We’ve all heard that it’s never too late to do things differently; never too late to do the right thing. Although true, I feel this is also the reason that it is easier for us to procrastinate and not undertake challenges in the present. It is the same in the business world as well. However, the fact is, it might soon become too late to make certain changes; for instance combating climate change. Now, there are a few companies out there who saw an opportunity for making a difference, and took the leap. One such company is Ecolab. Almost a century old company, Ecolab transformed itself and went from providing cleaning solutions to environmental solutions. It successfully created a new-growth business model in renewable energy and water resources, outside of its traditional business of industrial cleansers. This secured Ecolab a place on the Transformation 20, a study by Innosight of the world’s most transformative companies. Let’s take a deeper look into their story of transformation.
A man found a stain on a hotel carpet in 1923, and felt the need for a cleaner that would not require removing the carpet. That is the origin story of Economics Laboratory (EL); founded in 1923 by Merritt J. Osborn along with one employee, Ida Koran. Briefly going through their history, they started off with one product, Absorbit carpet cleaner, and then developed one of the first coloured detergents, Soilax, which put them on the map as the leader in ware-washing. The Great Depression hit EL hard, but they managed to make a comeback after two years of losses. Then World War II happened, however, not only did EL manage to stay afloat, the US Army contracted EL for producing germicidal rinse to sterilise troop mess kits, which kept the company going through the war years.
Post-war period opened up numerous opportunities for growth. They launched several new divisions, developed new technologies, expanded internationally, and became a publicly traded company in 1957. Economics Laboratory acquired various companies that provided entry into petrochemical and industrial cleaning, metalworking, laundering and transportation. EL changed its name to Ecolab in 1986; ‘eco’ for ecology and environment, and ‘lab’ for technology and labour. By this time, environmental concerns were being raised and there were new laws on pollution and human and civil rights. This is when Ecolab took its first step in transitioning from a provider of cleaning solutions to environmental solutions. Over the coming years, they formed a Water Care Services division to offer water treatment programs to industrial customers; EcoSure food safety management to provide audits of food safety procedures in hospitality facilities; Apex ware-washing platform to achieve best cleaning results at lowest environmental cost. Ecolab has been included in Ethispheres’ World’s Most Ethical Companies list, every year, since 2007.
Till the early 2000s, Ecolab was a well-established firm growing 10 percent annually by dealing in industrial cleaners and food safety services. They could have continued to sell more of what they had and kept the company going. However, there was an internal resistance to change. “They didn’t like the idea of not being the biggest anymore”, said CEO Douglas Baker Jr. Simply expanding into new geographies wasn’t bold enough, and they felt it was time to move on from just cleaning solutions to environmental solutions. They conducted surveys and found out that their biggest customers were also the ones concerned about access to clean water. Moreover, the customers’ businesses were such that water was integral to their industrial processes – cleaning and sanitising, boiler and cooling water treatment, food processing, influent and wastewater treatment, and oil and gas extraction. Thus, in 2011, Ecolab acquired water technology company, Nalco, that made the merger the global leader in water management in industrial and energy sectors.
The acquisition of Nalco was Ecolab’s largest one ever, for a whopping $8 billion. It included the possession of 3D TRASAR Technology that uses 24*7 automated sensing and monitoring to detect and correct water quality problems in cooling towers and boilers. A Nalco Champion business unit was established that launched the RenewIQ line of oil field water reuse solutions for the global energy market to reduce freshwater consumption. Since its transition from a provider of cleaning to environmental solutions, Ecolab has changed its purpose statement to “clean water, safe food, abundant energy and healthy environment”. It has helped its clients save 188 billion gallons annually, against the 2030 target of 300 billion gallons! In 2015, Fortune magazine named Ecolab to its list of ‘companies that are changing the world’ and also one of ‘the fastest growing companies to watch’.
Thus, what stands to be learnt from Ecolab’s story of transformation, from a leader in cleaning solutions to environmental solutions, is that a company thrives by having based its ability to restructure itself to create a new future, and not its size or performance at a particular point in time. What differentiates companies like Ecolab from the rest of the 1000 is the driving force. Most businesses fail due to complacency, fear of commitment, and self-imposed restrictions through the existing business model. When Covid-19 hit, the water got muddied; however, Ecolab collaborated with Microsoft to make use of augmented reality (AR) to enable remote access to plants. New digital tools like Ecolab3D analytics platform save both cost and time, and have created much value for Ecolab.
Ecolab could have easily continued on its existing path at any given point of time; it was not facing an existential crisis (which generally serves as a wake-up-call for companies). Nevertheless, they found a higher purpose; it takes courage to break out of the routine and challenge the status quo. CEO Doug Baker highlighted the importance of linking a company’s core business to the impact one wishes to target, such as the global agenda defined by the UN Sustainable Development Goals (SDGs). Sustainability is no longer an option in this era. He said, “If climate change is a shark, water is the teeth, and it’s the first thing you’re going to feel”. Sure, big moves can be risky. But, the payoff from successfully steering through a crisis and building a new future is even higher.
- Our History, Ecolab Timeline
- The Top 20 Business Transformations of the Last Decade, Harvard Business Review, September 24, 2019
- Ecolab CEO: 7 ways businesses can drive positive change at scale, GreenBiz, February 13, 2020