me talk about that for a moment, viewing sustainability as a cost center — which I have done, and honestly still catch myself doing — is damaging and probably a self-reinforcing fallacy. If you only operate in the area, this implies your zones of focus and action are more likely to be self-limiting. We catch ourselves focusing on compliance and value protection (protecting the value of the other activities that we’re juggling every day), and not really on where the real or significant risks, impacts or opportunities may lie.

So it’s likely that outcomes achieved from focusing corporate sustainability efforts in the areas of value chain outside the direct control of the business are also those which would yield the greatest opportunities for value creation. A cost center rationale has us, for example, focusing on compliance — as I mentioned before, protecting value and cost savings, right? — it limits investment in staff and initiatives. It’s likely to be integrated with core strategy. A cost center rationale is easier to integrate with your strategic initiatives but more likely to leave value and business opportunities on the table. And there’s less focus upon opportunity costs arising from sort of businesses as usual.

A value center rationale has a broader focus on value and opportunity. It uses sustainability for creating value, not protecting value. It’s solving customers current and future needs. It brings awareness of context, drivers and even the value built into business development and your planning. It offers a greater investment in staffing initiatives. It’s most likely a longer term approach. And we’re more able to demonstrate an integrated response in value to investors in more of a value center rationale.

A significant reason why sustainability is still seen through a cost lens — and again, I’m looking through that lens, I’m catching myself looking through that lens all the time — it is rarely strategically aligned. While corporate sustainability remains separate to core business processes, like strategy and brand and marketing, risk planning, governance, and HR, it will remain siloed as a poorly understood and really infrequently realized activity, sort of on the fringes of the day-to-day. So ensuring that sustainability efforts are aligned correctly with the wider commercial approach, I think has a double benefit of improving the performance of the business as well as aligning with the way that you already do business. So it’s important to note that regardless of the strategy of your business, and the strategies you use to compete, actions that reduce costs and improve efficiency are likely to always be valuable. So until sustainability is strategically integrated and understood in terms of its potential for value creation, it will remain sidelined as a cost. And that’s the danger to try to continue to view sustainability through a strategic lens and connect it to your core business goals.

Spencer: I think that’s so important to point out. And it makes me think of a conversation I just had with a baker two days ago. We were talking in terms of product development, but I think it applies to this conversation. He was telling me how it’s really hard to think about: How are we going to grow? And what does our product development look like when we’re just trying to fill the orders that are coming in today? Because especially in supply chain disruption, I mean, bakers are just overwrought. So he was talking about how it’s really hard to think big-picture and make room for that innovation when we’re just trying to get the product out the door now.

So when you apply that to the sustainability conversation, how can food manufacturers make time to take a step back? And then think about how do we incorporate it into our day-to-day?

Berger: For sure. I’ve been in those boardroom discussions where [we’re talking about how] we don’t have time for it, we don’t have time. It’s just yet another initiative that we must manage on top of everything that we’re doing. But where I have seen success is to be thinking about sustainability as part of your values, integrating them into your actual strategic initiatives, thinking about sustainability as a way to solve some of the demand problems that you just mentioned, or other network or supply chain challenges. Because again, if we’re thinking about sustainability as yet another initiative, it’s going to get siloed. It’s going to be pushed aside. But if we think about it as a means or a way to help us in our business, even long-term, I think it really has some profound benefits.

Spencer: I totally agree. So I have one more question for you. And I’m gonna ask you, if you could just really quick take your crystal ball out. Give me some predictions on what do you think the future of sustainable food manufacturing looks like?

Berger: I think that many companies are already in the process. They’re already radically transforming their models to respond to shifting market conditions that are calling for greater sustainability. I recently gained some perspective from Deloitte on the sustainability transformation, and I really like how they viewed the future in sustainability. They characterize and actually do some predictions of some several key shifts in the approach food companies are taking to sustainability. For example, moving from risk-focused to opportunity-focused, or opaque to transparent. We talked a little bit about that in opening up your work to your community. And not only operationalizing those values internally, but also outward-facing. Profit-driven to purpose-driven, enterprise focus to a more ecosystem focus, preservative to regenerative, and linear to circular.

I really like how Deloitte characterizes that look ahead. Zoom out beyond the short-term time horizons — it’s typical of strategy planning to take up a longer-term view of say, 10 to 20 years ahead — and understand what that feature could mean to the business. Then zoom back into the immediate future or identify actions within the next, say, six to 12 months that can help your business reach that future destination. Look inside. One example of looking inside might be Patagonia’s purpose-driven mission to take into account the interests of workers, the community and the environment.

Spencer: So how are companies like Patagonia sort of shifting the paradigm when thinking about stakeholder benefit?

Berger: It’s really interesting that the traditional business models aim to create value for shareholders, unfortunately often at the expense of other stakeholders. Sustainable businesses are sort of redefining that they’re designing models that create value for all stakeholders: in employees, shareholders, supply chains, the community and the planet.

And finally, look around. Leverage your business ecosystem. I mean, it’s not always necessary. In fact, in many cases, it’s impossible for businesses to build the capabilities such as knowledge, skills and technology. If the needed capabilities exist within others in your ecosystem, food businesses should consider seeking to engage and mobilize ecosystem partners to help support their own sustainability transformation. This approach to looking ahead, looking inside and looking around, I think can help us understand not only how the pressures toward sustainability could be a threat to our current business, but also helps us understand what opportunities they may hold for the future of our business.

Spencer: What a perfect note to end on, Rich. That’s so insightful and such good advice. And I love the looking ahead, inside and around, because that truly is what sustainability is really all about. So I just want to remind our listeners that the last episode of our podcast is going to consist of you answering listener questions. So I invite everyone to send a sustainability-related questions to info@avantfoodmedia.com.

Berger: Yeah, as we talked about in the first episode, this conversation is so important, and I would like to respond to all the questions that do come in. So folks that are listening and participating. We welcome those questions for sure.

Spencer: Awesome. Well Rich, thank you so much, and I will talk to you next week.