Hanko Kiessner Defines What a "Sustainable" Business Model Looks Like

It has become very fashionable in recent years to use the words "sustainable," and "green," and "lean" as marketing buzz. Like most things in business, however, one must sift the chaff from the wheat to discern the difference between business leaders who are sincere about it and others who merely want to jump on the marketing bandwagon.

There is an ongoing robust national debate about man's impact on this planet over whether we are good stewards of our environment or merely consumers gone wild with little or no accountability. No matter which side of that debate you land on, it makes perfect sense to become more aware of how much we consume as individuals and how much we conserve. We can all do better, and in the aggregate we can make a difference with even modest changes in our own individual behavior.

In the domain of politics, often legitimate efforts toward global change for the better get diminished because the politicians tend to cheapen everything to a point where words lose their meaning. The words "global warming" spring to mind. Without any government mandate to do so, there are some business leaders who simply "get it" because of the way they conduct themselves in private and in public by the way they live their lives and set an example for others to follow.

I've been able to observe a good corporate citizen up close and personal in recent years. Hanko Kiessner is the genuine article, an inspiration to those of us fortunate enough to know him personally as well as professionally. I am posting an interview conducted in-house recently by our Packsize blogmeister, Jacob Low, who asked Hanko to spell out his philosophy and more importantly his commitment to sustainability. He defines it more precisely than anyone else in my world. Perhaps his words will inspire others as he does all of us.

The Rainmaker 

Hanko Kiessner

In its July 2013 issue, DC Velocity named Packsize’s founder and CEO Hanko Kiessner one of their 2013 Rainmakers for his contribution to logistics and for advancing the industry. I had the chance to catch up with Hanko and ask him a few questions. Our conversation touched on sustainability, public policy, and good business practices.

Jake: You’ve just been named one of DC Velocity’s 2013 Rainmakers. Could you briefly explain the significance of this and why you’re being awarded with this achievement? 

Hanko: The Rainmaker Award is for high-impact and high-transformational change projects, individuals, or organizations. So I see this as receiving it on behalf of Packsize and all the team members and employees here for having a tremendous impact when it comes to sustainability, efficiencies within the fulfillment industry, and particularly the shipping supply chains. At Packsize, we are helping customers reduce their shipping volume by 40 percent or more — depending on their previous packaging situation — and that has a tremendous impact when it comes to the fossil-fuel consumption of trucks, freight planes, delivery vans, etc. This is an industry changing project that we at Packsize have undertaken. Given that, it has been very humbling to receive this nomination.

Jake: One thing I love about you personally and the way you run this company is the way you practice what you preach. “Green” and “sustainability” aren’t just marketing buzzwords here, but they are one of our core competencies and a huge part of the way you personally live your life. Why are you so invested in these causes? 

Hanko: When we started Packsize, it was always my goal to create a company that does not wreck the planet as it serves its customers and creates a profit for its investors and other stakeholders. It’s an unsustainable practice to run a business while over-utilizing all sorts of resources along the way just for the sake of creating a profit for the business. I just saw this being practiced too frequently in too many companies, and I concluded that if everyone acted that way, it would be completely unsustainable. We would not be leaving a livable, habitable world for our kids and their kids to come. So I wanted to prove that it is possible to do the right thing and at the same time run a profitable business. That’s always been on my mind. It’s been a lot of fun, and we’ve proven that running a sustainable business that is also profitable is possible. From today’s perspective, I would even go one step further and say that sustainable practices actually drive more profitability as well. In fact, if it’s not sustainable, one might as well not do it all, because you cannot do it forever, you can only do it for a brief period of time, and usually at the expense of others. Someone always pays the price of the lack of sustainability. Let’s look at pollution for instance: Someone inhales those particles that are being emitted. Someone pays for their healthcare. There is a cost for every unsustainable practice. It’s just not tracked in todays’ economic system.

Jake: Oh, that’s a good point I hadn’t thought of. How would you deal with this issue?

Hanko: My vision for a completely sustainable economy which I’ve started to contemplate is fully-burdened supply chain accountability. That means that every step along the supply chain — every emission, waste stream, everything that exits as a result of conducting the business, and all the negative impact as a result of running the business — all of these costs ought to be burdened into the very product that was created from these emissions. At that point, you would have to include the total, fully burdened costs of the cleanups, healthcare, and social expenses that come from that pollution. You would then have a really have a fair — and actually quite sustainable and exciting — economy that actually rewards the leanest and most sustainable product. At that point, you would have a self-regulating system where you don’t need a government anymore to regulate this or that because you would have every waste stream, every emission, the cost thereof would be factored into the cost of producing the product or service. So once again, I call this “fully-burdened supply chain accountability.” And I think we have no choice but to go there, as a society, in the long-term future. For instance, if you take a look at the copper mine over there [Packsize's headquarters is located across the valley from a copper mine], the entire health impact from all their operations — from all the dust particles, the emissions, the red air alert days — that cost should be factored into every ounce of copper they’re mining over there. At that point, you would have fully burdened supply chain accountability where the cost of the product already covers what is already spread across the rest of society. I mean, you’re really not adding anything to the costs anyway, because the costs are already there today. Today, the people who are not accountable for the infringement are the ones paying for it. It’s you, me, all of us, paying in the form of sick days and healthcare. But the price should be paid through the product. Only then you’d have really fair, sustainable, market equilibrium I know that’s pretty far-reaching, but at that point, the government would only have to make this one rule. Then you wouldn’t need to regulate much else, because the market takes care of it. So that’s my vision of how the entire economy should be working. You know, today, emissions are free. It’s free to emit. But there’s a high cost to those emissions. So that’s like socialism, right? You take wealth from someone and spread it across the rest of the country. Here, you’re taking the emissions of a few and you’re spreading it across the population. So in a way, it’s not a free market economy, like you’d have in a fully-burdened system.

Jake: That is something that I always did think was so cool about this company: It was a profitable company that is also green, and it’s a win-win-win situation. We’re making money, but the people who are using our solution are also saving money, and the customer who is on the receiving end of that solution gets an added benefit as well. 

Hanko: That’s really true. And they should also save money because they can purchase a more competitive product in the market, and spend less money having it shipped to them. I think in the future we’ll see one of the biggest drivers of profit is sustainable behavior. But it only works if everyone participates in that system. If we have a few polluters who are not participating, then they can take a short term advantage of the market. That’s where the regulators need to set the rules of the game, and then we’ll all play by the same rules. In my mind, the only rule we need in this context is that every product or service carries the fully-burdened cost of all of its operations.

Jake: That’s a tall order. 

Hanko: And I fully realize that with Packsize, we aren’t 100 percent compliant with that ourselves. For instance, our trucks that we use to ship corrugated are burning diesel, and we are not paying a premium on the fossil fuel consumption there. But we are holding ourselves accountable wherever we can control it. All of the power we use here at our headquarters, for example, comes exclusively from renewable sources. So where we can control our emissions, we will do that. And we will also choose a sustainable transportation method as soon as battery, natural gas, or bio-fuels become available. We have not achieved that goal completely, but with every decision, we are taking that into consideration and choosing the best available solution.

Jake: Other than using Packsize’s machines and solutions [wink, wink, readers], what advice would you give to someone who would like to increase the sustainability of their business? Where are some easy places to start? 

Hanko: I would say to question the status quo. There is always a more sustainable way of doing it. Sometimes, the choices are very easy to implement. In many cases, they’re also cheaper to implement than to go conventional way. The high-impact, low cost, or obvious ones include transportation, power generation, and shipping of supply chain. There are carbon neutral choices now available through many carriers. There’s the EPA sponsored program called the Smartway Transport Partnership, and we are members of that. And also to live the example. That’s always good leadership — to not just talk about ideas, but to actually do them yourself.

Jake: Without giving too much away, what are you most excited about in regards to the future of Packsize LLC? 

Hanko: What I’m most excited about is that we can scale up the impact that we’re having. We’ve proven our systems now for many years. We have some incredibly exciting new developments that have begun to hit the market and will continue to hit the market. These developments will provide incremental improvements for our customers, as well as quantum leap improvements. We consider ourselves founders of the On Demand Packaging® industry, and this industry is now in full gear. So what we started eleven years ago as a startup is now moving at light speed with hundreds of fulfillment buildings that want to be lean and have a lower cost structure. That inflection point that we are seeing right now is what I’m most excited about.

Jake: It is super exciting! Thank you for your time Hanko. 

Hanko: Thank you, This was fun.