Uncategorized

FUTURE ADVANTAGE ~ the futility of ‘greening’ your business as a means of survival and growth.

 

images01

For those that are prepared to see and to open their minds to listen; it is clear we live in a future of energy, physical resource constraints and sinks in which to dispose of the by-products of our efforts to create ‘value’ which we can sell at a profit to potential customers.

For over a generation now we have been told by environmentalists and consultants that ‘greening’ our businesses would make them more ‘sustainable’ ~ that reducing our environmental impact and reducing waste and recycling it would make us good people to do business with, good corporate citizens and by turn profitable and growing.

Whilst environmental, energy and resource ‘stewardship’ is clearly a good thing it is not the whole story and the way in which the story is told is misleading at best. The ‘Circular Economy’ is similarly said by many to be the additional tool in the toolbox of the corporate strategist that will save the day.

The first generation of environmental and sustainability consultants acknowledge that resources and sinks are constrained, with the inevitable results we are seeing all around us. However, they will not make the necessary intellectual leap to enlightenment; probably and understandably because they recognise that their potential clients and their customers do not want to ‘hear the truth’ ~ as Jack Nicholson said in a ‘Few Good Men’.

Unfortunately, some, because of their background in the environmental sciences, will not or cannot see the truth themselves, and that simple truth is that there is no such thing as a ‘green’ business.

Successful businesses add value, that is the only way they attract customers, and in an environment where energy, physical resources and sinks are not constrained that value can be Essential Value or non-essential value ~ anything that will attract sufficient customers to make a profit. This is market capitalism ~ a primeval force that has brought mankind to where it is to today, to the edge of the abyss, and the only force that can stop us falling into it.

FUTURE ADVANTAGE

In his 1982 book ‘Out of the Crisis, W Edwards Deming, the recognised father of Quality Management said in his Preface.

“Failure of Management to plan for the future and to foresee problems has brought about waste of manpower, of materials and of machine time, all of which raise the manufacturer’s cost and the price the consumer must pay. The consumer is not always willing to subsidize this waste….”

W Edwards Deming was writing before sustainability concerns came to the fore but they can be read into this statement none the less, and I hope he will forgive my attempt to do so.

‘Failure of Management to plan for the future and to foresee problems’ is the central issue here ~ societal and corporate management has failed to recognise that resources and sinks are becoming increasingly constrained and that waste of manpower, of materials and of machine time include increasingly unacceptable and unsupportable environmental, social and economic costs ~ leading ‘in the limit’ to the consumer, (society and the Earth) not being willing (or able) to subsidize this waste”

IN THE LIMIT

‘In the Limit’ is the crucial phrase here to Future Advantage, survival and growth; and to the truth that there are no Green businesses but only those that maximize the ‘Essential Value’ they create whilst minimizing their ‘Resource Intensity’ in so doing.

In the Limit, Management will also foresee that consumers will also only be willing or able to pay for Essential Value and that their primary function is to be able to define concisely, in terms of the categories below, what that Essential Value is.

Their only other function is to work on the work, with the workers and  manage value, rather than cost, John Seddon, Freedom from Command and Control, 2003, to maximize its creation and to deliver it at minimum Resource Intensity.

Recognizing that ‘in the limit’ environmental and social elements of Resource Intensity will predominate.

Essential Value

‘Essential Value’ is that needed to ensure a satisfactory Quality of Life for all citizens and in a wider sense, the stakeholders of a society”. This is the only way Future Advantage can be gained by a business, and maintained to maximize the opportunity of an enterprise to survive and grow.

If management can define the Essential Value they create within the parameters of these categories then this possible. The more categories they can include within that definition the higher the probability of survival and growth.

  • Satisfy emotional and spiritual need rather than gratuitous wants.
  • Satisfy essential needs in the lower orders of Maslow’s Pyramid
  • Employ people rather than energy where humanely possible.
  • Create or use renewable energy and other resources.
  • Minimise water use or create the technologies that do.
  • Create and deploy climate stabilising and mitigation technologies.
  • Virtualise and minimise the Resource Intensity of Mobility
  • Be increasingly local.
  • Provide a service rather than a product.
  • Practice life-cycle stewardship of their resources.
Advertisements

Democracy ~ What is the question most voters must be able to answer correctly?

I made the following statement and asked the question ~

To decide if a Democracy can survive and prosper, what is the question most voters must be able to answer correctly?

“In terms of digging a hole what is the difference between EFFECTIVENESS and EFFICIENCY?”

Here is my answer to the question expressed as concisely and as logically as I can.

In life we must as far as humanly possible, on a balance of probabilities, do the right thing right every time.

If we are asked to dig a hole, we have to ask “is the right thing to do?”; and if we think it is, then we must ask “do we know where to dig it and do we know the dimensions?” Will digging the hole be Effective?

When we are sure digging the hole will be an Effective solution to our problem then we must dig it (and refill it) using as few resources of time, energy and materials as possible, we must be Efficient.

If we dig the hole in the wrong place then the Effectiveness of our actions will be zero and all resources used wasted, no matter how Efficient our actions seemed to be. The Resource Intensity of our actions will be infinite.

If voters in a democracy are unaware of the distinction between Effectiveness and Efficiency then they are not in a position to judge the veracity of the policies placed before them at an election and so will not be able, on a balance of probabilities, to evaluate whether they will be effective in producing the outcomes claimed and efficient in using scarce public resources. Democracy will be imperiled, particularly when resources are constrained.

By extension voters become politicians and so they themselves will not be able to evaluate the veracity of the policies they are proposing to the electorate in respect of effectiveness and efficiency.

The blind leading the blind into oblivion.

Essential Value -Impossible Challenge or Challenging adventure?

Gail Tverberg has just released a presentation  that attempts to sum up the energy situation global society faces and how the election of Donald Trump to the presidency of the United States might be affected and influenced by it.

This is a plausible objective analysis that correlates well with the work of Chris Martenson and others such as the Post Carbon Institute.

Gail’s analysis is not a rosy one nor has she the time to spend on possible, if difficult to implement solutions. Her thrust appearing to be that there ‘aren’t any at the current level of humanity’. In this she is undoubtedly right but the question remains “how do we define a framework for democratic systems that can work effectively in the resource and energy constrained future we face?”

Do we want to see the future as an impossible challenge or a challenging adventure? Given a rational choice I believe humans would choose the latter.

This slide is presented as part of her presentation

complexity

It sums up the premise of this blog, that as limits of complexity are reached, individuals will seek to maximise the Essential Value they need to directly maximise the Quality of Life for themselves and their families.

Civil Society can enable or impede this and those societies that enable it will survive and those that don’t will perish, with tragic consequences for their citizens.

What is clear is that most of the waste of effort and resources, Non Essential Value, in societies is the result of absent organisational learning and improvement in governance. Our Western Democracies, as presently implemented being the principle culprits.

A number of posts on this blog give ways we can think about ‘recreating the Democratic Process’ to maximise the creation, use, retention and equitable distribution of Essential Value. Among them

The Essential Value and Resource Intensity Impact Assessment

Rethinking Democracy

Essential Value and the State of the World

In light of the recent G20 summit and the report today that particles may be affecting the brain it is interesting to revisit Sunita Narain’s foreword to the Worldwatch Institute publication  State of the World 2006

In 2016 she was named to Time Magazine‘s list of 100 Most Influential People

The foreword starts

Sunita Narain

The rest of the foreword identifies the issues confronting us today and the need for China and India to take a different development path to that taken by the West.

The foreword can be accessed here ww-forward-2006-sunita

 

Rethinking Democracy

I feel the diagram below represents a rethinking of the Democratic Process and flows sufficiently accurately to enable discussion in a forum setting. There is obviously devil in the detail. If anyone has seen a diagram they think better represents the situation in a simpler format please let me know.

I will attempt a written description below the diagram.

 

“In a world where the resources and waste sinks available to SystemUK are constrained, the UK must work to identify, maximise, defend, retain and fairly distribute, over time, the Essential Value needed for prosperity and growth.

It must do this at continually decreasing Resource Intensity, the resource use per person per unit of Essential Value created or retained, whilst continually decreasing Failure Demand creation, caused by not doing the right thing, not doing it right or not doing it right every time.

The Democratic Process is a Virtuous Circle for Essential Value Creation, retention and equitable distribution. It is an in-process controlled system that takes a synergy and the knowledge and skills of its stakeholders to enable process learning.

After sensing external factors it applies ingenuity and creativity within society to improve the process. In-process control is exercised by civil, regional and local services and democratic accountability is exercised by Parliament, regional and local government.

There is no direct connection between democratic accountability and in-process control. the connection is though a ‘moderator’ and political parties and their agents can only change control factors through an, independently moderated, Essential Value and Resource Intensity impact assessment.” 

SystemUK and the Ingenuity Gap

PPT2

The Process improvement and control diagram above explicitly emphasises the importance of Ingenuity and Creativity in continuous learning for sustainable governance.

It is clear that in a resource constrained environment, where, as identified below, Ingenuity and Creativity are also constrained, all efforts to their creation and application must be to the sole aim of sustainable governance in a democracy. To

“identify, maximise and defend the Essential Value available to society created and retained over time and to distribute it equitably at continually reducing Resource Intensity and Failure demand”

It is the fact that in any organisation or society, Ingenuity and Creativity are limited. This was identified by Thomas Homer in his book ‘The Ingenuity Gap‘ and it was also identified as a problem in the UK in an Ofsted Report as a missing element in education.

Sugata Mitra’s  experiments in self-teaching detailed here in the TED Talk he gave in 2010, have virtually proved that learning is an emergent property when small groups of students have access to information they can share. He provides at the end of the Talk a definition.

“Education is a Self Organising System where Learning is an Emergent Phenomenon”  

We are failing our learners if we do not lever the potential of social media and the internet to liberate the creativity all children possess and largely lose as they grow up with the educational model we have used since the beginning of the Industrial Revolution  . Ken Robinson makes this point in probably one of the most watched TED Talks, Do Schools Kill Creativity.

The problem, of course, is not with the children, it is with Society, Teachers and Industry; simply because they were not exposed to this concept of ‘emergent learning’ and the unlimited expectations of their mentors as they grew up.

In reality out traditional educational model never served, but in this time of exponential change,where more children will be passing through education in the next fifty years than have ever done, we cannot create inspirational teachers fast enough to liberate the necessary creativity that will enable us to solve the problems presented in the One Planet World we now inhabit.

The other key issue of course is the necessity we have to reduce the resource and carbon intensity of SystemUK by considerable amounts.

We must liberate the creativity to do this by design, or resource availability, at a price we can afford to pay as a society, or the Earth will do it for us.

In all this a key point is being missed and this is the need to maintain and generate the ‘tacit’ skills our society requires.

Fixing a Broken Democracy with Quality Thinking

All around us we are bombarded with messages telling us that we need to change, that the Earth is warming, that oil is peaking or we are in an power crisis. The messages are insistent and shrill but diverse and incoherent and all about our symptoms rather than the addiction we suffer, the hugely ineffective use of the resources and sinks that our only planet, the Earth, provides for us. As a result we are either paralysed into inaction or taking action that is neither systemic nor joined-up, to use a much hackneyed political expression.

Clearly the Earth as a ‘system’ is dynamic and complex and any attempt to describe it quantitatively and accurately is unlikely to lead to any clearer picture of useful action. What we need is a ‘mind model’, something that is powerful and evocative enough to provoke the right questions of societies, communities and organisations.A Mind Model 

‘A conceptual model of understanding, that once created, gives us the power to extract more information from it, than went into creating it.’ Such a conceptual, or mind model is the One Planet Equation.

The One Planet Equation

 We often are told we are enjoying a three planet lifestyle and this tells us that what we are doing is clearly not a sustainable state of affairs, but it is not clear from this what we need to do. We have in fact only ‘One Planet’ so the left hand side of our equation in a ‘resource constrained’ environment is fixed at 1.

The right hand side is made up of the population, their consumption of goods and services, and a factor which balances the equation. P x C x RI

There are clearly many interactions taking place here and there are inequities in resource distribution among individuals and societies; also the starting point assumes the footprint is no larger than the planet, however, a simple analysis shows us exactly what we need to do and gives us a paradigm in which we can form the correct questions to ask of ourselves, our institutions and our organisations.

We also express the population, consumption and resource factor, or intensity, aggregated as 1 lot of population and Consumption with a Resource Intensity of 1.

So at our starting point we have 1 = P x C x RI or 1 = 1 x 1 x 1 = 1 and as we move forward from this point, the 1 planet remains the same so the right hand product always has to equal one. The only way this can happen in a resourced constrained environment is if the Resource Intensity, (RI) is never more than 1/PC.

Simple compound interest does the rest and we can quickly see that if population stays the same and consumption grows at 5% for 40 years 1/PC is approximately 1/7 and if population grows at the predicted rate and consumption grew at 10% then 1/PC would have to be no greater than 1/70.

In round terms we would need to reduce Resource Intensity by a factor of between 10 and 100 by 2050. We can call this process dematerialisation. This can also be expressed as the ‘first law of sustainability’ that in a resource constrained environment, goods and services can only grow at the rate at which they can be dematerialised

Resource Intensities

 Whilst the above analysis is explicit in what we need to achieve, it will be useful if we can apportion Resource Intensities, within societies, communities and organisations.

A useful division includes

  • The Built Environment
  • Governance
  • Security
  • Mobility
  • Fulfillment
  • Learning
  • Failure Demand

It is clear from this list that they all overlap, which highlights the need to take a systems based view.

Intensity and Value Added

In this analysis there are areas that are beyond its scope, as the process with the least Resource Intensity is the one that doesn’t exist, and only society, communities, organisations and individuals can decide which are ‘essential’ and add value and which should be eliminated. For example, if a society considers unlimited, discretionary air travel adds value, then businesses will provide it. Whether this is a viable business model in a resource constrained future is a separate issue.

Loss and Genichi Taguchi

Once we have decided whether a process is essential within the bounds of our notion of added value, we have to decide if it is the right process to achieve the desired end and that it is carried out, without loss, correctly every time. That is, we have to be effective, by doing the right thing, right and then efficient, by doing it right every time.

Genichi Taguchi inspirationally made the connection that processes without loss were of perfect ‘quality’ and conversely, that less than perfect quality created a ‘loss to society’. It is also important to note that on a resource constrained planet, environmental and social losses can be as much, and perhaps more important than conventional economic ones.

In terms of this article, that loss results in an increase in the process ‘resource intensity’.

Intensity of Failure Demand

“Failure Demand’ is caused by a failure to do something, or do something right for the customer and ‘Value Demand’ – is what the system exists to provide”, – John Seddon. It is evident that such failure demand within systems will increase their Resource Intensity.

In the list above ‘failure demand’ is shown separately for emphasis but is, in reality, incorporated in the Resource Intensity resulting from the creation, use and disposal of the other categories. The Resource Intensity of Learning (RIoL) for example.

Continual Improvement

We have in the past thought that we can treat losses in processes as separate and that quality was a function within an organisation, focused on the customer, rather than that which

“Maximises the Essential Value added to and retained by society resulting  from the creation, use and disposal of products and services”

This must necessarily involve all an organisation’s stakeholders. It should also be stated, relating back, that it is society that decides what ‘adds value’ within its existent paradigm.

Losses in processes and systems can be environmental, social and economic and are best minimised by seeing the goal of sustainability as a journey of integrated, continual, quality improvement.

Creativity and Ingenuity

Shewhart created his circle of improvement, Plan, Do, Check, Act and it has stood the test of time but it doesn’t explicitly show the need for the creativity and ingenuity required to drive, integrated continual improvement, towards system sustainability.

A Virtuous Circle that, using ‘in process control’ and a synergy of the entire organisation’s stakeholders and their combined knowledge and skills will enable process learning and after sensing and absorbing the external signals will liberate the creativity and  ingenuity within to drive the process design in the direction of sustainability. As the process becomes more sustainable the losses are by definition minimised, reducing the need for appraisal costs and eliminating the costs and risks of internal and most importantly, external failures. With minimised costs and no external failures the profitability, public perception and value added to society are maximised.

 

The Right Questions

We have reached a point in our evolution as societies where innovation will shortly transition from being driven by technology and will by driven by resource constraints. It important that as societies, communities and organisations we ask the right questions based on the tenets that

  • our future is resource constrained
  • humans are creative and enterprising

These two tenets will ensure that as we transition into our resource constrained future, some organisations will disappear and be replaced; others, with exceptional strategic leadership and management, might survive and grow.

The task is simple, if not easy to accomplish, and again can by reduced to two key questions

  • Is our business model relevant to such a future?
  • Does our leadership and management, enable the liberation of the creativity required to continually reduce the resource intensity of the goods and services we produce, consume and dispose of?

This will need the most massive effort of ‘quality improvement’ the world has yet seen.

Conclusion

The message is clear; we have to change, but how? Our symptoms are plain for all to see but our addiction, the vast and hugely ineffective deployment of resources to create, use and dispose of the products and services we consume, remains untreated. Calling this addiction, Affluenza may be a representation of the truth in the developed Western Economies but it does not make clear the path we must follow to effect a cure.

Simply exhorting people to consume less is ineffective as is calling certain Jobs, Products and services, Green. There are many ‘essential’ jobs, products and services that cannot be considered in this light, many in the public sector, but their resource intensity is crucial in any attempt to balance the One Planet Equation. In the context of this balancing we can say that

‘There are no such things as ‘Green’ jobs, products or services, only those that increase or reduce the ‘Resource Intensity of Society’

This also highlights the absurdity of the Reductionist Paradigm, where Vauxhall Motors, in an ISO14001 video trumpeted energy savings in the order of £1m with a payback of 10 months, when GM should have been asking

“How do we evolve our business model and strategy to continually reduce the ‘resource intensity of mobility?”

Finally, the One Planet Equation is immutable, it drives our futures whether we choose to ignore it or not, and we have no option but to enter the future, either by design or negligence. Better, as far as possible by design.