U.S. Government It’s Time to Show Some Leadership
March 30, 2010
It’s not a secret. We’ve seen it happen continuously for centuries. Innovation, the big, bold future changing innovation, is driven by limitation. Almost always. When Steve Jobs went maniac to create the ipod in about nine months, he insisted it fit easily in a pocket, it looked like nothing anyone had seen before and would have a user interface so simple a two legged moron could intuitively use it. Those are arbitrary limitations. At the time, outrageous ones. Those limitations combined with time urgency created the most successful consumer electronic product in history…220 million ipods have been sold to date. Wow.
The point is potent. Innovation thrives in the paradox that limitations inspire previously un-imagined solutions. If you want to generate creative energy, put an entrepreneur in a box. Now s/he has something to think outside of! That’s exactly what we need to accelerate our quest for clean renewable energy. Energy that won’t motivate wars, poison our environment or change our climate.
Have you noticed that the new big honkin’ SUVs now get 25 miles to the gallon while just a few years ago these same beasts were drinkin’ a gallon of gas every 14 miles? What happened? To be sure rising gas prices and a wallet robbing recession. But most importantly what’s driving gas mileage innovation is the U.S. government’s mandate of gas mileage to average 35.5 miles per gallon by 2016. Welcome to the amazing world of forward thinking government regulation.
There is a strong American myth that free enterprise thrives when government is toothless and regulation is scarce. Today that thinking is increasingly making us less competitive in the worldwide competition to revolutionize how we generate and consume energy.
I read an interesting post in Time Magazine today titled Is Corporate America Our Best Hope Against Climate Change? The article discusses the role of government and business in addressing today’s climate change crisis. It states, “To traditional greens, business was the enemy, polluting with impunity, and government was the hero, ready to restrain…. But when it comes to climate change, times have changed. Although industry is still the engine of all those carbon emissions…it is also the source of clean-energy solutions, which are emerging from every layer of the business world, from tiny startups to Fortune 500 behemoths.”
It continues, “Meanwhile Washington is paralyzed, seemingly incapable of coming to grips with global warming or the looming energy crisis. What we need is smart policy to deal with the biggest long-term challenge facing the country. What we get is vacuum.”
The article goes on to discuss how new technologies from solar farms to wind turbines on a large scale, the resurgence of nuclear power, and recycling of energy used are all within our reach but will never gain momentum without government policy in place. In the U.S. There is an overwhelming need for strong energy legislation, including a firm carbon price that could help renewable energy compete today. If we are going to compete in the race to reinvent energy generation, the U.S. needs to establish requirements for renewable energy and strategically increase the public research money spent on energy.
This seems to be on the mind of forward thinking sustainability leaders. In my recent interview with the VP of Corporate Citizenship and Corporate Affairs for IBM, Stanley Litow discussed how the next big step for sustainability is collaboration across cross sectors. He said, “Global companies, government, and non-profits must create collaborative strategies that allow people to make significantly greater progress…The job is too big for business alone.”
Francois Ajenstat, Director of Environmental Sustainability at Microsoft, also made reference to the lack of government leadership when I recently talked with him about Microsoft’s sustainability efforts. He said that Europe is ahead of the curve in regards to sustainability because their governments are creating a framework for businesses to act while in the U.S. companies are acting more or less randomly on their own accord.
So why is regulation so strategic to the progress of clean energy? When the government issues regulation, it creates a level playing field for the most innovative companies to succeed. But if there’s no regulation, what happens is competition degrades to the lowest common denominator. For instance, if the cheapest energy plant is the dirtiest coal plant that spews out a vast array of toxic chemicals, more responsible companies can’t compete. Imagine trying to play football with no rules. Only the most vicious and ruthless would survive. Well today U.S. companies are playing the energy game without rules and we are losing to foreign competition. This frustrates the progress of forward thinking enterprises because their efforts are simply cancelled out by backward thinking polluters and energy hogs.
The U.S. is not only lagging far behind Europe but also other countries like China. USA Today reports that China is now the world’s leading clean energy country in terms of producing wind and solar products. Their goal is to make 15 percent of their total energy consumption come from renewable sources by 2020. Here some other startling facts:
• From 2005 through 2009, China’s clean-energy investment, including wind and solar, soared 148% vs. 103% for the USA.
• Clean-energy investment in Asia, mostly China, rose 37% last year to $39 billion. By contrast, investment declined 33% last year in the Americas as the economy slowed and credit markets tightened.
• Ten of the leading economies devoted a greater percentage of gross domestic product to clean energy than the U.S. in 2009.
• The U.S. has no national standard for expanded use of renewable energy. The American Wind Energy Association and others argue a national standard would do more to help manufacturers prepare for a big U.S. market for their products. The U.S. has also offered on-again, off-again financial incentives for renewable energy while other countries’ support has been steady.
The goal of capitalism cannot be to produce the cheapest goods and services but rather those with the most value. The role of government in creating standards through wise regulation serves capitalism by creating a framework for innovation around values that benefit everyone rather than abandon the world to who can exploit it the most viciously. Think about it. Without regulation we’d have lead in our paint, cribs that strangle our kids, and cars without seatbelts.
While it is indeed commendable and demonstrates courage that some corporations are acting on their own accord, just imagine how much more could be accomplished if government and business worked together. It’s actually what got us to the moon and back. It’s time for the U.S. government to join the revolution to save our future. Create a hurdle so we can jump over it!
It’s Time for Business Schools to Ride the Wave of Change
March 17, 2010
In today’s world it is critically important to integrate corporate sustainability into the core business strategy. It strengthens employee commitment and engagement, customer loyalty, spurs new innovation, and can have a great positive impact on the bottom line. But with all of this hype around sustainability in the corporate setting, are business schools also catching on? Are they giving the next generation of leaders the education they need to succeed in 21st century sustainable business?
Will Marre, CEO of Realeadership Alliance, asserts that business schools in the past have failed in producing socially responsible leaders. In Realeadership for Social Responsibility and Sustainable Abundance he states:
The central problem of our leadership class is that for the past forty years we have put tens of thousands of MBA students and millions of business managers through training in the arts of power. We have reduced leadership to a set of skills and attributes. The essential attribute of a real leader is not just their leadership skill but their noble intention…The real question of leadership is not what skills you possess but rather, what are you trying to accomplish? The problem with our leadership education and development system is that we haven’t been asking the right questions so we have few of the right answers. We have glorified accumulation instead of contribution, and our economy thrives on consumption instead of creation. There is too much “me” and too little “we.”
Margaret Heffernan, who teaches entrepreneurship at Simmons School of Management, passionately states in her Huffington Post article, What Do Business Schools Teach Now?:
For decades, b-schools prided themselves on demanding total commitment: excellence demanded the exclusion of other interests, people, values. Total dedication was crucial to the training, designed to make initiates dependent on one another, loyal to a single, exclusive set of beliefs. And, for the most part, it worked, generating legions of bright young things eager to sacrifice anything to serve the masters of Wall Street…If business schools don’t change — fast — they’ll become like military academies after the first world war: discredited and obsolete. It’s time to ditch the engineering legacy: companies aren’t machines, they are people. And business is not a discipline to be practiced like some religious cult, cut off from the society of lesser-minded mortals. If our economy is to survive, it needs to reposition business inside the world, inside human beings, connected to people, to consequences, to social ethics, values and responsibilities. This doesn’t mean we need just to nurture so-called ’social entrepreneurs’. It means that all businesses must see themselves as social businesses, operating in society, for society and because of society.”
In Business Schools: A Study Of Failure featured in Business Week, Peter Navarro states after surveying the top 50 business schools in the US, “The more things change in the global business environment, the more U.S. business schools stay the same.” He continues, “Despite the wave of corporate scandals, only 40% of the top schools require a stand-alone ethics course.”
While it seems unanimous that business schools need to do more in preparing students for sustainable business, some business schools are starting to catch on. The Chronicle of Higher Education reports that the number of business schools that focus on sustainability jumped from 13 in 2001 to 154 in 2007. However considering the number of business schools in the country, that number is still relatively low.
At Harvard’s extension school, enrollment in environmental courses has soared by more than 70 percent in two years, according to the university, which has responded with new offerings in fast-changing fields like carbon neutrality and environmental economics.
Berkeley reported a similar surge: three years ago, the sustainability studies office offered just five courses; today it includes 60 courses over a wide-ranging curriculum. Since 2006, enrollment has grown to more than 400 students per semester, from 55. (See New York Times).
An article in U.S. News states, “Business schools are reflecting the changes in the marketplace by integrating studies of corporate citizenship into their programs.” Kevin Thompson, senior program manager for corporate citizenship and corporate affairs at IBM, states, “Just as an M.B.A. is expected to know how to do financial modeling or how to read a balance sheet or develop a marketing strategy, increasingly there will be an expectation they can address the core society, educational, and environmental challenges,”
Sustainability is a Growing Theme in the Wall Street Journal discusses that while there is a growing demand for business schools to incorporate sustainability teachings, few corporate recruiters are making that a priority when looking for potential employees. It states, “This new push is part of a larger effort among corporations to integrate social concerns beyond donations and once-a-year volunteering. The effort is being met with both gratitude and skepticism from business schools, which say that despite the emphasis on integrating these hot-button topics into the curriculum, it’s business as usual at recruiting time. Few hiring managers, they say, ask students about corporate-responsibility training or indicate it’s a priority.” The article also states, however that “companies say that working with business schools is important to ensure a new generation of workers sees corporate responsibility as a bottom-line booster, not just something to feel good about.”
It is clear that business schools are making progress in integrating sustainability training into business leadership education, but they still have a long ways to go. It’s time for business schools to catch up to the rest of the world where everyone is demanding that businesses do more than generate a profit.
Business Strategy Not Philanthropy
March 4, 2010
Corporate Responsibility Magazine just released their 2010 100 Best Corporate Citizens List. The categories that companies were judged on are environment, climate change, human rights, employee relations, governance, philanthropy, and financial. While the list offers insight as to companies that are striving to be good corporate citizens, to be honest, looking at the list makes my stomach turn. As the saying goes, figures never lie, but liars figure.
It seems that a key question that is begging to be answered is, is their criteria for corporate responsibility really relevant? Of course there are many companies that deserve to be on the list, but there are many others who fail on the fundamental question of business strategy. Whether a company is helping to create a sustainable future or not is first based on how it is that they make money. The fact that fossil fuel extractors like Exxon and Chevron are on the list makes me wonder if CRM is asking the right questions.
A few weeks ago, for instance, at my speech for Innovation Humanity a CSR consultant for Altria, a leading manufacturer of tobacco products, asked me how to start a CSR strategy. I replied, “No amount of CSR can make up for murder.” You see it simply doesn’t matter how much CSR initiatives a company creates if their core business strategy is destructive to society or the environment. Coca-Cola is a leading company in CSR initiatives, and no doubt Coke is doing a lot of good things, but if their core product is unhealthy, no amount of CSR can make up for the human damage their product creates. It would be far better for companies like Coca-Cola to spend their resources coming up with healthy, delicious snacks that are just as appealing as sugar-laden pop than contribute to the World Wildlife Fund.
The idea of being a good corporate citizen by contributing to the community or mitigating the worst environmental impacts your business model produces, is simply not enough. What the world is looking for are companies who make money by solving the great challenges of humanity and by healing the environment. Slapping ourselves on the back because we get on lists that don’t sufficiently define the higher goal of corporate responsibility may be retarding our progress rather than helping it. It’s not that what CRM is doing isn’t good; it’s just that it doesn’t go far enough in defining what the companies of the future need to be focused on.