Technological sustainabilty and industrial progress [Bill Shireman, ISSS 1998 Plenary Session, July 20/98]

These notes are a rough transcription, prepared as each individual presenter and/or commentator spoke at the ISSS 1998 conference. Gaps and errors have likely occurred. For more accurate citations, please consult the original presenters. These notes have been contributed to the ISSS by David Ing, of the IBM Advanced Business Institute (sabi@systemicbusiness.org).

• president of Global Futures: resolves conflicts between business, environmental and scientific points of view
• was a pioneer in recycling.

• Comes as an informal practitioner of systems thinking.

• Drawing people towards a common solution.
• Have saved $2.5 billion by getting to root problems (E&Y study).

• Formed the Future 500, from Aspen in 1995.
• Drawn together by conviction that today's emerging technologies can reduce pollution and waste byproducts by a factor of 4 or a factor of 10.
• However, people are averse to change.
• Led by Tachi Kuichi (Mitsubishi Electric), Coors, ...
• Not only talk, but to put some ideas into practice.
• Want to evolve from corporations from machines, to innovative, creative as natural systems (reef, forest) which have sustained over hundreds of years.

• The application of ecological principles to business and industrial practices.
• Threefold objectives:
1. Minimize costs -- which is usually done.
2. Maximize gains, add value, increase profit.
• Not usually considered.
3. Promote sustainability.
• Create more than we consume.

• The ideas are in the air, in a network of fields.
• e.g. natural capitalism.
• e.g. increasing returns.
• e.g. emergence in nature.
• e.g. complexity and chaos theory.
• e.g. learning and living organizations.
• e.g. "a third way", drawn subtlety from systems thinking.

1. Bill Coors
2. Mitsubishi
3. Silicon Valley

• Was head of California's #3 environment advocacy, brother was focused on consumerism.
• Wanted to pass the bottle bill.
• Had been proud of losing, as unable to overcome big corporate interests.
• Strategy to lose one more time -- generate thousands of letters from citizens, protesting to politicians.
• Wanted to win: made a modest proposal.
• Run a campaign again, but sit down with corporate enemies, and find individuals as allies.
• e.g. grocers sitting with us, who would leverage the rest.
• Began to call traditional opponents: breweries, soft drink companies.
• First called Bill Coors:
• Coors had made some positive statements about recycling.
• Bill Coors took call personally.
• Invited to come to Golden, CO, and almost immediately started strategizing on how to pass a bottle bill.
• Cognitive dissonance.
• Biologist in 1975 had taken Bill Coors out to the forest behind the factory, found beer cans, described how it would be better if Coors had them back.
• At that time, no recycling.
• Coors had to invent aluminum cans.
• Manufacturers didn't want to return cans, because their power was subsidized, so Coors had to develop a recycling system.
• Put in much of the infrastructure to recycle.
• Bill Coors: "All pollution and all waste is lost profit"
• Industry was built around an open-loop system: linear use of resources.
• Wanted to create a closed-loop system, under which Coors' waste would become food for own or others industrial processes.
• [Diagram of the industrial eco-system]
• Founded on the use of machines to replace human muscle: from resources to dumps.
• The faster it's done, the more profit: therefore, incentive to go faster -- increasing returns to scale, standardization.
• "Standard Brands", "Standard Oils", "General Motors", "General Electric"
• Process brought great benefits to society, but tied economy to the iron law of energy and GNP.
• Every economic unit in the U.S. was strongly correlated to consumption energy and GNP.
• However, limits to sustainable systems.
• 1970s.
• Hubbert's pimple: the fossil fuel era will be a short period in the long history of human.
• [Thirring, 1958]
• Energy price shocks brought break of relationship to energy, led to emergence of new sources of energy.
• Efficiency became the fastest growing part of new energy and materials.
• Replacement by knowledge -- infusion of ideas
• Information-based economy.
• Coors also benefited from information-based economy.
• Old cans became new cans.
• Solvent waste into citrus-based cleaner.
• Rice hulls left on land, bird droppings converted them to fertilizer.
• Made money by selling ideas.
• Advanced ceramics became Coors Ceramics for microchips.
• Organic plastics from corn.
• Photovoltaic cells.
• More profit from emergent technologies than from the brewery.
• Conglomerates of related businesses, with synergies.

• First, uniform pioneer species.
• Low sustainability, then adaptation to diversity.
• Gradually evolve to be more sustainable.

• Hard capital as physical resources.
• Hard atoms.
• Soft capital as design and embedded knowledge:
• Soft atoms which show emergent properties.

• Hard capital declines with use.
• Soft capital have emergent properties which happen in parallel with consumptiveness.

• No better example of sustainability.
• Uses silicon, one of the most common substances on earth.
• Value is not in the raw materials, but on the drawing on the chip.
• Grow rich by gathering common materials, and combining them into complex products.
• Difference from "standardized" approach: Silicon Valley is comprised of divergent types.
• Illusion of relaxed environment while working 80 hours per week.
• Types:
1. Innovators: extraordinary talent (Shockley, Wozniak)
2. Exploiters: wisdom to build a business around core achievements (Noyce and Moore, Jobs, Gates)
3. Hoarders: venture capitalists who get scarce resources -- money
4. Resilients: companies who avoided birth and death in Silicon Valley, by settling on a growth technology, turning into bureaucracy or struggling by, but then evolving (Intel, HP).
• Operate more as complex adaptive systems, have the right people at the right time.

• [Note: Article available in Tomorrow, March/April 1998, pp. 48-49]

• The generation of natural capital.
• Entropy --> Feedback --> Adaptation --> Efficiency --> Integration --> Emergence --> Synergy
• Efficiency as adaptation to more focused activity.
• Specialization as efficiency requires more integration.
• Passing certain thresholds of complexity results in emergence.
• Need to have synergy to overcome entropy.
• Saw success in some businesses, failures in others.
• Microchips, then televisions.
• Now working on really big and really small.
• How can companies survive in rapid, discontinuous change?
• Inspiration from feedback from students who wanted to save the rainforest.
• Didn't know about rainforest, because doesn't do anything specifically related to rainforests.
• Have joined with Kiuchi to develop a curriculum
1. Measurement
• Developing systems of feedback to identify costs and benefits of products and activities.
• Not just ROI, also on knowledge, progress, ...
• Incremental feedback to social change
2. Management
• Applying learning organization (Senge) and David Hurst (crisis and renewal: growth, destruction and renewal)
3. Policy
• Systems-based approaches beyond command-and-control.
• e.g. fees after incremental amounts of pollution, not just after a certain level.
• Involvement of government.

Work can be more than just an instrument.

• By working together, can produce more than we can individually.

Questions

• Initial response a few years ago was to determine costs, and impose them onto companies.
• Have quantified some externalities, and done this, but it's difficult to calculate the costs, and then impose them -- power relationships have nothing to do with environment costs.
• Looking for natural principles, e.g. the natural step system (to be discussed later this week).
• Look for methods so that toxins aren't created, so that we don't need to clean them up, instead.
• Business needs to become its own regulator.

• Broad trend, but starting slowly.
• Kiuchi says he doesn't run companies to earn profits, he earns profits to run his company.
• Most people create for a larger purpose.
• Not a mechanistic philosophy, need to evolve to living systems, purposeful.