An Arts and Science Approach to Business – Part 2Posted: April 4, 2012
The opposable mind
Interestingly, the multi-disciplinary approach is becoming much more accepted and prominent. One of the leading business thinkers in Canada, Roger Martin, the Dean of the Rotman School of Management at the University of Toronto, writes in his book, The Opposable Mind, of the need in business for abductive logic and not just deduction and inductive approaches. Deductive reasoning works from a preexisting theory; inductive logic draws inferences from observations.
Abductive thinking creates the best explanation in novel situations with no precedent and little data. As Martin points out, such an approach is critical to innovation and yet most students, especially those learning business or other left-brain dominated subjects, have very little educational exposure to this approach. But I see this mindset flourishing in our Arts and Science Programme. Indeed Martin refers to abduction as the “art and science of generative reasoning.”
Martin writes of the importance of “assertive inquiry” in business. He contrasts the limitations of a defensive stance rooted in advocacy as compared to the learning that comes from inquiry and meaningful dialogue, a dialogue that involves a “sincere search for another’s views.”
Artistry in business
Hillary Austen, author of Artistry Unleashed, wrote:
As a culture, we’ve done a stellar job educating our executives to work the numbers. Yet when it comes to qualities, we’re falling short. And business is suffering for it.
This is where we can learn from what artists do. We business people have a tolerant fondness for the qualitative; when stumped by the numbers, we appeal to “gut feel”. But artists use the qualitative as a honed discipline. Artists are right at home thinking about qualities, then working those qualities into effective solutions even when no clear definition of success exists. This is exactly the kind of challenge we face in business today. How do we use a quality like the smell of burnt cheese to inform business decisions?
If qualitative intelligence in business, technology and science has been diminished, then where can we find it? Knowing that single answers to expansive problems never fly, artists willingly shape and engage ill-structured conundrums, vague situations, and problems without boundaries. They embrace the open-ended. Under these enigmatic conditions (so familiar to today’s executives), they create, master, explore, experiment, innovate, perfect, strive, and glory in their work. Artists drive themselves toward an unpredictable excellence that often reshapes the very nature of our world.
I think the whole-brain approach to issues in business is gaining ground because there is a growing consensus among business leaders that the specialized approach of the past may have been suboptimal before but it is certainly dysfunctional now. 30 years ago an Arts and Science approach to business was a minority view; now it is what top business leaders what more of in their organizations.
Social, technical and business innovation
This is an important time for new thinking and new approaches in business. Assumptions about how markets would self-correct, how people would act in rational ways, and how business prosperity would yield social benefits are cracking if not already broken. Yet for every tale of corruption and incompetence, there are as many cases of innovation and entrepreneurialism that are making big differences in people’s lives.
Here’s just one small example: Eight19 is a British business spun off from Cambridge University. It sells to poor families in Kenya, a kit consisting of a 2.5 watt solar cell, a 3-amp battery, and an energy-efficient LED bulb. To pay for the unit, they can buy for as little as a dollar each, a scratch card, which reveals a number the user text messages to Eight19’s server, which responds with an access code. After buying about $80-worth of scratch cards, which typically takes about 18 months, the user owns the unit outright.
Since the average Kenyan spends $10 a month on smoky paraffin plus another $2 per month to have their cell phone charged at a local market, this is a good proposition for customers. They can then choose to use their unit for nothing or trade up to 10-watt kit. Rather than relying on a charity to hand out these kits, a business can pay its own way and also create an affordable payment vehicle where credit does not yet exist.
The ecology of commerce
There is another area where business needs new thinking and perspective. Ecologically sustainable business is feasible and needed; it is also the purest expression of the business ethic: waste nothing. But as we know the tragedy of the commons has not visibly priced externalities such as particulate pollution or the true value of fresh water.
We also face muddle-headed thinking on how to approach environmental problems; things such as subsidies for growing corn for gas. Consumers are willing co-dependents in this mess. We want to have our electronic gadgets which most throw away after only a few years (or even months!). Too many people want a house with a lawn in subdivisions built for cars, not walking.
In his book, The Ecology of Commerce, Paul Hawken describes the how the energies of business can work to create more sustainable processes and products if we as a society are ready to pay the true costs for things. At the same time, businesses have all kinds of opportunities to increase their profits by reducing waste and creating innovative new methods to do more with less energy. In fact, business needs no environmental motive to do these things; if the full, life-cycle cost of energy, water, and waste handling of products is charged, businesses respond through innovation.
Lessons from a radical industrialist
The late Ray Anderson, the founder of Interface, a billion dollar flooring company, was inspired by Hawken’s book and proceeded to build a company that was truly environmentally efficient. In the forward to his book, Business Lessons from a Radical Industrialist, he wrote:
In 1994, at age sixty and in my company’s twenty-second year, I steered Interface on a new course—one designed to reduce our environmental footprint while increasing our profits. I wanted Interface, a company so oil-intensive you could think of it as an extension of the petrochemical industry, to be the first enterprise in history to become truly sustainable—to shut down its smokestacks, close off its effluent pipes, to do no harm to the environment, and to take nothing from the earth not easily renewed by the earth. Believe me when I say that that goal is one enormous challenge.
But as I said, I’m profit-minded and extremely competitive. I thought “going green” would definitely enhance our standing with our customers and maybe give us some good press, too. But I also thought it just might be a way to earn bigger profits from doing what was right by the earth. No one had ever attempted that kind of transformation on such a large-scale before. We aimed to turn the myth that you could do well in business or do good, but not both, on its head. Our goal was to prove—by example—that you could run a big business both profitably and in an environmentally responsible way. And we succeeded beyond my own high aspirations.
Wall Street heard “environment” and thought “costs.” Even after we showed them how reaching for sustainability could take a big bite out of waste and save us real money, even after we discovered that running a billion-dollar corporation with the earth in mind was a terrific new business model, there was still a lot of skepticism. There still is some, even though we now have over a decade of hard numbers that prove—beyond a doubt—that our course was both right and smart. Why, then, all the resistance?
I think it’s because our transformation flew in the face of all the old rules that still drive the “take-make-waste” economy, old rules that we inherited from the steam-driven days of the first industrial revolution and (many of us) unthinkingly accept as true. That old way of doing business seemed to work just fine when we thought the earth could provide endless resources, endless energy, and endless room to throw away all the stuff we make and waste.
But conventional wisdom and the status quo are powerful sedatives. Like opiates, they dim our vision and blur our minds. They whisper, Maybe all those arguing experts are wrong. Maybe there’s nothing to worry about. Or, okay, so there’s a problem, but I surely can’t solve it. Why even try?
Maybe that’s why conventional wisdom, wed to the status quo, was certain there was no business case for sustainability, that what we started at Interface was misguided, tangential, and doomed to fail.
Conventional wisdom was wrong. Consider a few facts. Remember the Kyoto Protocol? It was designed to reduce greenhouse gas (GHG) emissions by about 7 percent by 2012 here in the United States. Though a small reduction like that doesn’t even begin to address the problem of climate disruption, a lot of my peers in industry were sure that if the United States signed on to Kyoto, it would drive them right out of business. Really?
From 1996, our baseline year, through 2008, my business has cut its net greenhouse gas emissions not by 7 percent, but by 71 percent (in absolute tons), while our sales increased by two-thirds and our earnings doubled. Profit margins expanded, not contracted, while GHG intensity, relative to sales, declined some 82 percent.
No business case for sustainability?
While some businesses fret and sweat over rising fuel bills, renewable energy, limitless and available right now, provides electricity to power eight of our ten factories. The electrical power for seven of them comes entirely from renewables. Our consumption of fossil fuels per square yard of carpet is down 60 percent. As I write this, the price of oil has broken all previous records. Will it stay up there? Will it keep on rising, or fall back? I don’t know. But go take a look at some of your recent fuel bills. Think you could make the case for reducing them by over half?
Our company wide waste elimination measures have put a cumulative $405 million of avoided costs back into our pockets. Not only have these measures paid for themselves, they helped us ride out the deepest, longest marketplace decline…in our industry’s history.
Even better, taking a sledgehammer to conventional wisdom has thrown innovation into overdrive. We’ve patented machines, processes, and products that do a whole lot more with a whole lot less, and better, too. Each year, more of our products take their inspiration from nature, exhibiting nature’s beauty as well as benefiting from her genius for design that has been perfected over billions of years.
We’re making more of our carpets from recycled materials, too; at last count, we’ve kept 175 million pounds of carpet out of landfills and trimmed the scrap we generate and send to the landfills by 78 percent. Now, what used to be waste for the landfill goes back into our factories as feedstock. Valuable organic molecules are salvaged to be used again and again, with less fresh oil required each year, emulating nature in our industrial processes. After all, in nature, one organism’s waste becomes another organism’s food.
We haven’t used our final drop of oil quite yet, but I can see that day coming, and I hope to be around when it arrives. In fact, since 2003, we’ve manufactured and sold over eighty-three million square yards of carpet with no net global-warming effect—zero—to the earth.
Here’s the thing: Sustainability has given my company a competitive edge in more ways than one. It has proven to be the most powerful marketplace differentiator I have known in my long career. Our costs are down, our profits are up, and our products are the best they’ve ever been. It has rewarded us with more positive visibility and goodwill among our customers than the slickest, most expensive advertising or marketing campaign could possibly have generated. And a strong environmental ethic has no equal for attracting and motivating good people, galvanizing them around a shared higher purpose, and giving them a powerful reason to join and to stay.
Sometimes even they are surprised. Some of our best engineers and managers from top-tier universities have come up and told me, Ray, I never thought I’d be working for a carpet company. They come and they stay, because we aren’t just making carpets. We’re making history.
We will reach the summit when we have cut our last umbilical cord to the mines and the oil wells, when we no longer dump any waste into the landfills or pollution into the air or water. When we no longer take anything from the earth that the earth cannot renew rapidly and naturally.
Mind you, striving for the top will require nothing short of a vast, ethically driven redesign of our industrial system, a new industrial revolution that corrects the many things the first one got wrong. But can we do it in time?
Based on our experiences since 1994, I can promise this: Done right, sustainability doesn’t cost. It pays. And the view from that summit—looking out on a clean, healthy world for which our children and grandchildren will thank us—will make every step you and I take today for ourselves, and for them, worthwhile.
Ray Anderson died still a rarity among business people, but I can see year by year more and more hard-headed business people coming to the same conclusion: total system waste elimination is a tremendous source of sustainable profitability.
Systems of survival
A career in business is not something all Arts and Science graduates are interested in, but I believe that more familiarity with the essential concepts of progressive businesses is useful in non-business settings such as government, education, and healthcare. In fact many of these areas are finding that they need to adopt more business practices in order to do more with less in the administrative aspects of their institutions. But I agree with Jane Jacobs in her book Systems of Survival that not every area of civic life, such as governing, is best served by adopting the Commercial paradigm and that commercial interests should not perform what we she termed “Guardian” tasks such as crafting laws for the common good. It is when business governs and when government runs economies that the “monstrous hybrids” arise in Jacob’s words.