Heresy & Innovation
by Kealy Devoy -- November 13th, 2011
Lessons from the 2011 National Association for Environmental Managers Forum.
At a recent meeting of the National Association for Environmental Managers (NAEM), I sat in a packed conference center hanging on every word of the three keynote speakers.* Their panel discussion was about trends in economics, technology, and natural resources as they pertain to corporate sustainability.
The economic trends were pretty straightforward: global GDP is growing, demand for natural resources is increasing, and supplies of these resources are decreasing, which will raise prices. We are using more resources than ever, and it doesn’t look like we’re going to stop any time soon.
One speaker showed a diagram illustrating how the “traditional” business operates:
One thing stands out to me here: the use of the term “benefits” instead of “products/services”. This small semantic change can make a huge difference in the way that businesses perceive their operations. In truth, we as consumers do not want products; we want the benefits conferred on us from them. For example, I don’t buy batteries because I like batteries; I buy them because I want a portable source of power. If businesses can change their focus to the benefits they provide instead of products, they can think about the production process in a whole new way.
Specifically, they can focus on increasing resource use efficiency and make more products with fewer resources. This will reduce not only the amount extracted from nature, but also the amount of waste produced. Many companies are beginning to shift to this perception of their businesses, sometimes with staggering results. The ideas that come out of this type of innovation can seem strange at first, but often lead to huge benefits to the company.
My favorite example of this is when UPS eliminated left turns from their delivery routes. Imagine the person in the meeting who said, “Hey, what if we deliver all of our packages without making any left turns?” That suggestion seems outlandish – it would seemingly create circuitous routes. However, UPS gave it a try and found huge savings. Their trucks use less gasoline because less time is spent idling while waiting to make a left turn. They have reduced their delivery routes by millions of miles per year, which means they use less gasoline, reduce greenhouse gas emissions, and improve air quality. They have also seen a huge drop in accidents.
The UPS story is a great example of how a disruptive idea can lead to major efficiency gains. Some companies are taking this idea even further by introducing heretical concepts to their business model. For example, Xerox has begun helping businesses reduce printing and copying waste by promoting centralized printers instead of desktop printers. Xerox is choosing to sell fewer pieces of equipment.
They’re not the only ones, either. Tide realized that the predominant environmental impact of their detergents was in the consumer use phase – specifically from the energy that is used to heat the water for the wash cycle. So they developed a cold-water formula that considerably reduces the energy needed to wash clothes. Then they had to convince their consumers that you don’t need hot or even warm water to get your clothes clean.
The theory behind these disruptive and heretical innovations is that if that company doesn’t do it, another one will. If companies don’t start becoming more efficient and helping their customers do the same, some other firm will come along and do it instead. Developing a culture of innovation takes work, but it is work that can lead to serious economic, environmental, and societal gains.
*Note: The conference falls under the Chatham House Rule, under which the identity and affiliation of speakers cannot be identified outside of the event.