carbonRational

Think Like a Technology Company

2011-01-17T11:54:00.000-08:00

Why has the Chevron Corporation recently launched an ad campaign showing its commitment to the idea that it should think like a technology company?

The answer may lie in the fact that the growth and deployment of information technology over the last 40 years has had a transformational effect on the global economy. And transformational change is something oil companies - indeed all companies - will have to understand and embrace if they are to lead a global economy that will triple in size by 2050.

Chevron's ad alludes to this very important thread yet unfortunately it misses the mark. The fine print shows Chevron mistaking use of the latest technology for "thinking like a technology company." And these are not the same.

Any well run company makes use of the best tools available. But business-as-usual practices and simply deploying the latest technology is not enough. 2011 is the year when mining for new business models begins - and the tech sector provides the mother-lode of raw material about how to transform a global economy in four decades or less.

In the march towards a sustainable global economy, the most important lessons may come from the tech sector. The emergence of an information economy can be a powerful guide to transformation - and this is one economic transformation that is not optional.

Is Moore's Law "Sustainable" ?

2010-09-12T14:10:00.000-07:00

On August 30, 2010 a New York Times article revealed that researchers have been able to “overcome a fundamental barrier to the continued rapid miniaturization of computer memory that has been the basis for the consumer electronics revolution.” In short, Moore’s Law continues. Moore’s Law created the expectation of miniaturization around which the entire semiconductor industry organized itself. This drove investment into the burgeoning sector, resulting in the innovation that created what we now call The Information Economy.

Today we are at the dawn of a new age, requiring a new kind of economy, powered by clean, renewable energy. Getting this next industrial revolution right has huge risks but also enormous opportunities. While different from those of the information age, these opportunities are driven by the same fundamental principle – Expectation drives Investment which Leads to Innovation.

On Tuesday September 21st in New York City the conference BusinessClimate 2010 will bring together the world’s top business innovators and builders of a sustainable 21st century economy as we search for Moore’s Law for sustainability.

The Climate Change Executive Coach - What Every CEO Should Know

2010-04-05T13:53:00.000-07:00

In its Fall, 2009 issue, the MIT Sloan Management Review reported on a wide-ranging study in which 1500 business leaders were surveyed to ascertain their views on the new skills managers will need to address climate change and build sustainable enterprises in the 21st century. Results of interviews with experts in the field indicated that there were five management responsibilities that needed improvement: (1) the ability to act on a system-wide basis; (2) collaboration across conventional internal and external boundaries; (3) a business culture that rewards and encourages long-term thinking; (4) new capabilities in activity measurement, process redesign, financial modeling/reporting; and (5) new skills for engaging and communicating with external stakeholders. The survey results indicated that what is lacking in many sustainability initiatives is an overall plan. Efforts are often defensive and tactical rather than strategic; multiple initiatives are disconnected with one focusing on products, another on facilities, and perhaps others addressing employees, customers, or the general public. And sustainability initiatives as a whole reflect incremental rather than transformational change.

W. Edwards Deming – a giant of 20th century management thinking – spoke about transformational change. And even though he rarely used the term sustainability, Deming would have recognized his ideas reflected in each of the five areas that the Sloan Review cited: Deming taught (1) an appreciation for business as a system, (2) the importance of cooperation and collaboration as well as competition, (3) the need for managing for the long-term to foster a robust and durable enterprise, (4) new ways of looking at and understanding data and variation and the implications this has for management, and (5) an understanding of business in the broader context of community and society. The kinds of management approaches that sustainability experts today see as critical were being discussed – indeed urged – by Deming decades ago.
Today the issues facing top management are more daunting than ever. The economic well being of the business enterprise, and indeed the future of the entire planet are currently at risk from unsustainable practices such as the burning of fossil fuels leading to potentially catastrophic climate change. Executive leadership needs new ideas and approaches to the practices of management, the kind suggested by Deming years ago, in order to address this urgent challenge.

Appreciation for a System

When CEO’s first think about climate change, they often view it as a problem. Yet if studied at length, it becomes clear that climate change is not a problem, but a symptom – an indicator of a lack of alignment between two highly complex and adaptive systems - the planet earth and the global economy embedded within it. From this perspective, addressing climate change requires an understanding of systems.

A system can be defined as a grouping of interrelated and interdependent components in the service of an aim. Lack of alignment of components to overall aim can lead to sub-optimization, decay, and the ultimate destruction of the system. As a system, a business is made up of many interrelated and interdependent parts each of which must ultimately be aligned with the aim of the system – i.e. the mission of the enterprise. On a larger scale this is true of businesses within the global economy; each business is an interconnected and interdependent part of the global economy. The global economy in turn is a part of an even larger system: the earth and its biosphere.

Climate change has revealed that humanity has misunderstood the systems relationship between the global economy and the earth. Since the dawn of civilization, mankind has seen the earth as a vast resource to be put in service of the human economy. This is akin to the tail wagging the dog – and now the dog is beginning to get annoyed. A new systems model sees things the other way around, the human economy in service of the earth - that is, the economy as a subsystem of the earth, requiring alignment with the aim and workings of the earth and its biosphere. Successful CEOs today are those who are beginning to understand that sustainability is simply another word for seeing business as a system in alignment with the global economy which in turn is in alignment with the biosphere. The implications of this systems model will be the driving force behind 21st century commerce, including renewable energy, resource efficiency, information intensity, and closed loop production.
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Knowledge about Variation

Since CEO’s are surrounded by variation, how do they make sense of the numbers that come their way? What do the fluctuations in the numbers mean? Do they ascribe too much meaning or too little to the fluctuations? Can executives use the numbers to predict with a high degree of belief what the future holds? What kinds of actions should business leaders take to change the future? These kinds of questions have great importance to leaders of business and some understanding of variation can be helpful to answer those questions.

Variation that shows a clear pattern can sometimes be modeled and theories can be constructed about the causes of the pattern. Variations in the level of atmospheric concentrations of CO2 show clear patterns. Recent changes in the variation are causing scientists to predict that unless human industry radically changes course from business-as-usual, the concentration of CO2 in the earth’s atmosphere will be higher by mid-century than it has been in over fifty million years – a time when the earth’s climate was very different and much hotter.

Business leaders today have an immense influence on society. The meaning CEO’s ascribe today to the variation in atmospheric CO2, the predictions they make, and how they choose to address them may well determine the fate of our planet for centuries to come.

Theory of Knowledge

Executive leaders know that above all else, management is prediction. But rational prediction requires theory. And by comparing prediction based in theory with observation, new knowledge can be created. (A great practical form of this is the Plan-Do-Study-Act Cycle that Deming developed from the work of Walter Shewhart.) When there are competing predictions, as there are in the case of global warming, the soundness of the work that has gone into development of each prediction must be evaluated so that degree of belief in different predictions may be assessed.

Today, some CEOs and others who continue to question the validity or urgency of human-induced climate change often dismiss it as “just a theory.” Yet, human civilization has been built on theory. The greatest achievements of Newton, Darwin and Einstein were their theories – and those theories reshaped mankind and our planet. Climate change theory is already shaping the future and changing the ways humans interact with our surroundings – and for CEOs it is opening the door to new knowledge.

Psychology

Addressing climate change will take transformation. Deming knew that transformation could not take place without driving fear out of the organization - fear that saps people of energy, takes their focus away from the organizational aim, damages cooperation and constancy of purpose, and leaves people thinking about their own self-preservation. Driving out fear and building trust can unlock the creative potential that will lead to innovation and sustainability.

As climate change transforms the human systems that are corporations, psychology will play a key role in determining whether and how these corporations succeed. Given the mountains of scientific evidence, the decades of peer-reviewed vetting, and the magnitude of the threat posed, one may question why American society has not acted sooner and more swiftly. The answer is, in part, bound up in human psychology. CEOs that understand the psychology of individuals and groups can put that understanding to work to improve the lives of people and the effectiveness of organizations. On a larger scale, in understanding of psychology, corporate leadership can help to design approaches that will help society at large become more knowledgeable of the effects of climate change and the human population’s role in acting to prevent further damage to the biosphere.

Conclusion
Two decades ago, W. Edwards Deming called for new ways of management to address America’s competitive decline. He knew that tweaking business-as-usual practices would be ineffective and indeed counterproductive. Transformation was needed, and it had to be informed by knowledge. Today’s CEOs are living in a new era, where the term ‘business-as-usual’ refers to the continued practice of burning fossil fuels. Some business leaders are advocating sticking to business-as-usual or perhaps tweaking it around the edges. But such action will be ineffective and indeed counterproductive. A great transformation is required to avoid the worst consequences of a warming world – a transformation that aligns the global economy with the workings of the earth’s biosphere. It will require skillful management informed by new knowledge – using many of the very same ideas Deming introduced to transform management years ago

Is America Failing the Marshmallow Test?

2010-03-01T07:36:00.000-08:00

At the dawn of the 21st century America is facing a most urgent decision – what to do about climate change. We have before us two basic choices – (1) continuing with business-as-usual or (2) transforming our economy for the future. The fundamental priorities that guide this decision remind me of something called the Marshmallow Test.

The Marshmallow Test is an unusual exercise for testing children that has become regarded as a strong predictor of a child’s future success in school and in life. Originally conducted by Stanford psychology professor Walter Mischel in the late 1960’s, the Marshmallow Test presents a 4 year-old with a choice: he can have one marshmallow now, or two marshmallows in a short while. Mischel was interested in learning what enabled some young children and not others to forego immediate gratification in favor of a larger desired but delayed reward. What is most interesting was the follow-up years later. According to a study in 1990, the marshmallow test was more predictive than IQ of future SAT score.

Discipline and Trust

Researchers believe that the marshmallow test is an indicator of two important characteristics for future success: discipline and trust - the discipline to defer gratification in the present and the trust that a pledge of greater reward in the future will be fulfilled.

In the face of the daunting problem of climate change, is America reacting in a business-as-usual manner, satisfying our immediate needs, and grabbing the marshmallow before us? Or are we showing discipline by carefully considering the implications our current decisions have on the future, and trusting that we can influence that future to our greater benefit?

Discipline

Addressing climate change requires discipline - the discipline to maintain constancy of purpose, to invest in the future, and to understand the true nature of our problems. Maintaining constancy of purpose means having a sustained focus on our long-term problems even as their short-term symptoms rise and abate. That means we need an energy strategy not based on the spot price of oil, which sees us running to fuel efficient cars and mass transit only when oil spikes, and then abandoning them after it falls. The discipline to invest in the future means not only taking advantage of win-win investments with short-term returns like energy efficiency, but choosing investments that align our actions to our overall aims and that take into account long-term consequences even if the payback may be farther out than five years. Understanding the true nature of our problems means taking a systems view and seeing those problems not in isolation, but as interconnected and interdependent with other issues. Seemingly disparate events such as rising CO2 levels, China’s emergence as a renewable energy superpower, and increasing threats from climate-stressed failed states are all interlinked with American economic, social and environmental security. Understanding this and figuring out what to do takes measured and thoughtful discipline.

Trust

If America is to pass the Marshmallow Test we have to restore trust in our institutions – in government, in business, and in the sciences. U.S. government gridlock on climate change is exacerbated by the lack of trust between the two parties which feeds into a public confusion about the urgency of the problem. Lack of trust in the leaders of global finance is hurting the prospect for a carbon market in the U.S. Even if the economics make sense, the vision of Wall Street enriching itself from the climate crisis is almost too much for Main Street to bear. And sowing lack of trust in the underlying science is perhaps the best way to diminish the sense of urgency needed to address a public hazard whether it be climate change or cigarette smoking. Today’s whipped-up email “scandals” over climate science serve the same intention as found in a Brown and Williamson Tobacco Company memo from the 1960’s. It stated, “Doubt is our product.”

Does America Want to Pass the Marshmallow Test?

Imagine America as that 4-year-old child facing a choice: a sure, reliable and comforting marshmallow right now, or the potential for even greater marshmallow opportunity if we adjust our behavior. Which are we going to chose?

The one-marshmallow-right-now means business-as-usual i.e. continuing to base our economy on fossil fuels echoed by the mantra “drill-baby-drill.” It means avoiding expensive incentives for new forms of energy generation. It means continuing to borrow from China, in order to pay the Middle East so we can drive to work. It means putting no price on carbon so that energy in the short-term remains the cheapest in the industrialized world. And it means ignoring the science and continuing to put CO2 into the earth’s atmosphere, which frankly will not present serious problems for most of us in the next few years. Like that 4-year-old scarfing down that single marshmallow, we will be just fine - in the short-term.

But if we listen to those who have dedicated their lives to the study of these issues - if we trust the most informed of us – there is a significant probability that the future will be either much better than the present or disastrously worse depending on the choices we make now. Other countries are setting examples. Spain is making huge investments in renewable energy and high speed rail. Japan continues to make great progress with energy efficiency. Denmark has repowered entire communities with renewable energy. Germany and China are becoming world leaders in the solar and wind technology. And Abu Dhabi is building the world’s first completely self-sustaining zero-carbon city called Masdar. These countries are displaying the discipline to adjust current practices with the trust that there will be a long-term benefit. Like the 4-year-old who defers eating the single marshmallow for a more beneficial result in the future, these countries are all adjusting current practices to build economies that will bring more opportunity for even more people. They realize that building a sustainable economy today is key to leading the global economy of tomorrow.

The Marshmallow Test is telling us we need to be disciplined in our decision-making and we need to trust in each other. But what it is really saying is “Think about the future.” When following up on 4-year-olds many years later, those who waited for the second marshmallow were found to have scored 210 points higher on SATs than those who grabbed the first; they were also in general more successful and better adjusted to the challenges of life. The decisions made by this generation in this new decade will shape the future in ways more profound than perhaps any before us. America must pass the Marshmallow Test, because if we are not about the future, what are we about?

More Davos, Less Denmark - Shaping a Global Approach to Climate Change

2010-02-03T16:03:00.000-08:00

It is interesting to compare the goings-on in Davos, Switzerland this week, less than two months after the close of the climate conference in Copenhagen. First, as a follow-up to “How Important Is Copenhagen” it might make sense, after some breathing space to understand what really happened in the Danish capital from Dec 7th - 18th of last year. Will this event shape the future of a global agreement on climate change or will it be forgotten in a few years?

Predictions

In the earlier piece I wrote that for Copenhagen “to be a success it must produce a politically binding agreement that makes compulsory emissions reductions -- from industrialized economies and developing ones – inevitable. An eventual treaty must create a global system for trading carbon as a commodity, with liquidity and price transparency. It must provide compensation to those countries that avoid deforestation and thus preserve important carbon sinks. And it must ensure that emission reductions can be verified.”

Surprisingly, the final two points – deforestation and transparency – were met with much greater attention and success than most would have predicted a priori. In some sense the REDD agreement on reforestation compensation and the movement by China to accept some level of MRV standards were the two clear bright spots in an otherwise murky two weeks. Less clear were the fates of legally binding emissions and a global carbon market.

The Copenhagen Accord

If brevity is the soul of wit, then the Copenhagen Accord may be the most clever international climate agreement ever written. There are only 12 points to this political and non-legally binding accord, each averaging a mere 100 words. The 12 points include:
1. Commitment to < 2C temperature rise
2. Reaching peak global emissions ASAP
3. Funding transfers for adaptation
4. Industrialized country mitigation targets for 2020
5. Developing country mitigation actions
6. Forestry – REDD
7. Incentives for Action
8 – 10. Aid from the industrialized to developing world
11. Technology transfer
12. Next steps

Winners and Losers

Copenhagen refocused the climate conversation from the one taking place among 100+ nations to one happening among five countries, the U.S. and the so-called BASIC countries (Brazil, South Africa, India, China). These countries flexed their “climate muscle” at Copenhagen, usurping an international process that had been in place since Kyoto. In that sense they could be seen as winners, with the international process of negotiation and the smaller nations the losers. Barack Obama’s leadership to help salvage something out of Copenhagen made him look like a winner, with Europe losing influence after all of the years of diligent work leading the COP process. Lack of a clear path to a legally binding agreement on emissions must make oil and coal interests feel like winners, with carbon price predictability and the clean tech sector the losers.

But what about the public and the planet? Were they winners or losers? Having the U.S. and China front-and-center on climate change is indeed hopeful, but without legally binding agreements that align with the science and bring the rest of the world along the people and the planet may be the ultimate losers.

More Davos - Less Denmark

It is becoming increasingly clear that if one really wants to know how the 21st century is going to play out, the COP process may be a lagging rather than leading indicator. In many ways the COP process is mired in the past. China is still categorized as a developing nation yet emits more greenhouse gases than any other. Talk of technology transfer implies the world’s leading economies help developing ones, yet it is China again that is leading the technology race on clean green energy.

Only one month after the Copenhagen conference failed to give the world a clear picture of what the future holds, this year’s World Economic Forum may be doing just that. As reported by Katrin Bennhold from Davos in the New York Times February 1st "Topic A this year was the race to develop greener, cleaner technology.” The Times went on to say that the job-creating potential of green technology was “seen by many here as the next industrial revolution”, and a revolution in which China was moving ahead of the West. U.S. Senator Lindsay Graham was impressed, “… my concern is that every day that we delay trying to find a price for carbon is a day that China uses to dominate the green economy.” Graham is a not a Northeast Democrat, he’s a Republican from South Carolina. This is a hopeful glimmer in an otherwise dark landscape for climate legislation in the U.S. Senate.

Copenhagen’s successor, COP-16, is scheduled for Mexico this November. If the COP system is to stay important and relevant, it has to put that price on carbon that Senator Graham is asking for, and enforce a system of legally binding emissions reductions. Then to those Americans who think cap-and-trade puts their economy at risk, it becomes Senator Graham’s job to get them to stop looking at trees and instead see the forest. The risks to the U.S economy are infinitely greater if we don’t lead in the clean tech sector over the next decade – and without a price on carbon we will not lead.

Is Greed Sustainable?

2009-12-30T21:06:00.000-08:00

One of the greatest impediments to corporate management adopting sustainable practices is the belief that it can’t afford to adopt them. But the reality is quite different. Companies that take sustainable practices seriously are seeing the interconnectedness and interdependencies between different parts of their business. The view of their business changes, it begins to look more like a system - embedded in other systems – the local economy, the global economic system and the earth’s ecosystem. It becomes clear that for a business to be sustainable it must align with the workings of the systems of which it is a part and upon which it depends. When this begins to happen, the consequences of efficiency, lower costs, transformed organizations and increased profits emerge.

Recently however there's been a lot more said about greed and lot less about sustainability. Interestingly greed and sustainability are not unrelated.

Gus Levy, one of the legends of 20th Century finance and an icon in the growth of Goldman Sachs, in response to a question about his firm’s motivations once said “Yes at Goldman we are greedy. But we’re long-term greedy.” Levy saw Goldman as a process – a complex system of interrelated and interdependent parts in the service of an aim. While the system made its partners fabulously wealthy that was never the aim. The aim was to serve clients and do it better than the competition. Don’t just meet their needs, delight them and be loyal to them and provide them with the best advice - that was the roadmap to their success. Profitability was the consequence, not the aim - getting rich became the reward for managing well the system that was Goldman Sachs.

That appreciation for a system made Goldman a stand out - a very distinctive place to work, a place of excellence and of legend.

To build a sustainable enterprise, profitability is a necessity. But profitability itself must be sustainable, and can only be so if the enterprise is well managed from a systems perspective. Greed ruins an appreciation for business as a system and thus is not sustainable. There is a gap between the current ways of management and those that will be required to take a system for sustainable practices and nurture it into a long-term competitive advantage. Greed only contributes to the widening of that gap. Greed does not nurture, it destroys.

The Sustainability Gap

2009-12-08T15:28:00.001-08:00

Many issues can come up in a conversation around sustainability. The following 25 topics are just a few:

Climate Change • Cap-and-Trade • Carbon Sequestration • CO2 • Greenhouse Gases • Burning Coal • Peak Oil • Energy Efficiency • Clean Energy • Clean Tech • Green Jobs • Water Resources • Agriculture • Livestock • Fisheries • Waste • Pollution • Toxins • Health • Growth • Profit • Employees • Customers • Brand • Shareholder Value

The seemingly jumbled basket of issues being framed by sustainability puts the term itself in danger of becoming meaningless. Yet one consistent theme of sustainability is the idea that what someone does in one place and at one time has an impact – immediate or delayed, minor or major – on other people, places or things. Sustainability then has embedded within it the idea of interconnectedness and interdependence. Interconnectedness and interdependence are characteristics of systems. So sustainability is ultimately about an appreciation for business as a system.

Today most sustainability initiatives within corporations are characterized by multiple disconnected initiatives targeting products or facilities here, employees or customers there. These initiatives tend to be defensive and tactical rather than strategic. They bring about incremental rather transformational change to the organization.

This is The Sustainability Gap. Corporations know they have to act, they may even know what has to be done, but the training, incentives, habits and practices of management are holding back the achievement of sustainability in its fullest sense.

In order to bridge the sustainability gap and transform the organization into a fierce global competitor in the 21st century management must begin viewing the entire business enterprise as a system - an interconnected and interdependent system embedded in a global economic system, which in turn is embedded in the earth’s ecosystem. Adopting such a view will bring about the kind of transformation in management that will make genuine sustainability possible.

Some great resources for this kind of thinking include – The Ecology of Commerce by Paul Hawken, Mid-Course Correction by Ray Anderson, Biomimicry by Janine Benyus, Profit Beyond Measure by H. Thomas Johnson and The Fifth Discipline by Peter Senge.

But perhaps the granddaddy of all books on sustainability and management is an unlikely choice - The New Economics by W. Edwards Deming. Some may remember Deming as the man who taught Japan about quality, or as the father of TQM. But Deming never defined himself that way. He once said that rather than having taught the Japanese about quality “I introduced them to the principles of a system.” And the Japanese showed their appreciation – Deming was awarded the Second Order Medal of the Sacred Treasure from the Emperor. In addition, the highest business honor in Japan – The Deming Prize – was named for him.

Deming’s ideas included an appreciation for business as a system, the importance of alignment to system aims, the need for constancy of purpose, seeing profit as a consequence of the system rather than its aim, and understanding that what can not be measured is often more important than what can. Indeed the most urgent gaps in addressing sustainability – as reported in the Fall 2009 MIT Sloan Review – were the very issues that Deming had been urging management to consider decades ago.

But how does this relate to addressing any of the issues on the list above? Deming did not talk about issues of climate change or clean energy or cap-and-trade. He only began talking about the environment late in his life and mentions it in passing in his book. However his framework leads to the thinking that every business is a subsystem within the global economic system and certainly we are seeing all too clearly how the global economic system is a powerful subsystem of the Earth's biosphere. Every subsystem needs to in some way align with the aim of the overall system. The consequences of not aligning are sub-optimization, decay or in the worst case the ultimate destruction of the system. If sustainability is about aligning business and the global economy to the workings of the biosphere - then Deming may well have been the father of sustainability management.

The task ahead to bridge the Sustainability Gap is the task of transformation of the training, incentives, habits and practices of management. It will be the challenge of the next decade of global business.

carbonRational featured in CLIMATEBIZ.COM

2009-12-03T12:02:00.000-08:00

Our blogpost on Copenhagen is the featured article today on climatebiz.com

How Important is Copenhagen?

2009-11-30T13:34:00.001-08:00

... To continue reading, download this newsletter or visit climatebiz.com to view their posting.

Results as Consequences ...

2009-11-24T11:19:00.000-08:00

Recently I gave up and hired an organizational expert to help me clean up my disorderly home-office space. In working for an entire day with Annette D’Agastini of Manhattan Organizing I realized something – it struck me like a thunder bolt. What I thought I needed was a cleaned-up office space, but what I really needed was a system.

Hiring Annette was not like hiring a cleaning service for my office. If the aim is a clean office, any cleaning service will do. Yet within days the same unmanageable mess is back again. Annette’s aim however is not to clean your office. She uses the phrase “Give a man a fish and feed him for a day, but teach him to fish and he can feed himself for life.” Developing a system by which one can manage one’s books, magazines, mail, paperwork – the information flow of an office – is what Annette teaches, and in doing that she helps her clients create a framework the consequence of which is an orderly and neat office environment - and one that is sustainable.

This idea of being mindful that results are always the consequences of system or process has very wide application. We often talk about means vs. ends, but as someone rightly pointed out "Means are ends in the making." It’s as true in the arts (you get to Carnegie Hall through a system - practice, practice, practice), as it is in mental health (in Man’s Search for Meaning Viktor Frankl said that happiness can not be pursued, it must ensue from a life built of meaningful activity), as it is in business (profit is the consequence rather than the aim of a well manage enterprise.)

One of the most pressing global problems of the 21st century is the threat of human-induced climate change. Like the messy office, the earth’s atmosphere with way too much greenhouse gas is not just a problem but a consequence. The earth’s natural systems work one way, but the global economy is often not aligned with those workings - climate change being the most urgent symptom of that lack of alignment. So the sustainable solution to climate change is not so much about sequestering carbon underground or putting heat shields in the atmosphere (this is like shoving the excess office papers under the rug.) The sustainable long-term solution to climate change is to have a global economic system that runs as if it is an interdependent part of the Earth’s natural systems. We need to think about aligning the economy with how the earth works rather than aligning the earth to how the economy works. The more we plan and execute economic development from a systems perspective, the more likely the consequence will be a sustainable economy.

To paraphrase Viktor Frankl, a sustainable economy can not be pursued, it must ensue.

By the way, here’s how my sustainably neat home-office turned out:

SuperFreakonomics or Our Choice

2009-11-09T13:19:00.000-08:00

Two books have come out recently that address solutions to anthropogenic climate change. SuperFreakonomics by Steve D. Levitt and Stephen J. Dubner is the sequel to the authors’ multi-million selling Freakonomics whose aim was to teach us that everything can be understood if we just look at the numbers. Our Choice by Al Gore is the sequel to his multi-million selling An Inconvenient Truth whose aim was to teach us that global warming was a much more urgent problem than we had realized.

I could never attempt a better take on SuperFreakonomics than Elizabeth Kolbert’s review in the New Yorker this week entitled “Hosed .” Also an open letter to Steve Levitt from Dr. Raymond T. Pierrehumbert, a professor of geophysics at the University of Chicago provides a critique of one argument presented in SuperFreak that is worth reading. As far as Gore’s book is concerned, Newsweek has put him on their cover this week with the title “The Thinking Man’s Thinking Man.” Their review of Our Choice is downright glowing – especially as it relates to the work Gore did to gather the information for the book and his knowledge of minutia related to climate change science and engineering issues around renewable energy.

Ultimately the message of SuperFreak is that we can best address climate change through geoengineering – large planet-wide initiatives to address the symptoms of climate change. Geoengineering is about changing the planet to align with human needs. Gore on the other hand does not believe geoengineering is the right approach. “We are already involved in a massive, unplanned planetary experiment,” he writes. “We should not begin yet another planetary experiment in the hope that it will somehow magically cancel out the effects of the one we already have.”

From my perspective, climate change is the consequence of a misalignment between two very powerful systems – the earth and the global economy. A system is a grouping of interrelated and interdependent components in the service of an aim. Every component within a given system must in some way align to the aim of the overall system. The consequences of misalignment are sub-optimization, decay and the potential destruction of the system. In the case of climate change, the system is the earth and embedded within that system is a powerful sub-system called the global economy. Climate change is a symptom of the lack of alignment between the global economy and the earth of which it is a part and on which it completely depends.

Instead of aligning the global economy to how the earth works, geoengineering tweaks the earth to accomodate the global economy. For example one geoengineering solution to climate change is to change the composition of the earth's atmosphere by adding more SO2 in order to bring down global temperatures. But such action only further increases the variation in the system - acidifying the oceans and adversely affecting weather systems. It doesn't stop the increase in CO2 which means more and more SO2 will be needed, bringing more and more acidification, and more and more variation and instability within the system.

A long-term solution to climate change will only come from an appreciation for the earth and the global economy as one system. Understanding nature’s example of self-organization, interdependence and diversity will provide the basis for solutions. Nature is information intense and energy efficient and there are great opportunities for the global economy to move in this direction. Nature gets its current energy income from the sun – and the global economy has underutilized this resource – enough solar energy hits the earth's surface every hour to power the entire economy for a year. Nature sees waste from one process as a resource for another – this is also an important lesson for a 9-billion member (by 2050) human economy to learn.

SuperFreak is written by an economist who breaks things apart and starts measuring everything hoping to find answers in the disparate pieces. Our Choice is written by someone who has consulted with hundreds of the world's experts on science and engineering in addressing this one problem (the book's dedication is four pages long single-spaced.) While much can be learned by breaking things apart as economists do, what is lost is the system-ness of what is being studied. Addressing climate change is all about an appreciation for system-ness. On that basis, Our Choice is a well thought out resource for addressing climate change while SuperFreakonomics is way out of alignment.

The Warning

2009-11-02T12:49:00.000-08:00

For any of those who missed it, a few weeks back the PBS news magazine Frontline ran a fascinating yet disturbing report on how a warning was ignored about the dangers of unregulated OTC derivatives markets, markets eventually made infamous for the toxic assets which nearly brought down the global financial system.

The report told the story of one Brooksley Born, an accomplished lawyer and the head of the CFTC (Commodities and Futures Trading Commission) under President Clinton. Born became very concerned about the danger of unregulated derivatives markets after incidents like the Banker’s Trust derivatives fiasco of the early ‘90s which showed how opaque these markets were - indeed they were referred to as a black box. Born thought it a good idea to open the box and peer in with a flashlight to see what was going on. As the head of the CFTC, she had the authority to act on derivatives regulation - authority that only Congress could take away. Treasury Secretary Rubin, Fed Chairman Greenspan, and SEC Chairman Levitt became so concerned that Born was going to act on her authority that they called for hearings to strip the CFTC Chair of that authority. They hauled Born in front of the Senate Finance Committee where she was put through the ringer. “What are you trying to protect?” she was asked over and over again as Rubin, Greenspan, Levitt and Larry Summers looked on. She replied “We are trying to protect the money of the American public.”

A decade later the money of the American public put at risk by unregulated derivatives would be on the order of trillions of dollars.

Brooksley Born used reasoned arguments to convey the urgent need for derivatives regulation. She was stopped by those who felt their financial interests being threatened.

And isn’t that exactly what’s been going on for the last 30 years around the issue of climate change? For decades scientists and others have been issuing warning after warning, with ever increasing urgency - and the response from most politicians has been “Where’s the risk? I don’t see any problem.” And the reason for inaction is the same – financial interest.

Rubin, Greenspan and Summers have never admitted error in the Born affair. But Arthur Levitt has spoken out. He admits he was swayed by Rubin and Greenspan. “I was told she was irascible difficult, stubborn and unreasonable.” He now calls Born one of the finest public servants he has ever come to know, and he regrets his actions against her. “I should have acted differently. I could have made a difference.”

Quotes on Copenhagen

2009-10-19T11:17:00.001-07:00

The latest quote on Copenhagen comes from the U.K. Prime Minister Gordon Brown who said today, “There are now fewer than 50 days to set the course of the next few decades. We cannot afford to fail. If we fail now, we will pay a heavy price ... If we falter, the Earth will itself be at risk.”

Britain seems to understand the fact that the upcoming December climate conference in Copenhagen is a big deal. Having an agreement to control CO2 and build a sustainable global economy in the 21st century is urgently needed. And this is understood not just by Britons but by Europeans in general. A quote earlier this year by the EU Minister for the Environment Stavros Dimas supports this: “Copenhagen (is) the world’s last chance to stop climate change before it passes the point of no return.”

Yet we in the U.S. don't seem to get it. And it’s not just our ineffectual Congress which fails to sense the urgency. Here is a quote from Steven Chu, the current U.S. Secretary of Energy: “Let's not make (Copenhagen) the be-all, end-all and say if it doesn't happen that we're doomed. We can come back in two to four years' time.”

We are seeing very different levels of resolve emanating from the European and American governments. If it is unclear that the time to act is now, two things are clear: 1.) the latest scientific observations tell us that climate change is happening faster than earlier predicted, and 2.) the longer the U.S. waits to begin building a clean-energy economy, the further behind we will find ourselves.

One final quote: “The nation that leads the world in creating new energy sources will be the nation that leads the 21st century global economy. America can be that nation. America must be that nation.”

This quote comes from President Barack Obama who spoke these words before a joint session of Congress last winter. Americans must ask ourselves, what makes it more likely that we will be that nation, a Copenhagen conference that succeeds in getting a global agreement on greenhouse gas reductions, or one that fails? The answer may bring to the American political psyche the sense of urgency that has been sorely lacking.

Addressing Climate Change – Bioengineering or Biomimicry

2009-10-02T09:03:00.000-07:00

An article in the September 28th issue of the New Yorker entitled “A Life of Its Own” by Michael Specter got me thinking about how genetic research may play an important role in addressing the issue of human-induced climate change. Climate change is the consequence of a global industrial system that doesn’t behave in the same way the natural world does. Microbiology may provide clues to addressing this misalignment. But within the field two distinct camps are forming on how to do this - on the one hand you have the bioengineers and on the other the biomimics. The bioengineers say we need to learn from biological systems in order to adapt and align those systems to human aims. The biomimics say we need to learn from biological systems in order to adapt and align human aims to those systems. Two very different points of view, yet whose work often overlaps.

The fields of microbiology and genetics were built on shoulders of evolutionary theory. Darwin's theory changed the scientific view of the biosphere from one distinctly anthropocentric - man in the image of the creator having dominion over all living things – to one of an appreciation for a system - the biosphere as a complex, interdependent and evolving system of which mankind is a component. Darwin’s theory became a fundamental tool in bringing forth new knowledge about every aspect of the earth’s biosphere, from paleontology to botany to genetics. Darwin’s theory of evolution represented a great leap forward in systems thinking.

Over the last 50 years a new theory regarding the biosphere - perhaps as powerful as Darwin’s Theory of Evolution - has been emerging. It is the theory of anthropogenic climate change. Darwin’s theory showed that the biosphere was a system, and now climate change theory points to the central role of industrialization in dominating and changing that system.

Microbiology and genetics are being applied to address this problem. The bioengineers are looking to genetically engineer microbes that can absorb CO2 or excrete biofuels. The biomimics are looking for ways to recreate natural processes like photosynthesis but on a scale and with an efficiency that will transform current human activities.

The bioengineers believe, as reported in the New Yorker article, that synthetic biology can dispense with nature entirely by dismantling different organisms and using disparate genetic components to create custom-built packages of DNA. “We have gotten to the point in history where we simply do not have to accept what nature has given us,” Jay Keasling a professor of biochemical engineering at UC Berkeley is quoted as saying. Bioengineers believe humanity need no longer rely on the whims of nature to address the world’s pressing crises. “You need this drug: O.K. we pull this piece, this part, and this one off the shelf. You put them into a microbe, and two weeks later out comes your product.”

Proponents of biomimicry have a different view. As Janine Benyus writes in her book BIOMIMICRY, the field of biomimicry sees nature as the model, measure, and mentor for human development and advancement. This includes understanding the consequences of cooperative relationships, dense interconnectedness, and self-regulating feedback cycles. Wisdom resides in the whole, and organisms are adapted to place. There is more to discover in how nature works than we can possibly invent.

And the biomimicry advocates are wary of their bioengineering counterparts. Benyus writes in the introduction to her book “Now that we can synthesize what we need and rearrange the genetic alphabet to our liking, we have gained what we think is autonomy. Strapped to our juggernaut of technology, we fancy ourselves as gods, very far from home indeed. In reality, we haven’t escaped the gravity of life at all. We are still beholden to ecological laws, the same as any other life-form.”

Bioengineering holds the promise of great power to advance human civilization, but does that power threaten our very existence? Even bioengineers recognize that risks exist. Drew Endy, a professor of biological engineering at Stanford says “If the society that powered this technology collapses in some way, we would go extinct pretty quickly. You wouldn’t have a chance to revert back to the farm or to the pre-farm. We would just be gone.”

Humans have encountered tools of incredible power before – energy tools like fossil fuels and nuclear fission, and information and communications tools like computers, telephones and the internet. The extent to which these tools are out of alignment with the earth as a system (excess CO2, nuclear waste) the greater the long-term problems they have posed. The extent to which these tools have been in alignment with the earth as system (information intensity enabling resource efficiency) the more sustainable these tools make human industrialization.

As the world grapples with the increasingly urgent issue of human-induced climate change, what have we learned? Does climate change teach us that we need to align natural systems to human aims as bioengineering advocates, or align human aims to natural systems as biomimicry points to?

Baseball and Sustainability Part II

2009-08-24T13:24:00.000-07:00

Michael Lewis’ book Moneyball was about a lot more than a new way of looking at the management of a baseball team. It was about an appreciation for systems thinking. It was about an understanding of statistics and variation. It was about new knowledge and its genesis. And it was about human psychology. The thesis of Moneyball was complex, yet it struck a chord of familiarity with me.

Nearly two decades ago I had become familiar with these themes as I sat in a class at Columbia University’s Graduate School of Business. The professor was a ninety year-old man named W. Edwards Deming.
Known alternatively as “the man who taught the Japanese about quality” or “the father of TQM” (total quality management), Deming rejected these characterizations saying “I never taught the Japanese about quality, I introduced them to the principles of a system.” The appreciation of those principles directly resulted in what has been called the Japanese Economic Miracle and Deming’s role was central. To this day the highest honor for business excellence in Japan is The Deming Prize.

In his classes Deming talked about a system of transformation that would be necessary to make America competitive again. He called it a system of a profound knowledge and it contained four interconnected and interdependent components:
- Appreciation for a System
- Knowledge of Variation
- Theory of Knowledge
- Knowledge of Psychology

What Michael Lewis wrote about in a baseball context was what Deming called profound knowledge. Deming applied it not to sports but primarily to the social enterprise of business. The Japanese listened and thrived. Toyota is a great example of a company run using profound knowledge. Deming was very critical of American management which largely ignored him. GM may have dabbled in Deming here and there, tweaking around the edges, but they never embraced profound knowledge as a system. Critics of Deming - especially American critics - say he cared about soft things like human motivation, interdependence, and alignment of aims - and he ignored the harder issues that American managers are up against every day - like profitability and stock price. But you have to ask yourself, whose stock would you rather own today, Toyota or GM?

Applying profound knowledge to baseball is fun, and applying it to American business is important. But there is a more urgent application for profound knowledge in the 21st century. Today’s global economy requires transformation. Addressing climate change and building a sustainable global economic system will be the organizing principles of the 21st century. Climate change is not a problem as much as a symptom – a symptom of a misalignment between two very powerful systems, the planet earth and the global economy that is embedded within it.
To address climate change it must be viewed from a systems perspective, where the planet is the system, and the global economy is a sub-process – a very powerful subsystem – within the system. Using Deming’s systems approach, where each component must align with the aim of the overall system, the global economy must be aligned with the aim of the planet. Failure to do so can result in sub-optimization, decay and the ultimate destruction of the system.

Human civilization has been aligning these two systems for centuries - but getting it backwards. For a very long time we have been putting the earth in service of the human economy, instead of aligning the human economy with workings of the earth. Getting this right has wide implications for how we power our economy, how we feed ourselves, and how we develop and grow. In aligning with the planet’s ecosystem we will find how to (1) live on current energy income (i.e. renewable energy), (2) operate with the knowledge that waste = food (i.e. closed loop recycling,) and (3) become information intense and energy efficient (as biological systems are.)

Baseball & Sustainability - Part I

2009-08-18T09:32:00.000-07:00

It is summer. Minds turn to baseball as they have since that first game in Hoboken, New Jersey back in 1846. Baseball and its limited set of rules have been around for a long time. So it is stunning to think that after 150 years of one way of looking at baseball, new knowledge could come forth. But that's exactly what has been happening over the last decade. New knowledge about baseball. New ways of looking at something old, new opportunities for creating something very different, something better.

Where does new knowledge comes from? A wise man once said it comes from the innately curious individual who is responsible to no one. That describes a very special kind of person. A scientist perhaps, a thought leader, maybe an independent business person. It certainly describes Bill James, a man who set out to show the world that the way baseball was being managed at the professional level was idiotic. James published an independent journal about baseball emphasizing new ways of looking at information long ignored by the powers that be in MLB (Major League Baseball). James felt that the aim of management of baseball ought not to be about results - the most Home runs, RBI's, or wins. Not at all. The aim of managing a baseball team is understanding the process by which you get a player on base. Once a manager mastered that, the runs and wins would take care of themselves.

Realizing baseball as a process has a huge effect on what the definition of "doing a good job" means - with its implications for reward systems. For example, if baseball is only about results, then a batter who strikes out a lot makes no contribution to the team and is thus not rewarded. But if baseball is about process, then if a batter in striking out forces opposing pitchers to throw 15 or 20 pitches then he is making an extremely valuable contribution to the team. There may be no measure of this in the box score, but wearing down opposing pitchers arms is essential to winning games.

James and his independent journal The Bill James Handbook were covered at length in the book by Michael Lewis "MoneyBall."

Lewis showed how a team with one of the lowest payrolls in baseball, the Oakland A's, was able to achieve over a 10-year period one of the best regular season win-loss records in the major leagues, by employing the new knowledge of independent thinkers like Bill James.

If the limited sphere of baseball presents fertile ground for new knowledge how much more of an opportunity might exist in the sphere of business? If baseball managers, scouts and commentators were myopically focused on home runs, RBI's, and wins, business managers, analysts and reporters are no less focused on marketshare, quarterly earnings and stock price. Wouldn't it be great if someone could come along in business as James did in baseball and shake things up? Perhaps an independently thinking analyst could show how management in a business-as-usual mindset was missing out on great opportunities? Instead of managing with the aim of increasing market share, profit or stock price, what if management's aim was understanding their business as a system for producing the best value of good or service? What if an improved financial position was seen as the consequence - rather than the aim - of a corporate strategy? But that's not today's reality. Many in the greek chorus of business - as seen on CNBC and Bloomberg TV every day - are as fascinated by the market's daily spikes and plunges as baseball insiders are by home runs and high scoring games. How can a culture focused on financial results be transformed to focus instead on the means from which those results ensue? Isn't that what sustainability is all about? (Continued in Part II.)

Study and Management of Home

2009-07-13T05:58:00.000-07:00

Paul Krugman, the Nobel Laureate and NY Times columnist, wrote in today's Times about the slow emergencies our nation and planet face in the economic and ecological spheres. We seem to manage these problems based on their symptoms rather than on theory or knowledge, often making our actions too little too late.

One thing Krugman did not emphasize, but of which he is all too aware, is the tension between addressing the economy vs. the ecology. One of the reasons the Waxman-Markey climate bill that passed the House of Representatives on June 26th was so weak was because of this perceived tension.

However, these issues are not in tension at all, but are in fact aligned. Going back to the root meanings of the words economy and ecology we find that from the Greek economy means 'the management of home' and ecology 'the study of home'. Since when has the management of a subject not required study? How can we expect good management without knowledge? As if it is not obvious, economy requires ecology.

Economy and ecology come into alignment when we realize that the problems of the 21st century are going to be about managing resources to live sustainably. When we realize that the problems we face are systems problems, we will see the system as the earth and everything else as a subsystem within the earth system thus requiring alignment to the workings of the earth system.

For centuries human beings have put the earth in service of the human activity, now with knowledge we must begin to put human activity in service of and alignment with the earth.

The Bumpy Road to Copenhagen

2009-07-08T12:41:00.000-07:00

Photo: Jason Reed/Reuters.
As the New York Times reported on its website today, the G-8 nations have failed to reach an agreement on goals for eliminating Greenhouse Gases. One observer even claimed that - gasp - President Obama was doing no better the George W. Bush on this score. That's a pretty low bar when it comes to climate change on the international stage.

Voices of reason ...

2009-06-26T11:59:00.000-07:00

Today I was reading the June 29th issue of the New Yorker and came across an article by Elizabeth Kolbert entitled "The Catastrophist." In a nutshell, the article is about Jim Hansen, who has been spending the better part of the last 40 years understanding the changes in the earth's climate system, and half of that time trying to warn the world by dealing in the facts. Unfortunately, as compelling as they are, the facts continue to get drowned out in a chorus of loud, agenda-driven messaging about how climate change is not a problem, that it's really reversing, and it's all a big hoax anyway.

This was brought home to me clearly this morning when C-Span had a call-in program on the subject of climate change. The Waxman-Markey legislation to cap CO2 is about to go to the floor of the House for debate. Listeners were invited to call three numbers, one for Democrats, one for Republicans, and one for Independents. All the calls were against support for Waxman-Markey. Consistent carefully crafted messages abounded about how global warming was not a problem, and that Waxman-Markey would kill jobs. An email from a climate activist put it this way "I'm getting a ton of messages saying that we're getting killed on C-span this morning. We are trying to generate calls into C-Span while discussion is happening around the bill. Opponents have mobilized effectively to swamp all 3 party call lines. It's 100% against with same talking points."

In the movement to get climate change legislation enacted will mobilized talking-points win out over scientific facts?

Coming Home (Part II)

2009-06-08T11:48:00.000-07:00

Alignment of Ecology and Economy

If ecology and economy are aligned, what can ecology teach economy? How can ecology inform how to manage the global economic system? Does this mean we all have to live in mud huts, treehouses or caves? Is the implication of this a giant step backward for the quality of life of human beings?

When people start asking questions like that it is apparent that fear has crept into the discourse. “I don’t want to give up my SUV or second home, my steak dinner or trips to the South of France.” This is what they really seem to be saying. No one wants to change if they’ve got it pretty good. And we in the West have got it pretty good. But understanding that ecology informs economy is not about having it bad – it is not a call to privation and poverty. In fact it is the only way to insure sustainable prosperity and abundance for generations to come in the developed and developing worlds.

Having ecology inform economy is first and foremost about understanding systems. The earth’s biosphere is the system from which we all come. Humanity is not only the inheritor of the earth, we are its issue. Human beings are natural adaptive systems within the biosphere. Together we created another very powerful adaptive system called the global economy. Systems theory tells us that every sub-process and subsystem within an overall system must be aligned with the aim of the overall system, otherwise there will be sub-optimization, decay and the ultimate destruction of the system. The global economy as a sub-process within the biosphere must be aligned with the aim and workings of the biosphere. It is through ecology that we can understand how the biosphere works, and it is through economy that we can align with it to achieve sustainable human prosperity.

In that way, concern that ecology could undermine economy makes as much sense as concern that medical research could undermine human healthcare. The two are aligned as opposed to being in tension. An understanding of ecology – how the biosphere works – is a great enabler of a sustainable, prosperous economy.

Coming Home (Part I)

2009-05-26T11:50:00.000-07:00

In the increasingly urgent discussions around climate change and industrial sustainability, one hears over again concerns about the choice between ecology on the one hand and economy on the other. Renewed concern about the earth's ecology must be weighed against the negative impacts actions from such concerns could have on the economy – especially an economy in global recession with declining equity and credit markets. The earth's ecology and the global economy are presumed to be in tension, what’s good for one is bad for the other, as one rises, the other falls.

If we look more closely, picking between one or the other appears to be a false choice. The very meaning of the words ecology and economy hint at this. The root of both words - ecos - is derived from the Greek and means home or household. Ecology is the study of home, and economy the management of home. As a species we have finally come to realize that home is not the just our house, or the village town or state we come from, but the entire planet on which we live - that's home. Ecology is the study of home - the earth's biosphere and how it works. Economy is the management of home - but this meaning has also expanded as our thinking of home has expanded. Economy now is about managing a global economic system that is reshaping the biosphere on which it depends for its existence.

Since the Enlightenment, the study of a system has informed how it is managed. The fields of astronomy, physics, biology, medicine, psychology and many others – have brought forth new knowledge that has informed and optimized the management of human activities. So it must be with Ecos. Ecology - the knowledge of the biosphere - must be a tool for better economy - informing and optimizing the management of the biosphere.

Using ecology to inform economy is simply using knowledge to inform management. Where tension exists between new knowledge and management, the outcome is generally undesirable. The new knowledge from Darwin’s theory of evolution was very controversial in its day, and is still in tension with the way many groups and individuals view their very existence. This has negative implications for education and the advancement of knowledge and science. Viewing knowledge as a threat compromises human advancement. Viewing knowledge of the biosphere as a threat to the global economy could threaten human existence.

If the study of home, Ecology, and the management of home, Economy, need to be aligned, how can that alignment inform more effective management? Read next week in “Coming Home (Part II).”

The Waxman-Markey Bill

2009-05-19T11:05:00.000-07:00

Hi Everyone,

I just got back from the North Amercian Summit for The Climate Project, in Nashville Tennesse. W were charged with contacting our elected officials to let them know that we need the American Clean Energy and Security Act of 2009 (ACES), (the Waxman Markey Bill) to be passed.

Is it a perfect bill? No. Is it essential that we pass this bill now? Absolutely. The world will be meeting in Copenhagen in December to map out the future of global climate policy to cap CO2. If the U.S. does not have legislation in place, a global agreement on capping CO2 will be impossible, and American leadership in the world greatly damaged.

The question is, what type of role do we want to have in the world community in the decades to come? Do we want to be dragged kicking and screaming into responsible governance on global issues, or do we want to take leadership and have influence?

By contacting your representative in Congress you can affect change. Even if your Congressional representative is on-board, an email or a phone call or a letter will strengthen their hand, and perhaps turn them from supporter to advocate.

Tell your friends, corworkers, family, even some strangers, that they need to speak up and now and loud! You can ask them to phone or email their elected officials or direct them to the League of Conservation Voters website, http://action.lcv.org/campaign/april_gw_house_full. You can also direct them to the Alliance for Climate Protection website for Repower America, http://www.repoweramerica.org.

You can read the bill or a summary at http://energycommerce.house.gov/index.php?option=com_content&task=view&id=1560&Itemid=1

The time is now. The opposition and big polluters are very vocally against this legislation. We need every person we can to speak out. It's your right and your responsibility to speak up!

All Definitions of Sustainability are Wrong

2009-05-08T07:15:00.000-07:00

Some, however, are useful.

The word sustainability is in danger of becoming a 'garbage term', having widely divergent meanings depending on who's using it. A word with too many meanings tends to lose all meaning - more is surely less in this case.

To some people sustainability sounds stagnant, coming across as dug in - neither growing, nor changing nor adapting. To others sustainability means something entirely different - robustness, durability, constancy of purpose, even adherence to core values. Sustainability can reflect how business treats the environment in general such as through recycling and reducing waste and toxins, or it can specifically refer to reducing greenhouse gases and addressing climate change. To some, sustainability is just staying in business. Others define it more broadly, as a paradigm shift from a focus on short-term measures to an alignment to broader aims.

The problem is, no succinct definition can fit them all, so in that sense all definitions of sustainability are wrong. Yet some are useful. The one I find most useful which incorporates a lot of the above ideas - and does so in seven words: sustainability is an appreciation for systems thinking.

A system is a grouping of components and processes in the service of an aim. If it doesn't have an aim, then it's not a system; if you don't know the aim, then you can't optimize the system. If all the subsystems and sub-processes within a system are not aligned with the aim of the overall system, there will be sub-optimization, decay and the eventual destruction of the system.

In looking at the problem of sustainability, the system in question is the earth's biosphere, and embedded within it is a very powerful subsystem called the global economy. Humanity has been putting the biosphere to work in service of the aim of the global economy for centuries. But we will not achieve industrial sustainability and we will not effectively address problems like climate change until we figure how to turn that inside-out, and learn to align the global economy in service of the aim of the biosphere.

What is the aim of the biosphere? Sustainability, of course.

Climate Change Strategy - From Business For Business

2009-04-27T08:51:00.000-07:00

This EarthDay April 22, a group of leading global businesses announced the formation of Interraction, a consortium that will advise businesses about the risks of climate change and the advantages of sustainable solutions. carbonRational is among these firms. Here is our launch announcement:

carbonRational announces the launch of InTERRAction - the first multi-disciplinary business consortium established to address climate change risk.

InTERRAction provides a collective 360 degree expertise, and will offer a unique, cross-functional perspective that is necessary to help corporations manage climate related risks and leverage the business opportunities they create. InTERRAction provides businesses with both advisory services as well as execution of its recommendations.

“Corporate sustainability efforts, if they exist at all, are often characterized by ‘silo thinking’,” said Andrew McKeon, co-founder of Interraction, and principal at carbonRational, a strategic consulting firm focusing on addressing climate change at a systems level. “Management may commission a state-of-the-art green building from their facilities department, but then neglect to orchestrate complementary changes in the departments responsible for vendor practices, product sourcing and packaging, site location and corporate development. Typically, the result is that the anticipated payback in terms of environmental impact, return on investment and risk management falls short of goal.”

Mr. McKeon noted that the group’s founding vision is to offer a comprehensive strategic approach based on the collective knowledge and experience of its membership. “As a group, we can help corporations with the difficult task of seeing the organization as a whole, which is the key to delivering sustainable shareholder value and reputation. We are replacing ‘silo thinking’ with ‘systems thinking’.”

As a starting point, Interraction uses a diagnostic tool called The Sustainability Scorecard to assess and manage climate change risk.

“The Scorecard functions like a full body scan in a medical check-up,” said Kenneth D. Makovsky, Co-Founder of the consortium, and president of Makovsky + Company, an independent communications consultancy. He noted that the Scorecard provides a snapshot of the notable risks throughout an organization, pinpointing specifically the impact climate change can have on a firm’s growth and reputation. The findings are summarized in an easy to understand risk index. The Consortium then collaborates with a client’s leadership to review the findings, identify areas of concern, and discuss options to manage any of the risks uncovered.

“Interraction is poised to counsel any business on a single area of functional expertise,” added Mr. Makovsky. “But our true power as an organization lies in our collaboration that can bring into focus the significant environmental risks and opportunities that are typically obscured by departmental myopia.”

“Interraction proposes to deliver a compelling blend of disciplines for an integrated approach to corporate sustainable practices,” commented Aaron Binkley, director of AMB’s Sustainability Programs. AMB is a beta customer of Interraction and is currently assessing the service’s applicability.

Interraction consists of top experts in Architecture, Climate Forecasting, Communications, Environmental Science, Law, Management Consulting and Engineering. Members firms include:

• Arnold & Porter: One of the preeminent law firms in the world, Arnold & Porter offers clients broad expertise in understanding the legal implications of climate change, educating and advising them on their legal status vis à vis current law, and what to expect in coming legislation.

• Buro Happold: A premier international design and engineering firm that is a global leader in balancing sustainable design and functionality, Buro Happold provides expertise in environmental impact statements, environmental management, masterplanning and design, and specialized services.

• carbonRational: A management consultancy focused on corporate strategies for climate change and sustainability based on systems thinking. carbonRational was founded by Andrew McKeon, a former systems engineer and operations specialist who for several years has been working with Al Gore and The Climate Project to raise awareness on climate change.

• FXFOWLE Architects: FXFOWLE enjoys an international recognition for excellence in design and pioneering green architecture, including the Conde Nast Building (the first green skyscraper in New York), the New York Times Headquarters (with Renzo Piano), and LEED projects representing over 12 million square feet.

• Makovsky + Company: One of the largest independent public relations, investor relations and branding consultancies in the USA, Makovsky + Co. has been engaged by corporations ranging from the Fortune 500 to emerging leaders in sustainable products and services, ﬁnancial and professional services, health, and technology industries.

• Svante Scientific: founded to deliver to the private sector the quantitative information developed at Columbia University and NASA that is needed to identify opportunities and reduce risks associated with the changing global climate. The firm delivers both climate data and custom simulations of future climate change.

For more information about the consortium or The Sustainability Scorecard, please contact carbonRational at 917-750-6779 or info@carbonRational.com.

With Finance Disgraced, Whither Goest the Best and Brightest

2009-04-13T04:55:00.000-07:00

There is much speculation about the long-term consequences of the current financial meltdown and the impact it might have on the career choices of young people today. Frank Rich in his Sunday column, while skewering Lawrence Summers as an example of the the old model of cashing-in on one's influence, quotes his replacement at Harvard, President Drew Gilpin Faust. “Find work you love,” she implored the class of 2008. The “most remunerative” job choice “may not be the most meaningful and the most satisfying.”

A day earlier, another article in the Times entitled "With Finance Disgraced, Which Career Will Be King?" also discussed the direction of top U.S. students, with some surprising findings.

According to the article, public service, government, the sciences and even teaching look to be winners, "while fewer shiny, young minds are embarking on careers in finance and business consulting."

Also, graduate schools of government and public policy are seeing a surge of applications. And those top students who are deferring graduate school may be choosing to join "Teach for America", which has seen a surge in applications.

Beyond the "disgrace" of finance, another big trend pushing young people in a new direction are public problems, which the article says is being influenced by everything from the 9/11 attacks to climate change.

“There is a big crop of people, like me, who grew up in a different time when public policy and public issues have been at the center of things.” So says Matthew McKnight, a young Dartmouth alum who joined the Marines upon graduation, and is now headed to Harvard for a joint degree in business and public policy.

Don Chamberlin, a professor of computer science at the University of California at Santa Cruz recalled that back in the early 1960s when he was choosing a career, a technical professional was respected and well paid. Money, he said, was part of the equation. “But the bigger part of the motivation for me,” he said, “was that I would be doing exciting and important work and that my contributions would be appreciated.”

It is refreshing to see that people - especially younger people - are understanding that our future - as a society and as a planet - depends on what I would term an appreciation for systems thinking. Our society is weakened when we groom an elite to create vast wealth for themselves, while we ignore long-term political, economic and ecological problems. The individual myopic pursuit of fast money was exemplified by far too many young graduates from the 1980's until recently. Now it seems today's newly matriculated are looking longer-term, and realizing that the opportunities of the 21st century are going to be in solving big problems, requiring joint efforts between the public and private sectors.

When it comes to making career choices, our current President provides a good study. As Rich points out in his column yesterday "Obama turned down the lucrative career path guaranteed to the first African-American president of The Harvard Law Review to pursue the missions of service and teaching instead. The potential rewards for our country, now that that early choice has led him into the White House, are enormous."

I certainly hope so.

GM and 21st Century Managment ...

2009-03-30T09:09:00.000-07:00

The following is an article written by Dr. Gipsie Ranney. Dr. Ranney is a consultant in Nashville Tennessee and was a close associate of Dr. W. Edwards Deming with whom she collaborated for over a decade. The article is entitled 'Remembering Nummi'. Nummi was a joint venture between GM and Toyota back in the early 1990's. With all today's talk about whether and how taxpayers should be bailing out the American auto industry, I believe you will find Dr. Ranney's thoughts and perspective well worth your time and consideration.

Heretics and Climate Change

2009-03-29T13:28:00.000-07:00

In today's New York Times Magazine (Sunday, March 29, 2009) readers will find an article on Freeman Dyson entitled “Civil Heretic” . Clearly the world needs heretics - especially when they are geniuses and even if they are sometimes flat-out wrong. Dyson is a world renowned scholar and physicist, and has worked at Princeton's prestigious Institute for Advanced Study (the type of place that has hired people like Albert Einstein)for over 50 years. Dyson has recently come out saying that he believes the dangers of human-induced climate change have been greatly exaggerated.

The article is worth reading, but take note of a quote at the end. Dyson is quoted saying “But I knew Roger Revelle. He was definitely a skeptic. He’s not alive to defend himself.” Dr. Roger Revelle was Al Gore’s professor at Harvard and Gore often refers to him as the person who first introduced him to the idea that a build-up in the Earth's atmosphere of human-induced greenhouse gases might have long-term catastrophic consequences. By saying that Revelle was a skeptic is Dyson's way of saying Gore is wrong, or worse a liar.

I point my readers to an article published by the New York Times on July 25, 1977 entitled “Scientists Fear Heavy Coal Use May Produce Adverse Shift in Climate.” The article discusses a 281 page report written by Dr. Roger Revelle and other members of the National Academy of Sciences warning of “Highly adverse consequences” for the planet’s climate system were the world to continue to burn coal through the 21st century. The Times went on to report that Revelle, who authored the summary of findings, advocated early action “which was needed because it would take decades to narrow the uncertainties and then a full generation to move to new sources of energy, if that, as expected proves necessary.”

I can not know for sure that Dyson is wrong about the danger of climate change. What do know for sure is that he was very wrong about Roger Revelle.

Business As Usual

2009-03-25T08:29:00.000-07:00

President Obama has stated that part of addressing this financial crisis is making all parties realize that "business as usual" is finished. This message was largely directed to Wall Street bankers who scooped up billions of $$$ in the "good" times that brought about this crisis, and then expected the gravy train to continue even now in the depths of the abyss.

But the term business as usual is not new to those concerned about climate change. As a matter of fact it has been used by the IPCC (Intergovernmental Panel on Climate Change) for the last 20 years. They even coined the acronym BAU to indicate what can not be sustained by the planet's climate system to insure long-term stability.

Unfortunately we are still following business as usual here in the U.S. Not only have we not committed to capping CO2, we are ignoring great warnings that change is happening even faster than was previously believed possible. A recent conference in Copenhagen saw the esteemed economist Lord Nicholas Stern revise his 2006 "Stern Review" projections on the cost of not addressing climate change. Guess what? They're up by 50%! This made huge headlines in Europe and around the world.

In the U.S., however there was hardly a mention of it.

Sounds like BAU to me.

The Best and the Brightest ...

2009-03-16T08:26:00.000-07:00

I know this is supposed to be a blog about addressing climate change, so why do I continue to harp on executive compensation patterns? Because it is at the heart of how we structure our economy and reflects what we value as a society. One of the reasons we stand at the edge of the abyss of economic ruin today is because of compensation patterns, and one reason our economy has thus far failed to regulate greenhouse gases and deferred addressing the urgent threat of climate change is also directly related to how we compensate executive leadership.

Corporate management is never going to be able to address long-term issues like climate change and sustainable development without an appreciation for systems thinking. What happened to AIG was the result of the creation of a culture that abandoned any such appreciation for systems thinking and replaced it with a myopic focus on maximizing short-term results. In a toothless regulatory environment greed took over, more was better than less, so AIG kept doing more - and the final results speak for themselves.

Today's headline in the Wall Street Journal "AIG to Pay $450 Million in Bonuses" points to the absurdity if not obscenity of what is still going on. Mr. Liddy, AIG's CEO wrote to Treasury Secretary Tim Geithner that AIG "cannot attract and retain the best and brightest talent … if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury." Where have I heard that term before - the best and the brightest? Oh yeah, that was the title of David Halberstam's insightful and excellent book on how America was dragged into the abyss of Vietnam by really smart people. Was it not AIG's best and brightest - people like Joe Cassano - who created this catastrophe? TPM Muckraker referred to this ilk as the Axis of Weasels financial engineers who risked all their firm's money, engineered personal fortunes for themselves and then left Joan and John Q. Taxpayer to absorb all the risk?

Now we're supposed make sure some of these very same guys get bonus and retention pay of over $1 Billion? Absurd! No, OBSCENE! And God help the planet if this is the way corporate America is run in the 21st century.

Late breaking news from the NY Times: President Obama seeks to block AIG bonuses.

Paying the Weatherman for a Nice Day

2009-02-08T19:50:00.000-08:00

Climate change is at its core a systems problem and requires management to adopt systems-based solutions. Executive compensation is interconnected to climate change to the extent that it helps or hinders management in cultivating an organizational culture with an appreciation for business as a system.

In discussing the executive pay on Wall Street over the last few years, a recent article in the New York Times points out how bonuses were all too real even though profits proved a sham. Which reminds me of something a great teacher of mine once said. “Pay for performance is meaningless.” W. Edwards Deming was 90 years old when he taught a course at Columbia’s Graduate School of Business. Deming felt American management lacked the understanding to build sustainable profitability. He taught that for profitability to be sustainable it must be the consequence of a corporate strategy rather than the aim of one. Short-term executive “performance” and long-term shareholder value were very likely inversely correlated.

The results on Wall Street over the last year seem to bear Deming out. John Thain, the current bad boy of executive compensation was awarded over $50 million in 2007 from Merrill Lynch – the highest in the firm’s history – only to see the firm near collapse in 2008. Clearly, whatever Mr. Thain’s “performance” was in 2007, it did little to insure long-term shareholder value. More likely it drove the risky bets that resulted in Merrill’s demise. Billions of dollars in performance-based pay was doled out to Wall Street executives and traders who thrived while taking big risks and putting the global financial system at risk. If pay for performance were a reality, that pay would be callable.

Deming saw each business as a grouping of interrelated and interdependent processes in the service of an aim. In breaking apart the business and measuring the performance of each component in isolation, Deming feared the loss of appreciation for the "system-ness" of the business - the ability to attribute appropriate value to things that are not easily measured, such as the effect of a great boss or an involved employee, the flow of information or degree of cooperation within an organization, or the extent to which management decisions are aligned with the overall aim of the business.

An appreciation for the “system-ness” of business is going to be a necessary characteristic of 21st century management if humanity is to address one of the greatest systems problems of our time or any time – human-induced climate change. From a systems perspective, the global economic system has become such a powerful force within the overall system of the earth’s biosphere that unless we align the aim of the global economy with the aim of the biosphere – and fast – we will live with the consequences of that misalignment: sub optimization, decay and the ultimate destruction of the system.

If good management is about an appreciation for a system, we are going to need a lot more of it in the 21st Century. “Management is prediction …”, Deming said, continuing “… rewarding an executive for an increase in stock price is a lot like paying the weatherman for a nice day.”

Climate Change - Still A Big Secret

2009-01-13T09:35:00.000-08:00

I read with great interest over the past couple of weeks articles in the New York Times about innovative and unusual ways people are heating their homes these days. Two of the articles “Wall-to-Wall Warmth – Dec 18” and “No Furnaces But Heat Aplenty – Dec 26” gave examples of increased energy efficiency in home heating, while the third article “Burning Coal at Home is Making a Comeback – Dec 27” discussed how a very old fuel is finding new markets with homeowners because of reliability of price and supply. I recommend all three – but “No Furnaces” was my favorite. I love hearing about how a comfortably temperate home can be achieved with a 95% reduction in energy usage compared to the typical design. Such stories give me hope.

Yet nowhere in any of these three articles was the subject of climate change in general, or the build-up of greenhouse gases in the atmosphere in particular discussed. Home heating has significant implications for addressing climate change. The New York Times is doing a very good job covering climate change explicity through its Green Inc. and Dot Earth blogs and with great reporting by writers like Andrew Revkin. However, what is needed further is to have articles outside the explicit climate and energy reporting to provide points of departure for introducing readers to the urgent problem of climate change.

One such example of a missed opportunity was a recent article on wireless chargers for electronics. In this article, Intel Moves to Free Gadgets of Their Recharging Cords, the author points to an MIT study that shows wireless charging to have “demonstrated efficiencies of 50 percent at ranges of several meters.” That means one must use twice the energy for the convenience of wireless charging. The article does not calculate the increased energy cost of such inefficiency or the increase in greenhouse gases as a result. To give you a rough idea of the magnitude of our use of digital electronics, we dispose of 426,000 cell phones every day. Making the ones we keep twice as energy hungry does not seem a step in the right direction, and certainly deserves to be called out as antithetical to the general aim and urgent need for increased efficiency.

Those with the biggest megaphones need to find every opportunity to discuss this issue of climate change, to help the public learn the urgency of the problem, how humanity is impacting climate change and how climate change will affect our lives. I wished these otherwise interesting and well written articles in the Times could have done more to frame their discussions around the climate change issue.

America’s Oil Dependency – Addiction or Policy

2009-01-06T09:09:00.000-08:00

Today many Americans discuss our nation’s energy problems in the frame of “oil addiction”. Such talk is found at the corner bar, in the news media, and even in a President’s State of the Union address. While the term addiction conveys a seriousness and gravity, it also conveys a sense of helplessness, a lack of control and ultimately a lack of responsibility.

In truth America’s dependency on oil is more complex than addiction. It is in part a function of decisions and policy made by us the people through our elected representatives. Further, it is the consequence of interrelationships and interdependencies within our economic system and between government and the private sector that have made cheap oil the energy policy of the land for over half a century. The nation deserves a deeper understanding of the subject of national energy policy than the term addiction allows:

Addiction implies uncontrolled or compulsive use of something. Addicts see their fate as beyond their control and often feel powerless to change their circumstances. Addiction frequently follows the path from helplessness to hopelessness and ultimately to victimhood. So the message of oil addiction may imply, directly or indirectly, that America is not in control of its oil consumption but is instead a powerless victim of it.
Most addicts see no alternative to their habit. They will do whatever it takes, including act compulsively and irresponsibly, to get the next dose or fix. The message of oil addiction can subtly convey the idea that oil is irreplaceable and that America must adopt whatever national policy is required to feed the habit, even accepting compulsive or irresponsible actions by government.
With addiction there is a sense that complete recovery is unlikely if not impossible – it is said that once an alcoholic, always an alcoholic. And while controlling the addiction may be possible, this usually implies a very long and very difficult period of withdrawal with many steps along the way. Therefore oil addiction may imply an inevitable and perhaps even a perpetual tie to oil, that can never be ended, but only perhaps reduced, and then only through a very prolonged and measured transition.

The more America thinks of oil and energy in terms of addiction, the more likely our citizens will accept dysfunctional economic, political and environmental policy as an inevitable consequence.

We need to be thinking instead about what we want from our national energy policy and what it is capable of providing. Can we adjust the policy to reduce dependency on a politically and economically volatile commodity like oil? Can a sound policy help provide cleaner, renewable forms of energy to our economy? Can it stimulate job growth and wealth creation in the U.S. instead of sending billions of dollars overseas?

Policy that enables a transition away from oil and other fossil fuels may represent one of the greatest opportunities for insuring both America’s prosperity and the stability of the earth's climate system in the 21st Century. Hopefully the new government in Washington will begin making informed decisions about energy policy very soon. This will be a change in itself, since addicts are incapable of making informed decisions.

Andrew J McKeon

Business Education and Climate Change ...

2008-12-15T18:13:00.000-08:00

Last week Andrew Revkin wrote a very timely article for the NY Times Dot Earth post regarding the real meaning of Green Jobs. I think it is an important post - and some great responses too.

One thing I might add is the need for breakthroughs in education - not just for our kids (who, frankly, seem to know more about these issues than their parents), but education of our political leaders and perhaps more importantly our present and future business leaders. Yes, I agree that we need to put more money in the hands of scientists and technologists who can do blue-sky thinking -perhaps in a university lab or out of a garage - we should do a combination of both. We also need a breakthrough in understanding on the part of the business community. Business leaders must accept that the future of industry is not about putting the biosphere in the service of the economic system but rather aligning the economic system with the aim of the biosphere. Biomimicry is part of that breakthrough - a fascinating new area that is opening the eyes of many in the business community to realize that there is more to be gained from understanding and aligning with the biosphere than in simply exploiting it. So, I suggest we need to fund new ways of educating our future business leaders. A good start would be a course in every MBA program in the country with a title such as: “An Appreciation for the Global Economy as a Sub-system of the Biosphere” or “Economies like Ecosystems.”