BC Business
No. 3: Vancouver City Savings Credit Union (Vancity)
The first financial institution in Canada to give loans to women without male co-signers and the first in Canada to offer a daily interest account, Vancouver City Savings Credit Union (Vancity) has made social change a part of the bottom line since 1946. It has used a threefold vision of economic, social and environmental responsibility to set itself apart from its competition, with lending programs designed to help low-income renters buy a home, mutual funds focused on socially responsible investments, a commitment to become the first carbon- neutral financial institution in North America and other progressive offerings.
Our panel agrees that Vancity has turned its values into a value proposition, which is as much a marketing innovation as anything else – a view Vancity managers don’t deny. “This threefold value system is our brand,” says Vancity’s vice-president of strategy, Ellen Pekeles.
John Peloza, an assistant professor of marketing at SFU specializing in corporate social responsibility, says institutions with significant resources such as Vancity (which has $14.5 billion in assets) are able to influence enormous social and environmental change in their communities through the products they introduce. He points to Victoria’s Dockside Green, the Vancity co-developed and financed condo project, as a prime example. The development, slated to be completed in 2016, will be built from environmentally friendly materials and include such features as a biomass heat-generation plant to produce heating from renewable fuels, an on-site sewage treatment plant, a naturalized storm-water system and energy-efficient buildings. It is at the vanguard of green building practice in North America, with a LEED (Leadership in Energy and Environmental Design) platinum designation that is expected to raise the bar for commercial developments across the province. And it will also make a healthy contribution to the bottom line, as per Vancity’s blended value system, which calls for profit and sustainability to go hand in hand.
According to Peloza, the added benefit of this kind of investment is the so-called “halo effect,” where a company that’s seen as being well intentioned is more easily forgiven if something goes wrong. But Peloza cautions that the link between profits and ethics is never clear-cut. “In the case of Vancity, there really isn’t an obvious business case; you can’t necessarily say this strategy of philanthropic involvement points to this much market share.” But research shows the two goals are not mutually exclusive either, he adds. “From a managerial perspective, you should feel emboldened to take a moral stance and not have to assume that if you do something that feels right, it’s necessarily going to be aversely affecting the profit of the company.”
With a membership pool of more than 381,000 British Columbians as well as an earnings increase of 43 per cent between 2007 and 2008, Vancity’s performance suggests Peloza’s assertion is well-founded. Whether it’s an example of social responsibility being leveraged for business success or the other way around, Vancity’s branding platform, our expert panel agrees, is a remarkable one from which to learn.
One mark of a genuine innovation is that, after it’s made, people wonder, Could it have ever been any other way? Vancouver-based BuildDirect Technologies Inc. distributes construction materials, and its Big Obvious Idea is to excise the complicated middle of the supply chain, using the Internet.
Log on to BuildDirect’s website, select the kind of flooring, decking or siding you want, and you can order a pallet or shipping container directly from one of over 100 manufacturers worldwide. It won’t be long before the old six-stage route of goods – manufacturer to foreign exporter to local importer to wholesaler to retailer to you – will seem as quaint as an airplane with five stacked wings.
For CEO Jeff Booth, duplication is the mother of all evils. If you’re an exporter or wholesaler, Booth says, he doesn’t want to pay – in markup – for your brand development, salespeople and logistics in addition to his own. “You just be best in class in production, and we’ll be best in class in distribution.”
BuildDirect’s innovation has a nearby historical precursor: Issaquah, Washington-based Costco Wholesale Corp. In the late ’70s, Costco started to skim the most valuable customers from grocery stores – the ones who make the big orders. Today even the customer who just wants to buy a six-pack of Coke will probably buy it from someone who bought 40 flats from Costco. BuildDirect (average order: $3,500) is now doing the same to construction-material outlets such as Home Depot (average order: less than $100). A mark of the company’s success is that, despite the crash of the U.S. housing market, the company expects to launch over 10,000 new products this year. Booth talks about BuildDirect’s success as though it were the most natural thing in the world, and perhaps it is. “It’s about one thing,” he says plainly. “A more efficient channel to market.”