An explainable product design can ensure ESG goals are achieved

Explainable product design will be a key factor for accountability for not only business leaders, but also for political leaders to keep track of their time bound sustainability commitments post the COP26 summit. Image: Shutterstock

Business leaders see the rising demand for sustainable products as a growth opportunity. To address this demand, they have focused their efforts on two important trends that strongly influence the design of products. The first is conscious consumption or a shift in consumer preference towards sustainable products. Sustainable investment is the second trend, where investors consider ESG (Environmental, Social and Governance) metrics as indicators of reduced business risk and improved financial performance.

Explainable product design (xPD) is a holistic framework we propose to ensure that ESG goals are achieved. The five tenets of xPD are responsible, ethical, sustainable, environment-friendly, and traceable design – RESET in short. RESET helps analyse, document and communicate key decisions made in the lifecycle of a product. It helps explain the rationale of the decisions to conscious stake holders.

The RESET framework

Explainable AI is a response today for the increasing ‘black box’ problem of artificial intelligence. What does it take to make all product decisions explainable? We illustrate the efficacy of RESET with examples from the automotive industry, specifically for a cost-effective transition from the current technology of internal combustion engine vehicles (ICEs) to the more sustainable electric vehicles (EVs). These principles are applicable in other industries too. Following the RESET tenets needs a cultural change. Digital technologies are key enablers for real word deployment of RESET.

• Responsible refers to the optimal usage of critical resources (energy, water, consumables, labour) to make safe, secure products. AI and IoT should be used with an objective to reach a zero-carbon footprint situation, monitoring natural resource usage and plugging leakages if any.
• Ethical is a strict ‘no’ to dishonesty, not letting any bias interfere with our decisions, or any compromise on privacy in managing the products. Cognitive biases are common during decision making. For example, an automotive company may delay the adoption of EVs due to sunk-cost bias arising from its investments in incumbent ICEs. Further, confirmation bias can make the CEO first quote the high cost of EVs and the lack of charging infrastructure to support his view, and second, ignore factual evidence to the contrary such as efficient and clean energy conversion that the EVs offer.
• Sustainable is about enabling a circular economy through products that are repairable, reusable, recyclable, and refurbished, with safe disposal at their end-of-life. Right-to-repair is gathering momentum, where customers are allowed to fix their products.
• Environment-friendly design aims at creating products that are non-polluting, with a minimal carbon footprint. Utilities, vehicle makers, cities, and EV charging station providers should collaborate to enable usage of renewable energy for EV charging.
• Traceable products maintain the history of their lifetime with transparency for key events. Blockchains are a technology to maintain immutable records of the history of products. Cobalt is a key battery material with questionable practices in mining it. Maintaining its source is important for reliable supply chains.

The opportunities for application of the RESET framework across the lifecycle of a product can be split into two broad categories: presales and post sales. From a financial metrics perspective, the two broad categories are the revenue and profit, the top line and bottom line. Figure 1 is a depiction of a 2x2 showing the combinations of these two parameters.

MIT professor Yossi Sheffi, in his book on sustainability, talks about the Akerlof effect—if customers cannot judge a responsible product, they will not pay for it. Just adding labels will not be sufficient. If customers do not pay, companies will gradually lose interest in investing for sustainable, responsible products. Instead, following the RESET principle will avoid the Akerlof effect and help organisations both on their revenue and profitability aspects. Regular sharing of explanations in the form of questions and answers in annual reports and press releases on why key decisions were taken for sustainability will build trust in the mind of all stakeholders, eventually leading to better financial metrics.

The five tenets of the RESET framework should be applied at each stage in the lifecycle of a product—from its conceptualisation and design to manufacture, operation, repair and end-of-life (see Figure 2).

Design phase: During the design phase, the focus is on product attribute management. Target setting for product performance is made with two primary inputs i.e. customer expectations and competitive benchmarking. Sometimes unrealistic customer needs need to be pushed back. For instance, 250 to 300 miles of drive for a single EV charge may be unrealistic expectations of an urban customer. A more realistic and practical range can be 100 miles for the commute between home and office. Reducing the weight of vehicles is important to improve the fuel efficiency of current ICE vehicles and the range of EVs.

Manufacturing: The usage of natural resources like water, raw materials and electricity for manufacturing should be minimal and sustainable for both made and bought parts. For example, Mahindra & Mahindra’s engine factory at Igatpuri (Maharashtra, India) has achieved a ‘zero waste’ status.

Service and end-of-life: Moving our focus to the end of operational life of the product, there are many best practices across the automotive industry. Caterpillar has been remanufacturing its used parts since 1973, backed by the same warranty as new parts. Cummins remanufactures its used engines with stringent cleaning processes and quality guidelines in Pune. Reuse of end-of-life parts reduces the usage of virgin materials in new products.

Explainable product design will be a key factor for accountability for not only business leaders, but also for political leaders to keep track of their time bound sustainability commitments post the COP26 summit. These commitments have a medium to long term horizon. Documenting key decisions taken in this journey will ensure continuity whenever there is a change of leadership at a national or business level. Responsible, ethical, sustainable, environmentally friendly and traceable design have their own individual benefits. But they have a compounding effect and lead to bigger benefits when practiced in tandem.

About the authors: S Ramachandran is a consultant and the lead for manufacturing and engineering in the thought leadership team Infosys Knowledge Institute. Dr. Shankar Venugopal is vice president, and dean, Mahindra Technical Academy, Mahindra & Mahindra.

The thoughts and opinions shared here are of the author.