4 Business Tips That Can Save the World

By Tom Harnish on 3 August 2011 (Updated 17 August 2011) 0 comments

A few years ago I read an article in the Harvard Business Review that created a proverbial whack upside the head. Titled A Road Map for Natural Capitalism, the article explains that we ignore one major capital component in our financial models — the value of Earth's services, nature’s capital contribution to our success.

We just don't think about, much less figure into our budgets — things like water storage, atmosphere regulation, and the other life-support services because Mother Nature is the vendor. These services have huge economic value. Some, in fact, are priceless because there’s no known substitute. But because we don’t count them among our resources, or for the most part haven’t considered them at all, they’re being liquidated.

Here’s the deeper issue: when resources seemed boundless, low per-capita productivity and a relative scarcity of workers drove innovations in technology and processes that led to increased productivity (the Industrial Revolution). Today we have lots of people and labor-saving machines, but natural capital is disappearing. In the same way the Industrial Revolution replaced agrarianism, a new era of natural capitalism, or whatever future historians decide to call it, will inevitably transform the way we do business now.

The whack upside the head came when I realized that many companies today are looking for tradeoffs and consider economic, environmental, and social issues as competing factors instead of trying to integrate and optimize them. Carbon offsets are a good example of this “whistling in the dark.” Sure it might help, but it won’t solve the problem because there really is a boogie-man out to get us. In the immortal words of Pogo, “We have met the enemy and he is us.”

But the fight isn’t over yet, and the article noted four key ways to build more sustainable, profitable, and competitive businesses.

Focus on Using Resources More Productively

Most businesses already do this because efficiency produces savings in operational costs, capital, and time. Such investments quickly pay for themselves, and in many cases the capital outlay actually goes down. But we haven’t wrung out the possibilities — not by a long shot.

A decade ago, fuel accounted for about 15 percent of airline operating expenses. Five years ago, it was 29 percent. Today, it's 35 percent. So Boeing’s new 787, which saves airlines 20% in fuel consumption, is really going to help bottom lines. That said, the Chevy Volt takes the prize for efficiency — with four passengers it’s more fuel-efficient than walking.

Using Resources More Efficiently and Reducing Waste is Not Enough

We need to eliminate the concept of waste altogether.

Closed-loop production systems modeled after nature, can be designed to return harmless unused by-products to the ecosystem or create valuable resources for other manufacturing processes.

Lumber mills used to use sawdust to fire the boilers that ran their saws, for example. A couple of decades ago a company that made buttons sold off the chaff punched out of the holes as “gravel” for fish tanks.

All steps in the right direction, but an industrial park in Denmark leads the way — take a deep breath if you’re reading aloud.

A plasterboard factory uses excess gas and bio-treated waste water from a refinery to sell a pure sulfur by-product and gypsum produced from the sulfur scrubbed from the stacks of power plants to both the refinery and the power plant and hot salt water to fish farms which sell the stuff at the bottom of the ponds as fertilizer to local pig farms that also use sludge (a combined total of a million tons a year) from a pharmaceutical plant which uses electricity and waste heat from the power plant. How’s that for industrial symbiosis?

Value as a Continuous Flow of Services Instead of Sporadic Sales of Goods

Today, manufacturing is based on the sporadic sale of goods. Instead, we can deliver value as a continuous flow of services. By reducing inventory and revenue fluctuations, disposal liabilities, and other risks, it’s possible for both seller and buyer to get what they want cheaper, more efficiently, and in a more durable manner.

People want solutions not products. Lease plants for interior decor instead of selling them. Sell illumination, not lightbulbs, the authors of the article suggest. But, they also acknowledge, “This model entails a new perception of value, a move from acquisition of goods as a measure of affluence to one where well-being is measured by continuous satisfaction of changing expectations for quality, utility, and performance.”

Changing people’s values is never easy, but it can happen. For example: Do you still think a “woman’s place is in the home?” Do you think a lifetime career with one company is desirable? Do you worry about the cost of a telephone call across the country?

Reinvest in Natural Capital

Any good capitalist reinvests in productive capital; it’s good business. Companies are finding exciting and cost-effective ways to restore and expand the natural capital directly required for operations and indirectly in ways to sustain their supply system and customer base.

Innovative companies are already changing their strategies and developing a competitive edge. Former Dupont CEO and Apple board member, Edgar Woolard, put it this way, “Companies that adopt these principles will do very well, while those that do not won't be a problem, since ultimately they won't be around."

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