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Building the Sustainable Business Mandate

An Interview with Hakan Bulgurlu, the CEO of Arçelik

— October 7, 2019 — Business
In the present, contemporary lifestyles are guided by two factors – technology and sustainability. As climate change has acquired dominance in day-to-day discourse, companies seek to develop and implement cutting-edge technologies that help alleviate the stress put on the planet and contribute to a brighter future. Trend Hunter attended IFA Berlin 2019 – the “world’s most significant technology marketplace” to survey how brands are shifting gears to develop products that are sustainable, ethical, and useful.

Beko and Grundig – popular European kitchen appliance companies owned by Arçelik, seem to be leaders in this category as they exhibited products that were not only smart, connected, and incredibly elegant, but ones that also put specific emphasis on ethics and sustainability. Through its ever-expanding innovation portfolio, Arçelik pioneers features like the FreshMeter which introduces mindfulness to your fridge through combating food waste and special filters in washing machines that collect loose threads and prevent them from going into the ocean, causing harm to marine life.

Hakan Bulgurlu – Arçelik’s CEO, was present at the conference and delivered an incredibly passionate keynote. The speech was an inspiring journey that told the story of Hakan’s passion for the environment and what he is doing in his position to push a planet-forward mandate within the companies in his reach. Climbing Everest to raise awareness and inviting brands to use Arçelik’s eco-conscious product features were just some of the highlights of the keynote that definitely struck a chord with IFA attendees.

Trend Hunter had the opportunity to talk to Hakan Bulgurlu a little bit more about his passion for sustainability and the smart home movement, focusing on how those values are translated into Beko and Grundig’s product range and what that means for the future.

Can you tell us a little bit about your role and what led you to it?

I am the Chief Executive Officer of Arçelik -- the parent company of Grundig and Beko, one of Europe’s leading home appliance companies. During my term of office, our company expanded its operations from 130 to 146 countries, including new markets such as Asia-Pacific and North America, and grew its global manufacturing network to 23 plants in nine countries.

I began my career in 1995 at Koç Holding, a Fortune 500 Company and Turkey’s largest industrial conglomerate. There, I held a Senior Management positions in Asia, leading Koç Holding’s Asia-Pacific trading and outsourcing operations in Hong Kong. Prior to joining Arçelik, I have served as the CEO of Arçelik-LG -- a joint-venture manufacturer of air conditioners with the largest facilities in Europe and the Middle East.

I have a background in mechanical engineering and I am passionate about leading projects that create a positive social impact, driving change, as well as fostering inclusive, sustainable, and responsible business environments. I am particularly interested in global issues such as climate change, circular economy, and the concept of the green business.

I noticed there were quite a bit of upcycled products at IFA this year. Can you tell us what steps Arçelik is talking to propel the circular economy forward?

Creating value through reducing environmental damage is an important responsibility we should all take seriously. I believe that Arçelik has the power to do this because our products reach millions of homes and offices.

An example of how we’re contributing to the circular economy is through making use of PET plastic bottles that would have otherwise been considered waste. We upcycle these bottles to turn them into tubs for our washing machines. So far, we have recovered and repurposed over 25 million water bottles and our aim is to increase this number annually.

Another example is our synthetic microfiber filtration system. We’ve designed the filter boxes so that they can be upcycled to create new filter boxes. These can then be upcycled once more to produce synthetic fabrics that can be used to make clothing. In the process, we’re reducing the amount of plastic that escapes into our oceans at every stage.

Discarded fishing nets also wreak havoc on marine life. A staggering 640,000 tons of fishing nets and lines are lost every year and this equipment will continue to trap fish and sea creatures for many decades to come. Our answer is to reclaim this destructive litter and give it a new reason for being. By upcycling these old nets together with waste textile fibers, we’ve been able to create a nylon-based composite material with mechanical strength and thermal resistance. The material is perfect for the manufacturing of oven parts.

What would you say is different in the ways your company approaches sustainability in comparison to others?

We devote ourselves to a vision that respects the environment. “Respecting the world, respected worldwide.” This is our vision statement! We go to bed with this, we wake up with this, we work with this, we live it, and we breathe it. Every action we take is meant to get this vision closer to reality.

Sustainability is seen as a nice-to-have in the past, but today, it is a way of life and a business model. As responsible leaders and businesses, we must change our actions and fall into line with it. If you take a purpose as an individual, as a business leader and come to work every day with that purpose, you will see a trickle-down effect on employees, suppliers, business partners, everybody in the ecosystem that you work with.

More importantly, consumers are not only actively looking for products that address these global and environmental issues, but they are also willing to pay more for them. A recent global survey of over 30,000 people showed that 62% of consumers want companies to take a stand on current global issues such as climate change. This affects where they spend their money too and reinforces the idea that purpose-driven businesses will always outperform their peers in the long term.

I believe that standing up to create positive change is not just crucial to our world, it also makes good business sense. This way of thinking has allowed us to focus on some of the most important global issues facing our modern world and develop design solutions that can create real and crucial transformations.

How does your team approach innovation? Any rituals to kickstart ideas?

We’ve created a global innovation ecosystem by investing in state-of-the-art research and development facilities. We’re among the top 100 patent filers (67th) in the world with over 1,500 R&D engineers and 17 R&D facilities.

Our approach to innovation allows us to bring our ideas to people quicker in a cost-effective and sustainable way. Two years ago, we opened a new generation R&D center called ‘The Garage in Istanbul.’ This is where Arçelik’s brands and other start-ups can come in, share ideas, go through the phases of ideation and turn ideas into prototypes. All of this transpires in the span of one day. For innovation to be successful, it must be quick, results must be visible, while success and failure must be recognized and celebrated.

Innovation is also embedded in our progressive Industry 4.0 smart factory in Romania. Using the latest automation processes and integration of IoT applications, including intelligent machines and co-operative robotics technologies, we’re able to efficiently manufacture millions of products annually from the factory. Being 70% automated, it’s the most advanced manufacturing facility in our industry. Moreover, it’s among the best 26 smart factories in the world, according to the World Economic Forum.

We’re now looking to use the knowledge and expertise we’ve gained through creating our smart factory to transform our facilities in Turkey, South Africa, China and then, our global manufacturing network all over the world.

Health and nature seem to be a driving force for Beko. Can you take us through the process of conception to the actualization of a product?

We focus on creating products that help our customers save time and live healthily. We know that busy modern lifestyles make it difficult for daily trips to the supermarket, yet a well-balanced diet requires plenty of fresh fruit and vegetables. Food waste is a huge global concern and research indicates that many customers find that their groceries spoil before they have a chance to eat them. As consumers become increasingly health-conscious and aim to reduce food waste, technology will play a key role.

Beko has long been an advocate for health and wellbeing and we are proud of our ‘Eat Like a Pro’ initiative, which is a global mission to help prevent childhood obesity. The wellness industry is growing rapidly and consumers are taking more time to maintain their mental and physical health. Many feel burdened by mundane chores, which can add unnecessary stress to our lives. These changing needs inspire our innovations and motivate our global R&D teams.

An innovation that is the product of this mandate is HarvestFresh. This is an LED refrigerator technology that imitates sunlight and darkness, thus, prolonging the lifecycle of vitamins and antioxidants in fruit and vegetables, ensuring that they stay fresh for longer. Our AutoDose dishwasher function is another example. It uses the precise amount of detergent required for sparkling clean dishes. A full detergent tank will last for up to one month. This eliminates the need for dishwasher tablets or the need to put detergent for each new cycle.

How are Beko and Grundig disrupting the smart home movement?

Smart technology has transformed consumer lives and keeping up with that pace of change is essential for us. The Grundig HomeWhiz platform allows users to monitor, control and update home appliances remotely. Appliances such as the Combi Refrigerator, Washing Machine, Tumble Dryer, Dishwasher, Built-in Oven and Built-in Hob and Hood are already integrated to be remotely controlled by customers. HomeWhiz Smart Home can recognize people in the house, manage to light according to presence, and adjust HVAC and air purifier levels according to the number of people in the house. Using Grundig’s HomeWhiz Gateway technology, information is collected on activities in the home, allowing for automation of processes such as alarms, warnings if windows are open and ensuring the light is turned off.

We have also partnered with Amazon to launch Germany's first Fire TV Edition televisions, which boast features like hands-free voice control and OLED screens, ultimately enriching the customer’s entertainment experience. Users will be able to get full-screen visuals that complement Alexa voice responses on their Grundig TV screen!

Beko’s AutoDose technology, on the other hand, uses liquid or gel detergent and automatically detects how much detergent and rinse aid to use. It releases the optimum detergent amount for different programs. You can also control and monitor your dishwashers from your smartphone or tablet with the HomeWhiz app.

What other industries or spheres of life do you draw inspiration from?

The natural world has always been close to my heart. From a very young age, I developed a passion for the sea. At 5-years-old I used to join fishermen in Istanbul and sell the catch in the market. I would keep the best fish for me as payment. This exposed me to the endless variety and beauty of marine life and this connection to the sea has always stayed with me.

I also took on the personal responsibility to raise awareness for the climate catastrophe. Both in my personal and professional life, I am completely dedicated to doing everything I can in my power to counter the effects of climate change, which is an existential threat causing a risk that is growing way faster than ever imagined. Climbing mountains to raise awareness of climate change is an enduring theme for us at Arçelik. Together we have climbed Kilimanjaro in Africa, Elbrus in Europe, Aconcagua in South America, and most recently, I have ascended Mount Everest.

I believe that finding and pursuing a purpose is key -- not only in our personal lives but in business too. As a leader, I am in a very fortunate position to shape the actions of global business and I take this responsibility very seriously in order to, again, create value through reducing the environmental damage that we are causing as an industry.

Can you tell us a little bit about some noteworthy projects that are debuting in 2019/2020 and are game-changers for your company or the market?

One of the game changers is a washing machine with a built-in synthetic microfiber filtration system. This is a world’s first. More than one million fibers are flushed down the drain and end up in the oceans after every single washing load. These microfibers are then swallowed by fish and other marine animals and have now found their way into our food chain. The new technology will block 90% of microfibers from entering the water sources, with the filtration box located in the detergent drawer filtering the water before discharge. The product is planned to be rolled out in the market in 2020.

Another example is the Bio Fridge which is made with bio-based plastics, bio-based polyurethane insulation material and bio-based composites made from food residue. By increasing the endurance of materials from soy, eggshells, and corn, the carbon footprint of these bioplastics is 80% lower than conventional plastics used today.

Finally, there is the Solar Fridge. This new product addresses the electricity crisis that many countries around the world still face. The off-grid refrigerator runs on solar power. Powered by DC instead of AC, it has a lower carbon footprint and higher efficiency than conventional refrigerators. Switching from alternating current to direct current will mean lower energy costs, higher energy efficiency and reduced food spoilage. The product will be ready for serial production early next year.

Where do you see the industry being in the next 10 years?

When people think of future technology in the long-term, people tend to relate to virtual reality, 3D-printing, artificial intelligence, quantum computing, and nanotechnology. All of these things are well within our reach and I don’t doubt they will play an important part in the future, but I think it’s important not to forget how the world is changing more broadly, how people’s day-to-day lives are shifting and how technology fits in this context.

There has been significant growth in the health and wellness sector; sustainability has entered the common language of consumers; the sharing economy has become the norm and as the demographics of whole nations shift, space is at a premium and smart homes are on the rise. There are wide-reaching societal changes happening: the growth of the middle classes, rapid urbanization, and the expansion of the Asian markets -- all of which have an impact on the consumer goods industry.

By 2030 two-thirds of the global middle class will be living in Asia and as people’s income increases, they will buy their first washing machine or refrigerator. These technologies will be a game-changer because they free up time, especially the time of those traditionally restricted to domestic work. More time equals more opportunities to be productive or do the things one wants to do.

Now people expect not just great products that do the washing or preserve food for longer, but digital and connected solutions. By 2050 people’s expectations will be even higher. At Arçelik we strive to democratize technology by making it affordable and accessible to the masses. As product innovation continues and future technologies are developed, the impact on people’s lives will be even greater.

Home appliances are part of the innovation industry now, the pace of change and demand from consumers has never been greater. The market for smart appliances will grow steadily thanks to the increasing demand from China, the US, and Western Europe. But at the same time, in this age of hyper-connectivity, we understand that consumers want products that make their lives easier and more convenient. Consumer insight shows us the common theme across all groups is time, whether to spend with loved ones or to be productive. There is a demand for products that make consumer lives simpler, deliver seamless and convenient integration of products and services. A great example would be products that can self-diagnose any issues and/or appliances that can be managed remotely.

While time is the common theme for many, the thread across the technological advances is data. We are moving to a more data-based business model, which is a driver for innovation in the future that will help us deliver more time back to our customers. We know that the consumer landscape is transforming and as a business, we are at a pivotal point. We see the coming decades as an opportunity to embrace change and be an agile innovator. Through sustainably producing high-quality, smart and connected home products we can democratize technology, create value and play our part in society.

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