Want to See the Future of Work? Look at TV and Film

Television shows and films have very short lifespans. A movie may take 1-2 years to make and play for only a couple of months. A television series will run for a couple of years if it ever even gets an audience. Only outliers last more than five years. Product lifecycles and companies themselves are becoming more and more like TV and film. Products last a few years at best. Companies change so much and so fast that workers can't rely on staying at the same place for an entire career.

According to the Forbes article "The Rise of the Freelancer Economy," as of January 2016, there are 53 million freelancers in America. By 2020 it is expected that 50% of the US workforce will be self-employed.

Want to know how to plan your career when the economy consists of products and businesses with short lifecycles? Look to your friends in the film business. They've been doing this for years.

What's Good For The Group...

The economic theories of Adam Smith and the invisible hand help form the context of western civilization. "These ideas reflect the concept that each person, by looking out for him or herself, inadvertently helps create the best outcome for all."*

At an individual level, this translates to "what is good for me is good for the group."

In a world that now understands limited resources and the tragedy of the commons, it's quite clear that this paradigm is unsustainable.

What if our entire society could shift our most deeply held belief system to "What is good for the group is good for me?"

 

 

 

* Source: Investopedia

Volvo Meets Ten Year Goal In One Year

Saves $10 Million on 850K Energy Investment

Energy reduction is not as difficult as we initially believe it will be. Our mental models are a bigger problem than getting it done.

As part of the part of the U.S. Department of Energy's Save Energy Now LEADER Initiative, Volvo Truck's New River Valley plant set a 10 year goal to reduce energy intensity by 25% over ten years.

Not only did they exceed the target in a just one year, but they did it in a way that pays huge financial dividends.

The investment in energy efficiency cost about $850,000 and will save approximately $2 million per year according to the Department of Energy. Assuming a very conservative 5 year lifespan of the improvements they will see a total of $10 million in savings over that period. That is an annualized ROI of 215% and a total project ROI of 1,077%. Those are numbers any CFO can be happy with.

According an energy.gov blog post "The NRV plant also initiated a contest to promote employee engagement in identifying and suggesting ways for the facility to improve its energy efficiency. From late 2009 to early 2010, the implementation of employee-suggested projects saved the NRV plant more than 546,543 kilowatt hours per month, which translates to approximately $33,000 in monthly cost savings."

Significant energy risk and cost reduction are closer than you think. The sooner we take off the blinders of our embedded mental models the sooner we can start enjoying the benefits.

Sustainable Companies Stocks Outperform the Competition

Companies striving for sustainable outcomes outperform their competition in nearly every financial measure. And most importantly in this case, stock performance. Canadian publisher Corporate Knights recently published its 8th annual list of "100 Most Sustainable Companies." According to the Corporate Knights Global 100 website:

The graph below measures the monthly total return of the Global 100 and the MSCI All Country World Index (ACWI) in USD from February 1, 2005 to November 30, 2011.  Over this period, the Global 100 returned 42.54% compared to 29.52% for the MSCI ACWI.

graph-for-financial-performance

There are a host of activities and decisions that lead to a company becoming more sustainable. They are embedded in the culture and the inner workings of every organization on this path. However, a commitment to long term thinking and a passion for efficiency are critical. The same tools that are used in quality management systems and Lean Six Sigma are the ones that are used in achieving greater sustainability.

In the end, sustainability is about eliminating waste (whether that is wasted human potential or wasted natural resources) while meeting all stakeholder needs and expectations. By being ever more efficient in meeting needs we eliminate waste as a by product. If we combine that discipline with an eye towards sustainability, the two are a killer combination.

Better products, better communities, better planet, and better financial performance.

To see a great summary of the index you can read an excellent article by journalist Marc Gunther here. To see a how the number one ranked company, Novo Nordisk achieved such great results go here.

To see the entire methodology and listing, go to the website of the Global 100 Index here: http://global100.org/index.php

High ROI on Sustainability

Again, proof by the biggest capitalists that sustainability pays big ROI.

Bloomberg just produced its third sustainability report. This is the first one to be made public.

My favorite highlight is that for every $1 spent on sustainability they have seen $2 in savings in operating costs, which goes directly to the bottom line profit.

Bloomberg is reporting using the Global Reporting Initiative standard. I congratulate them on their transparency as a leader in the business community.

According to the website "Sustainability combines corporate citizenship, risk management and strategic opportunity – driving our operating costs down, our revenues up, and influencing wider adoption of sustainable practices across the business community."

I don't care what school of business you went to, costs down and revenues up is a good thing.

To see the full report go here: http://www.bloomberg.com/about/sustainability/#report_1

Compliance is cheap

Business estimates to comply with the clean air act of 1990 to reduce acid rain put the prospective compliance cost at up to $1,500 per ton. Over the first 10 years the price per ton NEVER went above $200 and the mean and average costs were significantly less*

The laggards in the US Chamber of Commerce have been beating the governmental pavement for years creating a false relationship between GHG and carbon emissions and economic recovery. Cleaning up our act will create more jobs, not less. That's why all the clean tech jobs are in Europe and China and not here.

* Source: "Green to Gold", copyright 2006, 2009; by Daniel C. Esty and Andrew S. Winston

The Results of Efficiency

The Las Vegas Sun reported today that the electric utility NV Energy is seeking a rate increase because efficiency programs are working and therefore people are using less energy and decreasing revenues. In any other commercial venture, a decrease in output means the supplier uses less raw material. They mistakenly overestimated demand and built too much supply (with taxpayer supported low cost financing). In a free market they suffer the consequences. Electric utilities are not like other companies though. They are a monopoly supplier and guaranteed a profit.

In any other business they would increase efficiency and create a long-term guaranteed supply (like wind). Should state officials grant them their request? I am torn.

As a businessperson, I believe they should increase their operational efficiency to match demand. On the other hand, the higher the energy prices the more we become even more efficient, creating a virtuous cycle that is only better for the commons in the long run.

Mental models and systems need to be updated to meet our new energy efficient economy. Simply giving the same model more money to burn more coal is more of the same. And that we for sure don't need. What should the electric utility and grid even look like in the future? Is our current system of regulated monopoly outdated?

See the full article here: http://www.lasvegassun.com/news/2011/may/04/nv-energy-does-good-so-it-wants-raise/

100% Sustainable Sourcing by 2020

I recently wrote an article for IBS America that shows how Unilever plans to execute 100% sustainable sourcing by 2020. Why are they doing it? To save money and reduce risk.

How will they do it? By requiring suppliers to meet recognized sustainability and environmental standards. Implementing management systems to track, improve and report are the only way for today's suppliers to stay alive. Those that cannot rise to the challenge will perish.

See the full article on the IBS America website at http://info.ibs-us.com/blog/bid/35543/Unilever-Goes-to-100-Sustainable-Sourcing-by-2020

 

The Paradox of Power in Sustainability

As a society we often say terms like "business wants (fill in the blank here)." Saying "business" wants one thing is like saying all Italian-Americans want one thing or all men want the same thing. There are lots of businesses with lots of leaders who see the world through all kinds of lenses. Over the last few weeks I have felt more hopeful than ever as I work with large corporations on sustainability that they are making great strides to put sustainability and environmental management systems in place. The pressure to do this is coming from two places primarily.

  1. Investor requirements that companies disclose emissions to the Carbon Disclosure Project (CDP) and thereby show their potential financial risk associated with climate change.
  2. Large OEM's and retailers like Walmart, IBM, Proctor and Gamble, Nike and a slew of others are requiring their suppliers to implement environmental management systems and report to the CDP.

Standards like the Electronics Industry Citizens Coalition - Code of Conduct (EICC-CoC) and the Walmart Sustainability Scorecard are deep in their requirements and if they get implemented with some real teeth will do far more than any other government program could.

Then, on the way home I listen to the news. I see that some of the largest and most powerful corporations are still using short term thinking and their deep pockets to push lawmakers into setting up policies that may help a quarterly report but continually put us behind the rest of the world in clean economy of the future.

In his excellent article "The Paradox of Corporate Power" author Jo Confino wrestles with the paradox that the most powerful in the world (the rich corporations) are simultaniously doing more than anyone to help and hurt the cause of sustainability. In the end it feels like he finishes optimistic, at least that's how I like to see.

See the full article here: http://www.guardian.co.uk/sustainable-business/blog/corporate-power-paradox-sustainability-change