Industry-wide innovation
Situation:
In 2007, the dairy industry came under increasing pressure from NGOs, retailers and consumers to address carbon emissions associated with fluid milk. Instead of going on the defensive, Tom Gallagher, CEO of the Innovation Center for U.S. Dairy believed that if the industry worked together on this issue it could:
- Identify inefficiencies and therefore cost savings all along the value chain
- Foster innovations to improve farming practices, profit margins, and the environment
- Position the industry as a leader on sustainability with key stakeholders
Challenge:
Many stakeholders in the dairy value chain, including farmers, viewed sustainability and carbon as a potential source of regulation and not part of their core business. In addition, there was little trust in the relationships between steps in the value chain as they were defined almost exclusively by price negotiations. Blu Skye saw the opportunity to unify the industry’s leaders around a common vision that emphasized the business value of sustainability that could be unlocked by working together.
Our Role:
Our approach was to:
- Measure what matters: we conducted a carbon footprint that identified the sources of carbon emissions from the farm to retail shelf.
- Identify the opportunities: we scoured the planet to find the people with the ideas and technologies that reduced carbon and created business value (including turning cow manure into electricity!).
- Convene the system: we designed and facilitated a 3-day “System-in-the-Room” summit with leaders, innovators and stakeholders to align them in a common vision and mobilize them around the opportunities.
- Quantify the business value: we identified $250 million of business value and created the business plans for twelve leading opportunities from the summit.
Results:
- Created a clear vision for sustainability that was adopted by the Innovation Center for U.S. Dairy’s Board (CEOs of the 30 largest dairy companies). This included an ambitious goal to reduce carbon emissions by 25% by the year 2020 supported by 12 innovation projects.
- Launched 12 innovation projects ranging from methane digesters to energy efficiency which will collectively generate over $250 million a year by 2020. Since 2008, these projects have enabled:
- Energy savings for farms: 438 farms have identified energy and cost saving opportunities through energy audits
- Economically viable methane digesters: Dean Foods, AgPower and Big Sky Dairy in Montana partnered to build a 1.2 megawatt methane digester that generates enough energy to power 900 homes
- Energy and fuel efficiency at processing plants. Darigold, a leading co-op in the Pacific Northwest, has reduced their carbon emissions by 14,000 metric tons per year and improved fuel usage in their trucking fleet by 50%
- Recognized by USDA Secretary Tom Vilsack at the 2010 Copenhagen Climate Summit as model for how agriculture should address climate change in a way that creates business value and environmental benefits.
Read more about this project in the white paper by John Whalen, Big Change Fast [PDF]