What Would You Do? Case Assignment Waste Management Houston, Texas

Americans generate a quarter billion tons of trash a year, or 4.5 pounds of trash per person per day. Thanks to nearly 9,000 curbside recycling programs, a third of that is recycled. But, that still leaves 3 pounds of trash per person per day to be disposed. In the past, trash was incinerated, often in local neighborhoods. John Waffenschmidt, vice president for Covanta Energy Corp., remembers that when he delivered newspapers in the 1960s, Id go out in the morning and there would be little flakes coming down because there were 4,000 or 5,000 apartment-building incinerators. The rest was incinerated in large power plants, like the one on the east side of the Hudson River that burns 1,900 tons of New York City garbage each day. With 20 million customers; 273 municipal landfills; 91 recycling facilities; and yes, 17 waste-to-energy facilitiesthats what large power-generating incinerator plants are called todayWaste Management, Inc., is the largest waste-handling company in the world. It generates 75 percent of its profits from 273 landfills, which can hold 4.8 billion tons of trash. And because it only collects 110 million tons a year, it has plenty of landfill capacity for years to come. You joined the company a decade ago, and, after 3.5 short years as deputy general counsel and then chief financial officer, became CEO. That quick promotion prompted you to joke, I needed to go to a bookstore to see whether I could find a book called CEO-ing for Dummies. Instead, Waste Management sent you to Harvard for an executive program for CEOs, where the most important lesson you learned was to listen, because, as you tell your executive team, This company and this industry arent very good at that. And with all of the changes taking place in your industry, Waste Management wont succeed unless it listens. However, corporations, cities, and households are greatly reducing the amount of waste they generate, and thus the amount of trash that they pay Waste Management to haul away to its landfills. Subaru of America, for instance, has a zero-landfill plant in West Lafayette, Indiana, that hasnt sent any waste to a landfill since 2004. None! And Subaru isnt exceptional in seeking to be a zero-landfill company. Walmart, the largest retailer in the world, has also embraced this goal, stating, Our vision is to reach a day where there are no dumpsters behind our stores and clubs, and no landfills containing our throwaways. Like those at Subaru and Walmart, corporate leaders worldwide are committed to reducing the waste produced by their companies. Because that represents a direct threat to Waste Managements landfill business, what steps could it take to take advantage of the trend toward zero waste that might allow it to continue growing company revenues? Another significant change for Waste Management is that not only are its customers reducing the waste they send to its landfills, theyre also wanting what is sent to landfills to be sorted for recycling and reuse. For instance, food waste, yard clippings, and woodall organic materialsaccount for roughly one-third of the material sent to landfills. Likewise, theres growing demand for waste companies to manage and recycle discarded TVs, computer monitors, and other electronic waste that leaks lead, mercury, and hazardous materials when improperly disposed. However, the high cost of collecting and sorting recyclable materials means that Waste Management loses money when it recycles them. What can the company do to meet increased customer expectations, on one hand, while still finding a way to earn a profit on high-cost recycled materials? Finally, advocacy groups, such as the Sierra Club, regularly protest Waste Managements landfill practices, deeming them irresponsible and harmful to the environment. Should Waste Management take on its critics and fight back, or should it focus on its business and let the results speak for themselves? Should it view environmental advocates as a threat or an opportunity for the company?

Question: Like at Subaru and Wal-Mart, corporate leaders worldwide are committed to reducing the waste produced by their companies. Since that represents a direct threat to Waste Managements landfill business, what steps could it employ to take advantage of the trend toward zero waste that might allow it to continue growing company revenues?