Jotting Number 80, by Joe Podolsky:
From: joe_podolsky@hp.com
Date: September 14, 1998
Subject: Role of Information Systems in a Sustainable Economy
On September 9-10, 1998, I attended a conference sponsored by HP Labs entitled "New Business Opportunities for HP in Sustainable Development." Over 100 people attended, with speakers and panelists from both inside and outside HP, all focusing on how sustainability makes good business sense.
Sustainability refers to activities that provide long term ecological stability, activities which use resources but at a rate slow enough for natural replenishment and repair. Usually, people distinguish between "environmental sustainability," the long term biological health of the planet, and "economic sustainability," the long term economic health of the people, the businesses, and the nations on the planet. The speakers at this conference, however, argued that these terms are not different at all, that environmental and economic sustainability are inextricably linked.
Stuart Hart, a professor in the business school at the University of North Carolina, was a key speaker at the HP Lab conference. He also wrote a seminal article in the January-February 1997 issue of Harvard Business Review, entitled "Beyond Greening: Strategies for a Sustainable World." In the article, and at the conference, he used the usual two-by-two matrix to provide a road map.
The horizontal axis of the matrix is labeled "Internal" and "External," referring to activities that are completed internal to a company versus those that are external. The vertical axis is labeled "Today" and "Tomorrow." All four of these terms are, of course, fuzzy. For example, outsourcing raises real questions about what's internal or external to a company's jurisdiction, while different companies and different parts of the same company can be deep into "tomorrow's" accomplishments while others are still mired in "yesterday," never mind "today."
The "Internal-Today" quadrant is home for well-known "Pollution prevention" processes. The logic here is straightforward: pollution is waste. Waste increases costs. Therefore, it's good business to reduce pollution. While most companies are far from perfect in this area, a lot has been done, especially in U.S. companies, both to increase awareness and in achieving positive, measurable results.
The "External-Today" box refers to "Product stewardship." This term says that a company should take responsibility for the environmental impact of its products throughout the entire product lifecycle, even after they have been sold to customers. In fact, at the HP Labs conference, we heard from the Interface Corporation, a manufacturer of commercial floor and wall coverings, that only leases its products, so that it can reclaim and recycle its products after the customer no longer wants them. Various forms of product stewardship are in the laws of a few countries, notably Germany, so many companies have been gaining experience in this area.
The "Internal-tomorrow" quadrant is labeled "Clean technology." The focus here is to take another step along the "Do it right the first time" path. The idea is to build processes that not only don't create waste but also facilitate recycling and reuse. These processes again lower costs, but now do so over the entire product life cycle, from raw materials through obsolescence and reclamation. The opportunities here are similar to those in classic reengineering but include not only savings in time and labor but also in the materials used in both the processes and the products.
The remaining "External-tomorrow" box holds our "Sustainability vision." From a business standpoint, this is where the opportunities really are. This is the place to put our ideas for new products, for whole new businesses and industries that will fit the sustainability criteria. The vision is to use technology to create products and services that will increase quality of life now without creating any compromises in the quality of life for our grandchildren. For example, HP's new handheld scanner can be seen as a device that allows people to capture information without using a copy machine, thus saving paper and toner usage.
How, then, does all this affect what we do in information systems, processes, and technology? As always, in general, we can use information technology both to enable business processes and to be itself the product or service that creates value and is being sold. But IT has a special place in the sustainability discussion. We might argue, in fact, that, to the extent that IT enables the virtuality promised by all the digital-age gurus, it is also the primary enabler of sustainability.
Let's take some of the obvious applications first, by looking at the "today" side of Hart's matrix. IT is really good at capturing, analyzing, and reporting information. IT can help process specialists identify and prioritize the costs of pollution. Many companies already do a lot of that for their internal processes, but most don't get routine reports about the waste produced by supply chain or delivery chain partners.
Likewise, the information technology exists to track the location of products once they are in the hands of customers. We only need the appropriate business policies to implement these systems in ways that balance efficiency and effectiveness. For example, in some cases, we use the product's serial number to track its location throughout its useful life, and be sure we get it back via some sort of trade-in process. With consumables such as ink-jet or toner cartridges, however, it might be more efficient to encourage customers to send us the used units, using IT to guide policy by measuring the effectiveness of various incentive campaigns.
Opportunities get more interesting on the "tomorrow" half of the matrix. For example, transportation is one of the most flagrant users of non-renewable resources. Whenever we can use IT to save a trip or save the movement of some product, we are probably increasing sustainability. I'm hedging a little on this because IT is based on electricity, and electricity has to be generated. It's outside the scope of this Jotting, but electrical power production, and battery construction and disposal are areas of great environmental concern.
IT can save or improve the efficiency of physical movement in lots of well-known ways. We can meet and work virtually. We can distribute electrons and then print just what we absolutely need rather than printing everything first (killing trees) and shipping the piles of paper (via environmentally costly trucks or planes). We can store electrons rather than paper. We can use complex algorithms to calculate more efficient load densities and improve routings.
We can apply these ideas to coming up with really novel ways of delivering value to the customer. Some clothing companies, for example, are making their products to customer order. This means that the person gets something that fits exactly, the manufacturer doesn't have to make and ship large inventories of product on speculation, and there is no need for the space and multiple shipment costs involved in wholesale and retail distribution chains. Personal computer manufacturers are trying to accomplish the same results either by building and shipping custom PCs from the factory or by having the PC assembled locally by a reseller close to the final customer.
The often-promised virtual world is beginning to offer similar possibilities. Sometimes, we can get what we want by skipping lots of trips. Comparison shopping for cars on-line might cut out a few trips to various dealers; e-mail and even electronic greeting cards save paper and the costs of postal transportation.
All of these are good ideas on their own merit, even without worrying about sustainability. But adding sustainability may jog thinking. One way to do this might be to change our definition of customer.
Most of us have learned that customers can be identified as financial buyers, end-users, or technical advisors. What would happen if we added another customer category for consideration: future generations of people? It's a simple step, perhaps not terribly compelling in the short run, but it might help us think of the sustainability consequences of our decisions. And it might motivate us to ask if there were possibly a way that we could use IT to mitigate any problems we see in the impact we are having on the future generations customer set.
Now that we have slogged through this introduction to the links between IT and sustainability, the obvious question now is, "In what ways do we see IT being used as a way of increasing sustainability in our specific work areas?" That's a good one, but there are others. For example, environmentalists often use systems thinking to describe their issues. How might we also use this tool better to generate ideas for applying IT to the sustainability issues? We might also consider the unintended consequences of focus on sustainability issues. How might the savings we achieve through sustainability, for example, cause sociological or cultural issues (which, in turn, might generate other IT opportunities)?
One of the fun things about sustainability is that it is all-encompassing. We see it everywhere; we can apply it to many things. All we have to do is start.
Regards,
Joe