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Archive for the ‘consumption’ Category

I know… I don’t blog enough around here anymore. Okay, I don’t blog around here at all. Watch this (empty) space. I will be back soon and regular. In the meantime, I do blog over at CSRWire more regularly. See below the latest one over there where I looked into my sustainably made crystal ball and imagined the strange (un)sustainable world of tomorow.

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No, this is not another “looking at 2014” piece. I am more interested in looking a little further ahead. The world we live in has changed dramatically over the last 10 years and there are larger trends changing the world in ways we can hardly imagine.

Imagine, for example, if we somehow had better insight into how transportation will change across the world over the last 50 years. Or how manufacturing will shift away from the U.S. and other developed countries or how the brands we love dissolve into nothing more than grand design houses with limited manufacturing capabilities. Not to mention how technology has changed the world – wish there was an app for all that.

I’m more interested in the mega trends that will shape our world over the next 50 years. What will drive the fundamental change in the way we source, manufacture, interact, communicate, build relationships, sell, transport etc.? In short, here are four mega trends that I believe will change the world of sustainability in a way that makes most of what we think is important today silly and obsolete.

Well, we’re done with the silly season after all…

1. Everything Is Personal

The rise of the individual over the group has in itself become a group activity. The marketplace of people has become so crowded that people are fighting to stand out. We have moved from the Pepsi Generation to the Me Generation. From consumers to individuals. This is already challenging the way brands interact with people, as people want to be known as Jane, Dick and Sipho – the individuals. They want brands to conform to them and not the other way around.

Brands who want to survive must find a way to engage in a conversation – a dialogue – where they are informed as much as what they inform. In other words, get ready to lose control of your brand to save it. As the new Edelman brandshare™ study shows, brands who ignore this new sharing revolution do it at their own cost. By losing control and allowing your own brand to become individualized you will empower individuals to love you, connect with you and advocate on your behalf.

At the same time, you will also lose control of what your brand looks like. Conversations with consumers won’t stop at Likes. They will want to be part of the design process. In many cases, they already are – go design your own Timberland boots or Nike’s today.

This mega trend will also influence how companies implement sustainability across their value chain. As technology and transparency make the world smaller, consumers will be driven toward making everything personal – and leveraging the power to know where their purchases came from, i.e., manufactured, sourced, farmed, etc. It’s already possible – we can trace coffee, wine, water, cocoa and even diamonds to any specific location today. And this is already playing out in the marketplace with sales of fair trade coffee outstripping the sales growth of traditional coffee.

As individuals design their own products they will also have the ability to pick the ingredients and/or materials, enabling them to make ethical choices from the source right through to disposal. As a brand, your ability to control your supply chain will thereby become even more important – because your consumer will drop you if you can’t give her the right goods to make your product.

2. Two Classes

Income inequality is growing faster than ever before. The rich aren’t just getting richer – they are getting richer at a rate that is bad for the U.S. and global economy.

Simply put, income distribution in the U.S. and in the world is unsustainable. This isn’t an ethical issue but a sustainability issue. I am not making a judgment call on whether the rich should or should not own as much as they do or whether CEOs should get paid as much as what they do – I am merely looking at the impact of this fast growing income inequality. The impact hampers economic growth and, as the fall of the Roman Empire showed us, huge income inequalities are bad for countries. Today, the U.S. has a worse level of income inequality than the Roman Empire.

The long-term solution? Either get rid of it or find a way to ignore it.

The problem with the rich in Roman times was that they could not find a way to cut income inequality. They gave a little bit away but never did enough to change the underlying systemic problems and reasons for income inequality. The same is happening today in the U.S. and the world.

Universal health care gives the poor(er) a little bit of breathing space but does not challenge the nature of the economic system and the underlying challenges: an obsession with fast growth, short-term investors addicted to high profit margins irrespective of values, too-big-to-fail industries and companies rewarding high risk takers, and a reward system that encourages investors and business leaders disconnected from long term business and societal needs.

This growing income inequality isn’t just a widening of the gap between the rich and poor but, more importantly, changing the nature of the middle class. The middle class has always been the bridge of hope between the poor and rich but now they are carrying an economic burden beyond their means and fast losing pace with the rich.

The new class system, unfortunately, isn’t between rich and poor but rather those who benefit from the system and those who “hang in there.”

While clearly unsustainable, there is little that can be done within the current economic system to alleviate this trend. The result: people will become even more entrenched in their class, defining their needs and wants according to their economic status – an acceptance of life rather than striving towards a new economic class.

However, this financial divide will also create a different kind of economic and social divide. Where you live, eat and play; what you buy and watch; and who you interact with, will increasingly be decided according to where you fall in this economic divide, creating a need for economic and social systems that can cater to both societies. You already see this with where people shop, what they drive, where they eat, what they watch, buy etc. Expect this trend to increase even faster over the coming years.

Examples can already be seen in the fast growing sharing economy as growing income inequality creates a new economic model that encourages sharing resources for financial gain – aided by developments like the growth of social media and the move toward cities. Uber, Sidecar, AirBnB, etc. allow anyone to start their own business and make it personal – but I bet their target audience isn’t those who buy Ferraris or who stay at the Four Seasons.

It is, in fact, a combination of all these trends that is leading to a major shift in how people are adapting the capitalist system to address their needs – but away from the big business model. And regardless of the outcome, it is clear that the impact will change the very nature of business in years to come.

3. 3D Printing

Like the stories of rock bands, the instant sensation of 3D printing has been 30 years in the making. While, the discussions today are about immediate controversies such as printing guns, the real disruption with 3D printing will be the ability to print stuff we use every single day – it is already printing apparel and footwear and food, and even human organs!

Imagine the future in 50 years when we will be able to print everything we need from our homes or local 3D print locations. Our food, clothes, furniture, even replacement organs and everything in between. The challenge is not the technology but the delivery of the “ink” to the printers. Traditional transportation methods – trucks and trains – won’t be able to keep up with the demand, likely leading to delivery via pipes and cables, much like gas and water today.

While 3D printing has the potential to have significant impact on infrastructure development and transportation, we are decades away from fruition. Today’s infrastructure is not geared toward delivering the world of tomorrow. Expect a transformation of cities and how we live and move around, which will lead to enormous changes across supply chains globally.

With people printing their Levi’s or Timberland’s or even the Big Mac at home, raw materials will be able to skip the middleman – the manufacturer. In other words, 3D printing will complete the move from brands controlling both design and manufacturing to becoming nothing more than design houses.

4. New Generation Gap

The last mega trend is the way social media is changing how we experience information and form relationships. There is a new generation gap between those who see new technologies and social media as an additional way to communicate and interact and those who see it as the only way to communicate.

Social media does not replace personal experiences or the importance of building physical presence to start a relationship – it enhances those relationships. It is an additional way to stay connected with your “network” no matter where they are. And, of course, another way you can consume.

But the younger crowd experiences this new social world differently.

For them the new technology is a natural extension of how they make friends and interact with the world. A snapchat is as good as a handshake. The need for physical interaction is not necessary any more to build trusted relationships anymore.

This is a huge shift in how humans have developed relationships and organized themselves. The suburb of tomorrow has gone digital – a place where people go to be with their own community. And then they step outside (if they really have to) to go to work. Social media, like little else, will change the landscape of tomorrow completely. Mega cities just need to connect to us via wireless. We can order cars through a sharing app. Work is a video away.

In other words, social media confirms the move to the personal and will challenge how we organize our social, economic and political systems.

So what will the world of tomorrow look like? Will it be a world of selfish individuals printing their ideal partners at home in their connected mega city apartment? Or will it be one where the individual is celebrated as making up this new connected world where we share what we can eat and print?

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Something has been bugging me for a while now. It’s not a new issue but something that has been slapping me on the head daily for the last few months more than it has done in the past. Maybe it is the continued economic struggles the world is going through. Maybe it is the Occupy movement. Or maybe it is just me in desperate need of a vacation on my dream island of Kauai. Whatever the reason might be… The question I ask myself is whether we working in sustainability/CSR/Shared Value (or whatever you call it) are dealing with the fundamental challenges the world face today or are we just working on some of the symptoms and applying band-aid to a sickness that needs much more than what we have to offer?

I don’t question that we are doing the right thing for the right reason. We are trying to make this world a little bit more sustainable. We are trying to make companies be more responsible as good citizens of this world. We are trying to prove that good business can be done by doing good. That capitalism with a heart is possible. That money can be made by sharing value with society. That business has a social purpose that it should embrace. Yes, we are doing good work and we are making a difference. But is it enough?

The world is consuming at levels that are unsustainable. We cannot consume the way we have in the past and expect everything to be okay. But the economic system that we live and survive on is based on more consumption. Consumption of products. Consumption of credit. Consumption of energy. More and more of each and everything.

We’ve seen where this has got us so far. The rich are getting richer and the poor are getting poorer. It’s been like a frog being boiled. It’s been a slow squeeze on the middle class and the working class over decades. When the system started running into problems we the people adapted and everyone started to work to pay the bills and buy those things we need – and those things we want. But income didn’t keep up. And slowly the world got into more debt to stay afloat. And then the bubble when kaboom.

The same is true of the environment. We consume so much more crap food, in the West especially, that farming had to change from providing us with food to providing us with GM foods, hormone injected meat, fields of corn for sugar and cereal and everything you can think of, and so much more crap. All because we wanted more and more of this crap food to feed our greed and insecurities. And we manufactured in ways and drove our cars without knowing that slowly but surely we are choking the world and messing with the climate.

And so it goes on. We know how we got here. We got here because we believed we needed things when we really just wanted it. And lines got blurred more and more between need and want. Between necessity and luxury. We consumed and we consumed and we consumed. It worked for a long time. It fed us and made us wealthy – or some of us. And we got addicted to it. Growth, growth, growth. The bigger the better – in what we have and how we looked. We consumed ourselves to a standstill.

But the “system” cannot live any other way. How do we get out of the economic slump? We’re told by consuming more. A key moment for me was when then President  Bush said right after 9/11 that people should go and shop and go on with their daily lives as if nothing happened. Well, something did happen. The same is going on right now. The world is suffering on a societal and environmental perspective. The world is a very different place from 3 or 4 years ago. But we’re told we need to consumer more to get us out this slump.

I always tell my kids and my clients that we can’t expect different outcomes by doing the same thing. The same is so true for us right now. We can’t go on the way we have and expect the outcome to be different. We cannot consume the way we have and expect a different outcome. We cannot do business the way we have and expect a different outcome. We as humans know this when we hit our heads against a wall – we stop doing it and go around the corner. We’re not stupid. Or are we?

So what does this have to do with sustainability? Well, we’re still telling people to consume. Yes, we are telling them “buy this product because it is so much more sustainable”. Energy? We’re not asking people to cut down on their use but rather to use renewable energy. Okay, sometimes we ask them to use less energy but not really to buy less energy using products. Do you really need so many televisions? Do you really need 2-4 cars? Do you really need a house that large? Do you really need spend so much money during Black Friday? No one is advertising asking people to please not buy so much of their products this coming festive season. Very nice of Patagonia to say they want people to buy less but we know they aren’t really saying that they need to grow a little bit less. Or not at all. They still want to grow but hoping that people will buy the slightly more expensive and sustainable product or buy the Patagonia product instead of buying from a competitor.

We in sustainability and CSR are making the world a better place. I don’t doubt that for a moment. If every company does what we in sustainability and CSR want them to do then we will be in a much, much better place. But are we dealing with the underlying weakness of the system or are we delaying the hurt to the next slump? Put it this way. Would the world be in a better economic place if every single product is made in the most responsible way possible? I don’t know - but I think we would’ve been heading to the same problem if we didn’t address the underlying addiction to consumption and growth.

That is really the 3 pillars of sustainability – product, profits and purchase.

Product – how the product is made. Make it as sustainable as possible. Make it by using renewable energy, sustainable sourcing, manufacturing without exploitation etc. Make it the best we can. And make the impact on society and the environment as light as possible.

Profits – do your business to make a profit. No business can live without it. It is at the heart of business. But don’t confuse profits with growth. We’ve become addicted to growth because of the shift in investors from long-term to micr0-term. Not even short-term anymore. That would require a day or a week or two. The majority of investors of today don’t give a damn about the company and what it makes – only about the return they can get in the next 5 minutes, or seconds. And they are holding businesses ransom. We saw this during this recession. Profitable companies laid off workers. How is that for commitment? They didn’t say “we’re struggling on the growth front but still profitable – so we’re going to knuckle down and work, work, work to get out if it but won’t let our people go as long as we are profitable.” No, they let people go because the micro-term investor demanded it. Puh-lease don’t talk to me again about your employees being your greatest asset. Your don’t sell the crown jewels with the first sign of a bit of a struggle.

Purchase – people need to buy your stuff for you to be profitable. But the reality is that we also need to get people to buy less stuff. This is at the heart of the challenge to business. How do you make stuff and sell stuff but make sure people buy less stuff. Guess what… I don’t know.

There is another “P’s” we have to address within the system as well to make the world truly sustainable. Parity…

Parity – we can’t live in a world where so few has so much and so many has so little. It is not sustainable. It. Is. Not. Sustainable. Get it? The gap between the highest earners and the lowest earners are just too wide. The gap between the 1% and the 99% is unacceptable. The gap between the pay of the executive and the lowest paid workers is not good for the company or society. No one is asking for 100% equality in pay. But the gap is just too damn wide. It is greed and nothing more. Any reason given is just snake oil. It is not just and not right. And more importantly, it is not good for business and it is not good for capitalism.

But it goes further than that. The West cannot consume the way they have and allow the rest of the world to slowly die. We live in a global world. The West is the 1% and Africa is the 99%. It is not sustainable. It is capitalism gone bad. It is the dark underbelly of greed. It must stop.

So until then we in sustainability are using band-aid to deal with a much more serious disease - unless we start seriously dealing with all 4 of these P’s – Product, Profits, Purchase and Parity. The challenge is we can’t do this on our own. We need to widen our circle because this means we need to forge new partnerships outside of business to get this right. But that discussion is for another day.

Now I need to get to Kauai to consume some sun.

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Sustainability should be much simpler than what we make it out to be. It’s not very complicated – take actions today that leaves the world in a better or no worse place for future generations. But the devil is always in the details. And this made me think a little of what are the different levels of sustainability. And how the concept of sustainability and the current trends influence business in the future. I’m sure this is way too simple so feel free to chip in and help define the levels of sustainability. These are rough thoughts that was hatched during my daily commute on public transport and therefore very rough…

Why make these distinctions? Because it helps us know how to work with and help each company. They are all very different and needs to be treated differently. Many moons ago I had a client who asked me to help them become “like Timberland”. My response was pretty straight forward – “You know you are an extractive company, right?”

More importantly, it helps us think of the future of sustainability. We know what a sustainable future should or could look like – what role does business play in this future?

1. I don’t do sustainability

There are many companies out there who just plain do not believe in sustainability. They believe in one thing and one thing only – increasing their ROI for the next few days. Even a quarter is a long-term vision for them. They will campaign against anything that asks them to take their impact into consideration – climate change, labor rights, equality in the workplace etc. They will comply to local laws because they have to and not always because they want to. That’s why they lobby and fight against so many of these laws. They will take subsidies without thinking of their own responsibility. They will cut corners where they can – and in most cases stick within the law. They will sell you snake oil and call it green. They’ll do the minimum and think that is the actions of a responsible company. They will use meaningless words and phrases that sound cute but mean nothing like “the business of business is business“. I won’t spend too much time on these companies. Arguing with them is a losing fight. They see what they want to see and nothing we can say or do will make them change their ways. I won’t invest in them and I won’t work with them. There are just too many other companies trying their best and who needs counsel, help and support. Let’s rather focus on those who see the sustainability of their company and the world as linked to their business bottom line. In any case, I don’t believe these companies will survive for long. History shows us that companies that think this way eventually just die a slow death. Eventually society will see them for who they are – in it for themselves and not really part of society.

2. I act responsibly

Of course there are a range of companies who just aren’t sustainable. The nature of their business and/or their current business model means that they can act responsibly but the company itself cannot be seen as sustainable. They must change how they source or manufacture over time to become sustainable. It doesn’t mean that they can’t be good corporate citizens. Many if them are good citizens who act with great responsibility. I see them as the CSR group rather than the sustainability group – a small but important distinction. Let me use an industry as an example. Most companies in the extractive industry just cannot be seen as practicing sustainability. They take stuff from the grounds and can’t replace it. They can’t leave that specific world in the same or better place. It’s a stretch for them to claim that. I worked with a very well respected luxury goods company and they refused to use the word sustainability. When I asked them why their response was “Because we mine diamonds and can’t put it back. And eventually we will run out of diamonds.” When will they run out of diamonds? Who knows! But the principle is right. But they do incredible work – one of my top 5 companies when it comes to CSR. Incredible work. They do everything right when it comes to sourcing their diamonds, adding value in developing countries where they source from, refuse to buy rubies from Burma, lobby against unsustainable mining practices – they tick all the boxes. But the nature of their business means they take full responsibility of their impact and are incredible corporate citizens – just not sustainable. This is in no way knocking them. Many of these companies do incredible work in difficult circumstances and delivers a product we desperately need today (and tomorrow) – we can’t live without them. I am proud to be associated with them and to work with them. So many of them are shining examples of what responsible businesses could and should be doing. Those in the group who practice sustainability can learn from these companies on what true responsibility in communities and supply chains mean and how to measure and reduce your impact in the world.

3. I am sustainable

Sustainability is slowly but surely becoming mainstream. More and more companies are embracing the discipline of sustainability to build a better business for the future. They have practices that highlight what can be done to make business work and help secure our joint future. They source in ways that do not deplete these resources. They take action on their energy use and tackle climate change in action and voice. They treat workers with respect and speak out against injustices. They will help their suppliers to become more sustainable themselves. They will take responsibility for their products and empower consumers to take responsiblity where they have a joint responsibility – such as driving recycling with consumers. These are the companies who are the leaders of today. They believe in values adding value. They know their future business success is tied to the sustainability of the world around them. The way they operate, source and manufacture, ensures they still have the ability to operate this way in future – the resources are replenished to ensure a better or same tomorrow. The world will be a poorer place without them. In so many ways.

4. I help make the world sustainable

This fourth category is the one that bugs me the most. It’s the most challenging and most complex. Maybe I should break it up into more levels of sustainable businesses, but for now I will keep the three distinctions of this group here.

The easy part is identifying those social innovators and entrepreneurs who focus on developing a business solution to a social problem. They are different from group 3 mentioned above because the nature of the products and services of group 3 is not aimed at a social problem but more about the “wants” of people. Most of the purchases of today are not because we need it but because we want it. We think we need a tablet but we don’t really need it, we just want it. A smartphone is a luxury and not a need. How many pairs of shoes do you need versus how many you want? Companies who are in group 3 still sells products in the “want” category but do so by taking responsibility for their actions and impact by making sustainability part of how they source, manufacture and take responsibility for their final product (waste etc). The social innovators focus on creating products and services society needs – new ways to get clean water to the poor, medicine people need to survive, nutritional products aimed specifically at groups in need, renewable energy solutions in challenging environments, energy-efficient cars (it’s more of a need than want if you only have one car!) – and much much more. They link the need of society to new product or service development and build a business around that. In some cases they might be a non-profit but the principle is still providing a tradeable solution to societal needs – micro-financing is a classic example.

Some of the companies in this category falls outside of this social innovation group though. They are still innovators but they actually focus on the want and not on the need. They develop new products and services that still deal with the current consumer behaviour of buying more stuff that is cool. They tap into the pop culture and fashion of the day and gives it a unique spin by giving it a social value over and above the hip new product. Think of TOMS. The product they sell isn’t unique and neither did they bring a product to life that deals with a specific societal need. They tapped into the mainstream consumer market by creating a cool new “I-want-that” product that has a huge societal benefit attached to it. The business model is very unique but the product itself is not. The concept itself is not that unique either. It is a logical evolution of cause marketing coming into maturity. From attaching a cause to a product to the cause becoming central to the product concept development itself.

The 3rd and last group in this category is the one I struggle with the most and my ideas are still only half-baked here so please feel free to rip it apart. But humor me for a moment.

All of these businesses in this group and the other categories still work within the system we know – sell more products and services to consumers. It operates within the current system. The challenges we face as a society today is challenging this system though. The question being asked is whether we can continue to expect these levels of consumption and be a sustainable world? I’m not talking about a narrow definition of sustainable consumption. Sustainable consumption debates have focused on selling more sustainable products and taking responsibility for your product post-consumer- whether it is how they are manufactured or used. The premise remains the same – sell more stuff. Sell stuff to increase ROI by creating new markets or pushing market share.

Is this system itself sustainable though? Can we really expect to build a more sustainable future by maintaining the same credit levels and expecting people to continue to buy more things? Let me give you an example… Are we any closer to sustainability if every single pair of shoes sold in the world now and in the future is made by TOMS? If we buy TOMS at the same rate of growth – does that make the world sustainable? TOMS might have a great business model but the world can’t handle buying at the same level we’ve had over the last 10-30 years – even if it is TOMS…

That is the essence of the challenge for companies – how to change the business model to remain profitable in a world that needs lower consumption levels and somehow keep investors happy. This would be the next level of business and sustainability. But this is a balancing act that is asking a lot…

The honest truth is that I have no clue how we can do this. Like I said, it’s just something that is bugging me at the moment. Somewhere the answer lies and I believe that good businesses, and society in general, will come up with an answer. We don’t have much of a choice as the runaway levels of consumption is not sustainable. And neither is the continuous pressure on the business bottom line via squeezed margins and market share. We’re close to a tipping point.

This goes way beyond the “Shared Value” concept. Shared Value argues we look at where business and society intersects and finding the joint value in that relationship to drive business and societal benefits. But what if the real value is to share less?

I don’t have the answer. But it’s worth exploring the options as doing nothing might not be an option for much longer.

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