08:20 – I arrive at my local bus stop on Haverstock Hill in north London, and wonder why there are some 20 people waiting there instead of the usual 3 or 4.
08:27 – We watch as the 168 bus approaches over the brow of the hill and, without hesitating, continues past us at great speed. Annoyed, I realise the bus is totally packed, the lower deck full of standing commuters.
08:38 – The next bus arrives – there are SPARESEATS! We fight our way on board, every man, woman and child for themselves.
09:08 – My usual 20 minute ride has already taken 30, and we are not yet half way. Frustrated by glacial progress, I alight just north of Euston station, and decide to walk. (Note to self: given the rate Greenland is slipping into the Arctic Ocean, need to stop using “glacial” as an adjective meaning “extremely slow”.)
09:10 – Roads jammed solid with stationary cars, buses, taxis, trucks all burning petroleum, belching poisonous fumes. The acrid air tastes like Leipzig, circa 1988. Thousands of cyclists struggle manfully along narrow “cycle lanes”, thin strips of tarmac demarcated from the motorised traffic by a flaking stripe of white paint.
09:11 – Hopelessly inappropriate for urban commuting, Range Rovers and other “sports utility vehicles” appear unable – or unwilling? – to stay out of the cycle lanes, causing cyclists to mount pavements in order to progress.
09:12 – I notice that not only are the roads chocca, so are the pavements! And not only with occasional cyclists – others like me are bailing out of their immobilised motor vehicles and taking matters into their own hands (or rather, feet). Hurrying along, scarcely avoiding several head-on collisions with grumpy Londoners, I am suddenly transported from pre-unification East Germany to modern-day Beijing.
09:15 – I spot a Modec electric delivery truck. Stationary, silent, consuming no energy, emitting nothing but the exhalations of the driver (hey, that’s CO2, don’t you know!). It does nothing whatsoever to relieve the congestion, but if only all these stationary vehicles were electric, I might be able to breathe!
09:19 – One minute short of an hour, my quest is complete as I arrive at SustainAbility’s office in central London.
09:20 – I pause briefly to wonder: is this what it’s like, every day of the year, to live in Atlanta, GA? I rarely use the tube – opting instead for buses and bicycles – but God am I grateful to the 28 million people who do.
To date, successful companies have been those which have been best able to meet and predict customer demands, delivering products that satisfy the desires of their consumers. This benchmark for success is reinforced by the business mantra of “the customer is always right”.
Increasingly, however, the realization is that leadership requires companies to play a more active role in shaping customer behavior. What if the customer is not always right?
A few days ago I had dinner at a fast-food burger chain. Throughout my dinner I couldn’t help but question the nutrition value of my dinner choice. I thought about the value meal I had purchased and the fact that the sides that came with my burger were pre-determined to be a soda and fries. Sure, I could have ordered a la carte and replaced the soda with juice and perhaps the fries with apples – but the pre-set meal was just so easy, so appealing. Somebody had already done the deciding for me. I knew there were healthier options, but why bother when I could just utter the words “a number two, please.” As I ate my meal, I wondered whether I would have opted for the healthier choice if it had been offered as a value meal package. Surely the reason this alternative version of a value meal didn’t exist was because it’s not what consumers want. The customer knows best, and success for the fast-food chain means making sure the customer is satisfied.
This seems like basic business sense. Build, market, and sell what your customers want – or even better, predict what they will want. The unfortunate reality is that the customer is rarely this savvy when it comes to matters of sustainability (environmental or social, including nutrition). A business designed to follow customer desires, rather than shape those desires, runs the risk of addressing only the economic piece of the triple bottom line. Too often consumers make choices based on external inputs (marketing, product positioning, etc.) that reinforce those choices, thus consumer demand can become a mere reflection of what companies are already feeding consumers.
Several companies are beginning to address sustainability issues beyond their four walls, particularly upstream in the supply chain. However, few examples exist of companies that have begun to act upon the realization that their sustainability impact also extends downstream to their customers. The next frontier is likely to be about addressing this downstream impact, and companies that take this leap will find themselves well positioned for sustainability leadership. The first challenge, however, will be coming to terms with the notion that the customer may not always be right.
Over 15 years ago I sat on a UK inquiry into the role of business (Tomorrow’s Company Inquiry). It concluded among other things that the traditional argument against corporate social and environmental responsibility – namely, that it would be in breach of a board’s fiduciary duty to its shareholders – was a flawed assumption. While precise legal requirements vary across the globe, company directors need – and have the right – to recognise the role and interests of other stakeholders. The Inquiry coined the concept of the ‘inclusive company’ and made a compelling case that to be competitive in the 21st-century companies should balance short-term profitability with a more informed assessment of how shareholders’ needs could be best served by seeking the wider views of stakeholders; and by judging shareholder value within a longer-term timeframe than the quarterly earnings cycle.
So it is depressing to read another article – in the Wall Street Journal, no less – which argues “the idea that companies have a responsibility to act in the public interest and will profit from doing so is fundamentally flawed.” Indeed, the author, Professor Aneel Karnani of University of Michigan’s Ross School of Business proposes that an attempt to simultaneously deliver both societal and shareholder value is “a potentially dangerous one”. He chooses to ignore the huge risks to shareholder value in maximising profit with no regard for the massive shifts in societal expectations of business in a globalised and privatised world. Our Changing Landscape of Liability report offered evidence-based insights into the risks of a compliance based business model and the risks to goodwill (the highest component of share value) if a company breaches societal values and expectations.
Far from Karnani’s claim that “in most cases, doing what’s best for society means sacrificing profits,” the opposite is surely true. Shareholder value is not simply a function of profitability. Why has Big Pharma radically altered its approach to patent protection and introduced differential pricing over recent years? It has nothing to do with short-term profitability and everything to do with its long-term “licence to operate and innovate”. Its position on generic drugs (particularly for HIV/Aids) exposed a fault line in its business model. Does elimination of generic drugs to protect IP not lead to the death of those who cannot then afford to be treated? Outcome: dead potential customers and protected IP. Very few businesses make money from dead customers. Similar examples can be found across all sectors. Oil companies are beginning to see that their assets (hydrocarbon reserves – the essence of today’s share value) may not be as safe as they assumed. Oil sands derived fuels could face the same fate as GMOs – fully legal but increasingly unacceptable to society. ‘Stranded assets’ are another huge threat to the oil sector’s balance sheets (Shell’s Nigerian reserves and, very probably, BP’s deepwater reserves are early examples).
The oil industry offers another insight into Karnani’s narrow perspective. How can he explain that a dollar of profit is valued differently according to which company is delivering that profit? Paradoxically, in the oil industry, ExxonMobil’s profits are (at least for the moment) valued more highly than its competitors’. I would suggest that this is because that company is more efficient in its operations and risk management than its competitors; while the huge climate change liability risks it is building are barely on investors’ radar screens. The point, however, is that share values are not simply a reflection of profitability but of the ability of a company to manage the complexity of risks and shifting societal expectations robustly: engaging sustainability challenges is now acknowledged by all progressive business leaders as a strategic issue. They also recognise that corporate responsibility investments – which may have been inappropriate in 1970 when Milton Friedman railed against them – are essential for protecting and enhancing shareholder value.
I am sure that Professor Karnani is well respected. It is all the more surprising, therefore, that he appears to be out of touch with rapidly changing societal values – and how that is reflected in corporate engagement with the sustainability agenda.
I can’t stop thinking about The Most Isolated Man on the Planet (and I’m guessing neither can the 10,962 people who’ve shared this Slate piece on Facebook to date). Writes former Washington Post correspondent Monte Reel, who left the Post in order to write a book on him:
He’s an Indian, and Brazilian officials have concluded that he’s the last survivor of an uncontacted tribe. They first became aware of his existence nearly 15 years ago and for a decade launched numerous expeditions to track him, to ensure his safety, and to try to establish peaceful contact with him. In 2007, with ranching and logging closing in quickly on all sides, government officials declared a 31-square-mile area around him off-limits to trespassing and development.
As Reel points out, what’s amazing here isn’t only that Most Isolated Man has maintained his solitude to such a degree and for so long, but that he is deliberately being left alone.
Advanced societies invariably have subsumed whatever indigenous populations they’ve encountered, determining those tribes’ fates for them. But Brazil is in the middle of an experiment. If peaceful contact is established with the lone Indian, they want it to be his choice. They’ve dubbed this the “Policy of No Contact.” After years of often-tragic attempts to assimilate into modern life the people who still inhabit the few remaining wild places on the planet, the policy is a step in a totally different direction. The case of the lone Indian represents its most challenging test.
I blog about this here not only because it’s a captivating story, but also because this piece offers a couple of short meditations relevant to our work. First, on the limitations of abstract cost-benefit analyses—when set against individual (and collective) human rights, yes, but even when set against reality:
Most [local landowners]… say that it’s absurd to save 31 square miles of land for the benefit of just one man, when a productive ranch potentially could provide food for thousands. That argument wilts under scrutiny, in part because thousands of square miles of already-cleared forest throughout the Amazon remain barren wastelands, undeveloped.
…The question of who’d benefit from clearing the land versus preserving it boils down to two people: the individual developer and the lone Indian. The government agents know this, which is why they view the protection of the lone tribesman as a question of human rights, not economics.
Second, on the role that technology-enabled transparency can play in holding us to account—what’s often called the court of public opinion, and which I like to think of as “crowdsourced civil society”:
But how long can his isolation last? I get Facebook updates telling me what people half a world away are eating for breakfast… In 2010, can anyone realistically live off the grid?
Some Brazilians believe that the rapid spread of technology itself might protect his solitude, not threaten it. The agents who have worked on the lone Indian’s case since 1996 believe that the wider the story of the man’s isolation spreads—something that’s easier than ever now—the safer he’ll be from the sort of stealthy, anonymous raids by local land-grabbers that have decimated tribes in the past. Technologies like Google Earth and other mapping programs can assist in monitoring the boundaries of his territory. Instead of launching intrusive expeditions into the tribal territories to verify the Indians’ safety, Brazilian officials have announced they will experiment with heat-seeking sensors that can be attached to airplanes flying high enough to cause no disruption on the ground.
Lovely reminder that sustainability-type challenges and learnings are everywhere. And as my colleague Shankar said when I e-mailed him this piece (he has written on land rights and displacement related to corporate projects, for example in this Issue Brief): “I think more than anyone else, indigenous people know what true sustainability is! It’s back to the big question – ultimately, what is life all about?”
Last week, during its AM Fix broadcast, CNN re-aired a clip from part of its original series, Addicted, sharing the plight of a teenage American girl, Melissa, who had been battling a near lethal addiction to prescription drugs. Despite making multiple public commitments and efforts to kick the habit, she found herself enslaved by the vicious cycle of addiction.
Many were quick to judge – how could Melissa be so weak? Why can’t she just commit to quitting knowing that her addiction had put her in a downward spiral of chronic illness and depression, trouble at school and in the community? The issue here was that despite her awareness and stated ambition, Melissa had yet to actually admit that she had a serious problem and seek support.
That didn’t happen until she was rushed to the hospital following a massive overdose, and declared about “15 minutes away from death.” Miraculously, she survived the incident, admitted she had a problem, and vowed to clean up her life.
I can’t help but draw some parallels between her story, and the plight of our modern society (and particularly that of America) and its seemingly insatiable appetite for ever more stuff. Our consumption of food, energy, water, and various “creature comforts” – beyond the earth’s carrying capacity, beyond many people’s financial capacities, and in ways that endanger our livelihood and that of future generations — is not so unlike a deeply rooted addiction.
But just as in Melissa’s case, lack of awareness here is not the issue, but waking up to the gravity of the reality and admitting that we have a dependency problem, is.
Over the past few years, we’ve witnessed a surge in public interest in sustainability. More than ever, people around the world are defining themselves as “green” and “conscious” consumers, claiming a desire to live more lightly and responsibly on the earth. Companies have noticed too, launching new “green” product lines, touting the socially and environmentally conscious attributes of their wares and services. But despite the exponential increase in social and environmental consciousness, recent research shows that only modest gains – if any – in shifts toward more sustainable behavior. (Note the US was ranked lowest of 17 countries in sustainable behavior).
So why the large gap between the awareness, stated desire, and actual behavior? According to the GreenIndex research, consumers commonly blame the following: the perceived inconvenience, the lack of adequate action on the part of governments and industries, and the belief that the seriousness of the environmental problems is exaggerated.
So basically, we’re not so unlike the old Melissa, in that we are:
Unwilling to admit we have a serious problem (“The American way of life is not negotiable”)
Too busy distracting ourselves from it by deflecting the blame and responsibility elsewhere (i.e. with governments, companies, and consumers claiming to await guidance from one another, while simultaneously resisting it), and
Taking others down with us in the process (thereby hindering the passage of any adequately ambitious regulation, nationally or internationally, to incentivize progress).
This has left us in a holding pattern, where we are just barely addressing the issue, while allowing ourselves to reinforce our bad habits, instead of trying to liberate ourselves from them.
Like Melissa, perhaps what we really need to overcome our addiction is a “twelve step program” with the first, most critical step being the admission that the American way of life is unsustainable.
Unlike Melissa though, we don’t have the luxury of waiting for a “near-death” experience to act. Mother Nature has been sending us plenty of wake-up calls over the years – with an alarming number in just the past few months alone. How many more lives, human and otherwise, will have to be lost in this vicious cycle of addiction — through tragic oil spills, coal mine explosions, increasingly strained foreign relations, volatile climate patterns, (record-breaking heat, drought, flooding, mudslides), and spreading disease – before we as a society stop snoozing and truly take responsibility and action towards our sustained wellbeing?
Melissa was lucky enough to beat the odds – let’s not leave our collective future to chance.
Last week, I had a meeting with a potential client at their office located in Gurgaon, a southern suburb of Delhi. As someone who is conscious of my personal carbon footprint and being part of SustainAbility, which advocates a zero-carbon world to whoever will listen, I thought it will be most appropriate to travel to this meeting by Delhi’s public transport pride – the Delhi Metro – which only recently had inaugurated a part of the Delhi-Gurgaon Metro line.
So, off I went on the Metro and after a smooth and comfortable ride, got off at the appropriate station in Gurgaon and set about finding the best way to my client’s office. Guragon, as a friend pointed out, lives in the 16th and 21st century simultaneously – it has no pavements and so walking, especially in the monsoons, was a real hazard and if you were looking for public transport, the options are cycle rickshaws or their crowded motorised rickshaws that spew smoke and carbon. So, cycle rickshaw it was!
As I retraced my path after a very cordial meeting, two things really struck me about this whole Gurgaon experience. Neither was surprising or new but I guess travelling on the Metro and cycle rickshaws gives you time to reflect!
The first was the profile of people who I saw on the Metro. They were ordinary folks, who up until then perhaps hung onto crowded buses risking life and limb to get to their destinations safely and on time. Several were women who undoubtedly had spent a long time in the same buses being harassed by one of the most obnoxious of living species on this planet – the Delhi Male. To them, here was a magical experience: clean, punctual… in fact everything that Indian public transport was not! But where were Delhi’s elite busy executives – those who travel alone in large, chauffeured cars? Missing! Will the Delhi Metro and its promise of a comfortable ride to those who have never got one also be a real low-carbon and convenient alternative to Delhi’s elite whose personal carbon footprint perhaps matches the per capita emissions of Europe, if not the US? The jury, as they say, is out; at least till the whole Delhi-Gurgaon line is functional!
The second thing was the office building. If there was any doubt that India’s low per capita carbon footprint was thanks to our poor ironically subsidising our rich, just go into any of the buildings in Gurgaon with a carbon and efficiency consciousness hat on. This building was of course no different from some 50-odd building in the vicinity, all with large, high-roofed entrance foyers, air conditioned of course but with a population density of less than 5 persons per 1000 square feet of air conditioned space with no seating to enjoy the ambience! Lift foyers are similarly unpopulated and the reception areas of companies can easily be used as indoor cricket or five-a-side football facilities! I do not know enough about LEED certification of buildings but does it factor in how energy consuming spaces are utilised?
Many accuse me of being pessimistic and cynical. So, here’s to hearing the ring of Blackberries on the Delhi Metro by 2010! And cricket matches in the entrance foyers of Gurgaon’s buildings – that way, they will at least be used!
Riding home recently on a “Boris Bike“ – so named after London’s inimitable mayor, Boris Johnson, credited with conceiving the new bicycle sharing scheme – I witnessed a phenomenal collision between two riders that resulted in one of them flying several feet through the air at head height. Spectacular! Moments earlier, I had felt a prescient discomfort as I rode behind the perpetrator of the accident that was about to happen. Just as I am ultra-wary when I see motorists maneuvering half a ton of steel while speaking on a mobile phone wedged between shoulder and crooked neck, as I approached this chap in his late 30s – wobbling around on his Boris Bike like a 3 year old – I decided to give him a very wide berth as I overtook. He was apparently enjoying himself as his front wheel invited him to randomly explore the full width of the road ahead. On hearing the surprisingly loud collision behind me, I turned in time to see a Lycra-clad helmet-wearing cyclist launch from his mangled racer in a graceful arc towards the road surface. Ouch!
Apart from feeling immense sympathy for the poor victim, my thoughts turned to what can happen to us when our environment suddenly changes. If this seems an unlikely mental leap, I should explain that I’m currently engrossed in a fabulous book called Deep Survival by Laurence Gonzalez that explores, among other things, how human beings respond to unexpectedly changing circumstances. Gonzalez recounts the tale of MP William Huskisson, run over and killed by George Stephenson’s famous Rocket steam locomotive on it’s maiden journey along the Liverpool & Manchester Railway in 1830. Until that moment, it is conceivable that Huskisson’s only experience of locomotion had been the humble – and relatively slow – horse and cart. Perhaps he was so taken aback by the dawning railway age that his survival instincts failed to prepare him for this sudden change in his environment.
In the case of my cycling anecdote, the appearance of thousands of Boris Bikes on London’s roads in the last few weeks has introduced a rather exciting random element to navigating the city streets: numerous spirited folk who probably haven’t been in the saddle for their entire adult lives. I’m expecting a string of early casualties, both cycling novices and other road users coming into contact with them. Paris went through a similar experience when it implemented its own bike share scheme three years ago.
In the future, adapting to our changing environment will be – as it has always been – critical to our survival. This of course means adaptation to the impacts of climate change, resource depletion, water scarcity, migration, etc. But it also means adapting to the technologies and systems we develop in an effort to mitigate those impacts.
Take electric vehicles. It’s now almost universally accepted that their high energy efficiency and compatibility with the full range of sustainable carbon-free energy sources make EVs an essential piece of the sustainability puzzle. But already one of the unique selling points of electric vehicles – that they’re incredibly quiet and therefore reduce noise pollution – has been portrayed as a grave danger for pedestrians, in particular the blind and partially sighted. In response, Nissan is fitting a synthesiser to its forthcoming Leaf EV, to warn bystanders of its impending arrival.
I have to question whether implementing technology fixes atop technology fixes might be distracting us from the larger challenges facing us: we need to redesign our urban landscapes so that low-impact mobility modes that already exist (walking, cycling, and mass-transit) are preferred by the majority because they’re safer, cheaper, nicer, and more convenient than higher-impact alternatives. At the same time, we will inevitably need to behave differently in order to thrive within our changed environment. And along the way, we need to be prepared for a few bumps in the road.
In a recent post to this blog titled Go West, I questioned the potential for US-based sustainability leadership, especially whether unique American attributes like open borders and brainpower (i.e. talent inflow via immigration and numerous ‘smart nodes’ as Richard Florida labels US metros) will conspire to generate the innovation on which such leadership depends. Overall, I’m optimistic, but I noted also Po Bronson’s recent essay in Newsweek suggesting America faces nothing less than a Creativity Crisis, and suggested we will need to watch weather vanes closely to determine trends, then work actively to accelerate those where creativity and sustainability collide to good effect.
As if on cue, the next issue of Fast Company put Mark Parker of Nike on the cover, heralding him as The World’s Most Creative CEO. What’s going on in Oregon?
Behind the Berm
The Nike campus is in suburban Beaverton, outside better-known Portland’s varyingly gritty, urbane and creative heart. An earthen berm encircling the entire campus increases an initial sense of insularity (though of course, being Nike, the berm has a running track on its crest too!). But to visit campus is to feel a crackle of positive energy and to witness active, energetic collaboration and engagement in offices and in the cafeteria, as well as on the playing fields.
To hear Fast Company render the story, Parker embodies and applies the attributes required to keep his company open to new ideas, inspired by others’ excellence (as often that of artists as athletes), and conscious how hard it must work to remain cutting edge – no small feat when leadership entails divining, interpreting and then continually redefining the limits of where performance and function meet fashion.
Designer at Heart
The Fast Company profile relates how Parker, who came to Nike as a footwear designer, still carries a sketchbook with him – and constantly puts it to use. Two pages of the sketchbook are reproduced in the article, one showing a list of the many opposites Parker strains to keep in balance: the short and long term; art and science; physical and digital; inspiration and innovation. The article also relates his ‘edit and amplify’ mantra, meaning he and Nike must ‘…amplify the innovation agenda further, and short-list the things that will make the biggest difference’. And Parker applies the mantra to sustainability, suggesting that design done right (e.g. the application of Nike’s Considered Index) will ensure that ‘the entire process becomes sustainable’ in time.
Artist and Student
I have met Parker just once, and I was impressed because, as the most senior guy in the room among a diverse group of external Nike stakeholders, he didn’t say much – he listened (which too many other CEOs seem pathologically unable to do). The article’s anecdotes about the extraordinarily diverse relationships he maintains (and the dinner parties he hosts!) make it seem that to listen – and to be curious – is part of his nature. If these traits are emulated by the larger Nike team, they could compose a living, global learning network, simultaneously plugged into myriad different sources of inspiration, with the opportunity to learn from mentors as diverse as graffiti artists, Steve Jobs, waiters and Lance Armstrong. You literally can’t buy that kind of consumer and societal insight. Parker and Nike are surrounding themselves with people and ideas capable of inspiration, and turning that inspiration into (progressively more sustainable) products that thrill consumers and shareholders.
Wish List
I ‘sketch’ more in words than images, but I finished the Parker article determined to attempt more of the latter in the notebooks I carry with me even in this digital age. And I couldn’t help but wonder: Would injecting more artistry help spur greater creativity in other boardrooms across America and around the world?
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