Tennant Company: Can “Chemical-free” Be a Pathway to Competitive Advantage?
Companies in every industry are attempting to reduce their use of chemicals, particularly synthetic organic compounds, where there is a perception of harm to human health or the environment. The industrial and commercial floor-cleaning equipment industry is no different, with many equipment manufacturers seeking to reduce their use of harsh cleaning chemicals such as petroleum solvents. But with every competitor pursuing similar greening efforts in a mature market, companies find it difficult to differentiate their offerings to customers.
Tennant Company chose to differentiate itself through a technology-driven business strategy based on chemical-free cleaning. Instead of reducing the use of harsh cleaning chemicals, or reducing the harshness of those chemicals, Tennant offered its customers a cleaning solution that used ionized tap water to clean and disinfect surfaces, thereby eliminating harsh chemicals altogether. The benefits to customers were numerous, including lower total cost of ownership and improved health and safety, while maintaining cleaning performance relative to conventional chemical-based products. This case helps to illustrate the challenge of profitably going beyond incremental “greening” efforts (aimed at doing less harm) — could a significant innovation in environmental performance be the central argument for the company’s value proposition?
The main objective is for students to explore how environmental pressures can drive disruptive innovation in relatively mature industries, leading to new sources of competitive advantage for mainstream companies, not only for eco-niche players. Additionally, students can understand and appreciate the tensions and choice-points in implementation faced by a company in shifting from conventional product/service offerings to offerings that meet the dual objectives of environmental benefit and profitability.
United States, Large, 2012
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