When I was in my third year at university, I recall distinctly the night before my big exam for BUSN3002 – Corporate Strategy – I watched an amazing documentary Called Surplus – Terrorized into Being Consumers.
It was pure happenstance; one of those moments in life where fate steps in and your life starts to take a new direction.
You see, I was doing great in this class. I had worked so hard – and developed such an intrinsic understanding of a range of corporate successes and failures – from Southwest Airlines to New Coke. I knew the case studies inside out; the theory, the practice and how small actions in the boardroom can mean the difference between billions in profit and catastrophic losses.
And on this night, with mere hours to go until my final exam, I was living and breathing strategy.
As was my habit, I decided to turn on the TV for a little bit of white noise, settling on an intriguing looking documentary – and I sat there, transfixed and catatonic, until the last credits had rolled.
The cliff notes of the documentary go something like this: we, that is, those of us fortunate enough to live in first world economies, are being relentlessly pressured and cajoled into buying ever greater quantities of stuff. It’s unhealthy, environmentally destructive and unsustainable.
One simple stark fact upon which the documentary is based: the average American consumes 5 times more than the average Mexican, 10 times more than the average Chinese person and thirty times more than the average Indian.
THIRTY TIMES MORE.
To put that into context, your volume of consumption over the next month would last the average Indian roughly three years. Are we really that different?
“What have I just watched?” I wondered to myself as I desperately tried to reconcile these facts with the jet fuel hedges and marketing surveys in which I’d so engrossed myself all evening. Suddenly, it all seemed so insignificant.
How could I care about McDonald’s successfully introducing a new type of burger into the American market when we’re already so, so destructively wasteful?
So it is that I woke up the next day, still traumatized by the seeming inanity of the whole subject of ‘corporate strategy’ and trotted off to sit my exam.
To say it didn’t go that well would be a very fair statement. Wisely, feeling inherently unable to decouple my feelings of first world guilt from my desire to get a good grade, rather than focus on good business strategy, I instead wrote a treatise on corporate social responsibility, emphasizing above all not profits, but social good.
Needless to say, with my one-dimensional professor, it went down like a lead balloon.
So perhaps the idea of a mutual responsibility for wasting less – for using the things we have more and for wanting new things less – was not a popular one among business people. When your sole measure of success is shareholder value, why would it?
There are a few ways to answer this question:
1. It wouldn’t. Welcome to corporate America.
2. It wouldn’t – but it should, because we’re all getting wiser to the fact that our resources will not last forever.
3. It wouldn’t – but this presents an opportunity for companies to disrupt existing paradigms by finding novel ways to achieve more with less.
I could be flippant and say something like “we all need to stop consuming so damned much”. But that would be an exceedingly naive statement; changing habits on a large scale is wayyyyyy too difficult.
Instead, we should look to those emerging companies that are embracing the concept of less – less wastage, more efficiency. There are plenty of great examples to look at – and no, Apple (with its just-launched ‘one phone per year’ program – is not one of them!
In the area of transportation, we need look no further than Tesla for an example of a company that is massively shaking up the legacy market for cars by producing not only a better product, but a product that has a far smaller environmental impact.
The ‘Tesla effect’ is not just about selling the Model S; it’s about forcing the world’s biggest players to up their own game on renewable energy-run cars. And it’s working a treat.
In the area of food, there are many great examples (and also many bad ones – hello, Monsanto). But perhaps the best of recent years is Chipotle, which spends more time, money and effort on sourcing its ingredients sustainably than possibly any other company.
Indeed, Chipotle serves more local produce than any other restaurant company in the US – and it does so in conjunction with small farmers, in a way that respects soil and animals, as well as the environment. A far cry from the McDonald’s supply chain that was so lauded in my Corporate Strategy classes.
And it clearly works – they’re making close to a billion dollars a year and now employ more than 37,000 people.
Whole Foods has become controversial on Wall St for daring to break the golden rule – by stating that its sustainable activities (including switching their entire supply chain to organic) are more important than shareholder profits.
Its CEO simply takes a different approach – doing business the right way is good business – and will deliver more shareholder value in the long term. He’s almost certainly right; his chain of stores is not only growing faster than its competitors, but enjoying fatter margins as it gobbles up their customers – and hopefully his example will be one that other companies follow.
Finally, there is Unilever – not necessarily famous as an ethical brand, so much as being one of the largest consumer brand companies in the world (if you’ve never heard of them that’s quite normal, but you can bet you’ve got at least twenty of their products at home).
Unilever has taken a huge step, recently announcing that it intends to source all its agricultural inputs from sustainable farming.
The writing is on the wall – and traditionally, it takes a long time for slow moving mega-corporates to read it.
Changing a fundamental business approach – especially when it costs money in the short term – is a big risk and takes a long time, akin to trying to turn an oil tanker at speed.
For corporate leaders, the status quo is always safer – nobody wants to be the CEO who brings in New Coke, any more than they want to be the CEO who got fired by her board for spending money on building out a sustainable supply chain.
But not only are the spoils of success rich indeed, so increasingly is the risk of inaction becoming apparent.
Make no mistake – many of our largest companies are steamers heading for an iceberg; they’ve heard the warning, yet they steam on, enjoying the champagne while it lasts.
Nobody wants to be captain of the ship when it strikes the iceberg – but strike the iceberg they will; and at that point, they will wish they’d taken evasive action much sooner.
If we are to send a message to these titans of industry, we may be able to soften the blow for all of us.
I know my old professor would be disappointed in me, but the way we’re going, we’re going to have much bigger things to worry about.