Family-owned SC Johnson has never been scared to examine the environmental and health effects associated with the ingredients found in its products. Starting with his father, Sam Johnson banning chlorofluorocarbons from its aerosol products in 1975, current SC Johnson CEO Fisk Johnson says that the company has been dedicated to acting on the information they find, even when conventional business wisdom may dictate otherwise.
In an article he recently wrote for Harvard Business Review, Johnson recalls when the company decided to reformulate Saran Wrap, one of its most popular products, removing the ingredient polyvinylidene chloride (PVDC). While that may sound like a simple task, Johnson points out that PVDC was responsible for two of Saran Wrap’s competitive advantages; its microwavability and its impenetrable barrier to odor. In other words, by reformulating Saran Wrap, SC Johnson risked losing sales and category share.
Public and government concern about polyvinyl chloride (PVC) began to grow around the time SC Johnson acquired Saran Wrap from Dow in 1998. PVC is a chemical found in consumer products with plastic components and in product packaging, including the packaging of some SC Johnson products. SC Johnson made the decision to reevaluate the use of PVC in the company’s products. Using the company’s patented SC Johnson Greenlist™ process, created in 2001 to measure the impact of product ingredients and chemicals on human health and the environment, SC Johnson decided to remove PVC from packaging materials and went a step further and removing PVDC from Saran Wrap.
"We could have simply eliminated PVCs from our product packaging and left Saran Wrap as it was," Johnson says. "Instead we pledged to stop selling wraps that contained chlorine of any kind, including PVDCs, by 2004."
Johnson stressed that it wasn’t a decision that was taken lightly.
"We had a choice: Risk losing customers and market share by replacing the original product with an inferior one, or continue with the original formulation and risk losing the goodwill we had built over the years with consumers and other stakeholders," he says.
Recalling how his great-grandfather had once said, "The goodwill of people is the only enduring thing in any business. The rest is shadow," Johnson believes the decision came down to one of trust.
"Trustworthiness is the most important quality a company can have. It has to be earned," he says. "At the same time, we need to be transparent and make sure the public is aware of our efforts. So we replaced the original Saran Wrap with this newly reformulated polyethylene product, knowing full well that it would no longer have competitive advantages over other wraps on the market."
The Saran Wrap market share did indeed take a hit – dropping from 18% in 2004 to 11% in 2014 – but Johnson says he has no regrets and that, "we gained a surer sense of who we are as a company and what we want SC Johnson to represent."
Source: SC Johnson’s CEO on Doing the Right Thing, Even When It Hurts Business | Harvard Business Review