A spear in the chest and subsequent events [Ray Anderson, ISSS 1998 Plenary Session, July 22/98]

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).

Ray Anderson

• Entrepreneur, president and CEO of Interface Inc., world's largest producer of floor covering.
• Georgia Tech alum, engineering
• Believes not only the right thing to do, the smart thing to do.
• Recognized for pioneering efforts as co-chair of president's council on sustainable development.
• Will give talk about the second industrial revolution.

• All on the same spaceship.

How his company understand sustainability, and how they approach it.

Chart: net sales and EBITDA

• First free-lay carpet tiles for offices.
• Today, global 110 countries, 29 factories
• Make and sell 40% of carpet tiles on earth, also produce broadloom.
• 1996, $1 billion sales, 1998 $1.3 billion.

• Summer 1994, read The Ecology of Commerce -- Paul Hawkins
• Had been asked to make a speech, design people asking sales (manufacturing, R&D) people didn't have an answer on what they were doing for the environment.
• Had a task force, asked to give a vision.
• Already at future time, looking back.
• Sustainable, possibly restorative, from Paul Hawkins' book.

• Rivers, lakes, oceans, wetlands, farmlands, air, stratosphere.
• Species disappearing.
• Nuclear cleanup at cost.
• Unemployment, poverty.
• Natural capital, lots burned into CO2.

• To what? The next industrial revolution.
• The first industrial revolution is not working.

• Adjust regulating negative feedback loops, changing the goals of the system.
• But #1, challenge the mindset / paradigm / mental model behind the system.
• Also the most difficult.
• Lots of systems: transportation, government, education, human, industrial, ...

• Earth as an inexhaustible source of resources.
• Relevant time frame: human being; for business, just the next quarter.
• Human dominion, doesn't need other species.
• Technology is omnipotent, when combined with left brain human intelligence -- rational.
• Invisible hand of the market.

• The end of substitutes will come: air for water, ...
• Time frames should be geologic, think of species.
• Right brain: Caring, nurturing, is at least important as left brain, may be more important.
• Market must be redressed to keep it honest: price of a cigarette, barrel of oil
• Who's paying for mudslides, rising sea levels? Progeny: taxational tyranny.

• Have started a climb.
• Financial results are not a coincidence. Share price has tripled.

How to communicate to company:

• Saw movie -- Mindwalk, based on Capra's turning point: ideas interconnections (albeit at subatomic level)

• Circle with thirds: processes, people, capital.
• Suppliers --> circle --> customers
• Supply chain, but not just supply chain.
• Add earth's lithosphere (for most), small amount from earth's biosphere.
• Connection to community.
• This is the typical company of the 20th century.

1. Eliminate waste
• Quality employing suggestions through TQM:
• Not only materials, also wrong bills, etc.
• Ideal is zero waste, found $70 million of waste in $725 million of sales.
• Program to cut in half
• Baseline 1994, 32% reduction in real savings.
• Have reframed Quest for next three years, to cut waste again in half.
2. Benign emissions
• Inventoried every stack -- started with 192 stacks, shut down 14 last year.
• Factories shouldn't need outlets.
• 14 effluent pipes, have closed 12
• Now trying to go upstream, with inputs from suppliers.
• Bill McDonough, U. Virginia Architecture: filters at end of pipes have no place to go.
3. Renewable energy, believe it should be solar in the long run.
• Short-term fuel cells, etc.
• Earth cries out for a carbon tax.
• All fossil fuel generate is reframed as waste, puts emphasis on energy
• Photovoltaic cell is being put into California, customers say they'll pay for it.
• Contract with Ontario Hydro for solar.
4. Closing the loop:
• Introduces new natural cycle for new materials.
• Introduces new technical cycle
• Need to get to solar power.
5. Resource efficient transportation.
• Hard to crack: videoconference, better cars.
• Don't want to break contact with customers.
• Want to rely on carbon offsets: signed up for Trees for Travel.
• Fly 4000 miles, plant a tree as penance.
6. Sensitivity hookup
7. Redesign commerce itself
• Prices at full cost, with externalities.
• Shift from products to services.
• Invested $100 million to get closer to customers.
• Sell comfort, not carpets: retain ownership, customer leases it.
• Has increased market share, at expense of inefficient competitors.

• From 1.55 lb. of natural capital per dollar sales, in 1994, have reduced to 1.2, while maintaining quality.

• I = P x A x T
• Environmental Impact = Population x Affluence x Technology

• Current technology = extractive, linear, was,

• I = P x A / T
• renewal, cyclical, solar/hydrogen drive, benign, emulating nature (no waste), focused on resource productivity (using what we lots of -- labour, less on resources).

• Nurturing

Questions

• Do need regulation for cleanup, but envision a company so clean that it's beyond environmental standards.
• Department of Energy convened appliance industry:
• Violent reaction, but one company doesn't care.
• American division of Electrolux, because in Europe, they'll always be ahead of Americans.
• Regulation process is the floor, not the ceiling. Compliance is as bad as the law allows.
• Increasing resource efficiency is the rising tide.
• China can't meet this.
• Clinton says that his biggest fear is that China will get rich the same way we did, because the world can't support it.

• Changing the mind of the people is not easy.
• Huge effort to open up the minds of the people: one year of spinning wheels, before getting traction.
• Experiential learning: created a company within a company, "One World Learning", now offered externally.
• About to publish a book, which is a compilation of learnings, hopes it will appeal to business people.
• Hope the financial people will read it, because there are financial benefits.