An Inflection Point

An Inflection Point

At Decision Strategies, we are currently ramping up our practice in sustainability consulting.  This has caused some confusion, partially because the word, “sustainability,” has almost become a buzzword, taking on whatever meaning the user wants it to take on.  People talk about it because they have heard that they’re supposed to be doing it, but they generally aren’t sure what it is.  Sustainability often gets lumped in with EHS (Environment, Health, and Safety) considerations in companies.

I think the concept of sustainability in business is much bigger and broader than making sure people stay safe and healthy and we don’t cause an environmental mess.  I actually believe we are at an inflection point in human history.

From the beginning of recorded history, progress has been measured by increases in labor productivity.  Certainly, that is what the industrial revolution was all about:  getting more and more out of each hour of human labor by supplementing it with vast amounts of energy, steel, and other natural resources.  Prior to the industrial revolution, human labor was supplemented with animal labor and simple machines (like the wheel, the lever, and the plow).  Throughout much of human history, one group would supplement their own labor by enslaving people from another group.  But regardless of how it was done, progress was always about increasing labor productivity among whatever group of people we considered ourselves to be a part of – making more and more stuff with each hour of work.

But there are about 7.3 billion people on Earth today, and the number is climbing.  Labor isn’t so hard to come by anymore.  More importantly, most of those people aspire to have a comfortable lifestyle, similar to that enjoyed by people in the world’s rich nations.  But the West’s comfortable lifestyle is supported by enormous consumption of resources.  If everyone wants to start consuming resources at those kinds of rates, we are all going to find ourselves in trouble.  After all, we live on a finite planet.

So labor is no longer the limiting factor; resources are.  We need to make a fundamental shift in how

we think about industry and about progress.  Labor productivity is no longer the key metric; resource productivity is.  Successful companies over the next twenty to fifty years are not going to be the ones that figure out how to squeeze greater productivity out of an hour of labor.  They’re going to be the ones that figure out how to squeeze ever more out of each ton of steel, each kilowatt of power, each pound of plastic.  This means reusing things, recycling materials, and using less of them in the first place.  One advantage to 3-D printers, for instance, is you can create an intricate lattice within a structure such that you use a fraction of the raw material, but the end product is just as strong as a solid piece would be.

Sustainability encompasses a broad variety of dimensions, including figuring out how to implement circular supply chains in which when a product dies, the manufacturer gets it back, reuses the component parts and recycles whatever cannot be directly reused.  The manufacturer’s requirement for raw materials plummets, lowering costs for everyone involved.  Both the manufacturer and the consumer can benefit.

This is an example of something I’ve written about previously:  taking into account all kinds of capital – financial, natural, and social – rather than just financial capital.  Paul Hawken, Amory Lovins, and L. Hunter Lovins call this “Natural Capitalism” in their book of that title; “Comprehensive Capitalism” might be a better phrase for it.  Sustainability is all about taking a comprehensive view of the world and the economy.  This means recognizing and appropriately valuing all three forms of capital.  It means realizing that while the practice of discounting future events down to near-zero in our valuations may make sense when looking only at financial capital, it makes no sense when considering natural capital or social capital.  It means realizing that on a finite planet, when we throw something away, there is no “away;” our waste stays with us, at least until natural processes can neutralize it (if they can neutralize it at all).  In short, sustainability means consciously planning to leave for future generations an economy that is at least as vibrant as the one we enjoy today.

Adopting resource productivity as a key metric for measuring progress is a great start.  It should be obvious that if you can provide the same level of goods and services while consuming a fraction of the resources, the total cost will be lower, the process can continue for much longer, and everyone can benefit.  And we can, in fact, do these things.  There is a huge amount of money to be made by leading the transformation of industry from our three-hundred-year-old model to one that is appropriate for the twenty-first century.

PAST COMMENTS

Good essay Patrick. Sustainability is an issue that each of us faces when something (a printer, a refrigerator) breaks. Do we throw it out (it ends up in a landfill) or get it fixed? It is a real challenge to find somebody who will actually FIX things!

Two personal examples: I use an HP Color LaserJet 3600 for our publishing business. At the time I bought it about 8 years ago, it was the best printer available. A couple of years ago it broke. A young man here in Houston started his own business fixing printers, and sure enough, I took it to his shop (“Printing Technologies”) and he fixed it and it is still working.

My refrigerator died a couple of years ago. Repair man charged me $75 to say, “Buy a new one.” Not wanting to add to the landfill, I found the replacement part online (power supply for the electronic controls) and installed it. It still did not work. Got online with one of the help sites, and the virtual repair guy and I checked all the resistances and we determined that the compressor motor was OK and that the new power supply was bad. Got another part and we were back up and running.

My point: sustainability is achievable but it takes some work!
– by Dave Charlesworth, Wed, 2015-Aug-5 at 5:29 PM, www.decisions-books.com

Dave,

Thanks for the comment.  I take my hat off to your perseverance when it comes to repairing things rather than dumping them into landfills.  Most people wouldn’t be so tenacious.  As a society, we need to make it easier for people to do these things.

Regards,

Pat Leach
– by Pat Leach, Mon, 2015-Aug-10 at 10:12 PM, www.decisionstrategies.com