Conscious-Business.org.uk

A home for the Conscious Business community in the UK


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Pricing

Everyone’s complaining about the price of energy. In all the analysis I didn’t hear many people say price rises are a good thing. But surely it’s good for the environment if people drive less and burn less electricity at home. If we use less. Are we all so miserly that we won’t spend a little more on these basic necessities?

And how do prices get set anyway?

It’s about what the market agrees, right? Whatever competitors are doing, plus anything we can get away with?

Why then are we are prepared to pay £10 for a round bit of plastic called a DVD costing a few pence to make. £100 for a bottle of alcohol tainted with a few chemicals and a nice smell. A thousand pounds for dress with the right label. Several million pounds for a cow cut in half.

Doesn’t price have a lot to do with perception?

I think part of our challenge for the future is to change people’s perception of the products and services they buy. So that we all properly value the incredible complex machine that delivers heat and light into our houses at the flick of a switch.

Maybe the best thing would just be to turn it off for a few days. I bet  that would change perception fast – and allow a really significant price adjustment.

And what would your customers think if you did that to them?? It’s an interesting thought-experiment. Not sure I’d dare try it out in real life though.


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Vive la difference?

Someone sent me this paper the other day written by Jane Lorand who runs a Green MBA at a university in the USA. The arrival of many more Green and Sustainable MBAs will no doubt mean we get a lot more of this kind of thing. I am not sure I am looking forward to it.

Lorand argues that “For today’s businesses, there exist two distinct paradigms about what is real and important.” She separates these paradigms and describes the characteristics of each, including the beliefs on which she believes they are based.

For “Business-As-Usual” companies “1) Everything is Separate and 2) Materialism is the Only Reality”.

And for sustainable companies “1) Everything is Connected and 2) Spirit and Matter Co-exist to Form Reality.”

There are things I like about the paper. I enjoy breaking things down into categories. But I think we need to be careful not to be too hard on Business-As-Usual companies.

For one thing, Lorand says that “individuals who work in Business-As-Usual corporations find it very difficult to assert belief structures, identities or methods inconsistent with their corporation.”

She also suggests that Business-As-Usual has a singular goal: “maximizing financial profit for shareholders.”

I worked for a large US corporation during the 1980s and while profit was important as far as I could tell it was never the single goal of the company. The goals were much more diverse.

Wouldn’t it be great if life was that simple and it was possible to set a single goal and then attain it? In real life, we all do our best and and a number of different things result. Often results emerge that we weren’t expecting and didn’t intend.

Reading the paper I started to wonder if every big corporation has its own Stasi – controlling the workers. By contrast, the company I worked for contained such a very large number of “mavericks”, both people and groups, that it would seem absurd to suggest that people were unable to express their own beliefs.

In fact, that company, like all others I’d suggest, was a much more diverse and heterogenous mix of people and ways of doing things than management consultants who focus on ideas like “culture” would have us believe. (In some unkinder moods I’d suggest that if organisational culture didn’t exist, management consultants would have to invent it.) I am of the school of thought that believes that culture emerges fluidly and dynamically from the beliefs and activities of the people who work in a business. It’s not some intractable glue magically imposed top-down or somehow encoded in the papers of incorporation.

Why is this important? Because as we navigate the waters of sustainable business I think we need to be very careful to be inclusive. I think we need to welcome people of all backgrounds and cultures, including those that have worked in “big business”. We need to work with these people, not against them. In my experience, most people who work in large corporations have hearts just as big as those who work in sustainable business.

And we also mustn’t start to think that big business is somehow not open to change. That sounds much too much to me like the kind of thing I might say to my wife!

This approach itself creates barriers to change – it puts people’s backs up (just ask my wife), and it disempowers us – we stop believing in the possibility of change.

Big businesses, like any business, change fast once change starts. There are armies of “catalysts for change” at every level in every decent company – not just a few undercover agents.

The evidence for this is that few big companies would have survived in the turbulent years since I have been working without an incredible ability to develop and grow in response to change. Only the real dinosaurs suppress change – and these typically go the way of the dinosaurs.

I haven’t met Jane Lorand but I feel sure she’d concur.


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New ways to consume

Another solution to over-consumption is simply that we stop consuming so fast! Slowing down makes a lot of sense to me, especially when it leads to a better experience as in the Slow Food movement. Yum.

And another is to create a rental business.

One example that has been around a really long time is video rental. Why does everyone have to buy a video, causing one to be manufactured, when a perfectly good business model exists for renting them? As we have seen the model does work well – it’s stood the test of time and evolved from shops into postal rental services like DvdsOnTap which became Lovefilm and so on. Maybe it will be replaced by electronic downloads, but so far I am surprised by how resilient the model seems. Maybe there’s more to these services than just selling the same physical item over and over again?

Another more recent example are the car clubs popping up everywhere (Streetcar, WhizzGo, CityCarClub to name just a few). It’s the same business model – buy one car and let many people use it.

I wonder what other goods could be provided in this way?

If you do go down this route, of course, differentiating yourself becomes more interesting. It has little to do with the product itself – differentiation comes from the way the service is offered. It’s good therefore to see more and more consultancies emerging specialising in this area – I came across the Engine Group just today.


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Close the loop

On Saturday I saw again the great little animated film The Story of Stuff – “a 20-minute, fast-paced, fact-filled look at the underside of our production and consumption patterns” according to the blurb.

One of the solutions proposed in the film is closed-loop manufacturing, an idea pioneered by William McDonough and Michael Braungart in the early 1990s. Essentially closed-loop manufacturing does what it says on the tin, and you can find out more about their version of it, “cradle-to-cradle” or C2C Design on their website.

Well worth a look.


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Oldest companies in the world

I found this piece on the oldest companies in the world at the Long Now site. And according to Business Week even well established companies can be vulnerable. Japanese temple builder Kongo Gumi, founded in 578 (yes, five hundred and seventy eight), succumbed to “excess debt and an unfavorable business climate” in 2006. The writer, James Hutcheson, draws some interesting conclusions:

“To sum up the lessons of Kongo Gumi’s long tenure and ultimate failure: Pick a stable industry and create flexible succession policies. To avoid a similar demise, evolve as business conditions require, but don’t get carried away with temporary enthusiasms and sacrifice financial stability for what looks like an opportunity. ”

The oldest in the UK is a relative youngster – only 467 years old. Surprisingly it isn’t in the City of London – it’s near Huddersfield and is called Brookes Mill. Textile manufacturing ended only in 1987, and the same family have transformed the business into a “heritage office park”. Sounds like a sensible evolution.

The youngest I recognised was Cordoniu who make rather good cava. Founded 1551. Our own local brew here in Lewes, Harveys, has a venerable 200 year history.

I wonder if there’s something especially sustainable about the drinks business?


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Sitting in the long grass

It’s that long grass time of year. That is, when the grass isn’t cut to 3 inches it can grow up to 3 feet or more. Great for sitting in and contemplating.

Somebody once said to me “enjoy nature”. And I think I know what he meant – relish it, absorb it, study it, let it overcome you. Nature has great lessons to teach. One is that anything important works on a long cycle.

Sitting in the long grass just now I was also reminded that business is a long game. I went to a course at the Sloan School of Management at MIT once and remember hearing someone say they surveyed a vast number of business startups and were surprised to discover that the average time from startup to being what they called a “mature business” was something like 18 years. Ok it might have been 16. But a very long time.

Much longer than I think many people appreciate when they start something up. Or when they try to change a business. I also heard today that while 2007 was the year of people learning about climate change, 2008 seems to be a year of people forgetting it again. Maybe this sustainability thing is just a passing fad?

But, as the people behind the Clock of the Long Now, and other interesting projects (I particularly like the Long Bets idea), are trying to point out, sustainability is a long game. The planet and nature work on long cycles.

It also takes time to develop a business strategy that will take you where you want to go. It takes time to implement it successfully. Sometimes a very long time.

So why not start now?


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To grow or not to grow?

One of the debates that seems to be threatening to ignite right now is the one about economic growth and how it fits with sustainability.

Is it possible to have an economy that grows, and be sustainable at the same time? Some say yes, some say no, some say maybe.

The issue to me seems to be partly one of definition. Wikipedia defines GDP as “the total market value of all final goods and services produced”. The article also suggests that GDP represents a measure of “the sum of value added at every stage of production (the intermediate stages) of all final goods and services produced within a country in a given period of time”.

There’s a well-known saying in business: “Turnover is vanity, profit is sanity”.

What I take this to mean is that any fool (more or less) can increase turnover, by for example, selling more products and services. The path to sanity is to focus not on turnover but on profit – because profit is a better measure of the value that an individual or an organisation adds to other people. It’s a measure of what we give, and, crucially, how well we do it.

If we accurately meet really important needs, and we do it really efficiently, the more profit we’ll earn.

I am not an economist, and so am probably making a idiot of myself here. But from my reading, GDP seems to be measuring something analogous to a country’s turnover, not profit.

Plants and animals (and people) grow – so I can’t see anything inherently wrong with growth. Small businesses seem to understand that growth and development isn’t just about size and scale. Profit seems to me to be an excellent way of measuring what we give to other people, and measuring our progress at getting better at that.

By the way, Wikipedia also lists 14 or 15 separate criticisms of GDP. It lists five alternatives to GDP and I heard about another one the other day: Gross Peaceful Product.

Perhaps as the sustainability/economic growth debate develops, we’ll agree some more useful measures of growth?