Collaboration – Communicate the facts to employees and customers, and ask for ideas and help.  Companies reported that employees came up with a number of really useful ideas to reduce costs.  Being able to do this underscores the critical importance of building a high-trust communications environment in your organization – so that people are willing to share their ideas, and care about your success.

Transparency – These successful entrepreneurs identified the key metrics that focused everyone on performance, and began reporting on them even more frequently.  To quote the article:  “One company described the increase in their business as ‘reporting that was done yearly was now monthly, monthly reporting was now weekly, weekly reporting was daily, and daily reporting was many times each day.’”

Creating a system for sharing performance measures may seem counter-intuitive during a recession, but the process has immediate payoffs.  In my experience, the act of getting your team into a room and talking about what the key measures ARE is a high value exercise in itself.  Once you’ve arrived at a set of key performance indicators and created a system for regular reporting (whether with a simple spreadsheet or a specialized performance management software package)  you are able to adapt and act, as a team, in a much more dynamic way.

We talked about the role of the car in the ecology of the urban landscape.  At a time when there is so much discussion about saving the American auto industry, it’s useful to take a deeper look at what the car actually is. Bailout notwithstanding, what are all the other costs of auto transportation that we have subsidized, externalized, or ignored in the conversation?  The auto industry is already deeply subsidized in a number of ways.  Public monies are spent to build and maintain roads and bridges.  Enormous amounts of real estate are devoted to parking, and the runoff from those parking lots is a toxic stew of old oil and tire dust. Much of our foreign policy, subsidized through our taxes, goes to maintain advantageous relations with oil producing regions.  The effects of carbon emissions include global warming and health impacts. Our entire built landscape has been created in response to the existence of the automobile.

Steve likened the bailout conversation to the debate over suppression of forest fires. We now know that letting fires burn is good for the forest system.  If we let a forest become overgrown, the effects of fire, when it does inevitably happen, are far more devastating.

So too the auto industry.  The human consequences of a Detroit failure are enormous, and just become worse the more that the industry is protected from the true costs of auto addiction.

Is insisting on higher fuel efficiency standards enough?  Steve suggested that this is just becoming more efficient at doing the wrong thing.  Sure, it’s better to use less gasoline, but is that really the big question? We are talking about an interdependent system of transportation, land use, economics and sociology, in which the automobile, and the auto industry is one player.

The real challenge of our times is not to get things back to the way they were.  It’s to see through the current crisis and write a new story about how we live, work and do business.

Listen to my interview with Steve:

Descartes has had such an impact on our culture that today we tend to think it “common sense” that each of us is an island – or at least we behave that way.  One of my teachers, Julio Olalla, was fond of pointing out that we tend to think of ourselves and our problems as our own isolated psychological case, when in fact we are playing out cultural scripts that date back centuries.  These scripts are passed on through family stories, cultural messages, official history, and the very words we use to describe our world.

Our culture has achieved incredible material success/excess because of our ability to view ourselves as separate – as if, like Archimedes, all we need is a place to stand and a lever big enough, and we can move the earth.  The only problem is, we are standing on the earth.  There’s nowhere else to stand, space fantasies notwithstanding. Despite our limited success at conquering nature, we are in danger of overbreeding, starving and poisoning ourselves with our own toxins.

Eastern philosophies, particularly buddhism, offer a radically different worldview, based on mutual causality. Western philosophy has generally focused on linear causality until very recently.  A causes B, which causes C.  Which is exactly why so many of our great inventions have brought about unintended consequences. Pharmaceuticals have conquered many diseases, which is a good thing, but are now polluting our water, subjecting fish, and ourselves, to unmetabolized birth control pills, anti-depressants, etc.  Only recently, with the development of Systems Theory, have we begun to see how phenomena emerge, sometimes unexpectedly and chaotically, from a variety of causes.

In a chaotic, interconnected world, we see that we cannot control everything, but instead influence a complex chain of events through intentions and small actions – even if we are not sure which ones matter.  This is why random acts of kindness are a good thing!  Thich Nhat Hanh, the Vietnamese buddhist monk and peace activist, has coined the term “InterBeing” to describe this mutual connectedness.  Rather than believe our own story about how things happen to us, he suggests we continually ask why things occur the way they do.  And, when we keep asking that question, we ultimately see there is no one to blame, including ourselves.

The way of leading business that I see emerging among “natural” entrepreneurs draws from this well.  Any complex product arises from a number of ingredients, that come from different places.  Each has an impact on the local economy that produces it, the local ecology, the health and well being of the people who live and work there.  Likewise for the way it’s manufactured, packaged, used and ultimately disposed of.

Today on my BlogTalkRadio Show, I interviewed Joshua Onysko, the founder of Pangea Organics. Pangea is the fastest growing organic skin care line in the world.  Josh has built Pangea from the ground up to be a business that acknowledges the connectedness of all players in the manufacture and use of the product.  Josh has even thought deeply about packaging.  Since cardboard packaging consumes millions of trees a year, Pangea’s products are packaged in downcycled paper fiber which is impregnated with seeds.  Plant your holiday gift pack wrapper and a Colorado Blue Spruce tree will grow.

Josh is using profits from Pangea to fund micro-financing efforts that go back to the people – mostly women – who grow the crops that supply Pangea with ingredients.  This creates stable livelihood for the growers, and a steady supply of quality product for Pangea.

The market for organic personal care products is growing at 22% per year. Why does this matter? Our skin is our largest organ, and absorbs 87% of what we put on it.  Cold processed organic soaps maintain the liveliness and efficacy of the ingredients so they can be available to the skin.

Josh pointed out that we are led to believe that healthy products are a luxury. In many cases, because of their effectiveness, organic products are actually cheaper per use, and infinitely better for long term health. Is a “cheap” bar of soap actually cheaper, when we consider the real cost of petroleum by-products, wasteful packaging, and unknown efffects of chemical ingredients?

All of this may sound like fringe thinking, but Josh summed it up when he said “the Fringe predicts the Future”. Business people and economists are beginning to see how many costs we have traditionally “externalized” – but on a small, crowded planet, all those “externalized” costs, like the pharmaceuticals in the water supply, ultimately find us.

Listen to my interview with Josh:

General Mills mission is to “Nourish Lives, Nourish Communities, and Nourish the Future”.  But what does this really mean, and how will we know if General Mills is actually getting somewhere with this great idea?

Agreement about Metrics.

Having an intention about becoming sustainable requires a way to measure the fulfillment of that intention.  Which comes down to Data.

It’s striking how many conversations are going on about creating metrics, indices, datasets of sustainability.  Without these, we don’t have an agreement on what we even mean by the term sustainability. For example, in Kim’s work with the Global Reporting Initiative, there are 10 food companies meeting with various NGO’s to define social and environmental measures that these companies can use in their reporting, and even more importantly, in aligning their own internal efforts.  They are talking about issues like child labor, animal rights, fair trade practices, and impacts on indigenous communities.

Some things are easier and more objective to measure,  like energy and materials.  This has been the subject of “lean manufacturing” for a while now. Measuring positive or negative impacts on an eco-system – whether an eco-logical system or an eco-nomic system – is more challenging. It’s less subject to pure scientific or engineering analysis.  More subjective, more values-driven. Which is why it makes sense that there are collaborative groups across industries having these conversations.

We are going through a major cultural shift about what we value.  For companies in a particular industry, like food, it’s important to have that collective conversation.  The players in a given industry share suppliers, production technologies, and even the same industry analysts on Wall Street. Collaboration is essential, especially when it comes to shifting the value proposition for a whole industry, and dealing with issues that balance economic, social and environmental concerns.

Kim summarized the impact of metrics by paraphrasing what he had learned from the work of Dr. Steven I. Simon, who specializes in creating safety culture for large manufacturers.  But, the lessons are just as applicable to creating a sustainability culture.  Kim said that, when expectations are made clear and communicated, the response of people is to want to live up to those expectations.  The result is predictable behaviors – and predictable behaviors are the essence of culture.

We are going through a cultural shift – from one in which business “predictably” focuses on the financial bottom line – to one in which business “predictably” balances the concerns of multiple stakeholders, including financial interests.

Listen to my interview with Kim:

Last week, I spoke with Graham Russell, Executive Director of CORE Colorado. CORE is a non-profit business association dedicated to promoting more environmentally and socially responsible business practices in Colorado and the Rocky Mountain West. CORE’s constituency tends to be small to medium businesses, and Graham is much more interested in reaching traditional businesses rather than preaching to the choir.

Much of the attention to sustainability in the business world is on the big companies. CORE, in conjunction with the University of Colorado at Denver Business School, recently undertook a survey of small-medium businesses to fill in the picture.  The study found a surprising amount of initiative and progress among businesses that don’t necessarily think of themselves as “green”.  The reasons for change vary – in some cases, business owners just feel it’s the right thing to do.  Others are driven by competitive and customer pressures.  A few cited compliance with regulation – but having said that, most small businesses hate regulation.

The picture is very different for big business. In my interview today, with Will Sarni, CEO of DOMANI Sustainability Consulting, he pointed out that many of the biggest industrial companies in the US have joined in the United States Climate Action Partnership to lobby the federal government for more greenhouse gas regulation.  For big companies, acting unilaterally to reduce emissions – if it raises costs – serves as a “prime mover disadvantage”.  So, they want a level playing field, at a new level.

Between big and small businesses, there are also big differences in the amount of “greenwashing” going on, being the act of making oneself sound more sustainable than one really is because it’s good PR.  According to Graham, greenwashing is big company branding issue.  Smaller businesses can’t afford the PR machinery to create the story in the first place. In the big companies, according to Will, greenwashing backfires pretty quickly given the ever increasing level of transparency in the marketplace.  Given the current economic climate, many companies that aren’t really sincere about sustainability are abandoning the story and just focusing on hanging on to their “base”.

Notable, and to me shameless, exception being Detroit’s Big Three, offering to come up with greener cars, if we will only save them. Like a drunk, showing up at church on Sunday and offering repentance, with a bottle hidden in his pocket.  The last so called “American” car I bought was a piece of junk, and I’ve been driving mostly Japanese, but “made in North America” cars ever since.  I have no sympathy.

But I digress….

I’ve been impressed with the thinking of Bob Willard on how companies evolve into sustainability.  He sees sustainability in business as a continuum.  Yes, a lot of companies start out ignoring sustainability, actively resisting it, then grudgingly complying with whatever it is they are pressured to do.  To me, greenwashing is a stage in which a company recognizes that someone out there – customers, employees, regulators, investors – cares about sustainability.  So, they are at least acknowledging those values by making sustainability claims, even if they aren’t sound.  Eventually, they realize it’s in their own self interest to be real about it, and move forward. I’m still impressed from my conversation with Don Beck two weeks ago, with his willingness to meet people where they are and open the way for them to evolve.

One big constraint on sustainability is that businesses are tending to view it as a cost, therefore something to be avoided.  Maybe we decide to endure the cost, because it’s the “right thing to do” and customers value it.  But the real opportunity for business, according to Will, is seeing sustainability as a top line focus. That is, innovating new products in the business to business, or business to consumer, markets that help customers save energy and reduce waste.  This involves rethinking the product itself, and creating new value.

A prime example, and well worth rethinking, is the automobile. One of the most mind-blowing ideas I’ve heard in the last year is the idea that electric cars can become an interactive part of an intelligent electrical grid.  One of the issues with wind power in particular is that it blows more at night, when demand for electricity is lowest.  And there’s nowhere to store the juice.  Except in millions of cars, with their batteries plugged in, resting in their garages for the night.

Here’s my interview with Graham Russell:

And my interview with Will Sarni:

I interviewed Alex and David on my BlogTalkRadio show last week.  Their story is one of honoring and benefiting the land, the people who live on it, and the consumer.

For those of you who haven’t tried it, yerba maté is a stimulating beverage favored by South Americans over coffee by a 7-1 margin. It is made from the leaves of a mid-canopy rain forest tree found in Argentina, Paraguay, Uruguay and Brazil.  The thick, waxy, green leaves are harvested, dried and aged before being made into a tea.

Conventionally, maté is grown on big plantations.  The natural rain forest is cut down, and a monoculture crop is planted in the sun, sprayed with pesticides and fertilized.  Tribal people are displaced and turned into farm workers.

Alex and David met in college at Cal Poly State University in the mid 90’s, and shared the goal of creating a sustainable business.  Alex, who is from Buenos Aires, invited David to come to South America, and together they developed what they have termed a “market driven restoration business model”.  Instead of creating a large industrial process of clearcutting and replanting, Guayakí makes agreements with indigenous people to plant yerba maté under the canopy, preserving a diversity of forest life AND creating economic opportunities for the people to retain their lifestyle.  In fact, the term Guayakí is derived from the name of one of these tribes, and literally means “wild people”.

All this gets even better when you think about what maté is and how it is consumed. Traditionally in South America, maté is a “slow food”, consumed in a gourd using a special straw called a “bomba”, passed around a gathering of people.  Holding the gourd is like the North American native practice of holding a talking stick or stone – it empowers the holder to speak from her/his heart while the others listen and hear.  Drinking maté symbolizes hospitality, and the act of taking a pause with friends.  It’s a more grounded stimulant than coffee, with no acidity, creating a kinder, gentler buzz.

Just as interesting is the way the company is run. There are five partners, all good friends, located from British Columbia to Buenos Aires, with California in between, who make decisions by consensus.  Each has taken a role based on his passion and expertise, and so far, after twelve years, it works really well.  The company has been financed with a “patient capital” philosophy, attracting investment from several veterans of the natural foods industry.

Here’s the interview:

Lean thinking offers a powerful combination of “hard” and “soft” management techniques that have been proven by Toyota and many other organizations.  The answer to the question “what would green look like?” is a specific set of metrics, against which current performance and future goals can be benchmarked.  The metrics are the reference point for all conversations about continuous improvement.  The (so called) “soft” side is the level of collaboration, trust, and honesty in the culture that allows those conversations to be effective. Combining the two, there can be a realistic assessment of what is,  creative imagination of what could be,  collaborative prototyping of new tools and practices, and ongoing performance improvement.

Included in a well designed performance measurement framework, such as a Balanced Scorecard, sustainability initiatives can be linked to impacts on costs, revenues, and profits.  More and more companies, like Dell Computer are actually saving money by reducing their carbon footprint.  With the right metrics, sustainability efforts are going beyond idealism and becoming just good business practice.