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Interface's Evergreen Services Agreement

Company name
Interface 

Author(s) 
Oliva Rogelio, James Quinn

Source 
Harvard Business School 

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Interface's Evergreen Services Agreement

Year published 
2003

Last year covered in case 
N/A

Abstract

In an attempt to reduce its ecological footprint, Interface Americas, a leading manufacturer of commercial carpet tile, has launched the Evergreen Services Agreement (ESA)--a lease agreement that provides would-be carpet purchasers with comprehensive floor-covering services (color, texture, warmth, beauty, acoustics, and safety). Under ESA, Interface retains ownership of all carpet material, thereby ensuring proper recycling. Despite active media attention and a lot of interested calls from potential buyers, Interface is having difficulty selling ESA. CEO Dan Hendrix is at a crossroad and must decide whether to continue support for ESA or to focus on other initiatives. This case, grounded in a failed negotiation with the University of Texas, Houston, details a discussion of the difficulties of structuring a long-term lease agreement, defining a new service value proposition for the customer, and developing a sustainable business model for product-related services.

Teaching note

  • N/A

Key Management Reading

  • Ambec, S. & Lanoie, P. (2008). Does it pay to be green? A systematic overview. Academy of Management Perspectives. 45-62
  • Reinhardt, F. (1999). Bringing the Environment Down to Earth. Harvard Business Review. July; 149-157 

    Other Readings

    • Senge, Peter & Carstedt, Goran. (2001). Innovating Our Way to the Next Industrial Revolution. Sloan Management Review, 42(2): 24-38.
    • Illustrating the Financial Benefits of Green Chemistry; Larson, Andrea. Darden Business Publishing, 2006. 

      This technical note forms the basis of a discussion on the economic value added of green chemistry principles. Students can learn how to: (1) increase net profit operating after tax (NOPAT) by increasing sales; (2) increase NOPAT by decreasing operating expenses; (3) reduce weighted average cost capital (WACC), driving down risk by decreasing risk perceived by capital providers; and (4) reduce invested capital. A grid showing green chemistry principals and how adhering to each might affect the bottom line provides an excellent context in which to discuss business strategies.

    Audio/Visual Material

    Discussion Questions

    • N/A 

        Green Chemistry Principle

        • Principle 1 Prevention
        • Principle 3 Less Hazardous Chemical Syntheses 
        • Principle 6 Design for Energy Efficiency 
        • Principle 10 Design for Degradation

        Industry
        Textiles and Fibers
        Plastics

        Teaching Topic
        Corporate citizenship
        Corporate governance and accountability
        Environmental issues
        Leadership
        Mission/vision/values
        Organizational design and change
        Restructuring
        Social marketing
        Social needs as business opportunity

        Management Discipline
        Strategy
        Operations
        Marketing

        Business Logic
        Redefining markets
        Product differentiation

        Environmental Issue
        Recycling

        Region
        North America

        Self Identified as Green Chemistry?
        No

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