Finding purpose: Environmental stewardship as a personal calling

– And Chip, anybody
else whistle like this? Man, that’s a talent
I’d like to have. Thanks for doing it. And thanks for coming
today to our final Pos Links lecture
of this semester, and I guess of
this calendar year. And it’s a great
privilege to be here, especially to cap it off with
my good friend Andy Hoffman. So I’m Kim Cameron. I’m on the faculty here in the
Management and Organization Department in the Ross School,
And have attended virtually every Pos Links since
we started in 2001. How about that? It’s been extraordinary. And you can see most
of those online– that is on the Center for
Positive Organizations website. You can go back and
watch each one of those over a period of years. And there have been a lot
of wonderful presentations by both scholars
and practitioners. What we want to do is introduce,
first of all, to you the Center for Positive Organizations,
but before we do, for how many of you is
this the first Pos Links presentation? How many are you here
for the first time? That’s terrific. That’s 20% or so. Fantastic. Well, welcome, and
thanks for coming. And so this video– which
I think Ryan or somebody, Angie will cue– will give you a
sense of what the Center is all about. [VIDEO PLAYBACK] – Moments of greatness
are all around us. Do you see them? It’s when you’re at your best. It’s when your team or
organization is at its best. Here at the Center for
Positive Organizations, we seek to understand this
greatness in you to help you and your organization be
at your best more often. Greatness is seen in
the high performing, ethical, and generous
leadership found at all levels of
an organization. It can be found in your
workplace relationships and a career filled
with purpose, meaning, and compassion. It’s seen in resilient
teams who buck the status quo to make a culture change. It’s in organizations that
make a positive difference in the world. Hundreds of researchers
from around the world study these phenomenon
in a field of science founded here at the
University of Michigan. And to this day, we’ve
remained the movement’s central catalytic hub. We share this knowledge in
inspiring and practical ways through innovative learning
programs, events, resources, and organizational partnerships. In our diverse
co-learning community of scholars, educators,
students, and leaders, we give opportunities for
individuals and organizations to find and grow
their greatness. Together, we are building a
new breed of organization, the positive organization. [END PLAYBACK] – So thanks to Chris White
and an incredible staff in the Center for
Positive Organizations for not only creating
that video, just– [MUSIC PLAYING] –by way of introduction, Oh. Whoops. [LAUGHTER] Hi, mom. It’s actually more
entertaining than me. You’ll see on your desk, or on
your table, some just ideas, 10 ideas, for making your
organization more positive. And it’s just one example
of just a constant flow of really interesting, exciting
ideas created by that Center staff and the 100
or so students also who are affiliated with
the Center, many of whom are in the room. We always begin with a one
minute high quality connection activity. And that activity– probably
my friend Jane Dutton was the originator, inventor,
of this little activity– and it’s a wonderful sort of
energizer to begin the meeting. And that is what we’d
like to ask you to do is to find somebody
in the room whom you don’t know particularly well. It may be the
person next to you, but it may be somebody else. We’re going to give
you 60 seconds. I’ll time you. And you’re going to create
a high quality connection. That can be defined in whatever
way you’d like to define it. So you’ve got 60
seconds to start. Ready, set, go. [SIDE CONVERSATIONS] – OK. We’ll have you
come back together. [WHISTLING] That is so impressive. Thank you. It’s kind of like putting
your children in the bathtub. They don’t want to get in. And once they get in, they
don’t want to get out. So thanks for doing that. It’s just a wonderful
way to start. We’d especially like to
acknowledge those who have sponsored this speaker series. Paul and Diane Jones–
and Diane is missing– but Paul is here, who
have been sponsoring this for several years. Thank you, Paul, very much. [APPLAUSE] In addition to that,
the Ross School Learning and Professional
Development Center– used to be called Executive
Education Center– Sangar Leadership Center, the Tauber
Institute, and the Zell Luri Center for Entrepreneurship,
all of whom are helping to sponsor this. That may sound
like ho hum, you’ve got to get through that
Cameron, but what’s really interesting
about this is the POS, Positive Organizational
Scholarship, started as this little kind of
micro-set of people interested in a small thing, in a
small set of phenomena. It’s now in Tauber, which
is– I mean manufacturing among other things–
entrepreneurship and practitioners. It’s become very broad
and highly influential. Thanks very much to you
who are in this room, and others, who have just
made this– it’s an impact. It’s a little bit of a
movement that’s impressive. And I’m grateful very much
to you for what you’ve done. Now, again, the capstone of
this semester is Andy Hoffman. Andy got his PhD at MIT. He holds the Wholesome Chair. That’s a chair reserved
for a person who has a professorship in a
School of Natural Resources and a professorship in
the School of Business. That’s not an easy
person to find. And we felt like
we hit the jackpot when Andy accepted that
position, because he’s a really world renowned
expert on many things. But the environment is
sort of one of them. He’s a dozen or so books and a
whole bunch of I mean awards. If you Google Andy, you’ll
find a list of 15 or 20 awards he’s received from various
entities around the world. And he’s also on the board
of all kinds of institutions interested in sustainability
and environment and so on. But the thing that you’ll like,
and I like a lot, his latest book is called Finding Purpose,
which has sort of been on TV. And he’s been in media a
lot because of that book. But several others I like a lot. One’s called Flourishing. They have a sort
of similar theme, how culture shapes the
climate change debate. I like a lot. And one that’s sort of
not in his sustainability, environmental focus, but
it’s a high impact book, it’s called Academic Engagement
in Public and Political Discourse. Andy is essentially
a champion of saying, look, scholars, people
who do research, ought to get serious
about having impact on policy, on public dialogue,
on government, for example, and the kind of life we live. And so he’s a
headliner in many ways. And it’s just a
delight to introduce my friend Andy Hoffman. [APPLAUSE] – Well, good
afternoon, everybody. That sound sounds good. That little exercise you
did at the beginning, I think it’s so helpful to make
people connected to the room. And I had a chance to experience
one that was rather unusual. I don’t know how
many of you heard of Ray Anderson, a big
promoter of sustainability, ran Interface carpet. And he became quite a hit on
the corporate lecture series. And I went to a talk
that he gave once. The room was filled with all
these guys in power blue suits and power red ties, and
all these really high powered mostly men. And he said, OK,
before I talk, I just want everyone to stand up. And they all stood up. And he said turn to
the person next to you and give them a hug. And it was an
unbelievable moment of a lot of really awkward hugs. But it took people
out of their skin. It took people out of
their skin and made them much more present in the room. I think that’s a very helpful
thing what you guys just went through. I listened to the video at
the beginning about the Center for Positive Organizations. And it talks about the idea of
a new breed of organization. What I want to
talk about today is what I see as the emergent
new breed of business leader. And in many ways, what we do as
academics, is we study things, but many times we report
what we’re seeing. And so I didn’t invent this,
but I do see it happening and it gives me hope. And I want to focus
on that emergent idea. As they say, when
you give a talk, you’re supposed to tell
the audience what you’re going to tell them,
and then you tell them, and then you tell them
what you told them. And so that’s what I’m going to
do to you here this afternoon. And I’m going to begin with a
story, and end with a story, and in the middle
I’ll try and make the thrust of what
I’m going to say. So you can go to sleep
after my opening vignette, if you like, or you can listen
to it all the way through. And the opening
story is something that happened to me in this
building, in my office in 2009. If you remember–
those of you who are not super young– but
General Motors went bankrupt. And the federal government
bailed them out. And the C-Suite with Fritz
Henderson at the head, knew that their time
was limited and they had to find another place to land. And we were
interviewing one of them here at the
University of Michigan to become a resident
in practice– actually, not in this building,
but on environmental issues in another part of campus. And he and I were talking. And he said the
most curious thing in the middle of
the conversation. He said you know I’ve been at
General Motors for 30 years. And I have to tell
you I had a ball. And that always
struck me as really, really a dissonant chord,
because to my mind, it’s similar to saying
the doctor coming out of the operating room, someone
you love on the operating table, and the doctor saying
I almost killed the patient. Someone else had to
come in and save them, but I had a great time
in the operating room. To me it’s the same thing. And what we would
think of a doctor said that is where is
that Hippocratic oath? And where is your accountability
and responsibility as a surgeon? And yet we don’t have
something similar in business. We don’t have any oath
for business managers to say first, do no harm. And I don’t think
we’ve caught up to the responsibility, the
power, and the accountability that business managers
have in our world. Had General Motors
gone under, people would have lost
their livelihood. Stockholders would have
lost their life savings. We could go down the list of
all the terrible things that would happen to them. And we have to come
to terms with that. Now I am not here to propose
institutional change. I’m not here to propose an
Hippocratic oath for management or certification. What I am here to
say is that there are more and more students that
I see, and I try to encourage, and it becomes part
of my teaching them, is to get them to think about
their career as a calling, as a vocation, management
as a calling. I think that is tremendously
important in this world. If we don’t create more
students and more leaders that think about what they do in
that way, I think we’re doomed. We’re going to have more
WorldComs and Enrons. And we’re not going
to have people using the power of business to
make the world a better place, because the power that
business has can bring us to a sustainable world or
it can bring us to ruin. It’s that simple. And so how do we start
to bring that in? Here’s a quote by Mark Twain
that I use with my students. And he says “the two most
important days in your life are the day you were born and
the day you find out why.” And it’s that second day
that I try and encourage my students to think about. So students come to my office
often, too often, and ask me the same question,
where can I go in my career to have the most
difference, the most impact? And that is the wrong question. And I tell them
that straight out. Because my answer
could be you know what? You want to have impact,
go become an accountant at a resource extraction
company, Rio Tinto, Exxon-Mobile, Weyerhauser. If you don’t like
accounting and you don’t want to work for one of
those companies, you will die. And you will do no one any good. Where can you go to thrive? Then you have
found your calling, your purpose, your vocation. And that word purpose
is so important. I really want to encourage
students to find a purpose. The truth is everyone has
a purpose in what they do. Some of them may have thought
about it, many people have not. And there’s a book that
came out last year called Excellent Sheep. We were just talking about this. That our students are excellent. They’re very, very smart. But they’re sheep. They just follow what’s
in front of them. And if you never
push back and say this is what I’m
going to be, you will find yourselves
down the line wondering how you got there. I have a colleague at
Boston University, Tim Hall, who studies careers. And my one of my favorite
lines from his work– he was talking to a woman,
a very highly successful executive, in her 40s,
extremely unhappy. And she pinpointed the
reason for her unhappiness one morning when she
looked in the mirror and she had thought oh,
my god, an 18-year-old picked my career. And she suddenly woke. But she never stopped
to say where to do I want to go with my career. There’s a little delayed
action on that joke. But it is something
someone said. And it is true. I mean how often do people
stop and reflect and discern what kind of a purpose
or meaning or calling do they have? And some people their
purpose is to make money. Some people’s purpose
is to have status. Just look at what someone
devotes their time and energies to and you will get a
sense of their purpose. It’s that simple. And if you look
at yourself, where do you devote your
time and energy? Is it in nature? Is it to your family? Is it to the quarterly report? Where do you devote
your energy and time? That tells me something
about your purpose. So how do we
discern our purpose? How do we discern our
calling and our vocation? Well, part of it,
certainly, is looking within inside ourselves
and where we thrive or how we thrive. Joseph Campbell talks about
this as finding your bliss. And that’s a piece of it. And that’s great. But that can lead us in some
strange directions as well. I think it also has to
connect to something important in the
world around us. And to that I turn
to Thomas Berry, who writes in a book called
The Great Work “The success or failure of any
historic age is the extent to which
those living at that time have fulfilled the special
role that history has imposed upon them. It is a role given to us,
beyond any consultation with ourselves. We did not choose. We were chosen by some
power beyond ourselves for this historic task. The nobility of
our lives, however, depends on the manner in
which we come to understand and fulfill our assigned role.” So I would ask you, what is
the great work before you that needs to be attended to? I challenge students to
think about it this way. If you are graduating from the
business school, or any school, in this university in 1942, you
may have dreams of your career and where it’s going, but
the great work is before you. And that’s called World War II. And you would have no
choice but to respond. And the nobility
of that generation is determined by the extent to
which they answered that call. We call that the
greatest generation. So what is the great
work before us today? To my mind, the great work
is around sustainability. It’s around environmental
and social issues. And in particular,
I want to focus here on environmental
issues, because I think that the environmental
issues we face today, as I will explain, are
of a character in nature never before seen by homo
sapiens on this planet. That may sound like a hyperbole,
but please put that aside for a second and
we’ll get to it. The important point is
that younger people coming into the world today, the
world of practice, management, or whatever, may resent that
previous generations have delivered this world to them. But they have no choice. They have to respond. They don’t even have the luxury
of asking will their efforts work, they have to try. The nobility of
their generation will be defined by how they respond
to that challenge before them. And that’s the point I
really want to make here is that we’re at a
point where students can think about their vocation
or calling in business, because business has to be the
solution to the sustainability challenges we face. Business is the most
powerful entity on earth. Business builds the buildings
that we live and work in, the clothes we
wear, the food we eat, that forms the mobility
you enjoy, the drive train under the hood of that
mobility, whether that will even be a private car out
there in the future, this all comes from business. And if business doesn’t
solve these problems, they will not be solved. It’s that simple. And so when I see
students starting to engage on these issues from
business schools, I see hope. And there is reason for hope. Sustainability has started to
penetrate the business school curriculum. This graph on the bottom is
research in sustainability within business journals. You can see it emerged
in the mid 1990s. Lucky for me I graduated
with my PhD in 1995. I emerged in this field just
as it was getting started. To my amusement, I’ve
been introduced in talks as a grandfather of the field. [LAUGHTER] That’s how new it is. And you can see just
the number of courses, or number of business schools
requiring a sustainability focused course,
going up, courses incorporating sustainability
going up 426% in 10 years. When I started in
this domain, it was a domain that was
really risky on research. You must be an advocate if
you’re doing academic research in this area. And the hurdle became higher. And now, it’s table stakes. In the words of
our previous dean, it’s table stakes in
management education. That’s how far we’ve come. And it gives me hope. And it also gives me hope
because I look at students today coming into
business schools and I think about students
going to graduate school. 20 years ago, students who
wanted to change the world and went to grad
school, they went to schools of government
and nonprofit management. And today they’re
going into business. And that means that
they understand the power of business to make
the world a better place. And they will focus on that. And they will change business,
and hopefully for the better. They’re responding to the
great work before them. So there is my intro. There’s point number one of
just really pushing on the idea that management is a
vocation or a calling, and focusing on the great
work of sustainability, and there’s hope that
there is a response. Now what do we do with it? And that’s where I want to
get to the more environmental sustainability or environmental
stewardship part of this talk. I want to present to
you two ways of thinking about business sustainability. On the left, I call it
enterprise integration. On the right, I call it
market transformation. On the left, fit environmental
or social sustainability in with the existing
logics of business. Don’t change them. Just show companies how
they can make more money by addressing sustainability. On the right, it’s about
changing the system so that it can further address,
or get to the root causes, of our sustainability problems. The first, I tell my
students, will get you a job. The second will
give you a career. The first focuses
on the symptoms. The second focuses
on the solutions. The first is about
reducing unsustainability, doing less bad. The right is about creating
sustainability, doing good. And it’s a totally
different mindset. It’s a totally
different approach. Let me use an analogy– in
Iraq we stopped the war. That is very different
than creating peace. It’s a totally
different approach, a totally different mindset. On the left, it’s one company
creating a new product. On the left, it’s
changing the system in which that company works
so that the system itself starts to evolve. There are two ways
to think about it. The left is how we’ve
been teaching business sustainability since 1995. The right is a new
emergent notions around how we can
teach sustainability. Both have to go together. Both have to be taught. And in many ways, it
challenges students to think with both sides of their brain. In the words of F.
Scott Fitzgerald, “A true sign of intelligence is
to hold two competing thoughts in your head at the same time
and be able to function.” And to put these two in your
head and be able to function requires that mental dexterity. Let me walk through
each of them. And then I’ll wrap it up. Let me start Sustainably
1.0, Enterprise Integration. We teach sustainability
as a market shift. And so I have some
market shifts up here to illustrate my points. And down in the
lower left, we have a device that some
of our students actually have never seen. This is called a typewriter. And on the bottom
right, a device that is ubiquitous–
a laptop computer. On the right, I challenge
my students, how many of you heard of Smith-Corona,
Brother, or IBM? And they all perk up. They know IBM. Well those are the three
primary typewriter manufacturers in the world. One of them saw the market shift
in play, two of them did not. One of them is still here. Two of them are gone. Those of you who
lived through it can remember all these weird
gyrations and hybrid ideas about moving from a
typewriter to a computer. You may also remember
when Steven Jobs said, I envision a day
where there will be a computer in everyone’s home. And all of us
thinking, what a nut. I mean who would want a
computer in their home? And yet here we are. And so environmental issues
can create a market shift like that. We have another device
on the lower left here that even fewer of our
students have seen. That’s called a Sony Walkman. And that’s how I listened to
music when I was growing up. And then over on the right, we
have the iPod and the iPhone. And this speaks to the culture
shift around technology. Those on the right
are intuitive to most. When I have problems
with my iPhone, I hand it to my
13-year-old niece. She solves them for me. But that on the right is not. In fact, last year, NPR gave
a 13-year-old a Sony Walkman and said live for a week with
this instead of your iPod. And he said it was
halfway through the week when he realized he had to take
the cassette tape out, turn it over, and put it back in to hear
the other side of the music. And it didn’t make sense to him. But now this fundamentally
changes how we access music, how we think about music, how
we think about information, and how we access it. It changes what we do
here in this university. The idea of just teaching
facts now, it makes no sense. Because I can pull up any
fact I want on my iPhone. We now have to teach people
how to be discerning users or consumers of that
information and how to make differences or
make concerted thought about the quality
before we move forward. Certainly a pertinent issue
that we’re facing today. The key of framing
it is a market shift is that you now move away from
these strange questions that have often been asked. Does it pay to be green? In a market shift, you innovate. So asking does it
pay to be green is the exact same thing as asking
does it pay to innovate? That’s a nonsensical question. So in a market shift, you should
ask yourself three questions. First of all, who is driving it? And so when I teach about
business sustainability, I teach about these drivers. You’ll see no moral
argument up there. I do not teach corporate
social responsibility. If I do that, what I’m
telling my students is go to your other classes,
learn how to maximize NPV, ROI, ROA, come into my class,
I’m going to teach you a different value set. That’s not sustainable
for their career. And so I connect it
to these constituents. And then I say which
department inside the company is going to handle it? And you can see
the different ways that companies can handle
environmental issues. And I tell the
students if you’re looking at maybe getting a
job at a particular company, you want to get a
sense of how they think about environmental
sustainability, take a look at where the Chief
Sustainability Officer sits. Do they sit in community
relations, marketing, operations, legal? That will tell you
a lot about how they think about these issues. Because at the end of the
day, I frame sustainability in the language of business. I don’t talk, when I talk
about climate change, I don’t talk about CO2. I don’t talk about
radiative forcing. I don’t talk about
carbon loading. I talk about operational
efficiency, consumer demand, cost of capital. I put it in the
language of business. And then they can find
ways to merge these issues and be successful managers
focusing on these issues. And it does help to be able to
speak to business audiences. One of the beauties
of my position is I have these two
appointments, these two schools. In many ways, they’re
like oil and water. But I can live
multiple identities. I can put on my
flannel shirt and jeans and go give a talk
to the Sierra Club. And then I can put on my
blue suit and my red tie and give a talk to the Michigan
Manufacturer’s Association, which I did a
couple of years ago. I find I’ve got this
new weird role where heads of trade groups
are inviting me in to sort of enlighten
their membership that doesn’t want
to hear this stuff. So I find myself giving talks
to unfriendly audiences often. It’s a strange role to have. And I gave a talk at the
Michigan Manufacturer’s Association on climate change. Before the talk
began, a gentleman came in early, sat
in the front row, and he slammed the
book on the table. He very deliberately slammed
the book on the table. And the title was facing me and
it was called The Climate Hoax. So I kind of had
an idea where he was going to go with his
comments and questions. And then in the middle of
my talk, he interrupted me. And he said this is nonsense,
because climate change is a hoax. And I said I don’t care. You can be agnostic about
the science of climate change and still see the
business issue, because regulation, consumers,
insurance companies, banks, suppliers, buyers, they’re
changing your business environment. You can adapt if you
wish, I really don’t care. There was nothing
more he could say. I put it in the
language of business and then he could listen. And so this is the
way I teach it. And we can talk about
the many shifts that are in play– I want to
be conscious of time– and so here are
some market shifts, just like the first
chart I showed you. So in the upper left, we have
an incandescent light bulb. Should you invest in
incandescent light bulb companies? No. Should you invest
in CFL companies? Maybe. Should you invest
in LED companies? Yes. That is the typewriter story. The technology to
make an incandescent and a compact
flourescent is the same. You run electricity through
a gas or a filament, it gets excited. It creates light. LEDs are solid state technology. It’s a different set of players. It’s a different
set of companies. And then interestingly,
very interestingly, LEDs last significantly
longer than other light bulbs. If you look at the companies
getting into the lighting– or are in the lighting industry,
they’re getting out of it. They’re shedding the assets. Because they’re looking at what
they call socket saturation where people buy less
and less of these. And the market is expected
to start to vaporize. Very interesting market
shift around sustainability. We could have your
thermostat up there. It’s a typical dome thermostat. And up in the upper right,
we have a Nest thermostat. And right behind it would
be GE Eco-Dashboard. How many people have
seen a Nest thermostat? OK. This is the future
of the smart home. Both of them are,
but a Nest thermostat is designed by Apple engineers. It’s very attractive. It’s very intuitive. It’s a programmable
thermostat, nothing new there. But then it does a
few other features that change the whole conception
of how we think about energy management and our lifestyle. And this is part of the cultural
shift of that first graph. It has a motion sensor. So it knows when I’m not
home and it automatically dials the house down
to a lower temperature because no one is there. When I land at the airport,
I can take my phone out. And I can go into my thermostat
and I can turn it back up, so I get back to a warm house. Siemens has one that
actually follows your phone and knows you’re
approaching the house and automatically
turns it on for you. It also as a
programmable thermostat that will, if you
keep changing it– let’s say you typically get
up later and later on Friday and you keep changing it–
it will change for you. It will start to
learn your behavior. Right behind it, the
GE Eco-Dashboard, you install this in your house. It gives you a real time
display of energy and water use. And so those of
you who are young, you can go to your parents’
house for the weekend, or those of you
who have kids, they can come to your
house for the weekend and they can get up
on Saturday morning and they take their usual
two or three hour shower. And you bring them downstairs
and you will have a graph. And it will have a dollar sign. And you say that shower just
cost me x, don’t do it again. And we’ll start to connect
behavior to outcomes. Because prior to this,
I’d get an energy bill at the end of the month. I have no idea how it happened. It just did. And I’d just pay it. And now I’m going
to say there are things I can do to
change my behavior to lower my energy use. And so, for example,
you go on vacation. And you’ll shut everything off. And you’ll see that the
house is still drawing power. And you’re going to learn
about phantom loads. And you’re going to
learn, for example, that lovely 60-inch plasma TV
you have on your wall that you love so much, that
uses more power turned off than a regular
TV uses turned on so you can have instant on for the plasma. Or you’ll learn that that
cable box that you’ve shut off, you’ve actually
shut off nothing. You’ve shut off the
LED display in front and the guts are still
going so that Comcast will keep monitoring the internals. And so you’ll learn
about all the ways that energy is just
wasted for no reason. And then you’ll start to
connect that to other things. Everyone in this room probably
has a standard hot water heater that’s making hot water
for no one who’s there . If you go away for a week,
it’s still making hot water for no one who’s there. This makes no sense. And there are instant
hot water heaters. I warn you, they
have to be designed for the house from
the beginning. Some people put them in,
the pipes are too small, they don’t work. Then they say it’s the device. It’s not. It’s the piping. But there are different
ways to think about energy and how you do. These are all examples of
the kind of market shifts and the cultural changes. Up in the upper
front, upper left, there’s a front loading washer
introduced in this country about 10 years ago. Very hard to get the
public to accept it. It uses less water, less energy. It must not clean so well. And people actually
avoided them. And they had to really work
hard to get them accepted. Want to go further? That picture of the
gentleman on the right is a company in Sweden
developing a washing machine that uses no water at all. It cleans with nylon beads. You want to talk about getting
culture change in a consumer market to accept
that, good luck. Let’s see where it goes. I can go through all these. On the bottom right
is a Nissan Leaf. If you buy a Nissan
Leaf in Japan, you can buy a transformer. So if your house
has a power failure, you plug the house into the car. You run the house
off the battery pack. These are the market
shifts in play. And it’s good. And business students
get excited about this. This is the kind of stuff
they want to focus on. They want to use
their business acumen to focus on these innovations. And the innovations are there. You can stay in a
sustainable hotel. You can eat sustainable food. You can drive a sustainable car. You can buy a
sustainable toothbrush. You can buy a
sustainable paintbrush. You can buy all this stuff. And so you would think the world
is becoming more sustainable. And here’s the turn in my talk,
because there’s one big but. And the but is that everything
I’ve talked about so far is not going to
solve the problem. Everything I talked about so
far is just doing less bad. The Tesla’s a wonderful
car, but it’s still a car. And that is not
going to bring us to the nature of the solution. As an example, COP 21,
year agreement in Paris to reduce our CO2
emissions, is wonderful. It’s important. It’s an important first step. But it’s reducing CO2. We are eventually going to
have to go carbon neutral. We’re eventually going to
have to go carbon negative. And everything I’ve
talked about so far, fitting it in with
the existing market, it will not get us there. And this is not just an
academic, theoretical exercise. Toyota has challenged
their company, it’s come down from Japan,
that by 2050, Toyota has to be carbon
neutral in production and use of automobiles. You’re not going to do that
just through carbon reductions. You have to start to
think totally differently. And that’s where we move next. To help drive the point of how
different things are right now, there are
geophysicists out there that are proposed that we are
no longer in the Holocene, we’re in the Anthropocene. How many people have
heard this term before? OK. If I do nothing else, I’ll
teach you a new fancy word. In the Anthropocene– and
they’re going through a process of approval right now– you
cannot describe the environment without including the
role of human beings. We are now in charge of
operating systems on the earth. They describe nine planetary
boundaries beyond which we should not go–
three of them, we already have– climate
change, nitrogen cycle, and biodiversity loss. Climate change,
we all know about. Nitrogen cycle, we
produce, as humans, more nitrogen than
natural processes do. That’s why we have
the algae blooms. That’s why we have a dead zone
in the mouth of the Mississippi River. Nothing can live in the mouth
of the Mississippi River because of the amount of nitrogen
that flows from the farms down the river, dumps
into the Gulf of Mexico. Phosphorous is right behind it. You have ozone depletion,
ocean acidification, all these. We are changing the world around
us in ways we don’t understand. This is more than just
insults to the environment. We’re now in charge. We’re in charge of
the operating systems. We have dammed most
of the major rivers. We’ve cultivated most
of the available land. Here’s one for you to
get your attention. I was talking to
a research chemist at Pfizer who very
matter-of-factly said in the conversation, there are
measurable levels of ibuprofen in the Mediterranean Sea. Think about that for a second. I saw one head just pop up. Let me go further. He said that does
not concern us. Ibuprofen is a relatively
benign compound. What really concerns us
is birth control pills and antidepressants. You take a drug, your body
uses a small percentage of it. The rest passes through, goes
into the treatment plant, it can’t handle it. It goes into the
aquatic ecosystem. And it’s changing the
flora and the fauna. And then we get our food
and our drinking water from that very source. Just last year
biologists were looking at salmon in Puget Sound. And what did they find? They found Prozac. If you eat salmon
out of Puget Sound, you’re getting a dose of Prozac. And we’re bringing
it back into us. I can go into other
industries, as well. In the chicken industry–
they’re phasing it out– there was a practice called
prophylactic antibiotics. You have an egg, the first
thing it gets is a needle. And it gets antibiotics,
whether it needs it or not. And then we eat them and
it changes our biology. This is the Anthropocene. This is the problem we face. And so the solutions
have to come from a fundamentally different
space than everything I’ve talked about before. And so where do we go with this? Well, one avenue is just saying
capitalism is the problem. In the words of
Naomi Klein, we have to shred capitalism and come
up with a totally new system. And the first thing I want
to do with my students is say you don’t have that luxury. No one has a blank slate in
order to define a new system. Every set of institutions
come from what came before it. Steven Jay Gould has
a wonderful article– I recommended it to all of
you– called the “Creation Myths of Cooperstown.” And he begins by saying
it’s preposterous to think that Abner Doubleday
invented baseball in 1895 in Cooperstown, New York. That just doesn’t
make any sense. There was a game that
was evolving over time. He merely wrote down some
rules as he saw them. And the game has
evolved since then. What they played in
1895, they do not play today in Tiger Stadium. Adam Smith did not
invent capitalism in 1776 when he wrote Wealth of Nations. He was watching a system
exchange happening within Europe and the UK. And he wrote it down. And it has evolved since. Much to my students’
surprise, capitalism is not a natural state
like the law of gravity. It is set of human
made institutions in the service of humans. And it is actually quite
malleable and diverse. Norwegian capitalism
is different than American
capitalism is different than Japanese capitalism. There’s many ways to do this. And it evolves to
serve our needs. So we can’t price fix. We can’t collude. You can’t sell drugs. There’s no reason to think
that capitalism will not evolve to say and you can’t emit CO2. And this is what we need to
start with as a starting point to say where is the
market going to go? Not what’s wrong with it? We need to throw out capitalism. Not this stale debate over the
end of capitalism has begun, no capitalism is great. It’s not a singular
static dimension. How will it evolve? And the beauty is
we have signals happening all over the place. The cues are there. There’s a wonderful
line by William Gibson. He said “The future
is already here– it’s just not very
evenly distributed.” There are people who can
see these distant signals and start to get a sense of
where might the market go. So I’d like to give
you four thoughts on the way I approach this. But I certainly don’t
have the crystal ball. And I don’t have
the final answer. But just ways to start to
think differently in order to transform the system. The first is we have to start
thinking about sustainability in the system. So a utility
installs a wind farm, calls it self-sustainable. That makes no sense,
because sustainability has to be looked at in
terms of the entire grid from generation through
transmission, distribution, use, and mobility. On that count, we can start
to talk about whether this is sustainable or not. And so the companies of
the future, the exemplars of the future, will
not be a company that created a great new car or a
green hotel or a green paint brush, it will be a company
that works to change the system around them. And that is happening. Intel, for example, has been
highly influential in getting the electronic industry to start
to analyze conflict minerals and whether they have them
in their supply chain. And there’s an element
of transparency in this. If you saw last year,
Nestle– I’m sorry, yeah, Nestle did a– was it Nestle? I’m having a moment, one
of those senior moments– I think it was Nestle. They did an analysis of their
supply chain, their fishing supply chain. And lo and behold, they found
slavery in the supply chain. And they disclosed it. To everyone’s surprise,
they disclosed it. And I would have loved
to have been in the room with general counsel
watching this person, having probably
get strapped down, and say, no, we can’t do this. But they did. And it’s a changing
mode within business. And these are the
exemplars we can start to think about going forward. We have to start thinking really
different about operations. So a company is part
of a supply chain. And that supply
chain is where we start to think about the system
parameters of sustainability. And how can we close the loop? Right now, it’s linear. Materials come in,
they go through, they go into the landfill. How do we turn it back? It’s called a circular economy. So that the stuff
coming out at the end comes back in and
works its way back in. Or gets sold to another
supply chain, where they can use it as a raw material. Robbie has done a
lot of work on this. And it’s sustainable
supply chains. Transparency is in there. We have to also
think differently about resource availability. We used to teach that
water is freely available. You need water? It’s there. No more. Water is now a very expensive
and risky commodity. Coca-Cola has bottling plants in
drought-prone regions of India. Right now, in hindsight,
we look and think what were you thinking? But when they put them
in, water comes and goes. No big deal. Talk to any ag company in
the Central Valley right now about the importance
of water to who they are. Coca-Cola now thinks of
itself as a water company. It’s their most
important ingredient. They lose that, they’re gone. So if we think about
that differently. And, then, interestingly,
human rights has entered the conversation
in some fascinating ways. Just five years ago, if you
went to corporate meetings, started talking
about human rights, they’re like I don’t
want to talk about that. That’s that activist
anti-capitalist agenda. We don’t talk about that. And now they’re really on it. They’re really trying
to get ahead of it. Whether it’s about living
wages, or human trafficking, or slavery, or living
conditions, or working conditions, they’re
really trying to focus on ways to improve it. We have to start thinking
about organizational parameters differently and how
organizations are structured. We typically think in terms
of for profit, nonprofit, and government. But there’s all kinds
of hybrid forms. There’s all kinds of different
ways of setting companies up. We don’t talk much about
ESOPs or COOPs anymore, but they are a valid
form out there. We can talk about
networked organizations. We can talk about many
ways of organizing and then many ways
to try and cultivate the talent within them. And so POS,
Appreciative Inquiry, are new kinds of innovations
to think differently about the role of people
within our organizations. And then finally, you
have to go to the root. You have to go to
the fundamental base of how we think about
business and how we think about business education. So we can begin to
look at, for example, some metrics that steer
us in the wrong direction. Gross Domestic Product
is right off the bat. Gross domestic product
moves any form of money. As long as money
moves, GDP goes up. So I can go down
the street and I can go to Krispy Kreme donuts. And I can gorge myself on Krispy
Kreme donuts and GDP goes up. Then I step outside the door
and I have a heart attack. And the ambulance takes
me to the hospital. And they have to operate on me. And GDP goes up. And then I die. And then there’s
a whole funeral, and they put me in the
ground, and GDP has gone up. It makes no distinction
over whether it’s about our well-being, it just
means the movement of money. And if you want to read a
very interesting report, four years ago, Nicolas
Sarkozy, President of France, commissioned Joseph
Stiglitz and Amartya Sen, two Nobel Laureates
in economics, to look at ways we can think
about alternatives to GDP. It’s a fascinating
report on the ways that GDP has measures that
lead us in the wrong direction, some of do, and some
that they totally miss, and the power of GDP to blind
us on where we’re going. Without getting political, but
the President-elect’s choice of Secretary of the Treasury
has said his goal is GDP growth in the 4%-5% range. GDP is going to be his metric. And yet there’s a
whole vast number of people in the middle
of the country who are saying these
metrics keep going up, but we get keep
getting left behind. Your metric isn’t catching us. And they’re heading
down that same path. It’s very strange. But if they become
almost unconscious, we just drop on them. Discount rates. We teach discount
rates as sacrosanct. Nicholas Stern, when he
wrote his report in 2010 on the cost and benefits of
addressing climate change, caused quite a stir
among economists when he used a really
absurdly low discount rate. I believe it was
a half a percent. And economists said that
this is totally unreliable, you can’t use a
percentage like that. And his answer was there are
times when using discount rates is inherently immoral. A 5% discount rate says that
everything 20 years and beyond is worthless. If I’m looking at the
impact of climate change, do I really want to have that
as an assumption in my models? That is called your future. Is it worthless? I don’t think so, nor
did Nicholas Stern. And when do we have
to stop and think when do discount rates lead
us in the wrong direction? And what alternative
metrics can we start to use to think about the
viability and the well-being of business? And so life cycle
analysis, system metrics, conscious capitalism. There’s a whole
host of models that are starting to emerge to
try and think differently. And then we can go to
the real base of it and we can start to think about
neoclassical economics, agency theory, and a lot of
questions about whether these capture what businesses do and
what people do within them. Because they do paint
a rather dismal picture of the motivations of
people as driven primarily by greed and avarice. And that they’re all focused
on the short-term utility, basically money
and obtaining that. And is that really what
people in business focus on? No. Very few business people
come into work today and say, how can I make more
money for the shareholder today? They’re motivated by a whole
host of more complex reasons. And even leaders of
companies aren’t just focused on those kinds of outcomes. If I, for example, were looking
for a new coach for the Detroit Tigers. And the coach said,
I am just going to win by just making
more runs the end metric, you’d say you don’t know
how to coach a team. How are you going to build a
team that’s going to do that? And so how do we think
differently about management? How do we think differently
about consumption? How do we think
a bit differently about the purpose of the firm? There’s some very
interesting conversations. Oddly enough, Jack Welch
coming out and saying the idea that the purpose
of corporation is to make money for
its shareholders is stupid quote
unquote “stupid.” Yet, if I walk
downstairs with a mic and put it in the front
of any student’s mouth and said finish this
sentence for me, the purpose of the corporation
is to– they will parrot back make money for the shareholder. That’s how pervasive
these ideas come. And that’s how we have to
start a channel at the base. So there are just some thinking
around market transformation, around business
sustainability 2.0. As I said I was going to close
with a story that tells you what I was going to tell you. And so I want to put together
the idea of a calling or a vocation, the
great work, and how we think about market
transformation get to the root solutions
of the problems we face. So to do that, I
want to introduce you to my grandparents, and in
particular, my grandmother. She was born in 1899. She died in 1995. I want you to think about this. In the course of
her lifetime, she saw the advent of indoor
plumbing, the advent of home electrification. She saw us go from horse and
carriage to the automobile. She saw man’s first flight. She saw a man land on the moon. She saw the first computer. She saw all that
in her lifetime. If I went back to her
when she was 20 years old and said this is what
the world is going to look like when you pass
away, she’d looked at me and say you’re crazy. The world you will
die in will be as crazy as what she
saw in her lifetime. You can take the
year you were born. And if you’re male, add 79, if
you’re female, add 81– sorry– and that is statistically
the year you will die. And I would challenge
you to think about what will that world look like? And it will be as
fundamentally different as the shift in the world
that my grandmother saw. Now, that’s the beginning
of the question. The second question is
what kind of a world do you want it to be? And what role do you want
to play in making the world that you think it should be? And so in the words of
Alan Kay “The best way to predict the future
is to invent it.” Thank you very much. [APPLAUSE]

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