Thursday, April 12, 2007

Stuart Hart's Book "Capitalism at the Crossroads"

I moseyed (OK, I drove) to Harvard Sq. earlier this week for another evening with the Kennedy School's Corporate Responsibility Council to hear Stuart Hart talk about his take on sustainable business. His book, "Capitalism at the Crossroads" has been on my reading list for a while, but I must confess that I have not yet read it.

After the glowing introduction of Professor Hart, when I learned that he initiated the sustainability programs at the University of Michigan, University of North Carolina, and now Cornell, we started reviewing the process of industrialization. Oh wait, before we launched into that, Prof. Hart talked about the similarities in the world now and 100 years ago in 1907. It was a time when people thought war would be completely irrational given the interconnectedness of the global economies. There were some intellectuals that saw signs of WWI on the horizon, among them the inequities between the haves and the have nots. No one listened, WWI and WWII came and went, and we are still dealing with the inequities that existed 100 years ago. Is climate change the looming WW of this era?

Industrialization: For many years, prosperity was equated with pollution, especially in the late 1800's and the early 1900's. As industrial activity increased, consumers bought more stuff, energy use went up, and more "waste" was exhausted into the air, the ground and the water. Prof. Hart recounted a childhood story of the need to wipe soot off the porch chairs each day at his home in upstate NY before taking a seat. The slightly acrid tinge to the air, depending on which way the wind was blowing, was described as "the smell of money". It was not until the late 60's, as Vietnam raged and free love coupled with the release of Rachel Carson's seminal Silent Spring that we realized that businesses were not going to self police relative to environmental preservation. A clean environment was an inalienable right. The EPA was created with the Clean Air and Clean Water Acts following in the early 70's. The era of environmental regulation was upon us.

The Quality (I am not talking Quality as described in Zen and the Art of Motorcycle Maintenance) movement of the 80's and early 90's (ISO 9000, Six Sigma, TQM, etc), spawned from our manufacturing failures illuminated by the foreign influx of goods, specifically cars, was what started us thinking about reducing waste. Is Cradle-to-Cradle manufacturing, Eco-manufacturing, Zero Waste Manufacturing the next logical progression on the quality movement? Sure. After all, waste means that the process is not optimized and therefore not as profitable as it could be and therefore poorly managed. What a tremendous business opportunity to make companies environmentally and socially restorative in their economic activities instead of extractive. We face a struggle; the business perspective is still that of the EPA as an enforcer, and that is still the case in many instances. We need to move to a collaborative model, such that stakeholders from business, gov't, NGO's, etc., work together to solve problems.

The element of Prof. Hart's material that I had not given much thought to from a sustainable business perspective was the growing social inequity in the global economy and the 4+ billion people that are completely ignored by the market. What good is it to have sustainable businesses that are geared toward the wealthiest 1+ billion consumers that make up the first world? Yay! Pat ourselves on the back. Whoops! There are 4-5 billion people on the outside looking in that are not happy. Political unrest anyone? How sustainable is a clean and happy first world with billions screaming to get in? Guess what, they'll figure out how to get in, and pollute and wage war on the way.

Why not come up with solutions that engage and serve the under served while using clean technologies? They are the ones that need it and it's a huge market! An example of a product aimed at this market that Prof. Hart talked about was a small, portable solar powered system using LEDs for light. This system, with a price tag target of $50.00, combined with another disruptive technology, microfinance, could vastly improve the lives of millions of people that do not have access to a utility grid. Is this technology really needed in the first world?

I have wandered a bit here in my reporting and commenting, and there are many other points Prof. Hart brought up that provoked ideas I could relay to you. I suppose the wandering is something that is part and parcel to discussions about sustainability, since it means different things to different people and crosses many segment boundaries. What I believe Prof. Hart was driving at is that there are tremendous business opportunities in developing leapfrog technologies to serve the disenfranchised while reducing our environmental impact.

I learned about the Base of the Pyramid, something I had not thought much about in the context of a sustainable economy.

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