Gil Friend is a systems ecologist and business strategist, and is the CEO of Natural Logic, an environmentally-focused strategy, design and management consultancy. He writes a regular blog on issues of business and the environment. Gil has agreed to write occasional essays on sustainable business for our Sustainability Sunday feature, and we are happy to add his voice and perspectives to our site. Take it away, Gil:
[An expanded version of this article is posted at http://www.natlogic.com/resources/nbl/v13/n08.html]
Two weeks ago, writing about the European Union's product take back and product content regulations, I observed that many companies' sustainability initiatives are hampered by a pervasive and deeply wrong-headed assumption: that designing and delivering better, more efficient, less toxic, more recyclable products would necessarily cost more money and yield less profit.
Why does that assumption persist? Let me offer some perspective on both the barriers and the opportunities -- and how companies that understand the ecosystem drivers behind these new regulations can potentially get out ahead of them.
First, there's the great power of "we've always done it this way," with its impact on habits (of thought as well as of action), on cost analysis methods, on capital budgets. What's worse, changing what "we've always done" engages the tacit admission that "what we've always done" may not have been as good as we could have done. This is hard on the human psyche and murder on corporate lawyers.
Second, change is not easy, and is inescapably multi-dimensional -- change in technology, processes, roles, ways of thinking, and more -- can demand investment, in time and money, that conflict with other perceived needs.
Third, business is hampered by analytical methodologies that fail to accurately capture and value the full spectrum of costs and benefits. Boundaries of consideration are typically drawn too narrowly, whether to exclude factors that are considered "someone else's problem," or because it's simply easier to do it that way. Multiple benefits and synergistic impacts are commonly ignored, because familiar financial analysis tools commonly ignore them.
What can be done about it? Here are four steps to consider (expanded versions of each of these steps can be found here).
It's easy to make design improvements that cost more -- just add "green" criteria on to an existing design. It's more challenging -- and more profitable -- to integrate "green" into the design process, by including stakeholder expectations and the system conditions for sustainability into the design specification from the very beginning.
"Regulatory insulation" -- running so clean that you don't really need to care about the regulations -- makes far more sense than regulatory guesswork. "Numerous chip companies," Rachel King notes in Electronic Business, "are redesigning parts so that they contain no hazardous substances, so they'll be compliant no matter what the final requirements specify."
Which, as radical as it may sound, is in fact the most prudent course of all.
Shouldn't we emphasize the lunacy of continuing to fund the unstable, terrorist-creating states that sell us oil? That approach might appeal to the people who think that "green" is a liberal plot to raise taxes and undermine capitalism.
I don't think you're giving enough emphasis to how Competative Advantage fits within the mind of people in business. They may be all for earthsaving stuff in the long run, but if it is going to be disadvantagous to them in the short run (and possibly put them out of business in the process) they're simply not going to do it. We have to develop arguments about how going Green is going to be good for these folks in the short run, right now, this minute. This is the only way we're going to get their attention.
Note that I wrote of "a pervasive and deeply wrong-headed assumption: that designing and delivering better, more efficient, less toxic, more recyclable products would necessarily cost more money and yield less profit."
Both "business people" AND "environmentalists" get easily trapped in the moralistic debate that flows from this assumption -- "you should sacrifice for the good of the whole" vs. "we can't afford to do what you ask" -- and miss the innovation opportunity that a commitment to both goals can drive.