Extended Interview: Clorox CEO and Sierra Club Chief on Green Products

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• SPENCER MICHELS:

  Let's start with Don. How big a decision, how momentous or how detailed was it to get to the point where you introduced this Green Works product?

• DON KNAUSS, CEO, CLOROX CORPORATION:

  Well for us it was a big decision. I mean this was the first new brand we've done in 20 years. So for a company the size of Clorox — and we are a Fortune 500 company — to take on and do a new brand for the first time in 20 years, we thought it was a pretty big decision. But it was actually an easy decision. It was big but it was easy. It was easy because we thought it was right on trend.

• SPENCER MICHELS:

  The five years before Clorox looked at green products and got interested but didn't really jump, what made the difference?

• DON KNAUSS:

  When I got here about a year and a half ago, I thought there were three trends that were irreversible, and we started talking about this with the management team. And the three trends were: health and wellness, which for us is disinfecting hard surfaces basically, sustainability, and then convenience, and convenience for solutions to consumers.

  And as we looked at those trends and saying, you know, these things really are irreversible. How are we going to provide solutions to consumers inside those three trends? Because one of the things we found around sustainability, for example, is consumers were much more concerned about "my world" rather than "the globe." So what are you going to do for my world around getting, for example, chemicals out of my home, what are you going to do in terms of offering me product solutions that are made from renewable resources? I want to feel like I'm doing the right thing, but, and oh by the way it had better be convenient. Don't try and change my behavior radically.

• SPENCER MICHELS:

  It had better be good, I imagine.

• DON KNAUSS:

  Absolutely.

• SPENCER MICHELS:

  And disinfecting is one of the trademarks of Clorox, and yet the new product I don't think disinfects.

• DON KNAUSS:

  Well, natural cleaners don't disinfect. They clean effectively, but you're right, one of the things we found, actually we found two things, one is the current natural cleaners that are out there don't work very well. And consumers are getting turned off by that. The second thing is they typically cost 50 to 100 percent more than a conventional cleaner. So I've got this solution that doesn't work very well and it costs me an arm and a leg, so what am I going to do about that? So we said, let's give people a solution that really works and let's only charge them 10 to 20 percent, about what the upcharge of our raw materials are. And that is what really I think caused Green Works to take off.

• SPENCER MICHELS:

  What happened in the world, if anything, that made this product viable?

• DON KNAUSS:

  Well, I do think that in the last year to 18 months there's been so much discussion around climate change and people wanting to do the right thing for the planet. The focus is clearly on their world first, but their world is part of the bigger world, and I think people want to be responsible.

  And what we found out, it's very interesting, a lot of people, their decision to use products like Green Works is irrespective of their belief or nonbelief in climate change. They look at products like Green Works as a renewable resource, saying it's just the right thing to do. We want to use things that have renewable resources, we want to do the right thing so whether we believe in climate change or we don't, this seems to be the right thing to do.

• SPENCER MICHELS:

  And I'm sure you tested this with focus groups and so forth.

• DON KNAUSS:

  We did a lot of testing. We did a lot of testing with actually giving people the products uh in their homes to use on a blind basis, and that's what really got us excited about Green Works. That's when we knew, we thought, we may have a home run here in terms of our ability to mainstream cleaning — because what happened is we have five different products, an all purpose cleaner, a glass cleaner, a bathroom cleaner, we gave those to people in plain white packages and we gave them to them coupled with a conventional, leading conventional cleaner. We said take these home for a couple of weeks, use them, see what you think. Didn't tell them they were natural. Four out of the five came back significantly preferred versus the conventional cleaner. We said, my lord, we've got something here because we've got something that's very effective. And once we tell people, oh by the way they're all natural, we're going to have something.