Can you afford to miss out on the business opportunities of the emerging circular economy?

I’ve been watching a LinkedIn conversation about “taking the immense risk that Climate Change is posing” and watched it transform into a believe/don’t believe conversation about human-induced climate change.

To me, sustainability advocates have a much more powerful challenge to make, especially to business players.  We can ask them a different and more immediate set of questions:

• “What does the market place think about environmental issues?
• What are your customers doing?
• What are your suppliers doing?
• What are the market leaders doing?”

We don’t necessarily need to prove “climate change is true” – we just need to prove that it’s there is a real case for business understanding of environmental issues.

Winning the sustainability game with Good to Great

In 2001, Jim Collins published his research into the factors that turned good businesses into great businesses, performing well above their industry average over long periods of time. The title of the book is “Good to Great. Why Some Companies Make the Leap and Others Don’t”.

Collins described a cyclic process of 6 steps that – pursued persistently – significantly increase and sustain outstanding business performance.  He called this cycle of steps “the Flywheel”. The 6 steps are:

1. Develop ” Level 5″ leadership. The process starts with  leaders who are smart coaches, not charismatic heroes.
2. Focus first on WHO, then what. Build the right team and work with them in deciding what to do.
3. Practice brutal honesty. Acknowledge what’s going on (and have faith you can deal with it). Create permission for the truth to be heard and dealt with.
4. Find your hedgehog. Deeply understand the core drivers of the business you’re in – the place your passion, excellence and customer value meet.
5. Develop a culture of discipline where everybody understands what the rules are for “our game” and how to play it well.
6. Use relevant technology to accelerate business performance based on sound strategy.

This process is highly relevant to successful business sustainability programs.

Always meant to read Natural Capitalism but not gotten a “round TUIT”?

If you’re interested in seriously cool sustainability then there’s a book you should read.   It’s about more than being good – it’s about reinventing the basic mindsets and models behind the systems that deliver our products and services.

“Natural Capitalism” is a big read – and it discusses some exciting strategies for creating the next Industrial Revolution.  If you’re still working up to it, here’s a kick-start for you from our article archives:

Is there a process behind our heroes?

Joel Makower’s recent blog “Why aren’t there more Ray Andersons?” was an interesting read with great insights into who Ray was from other famous sustainability players.  The ongoing conversation from that article is the basis of this post.

There was a process BEHIND Ray Anderson’s “aha” moment on sustainability…

I only met Ray through his books, including “Business Lessons of a Radical Industrialist” and “Mid Course Correction.  Among the many insights he shared was his personal process of transformation. In my interpretation, this was:

• The person – an innovator, entrepreneur and good leader (Jim Collins would say “Level 5”).
• The timing – that he was looking for a new challenge after 20 years of success. – an external prompt – ongoing demand from his customers – to do “more” about sustainability (persistently re-iterated by then research assistant Jim Hartzfeld).
• The do-able first step – to form an internal working party (proposed by Jim Hartfeld).
• A personal challenge to deliver internal inspiration (from Jim Hartzfeld to inspire the working party).
• The timely provision of inspiration (the friend who sent him “The Ecology of Commerce”).
• The realisation we CAN destroy eco-systems (in the book “The Ecology of Commerce”).
• The vision of entrepreneurial possibilities for business (in the book “The Ecology of Commerce”).

If disasters have multiple causes, the emergence of a hero may be the result of a process rather than a miracle. Is a more relevant question “What happened to turn Ray Anderson on to sustainability and how do we re-create the process?” And perhaps we need more Jim Harzfelds as well?

There was a process behind the “aha” moments that got me started, too…

What stopped me for many years was the assumption (I think based on mass media messages) that sustainability was a problem, that there were no potential solutions, and that the primary thing for me to do was use less.

What got me turned on was also a process :

• Turning 40 and asking “well what do I REALLY want for myself in the coming decades” (to make a difference reducing corporate burnout as a professional coach)
• Learning to listen to myself during my initial coaching studies
• Noticing that I was (reluctantly) interested in a Masters in Sustainability announced at lunchtime during graduate eCommerce studies
• Doing post graduate studies and being introduced to the books “Natural Capitalism”, “Mid Course Correction” and “Cradle to Cradle”

There was my serial “aha” (with a great inspiration from Ray Anderson included). I had been a supply chain systems consultant, and these particular books spoke to both my personal and business experience. Because of this experience, I believed (and still hold the assessment) that as an individual consumer I could not make a significant difference. Much as I loved my bush garden, I had no sense of power or possibility or connection to “this sustainability thing”.

What these three books gave me was HOPE – and a positive, explicit vision of practical ways our system could be AND WAS changing. These ways were congruent with my own knowledge of the inside operations of factories and warehouses in a range of industries.

That’s what activated me – HOPE and a specific positive vision.

Our emerging challenge…

In Innovation Diffusion terms, the challenge I see in front of us now is how to get this new way of doing business “across the chasm” to the Early Majority who are motivated differently from Innovators and Early Adopters. My experience in CleanTech circles is that the Innovators and Early Adopters have “got it”.

To me, if popular, powerful voices make “sustainability” look difficult and expensive to the Early Majority then that “chasm” will get wider, especially if they have to risk their reputation on “costly new programs”. So the more well-known people we can get to speak out about how straightforward, sensible and rewarding sustainability is when it’s done strategically to achieve win/win/win outcomes the better.

I assess that it’s also important to distill the systems changes required to get started into simple, powerful memes that suit our time. Easy, useful products and ideas get cross the “chasm” quite easily

Ontera proves Interface is no fluke

(From the Balance3 June newsletter)

It’s great to have a local story to combat “yes – but it’s different here”.  A favourite story of ours is that of InterfaceFLOR – a commercial carpet manufacturer making a big difference. So hearing about the case study of Sydney carpet maker Ontera at a workshop last month was great.

Ontera has profited significantly from their sustainability strategy, and their five year results show they’re making great progress “climbing Mount Sustainability”. Some of their results so far include:

• 40 per cent reduction in electricity and gas use (per m2 finished) over five years.
• 25 per cent reduction in waste over five years.
• 40 per cent reduction in water consumption in five years

From a regenerative perspective, their loop-closing explorations are particularly interesting:

• Diverting used carpet tile from landfill into local reuse and recycling initiatives: and
• Turning waste trim into an input to carpet underlay manufacture.

Read more about their journey so far at:

http://www.environment.nsw.gov.au/ resources/sustainbus/1019SA_Ontera_cs.pdf

Hume BEN delivers again

This case study was one of many presented by John O’Brien of Australian Cleantech at the City of Hume’s Business Efficiency Network Cleantech session in May. A range of other great case studies are in John’s presentation which is available at:

http://www.hume.vic.gov.au/Business_Major_Projects/ Business_Networking_Training/Business_Sustainability/ Business_Sustainability_Events_News

The City of Hume’s Business Efficiency Network is a great place to find out about what’s happening in Australian regenerative business. Membership is free, event fees are minimal and the food is great too. If you’re based in Melbourne and interested in Resource Recovery, Industrial Ecology or Cleantech then think about joining. Check it out at:

http://www.hume.vic.gov.au/Business_Major_Projects/ Business_Networking_Training/Business_Sustainability

What do you do when you’ve done efficiency? Levelling up in the sustainability game…

While efficiency is a critical element of sustainable business, it’s not the be-all and end all.   The real end game of sustainability is a big one – to re-invent how we make and deliver our products and services so that they’re profitable AND actively good for  their host communities and eco-systems.  The business winners of the future will build their careers and profits by taking the sustainability game to this exciting new level.

A new design paradigm…

Applying efficiency inside business-as-usual thinking limits our ability to find the win/win/win solutions that are increasingly part of the developing regenerative business revolution.  Levelling up in the sustainability game requires a bigger design perspective:

• Re-designing commerce so that “growth” is about delivering valuable services rather than selling more products.
• Re-designing how we use non-renewable material resources so that they are continuously recycled and remanufactured.
• Re-designing production processes to primarily use renewable resources.

Efficiency still counts…

This isn’t to say that efficiency isn’t important.  Most of our products and services have their roots in an out-of-date belief that natural resources are unlimited – and it’s a view that has been difficult to shift.   In Australia, for example, our energy efficiency record has barely improved in the past 40 years.  So we still have many opportunities to make significant bottom-line improvements by improving our efficiency.

Levelling up to regenerative thinking…

The bigger game of regenerative thinking (business that actively enables community and eco-system regeneration)  has been going on since the 1990s.  It’s a developing necessity and it’s going to change some businesses radically.  Those that aren’t tuned in to the bigger game could find that they’re making their industry’s equivalent of vinyl records or camera film.   The “truth” about climate will become irrelevant in the face of this new wave of innovation.

Those that ARE tuned in are the ones that will be developing new competitive capabilities and expanding into overseas markets with new products and services (like Australian companies Close the Loop and Futuris amongst many others).

Have you “hit the wall”?

If you feel you’ve done all you can in your business as far as efficiency goes that’s great.  So now it’s time to step back and look more widely for opportunities – out into your industry; up your supply chain to your customers and their end consumers; and down your supply chain to where your inputs come from.

Build your knowledge of the simple principles behind the next level of the sustainability game and start exploring for your opportunities.  It’s amazing what’s going on – and a whole lot of fun.  Dive in and Google “regenerative business” or “cradle to cradle” or “biomimicry” and just see what you find.

Sustainability is about more than efficiency – it’s about radical innovation and profitability – it’s time to level up!

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Leigh Baker is an author and facilitator who teaches the straightforward principles of Regenerative Business and the soft skills that innovators need to turn their ideas into results.  Her short book “The Deep Green Profit Handbook” summarises the straightforward principles behind the emerging regenerative business revolution in plain business language.

Is regenerative thinking an opportunity for small business?

The word “business” hides a huge amount of detail.   Business isn’t a single entity with a single set of motivations – the thing we call “business” is more like an eco-system, with a range of different players performing a huge range of functions.

So saying “business should change” isn’t enough.   Which businesses?  In which industries?  Big businesses?  Small businesses?  Service businesses?  Manufacturing businesses? Agricultural businesses? 

Communicating with different businesses requires flexible communication – what serves for the “whales” of big business is different from what matters for the smaller organisations that do business with them.

Thinking about smaller businesses…

In Australia, there were 2,051,085 actively trading businesses as at June 2009, of which around:

• 96 per cent were small businesses (up to 20 employees):
• 4 per cent were medium-sized businesses (20 to 199 employees); and
• less than 1 per cent were large businesses(200+ employees). 

Most businesses are “small” businesses – yet these small businesses provided employment for almost half of total industry employment in 2009–10.

(In the USA, it’s measured differently – a small business is defined as an independent business having fewer than 500 employees.  But still, small firms predominate – those  with fewer than 500 employees represent 99.9 percent of the total.)

Sustainability for Small Business…

So if most businesses are smaller businesses, how many are going to have the capacity to take an “overheads” view of sustainability?  How many will be motivated to do reporting or carbon trading?  Which businesses will have the capacity to hire environmental specialists and external consultants? 

So there’s a real challenge for sustainability practitioners- how do we make a compelling offer to smaller businesses and organisations?   I don’t have all the answers for this question.  I do wonder whether the mainstream offers of efficiency and cost savings around business-as-usual could be missing the mark?  Examples like the case study below excite me, and I wonder how we could multiply them.

An Australian Case Study…

Australian “medium” business Close the Loop® is a fascinating case study. It was founded in 2001, and has grown to over 100 employees in two countries.  Close the Loop® is an innovative materials recovery company, specialising in the collection and recycling of toner and inkjet cartridges, toner bottles as well as other print consumables.  It’s unique value proposition is “zero waste to landfill”.

Close the Loop® grew out of an imaging supplies distribution company.  Under price pressure from large multinationals, founder  Steve Morriss developed a unique selling proposition – to take back and recycle everything he supplied at the end of its life.  His customers bought it and Close the Loop® was born.

It’s a promise they’ve kept by developing new products and processes – and it’s been so successful that the company has expanded into the USA.  

Entrepreneurs are a rare breed…

Only about 2.5% of the general population are full-on innovators, but I suspect there’s a higher proportion in small business.  Innovators are venturesome enthusiasts, eager to try new things, often without putting price first.

I wonder…

What would happen if we put the emerging opportunities of regenerative business in front of smaller businesses?  I wonder how we’d do it?   What would you try?

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Leigh Baker is a regenerative business coach and educator, and author of “The Deep Green Profit Handbook: Winning Business Strategies for the Sustainability Revolution”

Figures on American business size were drawn from: http://web.sba.gov/faqs/faqindex.cfm?areaID=24

Figures on Australian business were drawn from: http://www.innovation.gov.au/SmallBusiness/KeyFacts/Documents/SmallBusinessPublication.pdf

7 design principles for Regenerative Business

I got seriously interested in sustainability years ago, during post-graduate studies.  I was fortunate to be introduced  through  great books like “Natural Capitalism”, “Cradle to Cradle” and “Biomimicry”. 

Along with  a mass of detail and lots of “reasons why” sustainability was important,  I found a set of  straightforward strategies that challenge out-of-date 20th century assumptions about the “how” of doing business.   I went looking for a book that summarised them in straightforward business language, but I couldn’t find one.  (So I wrote  one.)

Design principles for a Regenerative Economy

The fundamental design principles for a regenerative economy seem to boil down to the following 7 challenges to common business assumptions:

1. Everything is a service: challenges our ways of thinking on how we make and supply our customers. The more we know about what customers value in a product (it’s “service”), the more flexibility we have to design regenerative ways to deliver it.
2. There are no wastes: challenges implicit assumptions that un-usable waste is acceptable or desirable.
3. Design for total safety: challenges the need to use hazardous materials and our capability to control dangerous effluents.
4. Design for remanufacture: challenges one-way thinking by demanding that we design materials and processes around the reality of our closed-loop ecosystem.
5. Use LOTS less: challenges incremental-only improvements, proposing reductions to one-quarter (Factor 4) and one-tenth (Factor 10) of current resource usage as stretch goals to shift thinking about what’s possible.
6. Use/copy natural processes: puts a focus on the wealth of design solutions available to us – and that most of them have organic, room temperature process solutions.
7. Think small, local and smart: challenges “heroic” thinking that big is better and that there can be “one size fits all” supply models.

Using the principles…

While the principles aren’t a silver-bullet ‘answer’ they provide an important framework for making in a shift in business thinking.  They form a new form of common-sense  in the face of the rapid shift in environmental circumstances in which business is now done.   Increasingly, they’re being proven to not only be practical, but also very profitable.

They’re deeply grounded in business development and supply chain thinking.  They’re not “everything you need to know” – however they’re a good start to the exciting journey of regenerative business.

Essentially, the principles are intended to spark the process of thinking differently.  They’re not rules, they’re not standards to evaluate success or failure.   They’re ways to put attention on the assumptions we make about how business is done so we can explore exciting, profitable new ways to do business.

Describe what you DO want…

If you don’t want what’s happening at the moment, then have an alternative!

The good news is that there is one, and the better news is that there are proven win/win/win strategies that will enable many businesses to make good money, improve their eco-systems and build their surrounding communities.    

If you don’t know what they are, it’s time you did.  Get reading, find your local CleanTech network, get online.   If all you can do is rage at “selfish business people” and “evil capitalists” then are you really helping?   Or are you just generating resistance?

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Leigh Baker is a regenerative business  coach and author of “The Deep Green Profit Handbook”.  She works with sustainability practitioners to maximise their effectiveness as innovators and communicators.

An elevator speech for Regenerative Business

At a networking event the other day, we were talking about business sustainability.   Somebody asked me what I’d say if I found my ideal CEO client next to me in an elevator.  

KNOW / FEEL / DO

One great tip I work with (from Bill Jensen’s Simplicity Survival Handbook) is about being clear in your communication.  Do you have the answers to these questions:

1. What do you want the person to KNOW?
2. How do you want them to FEEL?
3. What do you want them to DO?

This is what I’d like business executives to know, feel and do about sustainability.

I want business executives to know that…

1. Behind the fog of mass media messages about crisis, cost and carbon trading, smart sustainability is fun and exciting. Done strategically, it’s full of great business growth opportunities.   “environment=cost” belongs way back in the past along side “the world is flat” and “we can’t afford quality”.
2. At the level of business strategy, profitable sustainability is straightforward.  There are 7 simple principles that have the potential to deliver major business and environmental improvements.  You don’t need an MBA or a degree in environmental science – just the ability to set directions and get results.
3. Set clear honest goals, build your organisation’s resource literacy and the work will do itself.   Give your people the opportunity for more meaningful work and get out of the way.

I want business executives to feel..

• Excited about the career and business opportunities of learning to do regenerative business.
• Relieved that “this sustainability thing” will be much more than  another onerous compliance obligation.
• Curious about the new strategies and practices that will emerge in their organisations.

I want business executives to…

• Start to learn about regenerative business – the straightforward principles behind the opportunity side of sustainability.  Who’s making money from achieving 50%-80% resource usage reductions?  How are they doing it?
• Start to build resource literacy levels  in their organisation.  The more people who understand their environmental footprint, the more people they’ll have enthusiastically looking for solutions. 
• Start to set goals for win/win/win results.  Tell them where you want to be in 8 – 10 years and turn your people loose to work out how. 

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Leigh Baker is an organisational coach specialising in business sustainability and the author of The Deep Green Profit Handbook.  She teaches the influencing and communication skills that increase the effectiveness of sustainability practitioners and advocates.

What is this thing called “business”?

“Business doesn’t listen!” is a regular complaint in environmental circles – but what IS business?   Essentially, business is a group activity – a process.  There is no physical thing called business that we can put in a wheelbarrow.  We may be able to put a building, a product, or a person  in a wheelbarrow – but not “business”.

At its essence “business” is a process  performed by groups of people working together to exchange what they perceive as valuable:

• Time and energy in exchange for wages (comfort and security), belonging or achievement.
• Products or services in exchange for money, satisfaction, belonging or achievement.

Sometimes the processes of business  work well, sometimes they don’t.  Many of the key performance indicators for business are past-based, short-term measures based on partial understandings of the economic and ecological environment – yet it’s these measures that often drive reward systems.  

Research indicates that just 1-2% of the population has psychopathic potential.  Even if we double or triple this number, it still  means that there’s a substantial majority who are fairly normal people, operating as best they can inside their understanding of the world and how it works.  From this perspective, the question for sustainability advocates is “how do we shift people’s’ understanding of the world and how it works?”

There is no “business” to influence – only people…

While we perceive business as a monolithic, uncaring machine we can feel powerless to shift it.   But business IS people – mostly operating from day-to-day on their past experience of how the world works.  

Within “business” are individuals doing their best to meet their wants and needs inside a system of beliefs and rewards largely developed when business was considered to operate within an infinite eco-system.   Surprisingly few of those people have been trained to think strategically, how to lead effectively, how to communicate skillfully or how to live intentionally.

 If “business” doesn’t exist, then sustainability advocates need to influence people – they need to engage with specific people in positions of influence and work to shift their understanding of the world and how it works.

Fortunately, over the past 30 years  we have developed a wealth of knowledge and tools to assist us in the process of  influencing and communicating.  Fields like Linguistics, NLP , neurobiology and Ontology (to name just a few) have codified not only how language works, but also the underlying perceptual systems, moods and emotions that generate human behaviour.

During the same period, smart entrepreneurs have been disproving some of the beliefs and understandings prevalent about “the environment” in business – so sustainability advocates now have a compelling offer to make to business about the world and how it works:

“Sustainability is about more than unwanted costs and boring compliance – it’s also about opportunity and profitability.  Done strategically and integrated into core business activity it’s a great way to develop better business processes, products, services and products.”

Who could you influence?

Who is the most influential person you know – the person that could make the most difference if they “got” the opportunity side of sustainability?  How could you influence them?  What are you saying to yourself that might stop you trying?  Are you:

• Resigned to the belief “Sustainable practices will cost them, so they won’t listen to me”?  (In which case is it time for you to learn about regenerative business – the opportunity side of sustainability?)
• Anxious that “I’ll look stupid and naive” or “I won’t know what to say”?  (In which case, is it time to learn the smart conversational skills of influencing and innovation?)
• Angry and resentful that “They’re doing so much damage”? (In which case, is it time to focus your outrage on effective action towards the result that you DO want?)

What would you need to know, feel, think and do to engage this influential person that you know more effectively?

If you want to be a successful change-maker, there are skills to learn which will increase your capability to make a difference.  Understanding what business is and how to influence it is all about the “soft stuff” of communication, engagement and influencing.  

If your back hurts, you get it re-aligned and develop your core strength so you can stand and move differently.   If you’re tired of living in frustration, anxiety, resignation and resentment then it may be time for a different sort of re-alignment and development program.

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Leigh Baker is a qualified Ontological Coach who specialises in helping sustainability practitioners work more powerfully.   Her decades of supply chain experience and positive, pragmatic approach gives her a unique insight into regenerative business and successful innovation practices.