Position: Founder director of the Zero Emissions Research and Initiatives
Contribution: Author of the Blue Economy: 10 years – 100 innovations – 100 million jobs, which advocates a way of doing business drawing inspiration from nature and natural systems
After World War II, humanity looked for solutions based on resources available anywhere in the world. We would ship anything anywhere, facilitated by the low cost of energy. Now, we propose to build the capacity to respond to our basic needs with what we have. This reduces costs while at the same time offers opportunities for the generation of additional revenues. Any concentration of people will generate by-products, the value of which we do not automatically recognise. This discovery is part of the learning process.
The traditional MBA will urge the entrepreneur to focus on one niche market with one core competence. This permits the translation of all benefits into one unique and easy-to-understand cash flow. The starting point of the Blue Economy is the opportunity to generate multiple benefits, with multi-disciplinary teams who are able to generate multiple revenue streams. The design process will identify which hidden assets and flows could generate multiple benefits for the investors, the clients, employees, the community and the ecosystem.
The key is to insist that a whole new form of competitiveness needs to be devised. The focus should not be necessarily on cutting costs but on abandoning the principle of core competency. Businesses today are not responding adequately to their fundamental obligation of creating shareholder value. Having multiple revenue streams is demonstrably more beneficial and sustainable for all stakeholders. There is no room, however, for such thinking in the existing frameworks.
I have had long conversations with chief executives of companies on sustainable solutions that can create shareholder value if only they saw the opportunity. But the standard answer I come up against is that their engineers do not have the core competence. They are stuck in the core business model. Even those CEOs who have grasped the importance and the possibility of thinking differently feel helpless in explaining it to the analysts. Only companies that are not listed on stock exchanges can possibly make the thought transition.
Once I had a detailed discussion with the head of a mining company on converting their mining pits into hydropower generation plants. The company had 32 open pits and it needed to make a provision of $5 billion for them. Instead, if the company invested just $500 million connecting the pits, which had become water reservoirs, with existing tunnels and shafts, it could generate about 300 MW of electricity at just 3 cents per kilowatt hour. We went through the risk, energy and cost analysis and it was plain as daylight that it was a winning proposition. The CEO finally said, “I have no clue how to explain to the analysts on Wall Street that I as a mining executive propose to invest in power generation, converting provisions into investments.’’
Another argument is that such recycling does not offer scale. Of course we prefer to start and stay small. That does not mean we cannot grow big. Size is not the result of economies of scale; rather it is the result of economies of scope or doing so much more with what we have that we can grow the economy. Coffee waste is a substrate for mushrooms; the spent substrate enriched in essential amino acids is great feed for chickens. My son of three is capable of harvesting mushrooms every day from his bags of coffee and tea waste. He picked up a wild mushroom in the forest, wrapped it in a wet newspaper, saw the mycelium grow, then put some of it in the plastic bags and two or three weeks later harvested edible mushrooms.
The mega industries are stuck in the straitjacket of ‘core business’ and large coffee processing companies will claim that they are not in the mushroom business and, therefore, forego this opportunity to produce food cheaply. If all 25 million coffee farmers in the world were to convert their waste to food then we could generate an additional 50 million jobs (two per farm) and generate as much cholesterol-free food for human consumption as the whole fish farming industry today. And that is only coffee!
(This article is excerpted from the latest Forbes India 22 June, 2012 issue which is now available at news stands and book stores. You can buy our tablet version from Magzter.com)