Wednesday, May 28, 2008

Doing Business in a Shrinking Sandbox

Why Social Response Capitalism Will Put Us on a Sandy Beach Instead of a Sandy Desert

All that I need to know about business sustainability, I learned in kindergarten. Are the actions and behaviors of adults and modern corporations remarkably different than those of children? This is not necessarily the most important question of our time, but its answer is revealing…No! Modern corporations and the adults that manage them are just bigger versions of the toddlers playing in local park sandbox. The sandbox has gotten bigger, and in many cases so has their ego, but the rules of play are just the same.

We learned as toddlers to share, to play fair, to put things back where we found them, to clean up our own mess, not to take things that were not ours, to live a balanced life and to have a balance diet. Robert Fulghum summarized some of these early childhood discoveries in his now classic book, “
All I Really Need to Know I Learned in Kindergarten”. Like the book “World Inc.: When it Comes to Solutions - Both Local and Global - Businesses Are Now More Powerful Than Government” by Bruce Piasecki, Robert Fulghum’s book is essential reading for corporate managers and executives. It’s good to have a refresher to reevaluate why your firm is in business, how it does business, and what the future business of your firm will be.

As companies, consumers and citizens we’ve spent too much time in the petrochemical sandbox. In fact we’ve spent so much time that we’re now being charged more and more money to even show up at the sandbox to play anymore (the month of May welcomed $130/barrel oil to the world). Today’s petrochemical sandbox is enormous. It’s includes 195 countries, 6.6 billion people, 148.94 million sq. km. of land, 361.132 million sq. km. of water and one over consumed resource – oil.

The petrochemical sandbox is often not a clean place to play either. On November 11, 2007 more than 560,000 gallons of fuel spilled into the Strait of Kerch and in the nearby area of the Black Sea when massive seas crushed a Russian tanker. Three days prior a ship bound for South Korea spilled in excess of 58,000 gallons of oil into the San Francisco Bay when it struck a tower supporting the San Francisco-Oakland Bay Bridge in dense fog. Whether human error, natural disasters or acts of God, natural resource damages from oil are messes we need to clean up.

It is no secret that the world is running out of oil as well as a host of other natural resources. It’s also no secret that we have a limited supply of fresh and potable water, as well as clean air. Modern society as we know it is unsustainable. While we have mastered the art of production and consumption we are not yet even apprentices in learning the art of sustainability and social responsibility. But, how do you master an art without a teacher? Earth has been around much longer than humans, so I would postulate that our teacher is present. The question is, are the students? Unfortunately most of the students that matter, like corporate executives or politicians, the “decision makers” are at recess or gambling their futures in the petrochemical sandbox. That’s too bad because consumers are at social response class and taking notes. In fact Americans
drove 11 billion fewer miles in 2007 compared with 2006 according to the US Department of Transportation in their own social response to higher gas prices (a year over year 4.3% decline in miles driven and the sharpest year over year decline ever recorded since the US DOT began keeping records and monitoring such data in 1942). And CNN.com recently reported that some consumers and business professionals are changing their lifestyles as they choose to ride bikes away from the petrochemical sandbox as their primary mode of transport to work each day.

While most believe the sandbox to be in Saudi Arabia, Iran, Iraq, Kuwait and Venezuela, the children at play are stationed all around the world. The petrochemical sandbox has no boundaries. It’s a modern machine pumping, refining, consuming and banking on the children to show up at the park the next day. The question is, why do we continue to show up to play in the sandbox?...Particularly in a world where we don’t share, don’t play fair, don’t put things back where we found them, don’t clean up after ourselves and don’t respect ourselves through a balanced diet. Have we learned nothing from our Kindergarten years?

In his book “World Inc.” Bruce Piasecki examines a new paradigm in business, government and capitalism where the sandbox is no longer defined by our petrochemical past and that the new kids on the block are playing new age games that are more inclusive, cleaner, and more rewarding than the petrochemical sandbox ever was. While we have to hang onto our youth for just a little while longer, there are positive signs that we’re growing up as citizens, companies and governments to practice what we learned in Kindergarten many years ago.

I don’t expect big egos to “say they are sorry when they’ve hurt somebody” even if that somebody is the natural environment, the economy, entire cultures or religions or thousands of retirees without adequate health coverage.

But why not? An apology might be a healthy start. Besides, if modern innovators, scientists and entrepreneurs have it their way there will not be a petrochemical sandbox in fifty years to show up to, making discussions of peak oil relatively moot. It’s interesting how many politicians and government leaders are so focused on whether or not we are close to running out of oil versus doing anything about it at times. We get caught up in creating too many rules for our sandbox as opposed to thinking outside of our sandbox for solutions. Perhaps that is where the saying “get your head out of the sand” came from?

Anyway let’s stop blaming those that run the petrochemical sandbox and start developing our own end game for the future beyond oil, beyond past mistakes and beyond the impasse that we so often revert to when its easier to not share and not play fair than it is to let down our guard and world together for the betterment of commerce and the betterment of government and society. The petrochemical sandbox is a zero-sum game. In the short run we might seek to further optimize the use of oil through greater efficiency, but this ultimately just buys us more time in the sandbox, and likely not at lower cost. In the mid term we can seek to bridge the present with the future by incorporating new technologies like plug-in hybrid electric vehicles into our vehicle fleets or renewable energy technologies into our electric generation mix, but these also have their limits.
Ultimately we will likely have a mix of technologies and strategies and oil may still be one of those options. No matter what the future holds for technology we will be left with the scars of unfair sandbox play, left to clean up our messes and deal with the repercussions of an unbalanced energy diet that lasted in excess of a century. Over the next thirty, fifty or more years many of the world’s largest corporations and governments will spend in excess of one trillion dollars conducting long term operations, maintenance and monitoring (OMM) of environmental liabilities, waste sites, many left from our days playing in the petrochemical sandbox. Some might say no wonder the current cost to play in the sandbox is rising. Other might say it was truly a zero-sum game after all.

The balanced energy diet of the future will be filled with nutritious sources of energy. To get there however will require corporations, governments, special interests and the global community to work together, play fair, and respect one another. What will be different from today is how we as companies, governments and society play in the sandbox and whether we choose to take what we learned in Kindergarten and apply it, or choose to remain petty, infantile and underdeveloped. It’s too bad so many politicians, corporate executives and even special interest groups have chosen the latter. It speaks volumes of who they are as “regular people”.

The future of capitalism will be driven by cleaner technologies, renewable energy and innovative business models that seek to reduce pollution, optimize the efficiency of our machines and products, and create long lasting value for shareholders, stakeholders and future generations alike. Companies (and governments) that share, play fair, put things back where we found them, clean up after their own mess, don’t take things that are not theirs, and that live a balanced life with a balanced energy diet are better investments in our future. They reduce risk, extinguish liabilities and seek to enhance quality of life by delivering on social needs. Removing our heads from the petrochemical sandbox is a start. Ultimately we will diminish our reliance on oil and just might reshape our economy in the process so that we can someday relax on a sandy beach instead of buying time by fighting in a sandy desert.

Want to get real about the future of energy, natural resources and capitalism, go to
www.ahcgroup.com and www.worldincbook.com to learn more on how leading companies are reinventing the future of business through social response product development and social response capitalism.

Mark C. Coleman
Senior Associate & World Inc. Case Leader, AHC Group, Inc.

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