How Redbox took on climate change: fewer left-hand turns

One bad storm can kill your business model.
One bad storm can kill your business model.
Image: Reuters/Fred Prouser
We may earn a commission from links on this page.

In Washington, politicians seem to fall into one of two camps on climate change. Some believe we need to act quickly to reduce America’s greenhouse gas emissions. Others believe the cost of reducing those emissions will hurt the economy.

As an entrepreneur and investor, I see it differently.

I previously led the innovation and strategy team at Redbox, the company that owns those red automated movie kiosks you see at your local grocery store, pharmacy, or fast food restaurant. My job was to find new ways to grow the business and better serve our customers.

With a sophisticated supply chain, we grew the business from a few hundred locations to more than 35,000 locations in about 10 years. With this many locations, it’s critical to carefully coordinate how field reps move from one kiosk to another to restock new titles.

With these exact logistics, however, we were vulnerable to the effects of climate change. This is especially true because many of our kiosks are located outdoors. Severe weather—extreme temperatures, floods, or unusually strong hurricanes—impacted business in a measureable way. Sometimes, it kept customers away. It often prevented field reps from restocking kiosks. Floods and storms also damaged kiosks and the inventory inside. In fact, Hurricane Katrina destroyed over 100 kiosks across the Gulf Coast.

Katrina made us much more aware of how climate change affected our business. The company started looking for ways to become more sustainable. One of the areas in which we had the most success was route optimization.

We aimed to reduce fuel consumption and time spent on the road by finding the most efficient routes for our field reps to travel between stops. We minimized the number of left-hand turns drivers took and accounted for traffic patterns and stop lights. As a result, the drivers used less gasoline and spent less time on the road. The savings on fuel, labor, and trucks were substantial. And by tightening up the supply chain, severe weather events impacted smaller service areas, creating additional savings for the company’s bottom line.

Smart investments in sustainability measures can pay substantial dividends over time. Likewise, business leaders looking for cost savings may implement efficiency measures that help the environment too. Innovating company practices can create many indirect benefits.

Policymakers could learn from this lesson as well. The EPA has issued new draft standards that will require power plants to reduce their carbon emissions, and each state is free to develop its own plan to meet them. If state officials, utility companies and local business leaders work together to come up with a smart, innovative plan, we can reduce our long-term energy costs, improve energy reliability, and become more competitive than those who stick to business as usual.