In connection with my day job, I’ve just finished this extensive and comprehensive course on sustainability and business innovation, taught by SAP’s first Chief Sustainability Officer, the personable and knowledgeable Peter Graf.
A few key ideas and concepts I learned that I want to think about some more:
1. The concept of a “social license to operate”. Governments issue businesses with licenses to operate, but markets issue them with “social license to operate” – that is, if we decide that we don’t want to patronise businesses that don’t conform to our values, their viability becomes endangered. An example is the backlash against Nike when they were found to have child labour in their supply chain; they’ve since tightened up their act and become a model of socially responsible manufacturing, knowing that their brand would otherwise be destroyed. (Look for something similar from VW soon.)
2. The idea of a “circular economy”. The traditional linear economy extracts resources to make consumer goods which end up becoming waste. A circular economy designs from the beginning with reuse and recycling in mind, pays attention to how materials are sourced, how goods are manufactured and shipped to markets, to the costs incurred when the goods are in use (for example, energy efficiency of devices), and to the process of recycling them back into the value chain when they’re no longer usable for their intended purpose.
3. Dematerialisation: a product (or process) that used to be physical becomes virtual. We’ve seen this with music, movies and books so far. It also applies to things like remote education and the replacement of physical travel with electronic collaboration or telepresence. All of this reduces environmental damage incurred by transporting things or people around.
4. Replacing the selling of products with the selling of a service:
– An air compressor manufacturer shifts from selling air compressors to selling compressed air, meaning that they install, monitor, maintain and replace their compressors in the client’s facility and charge for the air they produce. They now have an incentive to make their machines as efficient as possible.
– A tractor company or a fertilizer company shifts to selling agricultural productivity, monitoring farmland and advising on the best way to produce maximum yield, and providing only the necessary machinery or chemicals at the time they’re needed.
– A carpet company shifts to selling floor covering as a service, so it’s now in their interests to make the carpet last a long time and be recyclable when it’s worn out.
All these are made possible by cloud computing; big data and the ability to analyse it; the internet of things (constantly monitoring multiple aspects of performance for big data techniques to analyse); and mobile technology.
5. Changes in behaviour occur when people or companies see a personal, immediate benefit – so that’s the way to pitch the change. For example:
– Sell car pooling as a social benefit that provides networking opportunities and the ability for the participants to grow social capital.
– Use energy use as a proxy for process inefficiency, and make a business case based on saving money on energy costs.
– Demonstrate that employee retention has an impact on training, recruitment and internal efficiency costs, and put a dollar value on an improvement in employee retention – which will give you the budget to offer your employees something that will make them stay around.
6. The idea of a “social sabbatical” – offering skills to NGOs or developing countries, or in mentoring students or entrepreneurs, which in turn cultivates potential valuable employees or business partners.
I personally believe in a mixed economy (which is what we have, of course), neither completely unregulated and relying solely on “enlightened self-interest” to produce good outcomes, nor completely regulated and assuming that good outcomes must always be compelled. Just as laws regarding how individuals behave aren’t necessary for people who have enough social awareness that they don’t attack each other or steal each other’s stuff, but still are necessary because not everyone is like that, so laws regarding how companies must behave aren’t necessary for companies that are smart enough to see that taking care of their social and physical environment is in their best interests – but they are still necessary, because not all companies are that smart. (Also, sometimes acting in a way that harms others is in a person or company’s interest, unless the law provides negative consequences that the act itself does not.)
All in all, thought-provoking stuff, and it will go into the mix for any SF I write in the future.
https://open.sap.com/courses/sbi1-1