It’s quite amazing how the concept of waste is so prevalent in today’s society. Wikipedia defines waste as unwanted or unusable materials. This definition of waste is relatively new if one thinks about the fact that waste only emerged as a household term once we began to systematically extract materials from the earth’s crust that are not easily and/or naturally reinserted into the Earth’s natural cycle. But growing up with the very idea of a trash can underneath the kitchen sink has created the perception that waste is as common and necessary as oxygen, as unavoidable as the winter seasons, and as natural as sleeping. But if we step back from our anthropocentric worldview and reestablish our interconnection with nature, we’ll begin to realize that waste has no place in a sustainable society. Could you imagine not having the luxury of dumping to the curb batteries, plastic containers, seran wrap, food waste, your old cell phone, bounce sheets, your old ipod, a stained shirt, chocolate bar wrapper never to be seen again once picked up by the garbageman?
The growing headache of waste disposal and the disappearing space available to dump the waste is foreshadowing a society where this predicament might actually exist. Terracyle is a small entrepreneurial business fixed on “upcycling” waste into new products. The business started in New Jersey when the founder Tom Szaky learned that worm poop is an excellent all-natural fertilizer. This gave him the idea that perhaps all products could be made from waste. Emulating nature’s approach to waste, TerraCycle considers waste as a resource for something else. The worm-poop fertilizer product, for example, is bottled in old soda and water bottles. You can find the product in Wal-Mart and Home Depot in a range of different bottle sizes and types. The interesting thing though is that the company has involved thousands of community groups, organizations, and schools to help collect the bottles in return for money used for community or school events.
Only about 23% of plastic drinking bottles are recycled meaning that 77% end up in landfills. Now you may think that you’re doing your job by recycling your plastic water/soda bottles. But if you follow the journey of a recycled bottle, you’ll learn that the energy required to crush the bottles is enormous in addition to the fact that we typically send the bottles overseas, emitting tonnes of carbon. TerraCycle works to eliminate these additional steps by thinking of waste as a resource in the same way that nature thinks of waste as food. Due to the success of the TerraCycle fertilizer product, they’ve expanded to other products like tote bags made from drink pouches, corkboards made from cork, and laptop cases made from drink pouches. If you go to their website (Terracyle website) you’ll notice that they’ve made a call for candy wrappers and drink pouches at $0.02 each.
This company amazes me because not only have they come up with some amazing products made from waste, but they’ve been able to convince behemoths like Wal-Mart, Home Depot and Target on the customer side to stock their products and have attracted the likes of Mars, Fritolay and Stonyfield on the supply side to assist in researching how the waste from their products can be turned into new products. On top of all this, they’ve harnessed the power of communities to collect the waste, thus creating awareness among our youth that perhaps the very notion of waste is ill-founded when we consider the state of our environment and the current practices we use to create these same products from scratch.
When I write about the need for change in business cirricula, I’m referring to the need to build in frameworks that teach future managers how to build business models that incorporate this greater complexity rather than reduce it. TerraCycle is weaving together the need for economic sustainability, social sustainability, and ecological sustainability not as separate isolated initiatives but as an integrated business model with zero tradeoffs.
Saturday, March 27, 2010
Monday, March 22, 2010
China and Google
Things are certainly heating up in China as Google is preparing to exit the massive Internet market. While critics are skeptical of Google's underlying motivation for this move, there appears to be little doubt that 'restricted free speech' is at least one of the fundamental reasons for this move. Regardless of the immediate impact that this strategy has, I think there are at least three precedents that this will set. First, because of Google's trusted brand, the world, including Chinese citizens, are now that much more aware of controversial human rights issues associated with freedom of speech in this nation. Whether or not human rights is in fact an issue in China is, I think, less important than the global attention this story has created. Second, Google, as a for-profit company, is raising the bar on expectations of companies that face decisions that present a trade-off between profit and the public good. Third, as mentioned in earlier posts, companies will be hard-pressed to avoid situations where they are playing the role of government or at the very least filling in gaps in public service left by governments. There is no doubt that the private sector is the largest and most powerful actor in today's global society. Regardless of their motivations, Google's move highlights how this power could very well be a force for public good.
Sunday, March 21, 2010
Too much stuff!!
With the release of Annie Leonard’s book and less recent video “Story of Stuff”, there has been a lot of talk lately of the sheer amount of stuff that we consume as a civilization. In the 1950s, post-world war policy in North America and Europe revolved around establishing a consumer economy. Retail analysis Victor Lebow said it clearly more than 50 years ago:
“Our enormous productive economy demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption. The economy needs things consumed, burned, worn out, replaced, and discarded at an ever-increasing rate” (Cited in Alan Durning, How Much is enough? (New York: Norton, 1992)
Around this time, companies were encouraged to find the optimum length of time at which to make their products obsolete or breakdown. That is, the goal was to find the product life cycle length that wouldn’t quite turn off the consumer (because it became obsolete or broke too quickly), yet wouldn’t unnecessarily last too long where revenues from repeat purchase would be lost.
Consumerism today certainly isn’t stated as explicitly as it was back then, but it remains powerful. Consider the following statistics.
• Globally, personal consumption expenditures (household spending on goods and services) topped $24 trillion in 2005, up from $4.8 trillion (in 1995 dollars) in 1960.
• Americans spent two-thirds of their $11 trillion on consumer goods
• Americans spent more for shoes, jewelry, and watches ($100 billion) than for higher education ($99 billion)
• According to the UN, people worldwide spent $18 billion on cosmetics and $17 billion on pet food in the US and Europe combined. Consider that eliminating hunger and malnutrition is estimated to cost $19 billion
• We spend $14 billion on ocean cruises and it is estimated to cost $10 billion to provide clean drinking water for everyone
• As of 2003, the US had more private cars than licensed drivers
Fueling policy around consumption was the firm belief that economic growth, as measured by Gross Domestic Product, creates the wealth needed to provide material abundance for everyone, increasing happiness, ending poverty, and healing the environment. Yet since 1957, the GNP in the United States has more than doubled, but the average level of happiness has declined. Over the same period, the divorce and teen suicide rates have doubled, violent crime tripled, and more people than ever say they are depressed. This is not to mention some of the ecological effects resulting from these consumption levels like the patch of floating garbage the size of France circulating in the Pacific Ocean.
As of 2008, with almost 7 billion people in the world, we are consuming at a rate of 1.3 planets. This means that our global footprint – the area of land we use to produce, consume, waste – is 30% larger than the size of Earth. Like an individual spending more than he/she is earning, we’re slowly reaching a stage of ecological bankruptcy because we’re consuming more ‘capital’ than the Earth can produce naturally. With population expected to reach 9 billion, this 'capital' will only erode more quickly.
A video summary of Annie Leonard’s book can be found here:
Story of Stuff
“Our enormous productive economy demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption. The economy needs things consumed, burned, worn out, replaced, and discarded at an ever-increasing rate” (Cited in Alan Durning, How Much is enough? (New York: Norton, 1992)
Around this time, companies were encouraged to find the optimum length of time at which to make their products obsolete or breakdown. That is, the goal was to find the product life cycle length that wouldn’t quite turn off the consumer (because it became obsolete or broke too quickly), yet wouldn’t unnecessarily last too long where revenues from repeat purchase would be lost.
Consumerism today certainly isn’t stated as explicitly as it was back then, but it remains powerful. Consider the following statistics.
• Globally, personal consumption expenditures (household spending on goods and services) topped $24 trillion in 2005, up from $4.8 trillion (in 1995 dollars) in 1960.
• Americans spent two-thirds of their $11 trillion on consumer goods
• Americans spent more for shoes, jewelry, and watches ($100 billion) than for higher education ($99 billion)
• According to the UN, people worldwide spent $18 billion on cosmetics and $17 billion on pet food in the US and Europe combined. Consider that eliminating hunger and malnutrition is estimated to cost $19 billion
• We spend $14 billion on ocean cruises and it is estimated to cost $10 billion to provide clean drinking water for everyone
• As of 2003, the US had more private cars than licensed drivers
Fueling policy around consumption was the firm belief that economic growth, as measured by Gross Domestic Product, creates the wealth needed to provide material abundance for everyone, increasing happiness, ending poverty, and healing the environment. Yet since 1957, the GNP in the United States has more than doubled, but the average level of happiness has declined. Over the same period, the divorce and teen suicide rates have doubled, violent crime tripled, and more people than ever say they are depressed. This is not to mention some of the ecological effects resulting from these consumption levels like the patch of floating garbage the size of France circulating in the Pacific Ocean.
As of 2008, with almost 7 billion people in the world, we are consuming at a rate of 1.3 planets. This means that our global footprint – the area of land we use to produce, consume, waste – is 30% larger than the size of Earth. Like an individual spending more than he/she is earning, we’re slowly reaching a stage of ecological bankruptcy because we’re consuming more ‘capital’ than the Earth can produce naturally. With population expected to reach 9 billion, this 'capital' will only erode more quickly.
A video summary of Annie Leonard’s book can be found here:
Story of Stuff
Tuesday, March 16, 2010
Lehman Brothers: The Pinnacle of Greed
A lenghty report released only a few days ago concluded that Lehman Brothers was engaged in fraudulant accounting practices where they sold 'garbage' assets immediately prior to quarterly reporting time for $50B. This, of course, was to mislead investors into thinking that they were financially legit. Immediately after reporting time, Lehman would repurchase those 'garbage' assets to once again reflect the reality of their financial situation.
Now it's one thing to consider this unethical act as an isolated incident but the implications for the world economy were huge because the market wasn't receiving true depictions of what these investment banks had as assets, which prolonged and exacerbated the ensuing financial crisis.
As a prof instructing future managers and executives, hearing about these types of stories is disheartening. A study in 2006 found that more than half of MBA students admitted to cheating regularly during their programs mainly because they presumed that the rest of the students were doing so. Interestingly, when I ask my students what turns them off about business, the most common answer I receive is greed and corrupt/unethical behaviour. What's going on here? Do business programs elicit this beheaviour or does the competitiveness of business bring out this behaviour to the point where it becomes unintentional. Like the frog unable to leave the pot of water reaching its boiling point, do managers start with small seemingly insignificant unethical decisions only to pursue small incremental increases in the degree of corruption until they unknowingly reach the boiling point?
Now it's one thing to consider this unethical act as an isolated incident but the implications for the world economy were huge because the market wasn't receiving true depictions of what these investment banks had as assets, which prolonged and exacerbated the ensuing financial crisis.
As a prof instructing future managers and executives, hearing about these types of stories is disheartening. A study in 2006 found that more than half of MBA students admitted to cheating regularly during their programs mainly because they presumed that the rest of the students were doing so. Interestingly, when I ask my students what turns them off about business, the most common answer I receive is greed and corrupt/unethical behaviour. What's going on here? Do business programs elicit this beheaviour or does the competitiveness of business bring out this behaviour to the point where it becomes unintentional. Like the frog unable to leave the pot of water reaching its boiling point, do managers start with small seemingly insignificant unethical decisions only to pursue small incremental increases in the degree of corruption until they unknowingly reach the boiling point?
Sunday, March 14, 2010
Monsanto: Good Business or Sadistic Action
Monsanto has recently come under fire for treading the fine line of good business practice and violation of antitrust laws. Whether they have in fact violated these laws is I think less relevant to how sinister this behaviour really is. The full story is below:
Monsanto's Dominance Draws Antitrust Inquiry
To summarize, as one of the world's largest chemical companies, Monsanto created and patented a product known as Roundup in the 1970s. Roundup kills just about all weeds but unfortunately also kills any crop if used after planting it. The company apparently ‘stumbled upon’ some resilient organisms that could withstand the chemical's lethal effects. Scientists isolated the resilient gene, genetically modified it and placed it into soybeans and corn creating a plant known as Roundup Ready.
Now let's step back and think about this. Monsanto creates a product that is lethal for the environment yet through this process figures out how to genetically modify resilient organisms to create new crops that can withstand this negative effect all the while obliterating the competition. Similar to the razor blade model (where you have to purchase the blades from the same company that sold you the razor), farmers are locked in to purchasing Monsanto's crops because they're the only ones that can withstand the years of herbicide use that Monsanto imposed.
This is not that different from my Nestle blog posting (Prime Time Advertisements) where Nestlé is capitalizing on the negative effects of their processed food by creating a new market of health products in France. Here, Monsanto is capitalizing on the negative effects of their herbicide by creating a solution, the solution, to withstand these negative effects. The scary thing is that no one is better positioned than Monsanto and Nestlé to figure out how to remedy the negative effects of their products. While some may say that that is a good thing, I would argue that this creates a highly dangerous and repetitive business practice of creating a problem and then finding the solution to the problem to double revenues and obliterate the competition, all the while ecological and social devastation continues unabated.
Now unfortunately that is the crux of strategic management - a firm's obligation to differentiate itself from the competition - the course all business students take in their final year of an MBA or Commerce degree. Something needs to change!
Monsanto's Dominance Draws Antitrust Inquiry
To summarize, as one of the world's largest chemical companies, Monsanto created and patented a product known as Roundup in the 1970s. Roundup kills just about all weeds but unfortunately also kills any crop if used after planting it. The company apparently ‘stumbled upon’ some resilient organisms that could withstand the chemical's lethal effects. Scientists isolated the resilient gene, genetically modified it and placed it into soybeans and corn creating a plant known as Roundup Ready.
Now let's step back and think about this. Monsanto creates a product that is lethal for the environment yet through this process figures out how to genetically modify resilient organisms to create new crops that can withstand this negative effect all the while obliterating the competition. Similar to the razor blade model (where you have to purchase the blades from the same company that sold you the razor), farmers are locked in to purchasing Monsanto's crops because they're the only ones that can withstand the years of herbicide use that Monsanto imposed.
This is not that different from my Nestle blog posting (Prime Time Advertisements) where Nestlé is capitalizing on the negative effects of their processed food by creating a new market of health products in France. Here, Monsanto is capitalizing on the negative effects of their herbicide by creating a solution, the solution, to withstand these negative effects. The scary thing is that no one is better positioned than Monsanto and Nestlé to figure out how to remedy the negative effects of their products. While some may say that that is a good thing, I would argue that this creates a highly dangerous and repetitive business practice of creating a problem and then finding the solution to the problem to double revenues and obliterate the competition, all the while ecological and social devastation continues unabated.
Now unfortunately that is the crux of strategic management - a firm's obligation to differentiate itself from the competition - the course all business students take in their final year of an MBA or Commerce degree. Something needs to change!
Monday, March 8, 2010
Prime Time Advertisements
During my weekly one hour of television, i get exposed to mainstream advertisements that drive me absolutely nuts! Consider the order of the following adverts: First there's a Wal-Mart commercial talking about the billions of dollars people will save by shopping there. This is followed by a DQ commercial and a Wendy's commercial about their latest cheap deal under $5. We then see yogourt and gronola bar commercials touting the latest nutritional fad. The series of ads is rounded off with a weight loss advertisement with patients talking about their weight loss challenges and success.
Is there something wrong here? Is it not bad enough that a substantial chunk of commercial activity is largely predicated on negative socially and ecologically outcomes that we now capitalize on these negative effects through more commercial opportunities? Is this what we teach in our business schools? From a business perspective, it's clearly more worthwhile to sell things that create problems to boost other opportunities to sell more things. Nestle recently indicated that they aim to enter the French market because consumers there are starting to emulate the Western fast food diet. Nestle has a Jenny Craig arm that comes with a range of apparently healthy products. Yet Nestle is increasingly criticized for its processed foods contributing to an obesity epidemic. Interestingly, one can argue that Nestle is captivating on increasing levels of obesity that its own products have helped to create.
Should we not be educating our future graduates that perhaps this approach is fundamentally flawed? Or do we dismiss this as just the natural course of events that makes our economic foundation tick?
If the answer to this last question is yes, then I have no place in a business school.
Is there something wrong here? Is it not bad enough that a substantial chunk of commercial activity is largely predicated on negative socially and ecologically outcomes that we now capitalize on these negative effects through more commercial opportunities? Is this what we teach in our business schools? From a business perspective, it's clearly more worthwhile to sell things that create problems to boost other opportunities to sell more things. Nestle recently indicated that they aim to enter the French market because consumers there are starting to emulate the Western fast food diet. Nestle has a Jenny Craig arm that comes with a range of apparently healthy products. Yet Nestle is increasingly criticized for its processed foods contributing to an obesity epidemic. Interestingly, one can argue that Nestle is captivating on increasing levels of obesity that its own products have helped to create.
Should we not be educating our future graduates that perhaps this approach is fundamentally flawed? Or do we dismiss this as just the natural course of events that makes our economic foundation tick?
If the answer to this last question is yes, then I have no place in a business school.
Sunday, March 7, 2010
Unethical Marketing
Unethical Marketers
The below story speaks of lessons learned from the successful marketing of the Hummer. The lessons learned here are meant to provide guidance on how marketers can successfully market other potential products and services needing a breakthrough in the marketplace.
Lesson for Marketers from Hummers
This article frightens me to be honest. While I commend marketers for their ingenious tactics, I can’t help but wonder why ethical values seem to have dropped off the radar screen in the process. When companies have millions of dollars to spend on marketing products, they carry so much power and influence that we can no longer rely on consumer discipline and control and thus the free market to influence companies to adopt more sustainable practices. Naysayers of corporate social responsibility typically revert to a tired argument where consumers are not forced to buy products and so if more social and ecological products and services are demanded, the market will correct unethical business behaviour. But we now know that such a theory rarely holds in practice. And with very persuasive marketing campaigns mixed with limited alternatives in the marketplace, the market fails to curb private sector behaviour.
The marketers for the Hummer and a range of other products typically ignore the ecological and social implications of the product’s diffusion in the marketplace. Do these marketers ever step back and think about how their ingenious tactics, while lucrative for General Motors, convey highly questionable claims to lure the consumer so that more of the world’s most guzzling vehicles can be driven on the streets? Are these implications at all on their respective radar screens? Should they be? When people ask me whether the private sector can be an agent of change in a crippling socio-economic system, it’s these sorts of stories that paint a very bleak picture, for until the social and ecological implications warrant equal attention to the isolated objective of revenue growth and market share, the private sector will continue to be perceived as the poster child for an unsustainable society.
The below story speaks of lessons learned from the successful marketing of the Hummer. The lessons learned here are meant to provide guidance on how marketers can successfully market other potential products and services needing a breakthrough in the marketplace.
Lesson for Marketers from Hummers
This article frightens me to be honest. While I commend marketers for their ingenious tactics, I can’t help but wonder why ethical values seem to have dropped off the radar screen in the process. When companies have millions of dollars to spend on marketing products, they carry so much power and influence that we can no longer rely on consumer discipline and control and thus the free market to influence companies to adopt more sustainable practices. Naysayers of corporate social responsibility typically revert to a tired argument where consumers are not forced to buy products and so if more social and ecological products and services are demanded, the market will correct unethical business behaviour. But we now know that such a theory rarely holds in practice. And with very persuasive marketing campaigns mixed with limited alternatives in the marketplace, the market fails to curb private sector behaviour.
The marketers for the Hummer and a range of other products typically ignore the ecological and social implications of the product’s diffusion in the marketplace. Do these marketers ever step back and think about how their ingenious tactics, while lucrative for General Motors, convey highly questionable claims to lure the consumer so that more of the world’s most guzzling vehicles can be driven on the streets? Are these implications at all on their respective radar screens? Should they be? When people ask me whether the private sector can be an agent of change in a crippling socio-economic system, it’s these sorts of stories that paint a very bleak picture, for until the social and ecological implications warrant equal attention to the isolated objective of revenue growth and market share, the private sector will continue to be perceived as the poster child for an unsustainable society.
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