Copyright 1998 AXIS Performance Advisors, Inc.
It’s often said that there are only two things you can count on: death and taxes. But these two factors don’t do much to inform business decisions.Wouldn’t it be nice to be able to look out ten, twenty, thirty, or forty years and know with a high degree of certainty what your business must be able to do? Certainly, if you’re making major capital investments or doing strategic planning, this insight would be an asset.
The Natural Step shows you how to do this long-range forecasting based on some immutable laws that all scientists agree upon. It can’t tell you what to do you still need to lead your organization but it can tell you what conditions your organization must meet to succeed into the next century. And it generates a huge wave of innovation, promoting out-of-the-box thinking, that can improve your competitiveness and profitability.
Nowadays, everyone seems to have their favorite trend. Some say we’ve moving into a global economy, knowledge-based society, or a new democratic and capitalistic world. Others cite demographics including the age-wave and diversity issues. All of these appear to be true, but they represent”noise” over the top of a global trend that will transform our world.
On a global scale, the demands that humans are placing on the world is increasing. Population, currently around 6 billion, is expected to almost double by the middle of the next century. But the impact of population growth is compounded by rising standards of living where, for example, the Chinese are eating more animal protein and driving more cars. These trends could be good for business: more consumers with more money.
But a countervailing trend is also occurring globally. (See figure 1.)Scientists agree that the earth’s capacity to provide resources is declining.All major ecosystems are diminishing: fish stocks, rain forests, top soil,availability of arable land, even the air’s ability to process the wastes we belch into it.
Why care about the environment? Because absolutely everything we consume comes from the earth and the earth is finite. So it places some undeniable constraints on society.
Figure 1: The Funnel
So we are in a funnel of sorts, being squeezed between these two global trends. We can easily envision what will happen as we move down this funnel.The cost of raw materials will rise, additional regulations will be written,customers will increase their expectations for environmental stewardship,and so forth. In fact, we are already seeing some of these actions. Lumber prices have risen dramatically; governments are under pressure to reduceCO2 emissions, and many organizations have been harassed by the media for poor environmental performance. Depending on your industry and your organization’s practices, you will experience different effects, but no one will escape the squeeze.
You have two choices in business: you can anticipate the future and take actions now that will reduce the likelihood that you’ll be affected by the impacts, or you can wait till your organization “hits the wall of the funnel” and then scramble to react. The former is obviously preferable,as it gives you time to phase in process improvements and avoid preemptive strikes from your competitors. So encourage innovation now that will keep your organization flowing comfortably away from the walls of the funnel.
If you just project these two trends linearly, the lines eventually cross.No one knows when this would occur although some scientists feel that our opportunity to change the trajectory of the lines is in this next decade.To make matters worse, the lines are probably not linear; since the life systems of this planet are all interrelated, the funnel is likely to close at an increasing rate, a exponential curve rather than a straight line.But I am optimistic, because human beings are incredibly adaptable. Over our history, we found replacements for whale blubber and cleaned up Lake Erie. We can meet human needs for shelter, meaning, and leisure in ways that do not exceed the carrying capacity of the earth.
The Natural Step lays out four principles for sustainable development.These four “system conditions” enjoy the consensus of scientists around the world. And once you read them, you’ll undoubtedly say, ” Iknew that.” They, like the Ten Commandments, are stated in the negative, providing the minimum conditions for a sustainable economy.
1) Materials from the earth’s crust cannot systematically increase in the biosphere (the surface of the earth and the atmosphere where life exists).
It took billions of years for the earth to sequester nasty chemicals into the earth’s crust so that life could begin. But mostly in the last century, through the use of fossil fuels, mining, and the like, we have put many of those chemicals back into the air. If this continues, the earth will become uninhabitable again. This does not necessarily mean we can’t mine, for example, only that we must contain those chemicals (e.g., through recycling) so they don’t become part of the biosphere.
2) Substances made by humans must not systematically increase in the biosphere.
Through our technologies, we have learned how to make many substances that nature is unprepared to process, so they persist and accumulate. Two separate studies, for example, have found a wide assortment of artificial chemicals in women’s breast milk. Do you really want to feed your baby DDT or PCB’s? If not, we must either find replacements for persistent artificial chemicals, products that will biodegrade, or we must find a way to contain them. For the laws of thermodynamics teach us that matter cannot be destroyed and will tend to disperse.
3) The physical basis for the productivity and diversity of nature must not be systematically deteriorated.
Look around you. Everything you see came from the earth: the light, your computer, the stapler, the carpet, your sack lunch. Everything. Nature provides us many services for free: it purifies our water, grows our food, provides medicines, creates oxygen for us to breathe, and processes much of our waste back into nutrients. We don’t know how to do these things for ourselves without nature. So we must preserve the basis of life on this planet. There are no other suitable home sites nearby.
4) We must be efficient enough to meet basic human needs.
[EDITOR’S NOTE 2013: This condition has been since reworded]
The previous three system conditions are based on hard science. But there is also a social component. We cannot meet the above system conditions if we do not meet basic human needs. Poverty is related to environmental degradation.Starving Brazilian farmers will still cut down rain forest if their families are hungry and they have no other means to provide for them.
These four system conditions were created through the normal scientific review process, over 20 review cycles. They have been refined to the point that no scientists disagree. So in addition to death and taxes, you can take these four principles to the bank. You can use them in business, at home and in your community. In Sweden, where The Natural Step originated,they are using this framework for creating a sustainable society.
No organizations currently meet all these system conditions. The wise leader will begin planning innovations that will bring their organization’s practices more into alignment. Pick the low-hanging fruit, those actions that can save or make you money now to fund future innovations. Stay at least one step ahead of your competitors and safely inside the walls of the funnel. The whole idea of TNS is to get “more value with less stuff.”
Interface is one US organization that has embraced these principles.After reading Paul Hawken’s book, The Ecology of Commerce, president Ray Anderson became a changed man. He decided to make his company “the first fully sustainable industrial enterprise” by making his petrochemical conglomerate 100% environmentally benign. He calls it “cyclic capitalism.”Instead of selling carpet, they lease it. As their customers’ carpet tiles wear out, Interface replaces them, recycling the old tiles into new ones.
Their goal is never to take another drop of oil from the ground. And this direction has paid off on the bottom line: sales grew from $800 million to $1 billion in one year and raw materials dropped by almost 20% per dollar of sales. “The world just saw the first $200 million of sustainable business,” says Anderson.
Most processes that organizations use to improve their environmental performance include using teams, and TNS is no exception. Once your organization has decided to move ahead, you’ll want to identify key opportunities for moving toward the system conditions and at the same time improve your competitive
advantage. You might assemble a team of people to identify these opportunities and then assemble teams to work on your top priorities.
So where might these opportunities lie in your organization? According to a 1989 study of manufacturing in the US, only 6% of the material ended up in the product. 94% was “non-product output.” I’ve heard figures that it takes 20,000 lbs of material to make a 6 lb. laptop computer, for example.
For those not in manufacturing, you’re not exempt from waste. Whenever you purchase supplies, install equipment or remodel, you have opportunities to impact the system conditions.
Scandic Hotels in Sweden reduced their solid waste by 16 tons in the first year in part by replacing shampoo mini-bottles and soap bars with dispensers. Look in your dumpster. You paid for all that stuff and now you pay to haul it away! When Scandic redesigned their hotel rooms around the system conditions, they found the remodeling cost 17% more. However, since the rooms now didn’t need to be remodeled as often (e.g., the wooden floors could be refinished many times), it saved them 30%.
As experts in teams, we have some advice for how to launch and run these teams. Too often, we have seen managers create teams without being clear about their outcomes, boundaries, and appropriate membership. We have walked many clients through a pre-launch analysis, typically lasting 4 hours, before creating a team. This process allows the team maximum freedom because the boundaries are clear. The teams come up to speed faster and avoid blind alleys because they are clear about their task. Managers typically can’t believe it will take four hours to figure this out, but they are always amazed at the issues they hadn’t thought about. When we encouraged one of our clients to ask the new team how they felt about the information they got at their initial meeting, the answer was a resounding, “Great!Why didn’t you do this before?”
So before you launch a team, answer these questions:
Why?What is the business need? Tie into what’s in it for the team members too.
What?What are they to do (and NOT do i.e. boundaries)? Be sure to express hopes and expectations too. In the case of a task force or problem solving team, frame their task as a simple question or set of questions. Make clear what they can decide and what they can only recommend.
Who?Who needs to be on the team or how will members will be chosen? Who else will the team have access to?Are special roles needed? Who is the sponsor and who are other stakeholders?If the team members are acting as representatives, be sure to discuss how to keep those represented informed and involved.
When and where?Consider logistics:how often/long should they meet? Deadlines? Access to facilities? Budgets?Task forces seem to work best with short time frames and intense work sessions(rather than meeting one hour per week for months).
How?What methods should they use? Establish effective meeting roles and processes, ground rules. Discuss any assumptions about assessments, tools, research, budgets, processes, and other resources they may use.
Once the teams are up and running, they will encounter other challenges.Watch out for these common problems:
If you want to learn more, the following articles and organizations maybe helpful:
“I want to Pioneer the Company of the Next Industrial Revolution”(article about Interface), FastCompany, April/May 1998.
“Natural Capitalism: We can create jobs, reduce taxes, shrink government,increase social spending and restore our environment.” by Paul Hawken,Mother Jones, March/April 1997.
Good Business: How the Best Organizations are Doing Well by “DoingGood”
October 13, 1998 at Nike’s Conference Center
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