Sustainability Facts and Fiction: Linking Green Idealism and Practical Business Application  Conference: Ontario Institute...
Sustainability Facts and Fiction <ul><li>Central Theme </li></ul><ul><li>A Collective and Collaborative Understanding </li...
Sustainability Facts and Fiction <ul><li>“ In our rapidly evolving capitalist economies, where it is in the natural order ...
Sustainability Facts and Fiction <ul><li>What is the Triple Bottom Line? </li></ul><ul><li>TBL, 3BL or People, Planet Prof...
Sustainability Facts and Fiction <ul><li>What is the Triple Bottom Line? </li></ul><ul><li>In the Public Sector TBL became...
Sustainability Facts and Fiction <ul><li>What is Full Cost Accounting? </li></ul><ul><li>Full Cost Accounting (FCA) True C...
Sustainability Facts and Fiction <ul><li>What is the Triple Bottom Line? </li></ul><ul><li>In the Private Sector TBL becam...
Sustainability Facts and Fiction <ul><li>What is Corporate Social Responsibility? </li></ul><ul><li>Simply put, CSR consid...
Sustainability Facts and Fiction <ul><li>What is the Triple Bottom Line? </li></ul><ul><li>For the majority of organizatio...
Sustainability Facts and Fiction <ul><li>What is the Triple Bottom Line? </li></ul><ul><li>Unlike the famed Buckley’s coug...
Sustainability Facts and Fiction <ul><li>Why is the question of blended value or a symmetry between bottom line objectives...
Sustainability Facts and Fiction <ul><li>Journal of Information Technology (Public Sector) </li></ul><ul><li>“ Fountain (2...
Sustainability Facts and Fiction <ul><li>Do you have a collective and collaborative understanding of your organizations su...
Sustainability Facts and Fiction <ul><li>The beginning of understanding . . . ? </li></ul>
Sustainability Facts and Fiction <ul><li>The Eastman Kodak Company </li></ul><ul><li>A Clear Picture of a Hazy Future </li...
Sustainability Facts and Fiction <ul><li>Many schools find it more financially feasible to provide digital labs as they ca...
Sustainability Facts and Fiction <ul><li>Question: which one of the four points provided on the previous slide would be su...
Sustainability Facts and Fiction <ul><li>Would the negative ecological impact alone have been sufficient to effect the cha...
Sustainability Facts and Fiction <ul><li>What is driving your organizations current sustainability programs (rhetorical qu...
Sustainability Facts and Fiction <ul><li>Ron Hildreth’s 2005 article* provided important insight into the paradoxical diff...
Sustainability Facts and Fiction <ul><li>The Eastman Kodak story is compelling in that the attributes of two seemingly dis...
Sustainability Facts and Fiction <ul><li>On January 13 th , 2004 Kodak announced that with the exception of disposable cam...
Sustainability Facts and Fiction <ul><li>“ A Different Type Of Cannibal” </li></ul>
Sustainability Facts and Fiction <ul><li>In the early 1990’s Kodak had the technological capability and know how to develo...
Sustainability Facts and Fiction <ul><li>Despite the previously referenced benefits, as well as countless others, Kodak’s ...
Sustainability Facts and Fiction <ul><li>Kodak paid the price for their reluctance to embrace digital technology, or even ...
Sustainability Facts and Fiction <ul><li>By the time Kodak made the long overdue shift to digital products, its worldwide ...
Sustainability Facts and Fiction <ul><li>The Environmental Connection? </li></ul>
Sustainability Facts and Fiction <ul><li>While digital imaging raises its own red flags regarding sustainable impact relat...
Sustainability Facts and Fiction <ul><li>Kodak has been identified has being one of the worst polluters in the United Stat...
Sustainability Facts and Fiction <ul><li>Kodak did receive the Environmental Protection Agency’s (EPA) Energy Star Sustain...
Sustainability Facts and Fiction <ul><li>While I am not suggesting that environmental issues were even on the radar screen...
Sustainability Facts and Fiction <ul><li>This leads to the obvious question . . . Would the lens through which Kodak viewe...
Sustainability Facts and Fiction <ul><li>The Provincial Government of Ontario </li></ul><ul><li>Governmental Influence – t...
Sustainability Facts and Fiction <ul><li>According to the EcoMarkets 2007 Survey, the majority of government departments o...
Sustainability Facts and Fiction <ul><li>Question: Given the EcoMarkets Survey’s findings regarding cost constraints and p...
Sustainability Facts and Fiction <ul><li>With financial constraints and profitability supposedly removed from the equation...
Sustainability Facts and Fiction <ul><li>Citing psychologist findings that documented the “human tendency to discount futu...
Sustainability Facts and Fiction <ul><li>The expert lamented the prevalence of the “present expense versus future savings”...
Sustainability Facts and Fiction <ul><li>The CFL example is interesting in that the Government of Ontario championed a suc...
Sustainability Facts and Fiction <ul><li>Looking for ways to reduce energy consumption in the late eighties and early nine...
Sustainability Facts and Fiction <ul><li>Almost 15 years later, the EcoMarkets Survey reflected the continuing enthusiasm ...
Sustainability Facts and Fiction <ul><li>Energy Conservation </li></ul><ul><li>Energy conservation is the practice of decr...
Sustainability Facts and Fiction <ul><li>Green Electricity </li></ul><ul><li>Green electricity or green energy describes s...
Sustainability Facts and Fiction <ul><li>The question the Ontario initiative raises is whether the program would have been...
Sustainability Facts and Fiction <ul><li>A question of equal importance would be the ongoing viability and effectiveness o...
Sustainability Facts and Fiction <ul><li>The Ford Motor Company </li></ul><ul><li>Sustainability In Reverse? </li></ul>
Sustainability Facts and Fiction <ul><li>Industry watchers (or watchdogs) often refer to The Ford Motor Company’s historic...
Sustainability Facts and Fiction <ul><li>In interviews for the “Greening of Procurement” White Paper, the self-professed e...
Sustainability Facts and Fiction <ul><li>One “well-informed” environmental advocate made a comment that appears to have st...
Sustainability Facts and Fiction <ul><li>Question: If the assumption is in fact true that the demise of an incumbent is re...
Sustainability Facts and Fiction <ul><li>In a situation where irresistible force (sustainable capitalism) meets immovable ...
Sustainability Facts and Fiction <ul><li>Another reason for a reversal? </li></ul><ul><li>(The Innovator’s Dilemma) </li><...
Sustainability Facts and Fiction <ul><li>In his book The Innovator’s Dilemma (Harvard Business School Press, 1997), Profes...
Sustainability Facts and Fiction <ul><li>In a direct excerpt from his book, Christensen observed that  “For many years  in...
Sustainability Facts and Fiction <ul><li>Question: While Chistensen’s automotive example bears similarity to Kodak’s tradi...
Sustainability Facts and Fiction <ul><li>If not, what degree of responsibility for the failure to pursue (or honor) the pl...
Sustainability Facts and Fiction <ul><li>Will steadily increasing fuel prices act as a catalyst in mainstream consumer ado...
Sustainability Facts and Fiction <ul><li>While sustainability champions may point to industry leaders such as Warren Buffe...
Sustainability Facts and Fiction <ul><li>. . . The inability to identify the true points of convergence (connection) betwe...
Sustainability Facts and Fiction <ul><li>Question: is your organization operating under a traditional capitalism or sustai...
Sustainability Facts and Fiction <ul><li>Relative to a sustainable supply chain, how do you quantify your bottom line cont...
Sustainability Facts and Fiction <ul><li>Less than 20% of CFOs consider the work of CPOs and their staffs as having “a ver...
Sustainability Facts and Fiction <ul><li>According to Robert Rudzki, President of Greybeard Advisors and co-author of “Str...
Sustainability Facts and Fiction <ul><li>CONSEQUENCES? </li></ul>
Sustainability Facts and Fiction <ul><li>Questions </li></ul>
Resource Index 1 © 2007-08 Hansen Consulting & Seminars Inc.   ©
Resource Index 2 © 2007-08 Hansen Consulting & Seminars Inc.   ©
Resource Index <ul><li>Resource Index 1 </li></ul><ul><li>AMMG  http: //www.ammg.ca/   </li></ul><ul><li>Beyond Referrals ...
Resource Index <ul><li>The resource index was created as a means of responding the increasing number of audience questions...
Procurement Insights Blog The Power of Insights – Procurement Insights   <ul><li>URL Link </li></ul><ul><li>http://procure...
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Sustainability Facts And Fiction (Oipmac Day 1)

  1. 1. Sustainability Facts and Fiction: Linking Green Idealism and Practical Business Application Conference: Ontario Institute of the Purchasing Management Association of Canada Presentation Dates: September 29 th and 30 th , 2008 Conference Duration: 2-Day Seminar
  2. 2. Sustainability Facts and Fiction <ul><li>Central Theme </li></ul><ul><li>A Collective and Collaborative Understanding </li></ul>
  3. 3. Sustainability Facts and Fiction <ul><li>“ In our rapidly evolving capitalist economies, where it is in the natural order of things for corporations to devour competing corporations, for industries to carve up and digest other industries, one emerging form of capitalism with a fork – sustainable capitalism – would certainly constitute real progress.” </li></ul><ul><li>From Cannibals With Forks – The Triple Bottom Line of 21 st Century Business </li></ul><ul><li>John Elkington </li></ul><ul><li>Capstone Publishing Limited, Oxford, 1997 </li></ul>
  4. 4. Sustainability Facts and Fiction <ul><li>What is the Triple Bottom Line? </li></ul><ul><li>TBL, 3BL or People, Planet Profit “captures an expanded spectrum off values and criteria for measuring organizational (and societal) success” from an economic, environmental and social standpoint. </li></ul>
  5. 5. Sustainability Facts and Fiction <ul><li>What is the Triple Bottom Line? </li></ul><ul><li>In the Public Sector TBL became the dominant approach in Full Cost Accounting methodology. </li></ul>
  6. 6. Sustainability Facts and Fiction <ul><li>What is Full Cost Accounting? </li></ul><ul><li>Full Cost Accounting (FCA) True Cost Accounting (TCA) is technically the method for gathering and presenting data as it relates to the environmental, economic and social impact of public sector policy and practice (the Triple Bottom Line). </li></ul><ul><li>Given the subjective nature associated with the FCA or TCA process, expert opinion regarding their “true effectiveness” as a method for reliably quantifying impact is mixed. </li></ul><ul><li>As a result, the impact of sustainability programs are usually confined to traditional management consulting principles. </li></ul>
  7. 7. Sustainability Facts and Fiction <ul><li>What is the Triple Bottom Line? </li></ul><ul><li>In the Private Sector TBL became the “expanded” guideline for defining Corporate Social Responsibility (CSR). </li></ul>
  8. 8. Sustainability Facts and Fiction <ul><li>What is Corporate Social Responsibility? </li></ul><ul><li>Simply put, CSR considers the interest of “society” by understanding the impact of corporate policies and actions on key stakeholders including: customers, suppliers, employees, shareholders, communities including environmental interests. </li></ul><ul><li>Presented and driven as a moral imperative, critics on both sides of the issue are sharply divided in terms of whether it is a natural progression of evolutionary business development, or an unwanted distraction from the traditional metrics by which corporate performance has and continues to be assessed (i.e. shareholder value, profitability etc.). </li></ul>
  9. 9. Sustainability Facts and Fiction <ul><li>What is the Triple Bottom Line? </li></ul><ul><li>For the majority of organizations, especially within the private sector, the TBL mindset is the antitheses of responsible corporate governance. </li></ul><ul><li>It is the trigger for the vacuous smiles and empty platitudes that belie an ever present disconnect between competing objectives of individual stakeholders. </li></ul><ul><li>How do you reconcile the pervasive interest of shareholders in terms of profitability with societal stakeholder pressure advocating sustainability – the premise behind the TBL stakeholder theory is that “the business entity should be used as a vehicle for coordinating stakeholder interests, instead of maximizing shareholder (owner) profit.” But aren’t shareholders also stakeholders? </li></ul>
  10. 10. Sustainability Facts and Fiction <ul><li>What is the Triple Bottom Line? </li></ul><ul><li>Unlike the famed Buckley’s cough syrup commercials which proclaim that their product “tastes terrible but works great,” can a “blended value” or “symmetry” between bottom line objectives and societal needs be achieved? </li></ul>
  11. 11. Sustainability Facts and Fiction <ul><li>Why is the question of blended value or a symmetry between bottom line objectives and societal needs important? </li></ul>
  12. 12. Sustainability Facts and Fiction <ul><li>Journal of Information Technology (Public Sector) </li></ul><ul><li>“ Fountain (2001), for example, asserts that approximately 85% of government information technology projects worldwide have been failures.” (1/9/2007) </li></ul><ul><li>The Wall Street Journal (Private Sector) </li></ul><ul><li>73% of all implementations result in partial or total failure. (2/2005 ) </li></ul>
  13. 13. Sustainability Facts and Fiction <ul><li>Do you have a collective and collaborative understanding of your organizations sustainability strategy relative to both internal as well as external stakeholders? </li></ul>
  14. 14. Sustainability Facts and Fiction <ul><li>The beginning of understanding . . . ? </li></ul>
  15. 15. Sustainability Facts and Fiction <ul><li>The Eastman Kodak Company </li></ul><ul><li>A Clear Picture of a Hazy Future </li></ul>
  16. 16. Sustainability Facts and Fiction <ul><li>Many schools find it more financially feasible to provide digital labs as they can be housed in a single room requiring adequate electrical power. </li></ul><ul><li>Conversely, the expense associated with the construction of darkrooms due to their large footprint makes it challenging for most school budgets. </li></ul><ul><li>Student access to both home computers and digital cameras means that digital labs are synonymous with increased student flexibility and independence. </li></ul><ul><li>Health hazards (nee ecological impact) related to traditional film and print processing further highlights the negative impact of continued darkrooms utilization. </li></ul>
  17. 17. Sustainability Facts and Fiction <ul><li>Question: which one of the four points provided on the previous slide would be sufficient to effect the transition from darkrooms to digital labs? </li></ul>
  18. 18. Sustainability Facts and Fiction <ul><li>Would the negative ecological impact alone have been sufficient to effect the change to digital labs if the financial considerations were reversed? </li></ul>
  19. 19. Sustainability Facts and Fiction <ul><li>What is driving your organizations current sustainability programs (rhetorical question . . . For now)? </li></ul>
  20. 20. Sustainability Facts and Fiction <ul><li>Ron Hildreth’s 2005 article* provided important insight into the paradoxical differences as well as similarities between traditional capitalism and sustainable capitalism . . . And with it the reason for the decline of what was once a venerable American Corporation. </li></ul><ul><li>* From Digital Imaging Vs. The Darkroom: Developing Our Attitudes As We Expose The Future (Shutterbug, November 2005) </li></ul>
  21. 21. Sustainability Facts and Fiction <ul><li>The Eastman Kodak story is compelling in that the attributes of two seemingly disparate streams (financial feasibility versus social responsibility) converged to create a new industry reality. </li></ul>
  22. 22. Sustainability Facts and Fiction <ul><li>On January 13 th , 2004 Kodak announced that with the exception of disposable cameras it would stop manufacturing traditional film cameras in the United States, Canada and Western Europe. </li></ul><ul><li>The decision was predicated on the company’s decision to focus on the Digital market. </li></ul><ul><li>As one of the original digital platform pioneers, it was generally thought that their decision was a “day late, and a dollar short.” </li></ul>
  23. 23. Sustainability Facts and Fiction <ul><li>“ A Different Type Of Cannibal” </li></ul>
  24. 24. Sustainability Facts and Fiction <ul><li>In the early 1990’s Kodak had the technological capability and know how to develop and introduce the market’s first viable digital camera and continuous tone printer. </li></ul><ul><li>Although still expensive by today’s standard, at the time these nascent units represented a firm and foundational foothold on an emerging market – a market that would have secured the corporation’s position of leadership for a generation and beyond. </li></ul>
  25. 25. Sustainability Facts and Fiction <ul><li>Despite the previously referenced benefits, as well as countless others, Kodak’s hierarchy were slow to embrace the emerging digital technology for fear that it would “cannibalize” their traditional film market – and the at the time steady and somewhat hefty profits that went with “staying the course.” </li></ul>
  26. 26. Sustainability Facts and Fiction <ul><li>Kodak paid the price for their reluctance to embrace digital technology, or even for that matter proactively develop and implement a viable transformation strategy. </li></ul>
  27. 27. Sustainability Facts and Fiction <ul><li>By the time Kodak made the long overdue shift to digital products, its worldwide workforce had been reduced by a massive 20 to 25%. </li></ul><ul><li>(Impact Discussion: some may argue that had Kodak made the move away from traditional film early on, the level of cutbacks might have been the same – only sooner, given the resulting shift to the digital platform.) </li></ul>
  28. 28. Sustainability Facts and Fiction <ul><li>The Environmental Connection? </li></ul>
  29. 29. Sustainability Facts and Fiction <ul><li>While digital imaging raises its own red flags regarding sustainable impact relative to e-waste (according to a EPA study, more than 4.3 million tons of appliances and consumer electronics had been discarded in 1999), the environmental impact is considerably less than the chemicals used in traditional film processing. </li></ul>
  30. 30. Sustainability Facts and Fiction <ul><li>Kodak has been identified has being one of the worst polluters in the United States (number one in New York State) releasing an estimated 4,433,749 pounds of chemicals into the air and water supply. </li></ul><ul><li>The University of Massachusetts Political Economy Research Institute, the author of the Toxic 100, identified Kodak as the fifth largest polluter in the United States in 2002. </li></ul><ul><li>The Citizen’s Environmental Coalition (CEC) “honored” Kodak with the dubious Dirty Dozen Award in 2004, which are usually reserved for those organizations that are consistently rated as being “the worst” environmental offenders. </li></ul>
  31. 31. Sustainability Facts and Fiction <ul><li>Kodak did receive the Environmental Protection Agency’s (EPA) Energy Star Sustained Excellence Award in 2005 for their efforts in reducing greenhouse grass emissions. </li></ul><ul><li>Kodak has demonstrated “environmental stewardship” through their efforts to care for a pair of Peregrine Falcons since 1988. </li></ul>
  32. 32. Sustainability Facts and Fiction <ul><li>While I am not suggesting that environmental issues were even on the radar screen in terms of influencing Kodak’s decisions relative to pursuing a digital imaging strategy, it clearly shows that the TBL “concept” has become a somewhat symbiotic element of recognizing and pursuing a collective advantage. </li></ul>
  33. 33. Sustainability Facts and Fiction <ul><li>This leads to the obvious question . . . Would the lens through which Kodak viewed their digital strategy have been different if a TBL point of view had been presented and considered? </li></ul>
  34. 34. Sustainability Facts and Fiction <ul><li>The Provincial Government of Ontario </li></ul><ul><li>Governmental Influence – the Fuel for Change? </li></ul>
  35. 35. Sustainability Facts and Fiction <ul><li>According to the EcoMarkets 2007 Survey, the majority of government departments or agencies in Canada and the United States have instituted green purchasing policies. </li></ul><ul><li>This, the study concluded, provided a clear indication that “governments are making the effort to lead by example.” </li></ul><ul><li>It is also an indication that governments are “less driven” by “financial constraints or profit making.” </li></ul>
  36. 36. Sustainability Facts and Fiction <ul><li>Question: Given the EcoMarkets Survey’s findings regarding cost constraints and profitability, do public sector organizations have an easier road to sustainability adoption? </li></ul>
  37. 37. Sustainability Facts and Fiction <ul><li>With financial constraints and profitability supposedly removed from the equation, what obstacles to adoption confronts the public sector organization? </li></ul>
  38. 38. Sustainability Facts and Fiction <ul><li>Citing psychologist findings that documented the “human tendency to discount future savings more than present expense,” an interview* with an industry expert revealed that this was one of the main reasons that Compact Fluorescent Lamps (CFL) is considered “too expensive.” </li></ul><ul><li>* The Greening of Procurement: How Social Consciousness is Re-Shaping Procurement Practices (Procurement Insights, 2008) </li></ul>
  39. 39. Sustainability Facts and Fiction <ul><li>The expert lamented the prevalence of the “present expense versus future savings” mindset, especially given the fact that “CFL bulbs will last 1 to 3 years, when compared with the less efficient incandescent bulbs which consume 4x the electricity and have to be replaced 4 – 8 times per year.” </li></ul>
  40. 40. Sustainability Facts and Fiction <ul><li>The CFL example is interesting in that the Government of Ontario championed a successful transition to energy efficient lighting within the corporate community by recognizing the present expense versus future savings “obstacle” and then pressing the right motivational levers. </li></ul>
  41. 41. Sustainability Facts and Fiction <ul><li>Looking for ways to reduce energy consumption in the late eighties and early nineties, the Province offered “significant” subsidies to businesses that made the change to energy efficient lighting. </li></ul><ul><li>With the subsidies covering the majority of the transition/upgrade costs, the rate of conversion skyrocketed as immediate savings were recognized with the very first electric bill. </li></ul><ul><li>An unexpected adjunct benefit of the program was that the subsidies also stimulated revenue opportunities and growth for the companies (many of which were Small-Medium Enterprises) that sold and installed the new fixtures. </li></ul>
  42. 42. Sustainability Facts and Fiction <ul><li>Almost 15 years later, the EcoMarkets Survey reflected the continuing enthusiasm for programs like the one offered by the Province of Ontario as survey participants indicated that “energy conservation programs are 3x more common than green electricity programs.” </li></ul>
  43. 43. Sustainability Facts and Fiction <ul><li>Energy Conservation </li></ul><ul><li>Energy conservation is the practice of decreasing the quantity of energy used and is achieved through programs such as the Province of Ontario’s energy efficient lighting initiative. </li></ul>
  44. 44. Sustainability Facts and Fiction <ul><li>Green Electricity </li></ul><ul><li>Green electricity or green energy describes sources of energy that are considered to be environmentally friendly and non-polluting. </li></ul><ul><li>Green energy is commonly thought of in the context of electricity, heating and cogeneration. </li></ul>
  45. 45. Sustainability Facts and Fiction <ul><li>The question the Ontario initiative raises is whether the program would have been successful without the generous subsidies? </li></ul>
  46. 46. Sustainability Facts and Fiction <ul><li>A question of equal importance would be the ongoing viability and effectiveness of Small-Medium Enterprise development programs in which a traditional “set-aside” framework is used as the basis for establishing engagement and utilization policy? </li></ul>
  47. 47. Sustainability Facts and Fiction <ul><li>The Ford Motor Company </li></ul><ul><li>Sustainability In Reverse? </li></ul>
  48. 48. Sustainability Facts and Fiction <ul><li>Industry watchers (or watchdogs) often refer to The Ford Motor Company’s historic tendency to backtrack on previous sustainability commitments such as the promise to improve the fuel efficiency of their SUV vehicles in 2000 and a 2005 pledge to build 250,000 hybrid vehicles. </li></ul><ul><li>In 2003 the SUV efficiency initiative was abandoned as was the 2005 hybrid production commitment a little over a year later in 2006. </li></ul><ul><li>Some analysts believe that the “change in heart” at Ford was predicated by a powerful if not pervasive internal resistance mechanism that remains sympathetic to powerful lobbyist groups representing the nation’s corn ethanol and petroleum sectors. </li></ul>
  49. 49. Sustainability Facts and Fiction <ul><li>In interviews for the “Greening of Procurement” White Paper, the self-professed environmentally informed claim that the corn ethanol and petroleum sectors have a “vested stake in not improving fuel economy,” and are therefore hostile the to programs such as the Corporate Average Fuel Economy (CAFÉ) standards that were enacted by the U.S. Congress in 1975. </li></ul>
  50. 50. Sustainability Facts and Fiction <ul><li>One “well-informed” environmental advocate made a comment that appears to have struck at the very heart of the sustainability issue when he opined “of course, those gains won’t be enjoyed by the same companies as today, which profit from carbon extraction and emission. Industries like wind power, nuclear, solar, etc. will benefit from a carbon constrained world. Others will lose.” </li></ul>
  51. 51. Sustainability Facts and Fiction <ul><li>Question: If the assumption is in fact true that the demise of an incumbent is required to “pave the way to a new future,” what would you do if your company was that incumbent? </li></ul>
  52. 52. Sustainability Facts and Fiction <ul><li>In a situation where irresistible force (sustainable capitalism) meets immovable object (traditional capitalism) what is the answer? </li></ul>
  53. 53. Sustainability Facts and Fiction <ul><li>Another reason for a reversal? </li></ul><ul><li>(The Innovator’s Dilemma) </li></ul>
  54. 54. Sustainability Facts and Fiction <ul><li>In his book The Innovator’s Dilemma (Harvard Business School Press, 1997), Professor and Author Clayton Christensen addressed the “immediate earnings” influence on the development efforts of new technology when future profitability had yet to be defined. </li></ul>
  55. 55. Sustainability Facts and Fiction <ul><li>In a direct excerpt from his book, Christensen observed that “For many years into the future, the market for electric vehicles will be so small that this business is unlikely to contribute significantly to the top or bottom lines of a major automaker’s income statement. Thus, since senior managers at these companies cannot be expected to focus either their priority or attention or their priority resources on electric vehicles, the most talented managers and engineers would be unlikely to want to be associated with our project, which must inevitably be seen as a financially insignificant effort: To secure their own futures within the company, they naturally will want to work on mainstream programs, not peripheral ones.” </li></ul>
  56. 56. Sustainability Facts and Fiction <ul><li>Question: While Chistensen’s automotive example bears similarity to Kodak’s traditional film versus digital imaging paradox, are hybrid or electric cars likely to gain mainstream market acceptance in the next five to ten years to the same degree as digital imaging did in its sector? </li></ul>
  57. 57. Sustainability Facts and Fiction <ul><li>If not, what degree of responsibility for the failure to pursue (or honor) the pledge to build 250,000 hybrid vehicles rests with Ford? What percentage of responsibility rests with the buying public? </li></ul>
  58. 58. Sustainability Facts and Fiction <ul><li>Will steadily increasing fuel prices act as a catalyst in mainstream consumer adoption of hybrid or electric automobiles in much the same way that the numerous benefits of digital imaging stimulated the move from traditional film? </li></ul>
  59. 59. Sustainability Facts and Fiction <ul><li>While sustainability champions may point to industry leaders such as Warren Buffet consistently beating his competition by putting “long-term value” ahead of “short-term earnings” . . . </li></ul>
  60. 60. Sustainability Facts and Fiction <ul><li>. . . The inability to identify the true points of convergence (connection) between the two realities of traditional capitalism and sustainable capitalism represents one of the (if not the) single most important obstacle to adoption and transformation. </li></ul>
  61. 61. Sustainability Facts and Fiction <ul><li>Question: is your organization operating under a traditional capitalism or sustainable capitalism model? </li></ul>
  62. 62. Sustainability Facts and Fiction <ul><li>Relative to a sustainable supply chain, how do you quantify your bottom line contribution in terms of your current procurement practice </li></ul>
  63. 63. Sustainability Facts and Fiction <ul><li>Less than 20% of CFOs consider the work of CPOs and their staffs as having “a very positive impact on competitiveness.” </li></ul><ul><li>Of the 11.9% of average annual identified savings only 3.2% actually gets booked, a difference of 73% from ID identification to realization. </li></ul><ul><li>On average only 46% of CFOs feel that the procurement team has contributed to enterprise growth, while just 57% feel that procurement contributes to enterprise profitability. </li></ul>
  64. 64. Sustainability Facts and Fiction <ul><li>According to Robert Rudzki, President of Greybeard Advisors and co-author of “Straight to the Bottom Line,” here are the five critical finance terms with which every purchasing professional should be familiar: </li></ul><ul><li>ROIC (Return on Invested Capital): earnings divided by the total capital invested in the business (long term debt plus stockholder equity). </li></ul><ul><li>Cost of Capital: the weighted average “cost” of debt and equity. It represents what you must earn to, minimally, cover the expectations of your debt holders and stock holders. </li></ul><ul><li>EVA (Economic Value Add): if ROIC is greater than Cost of Capital, then EVA is positive (you are adding value to the organization). If ROIC is less than Cost of Capital, then value is being destroyed and – absent substantial corrective action – the demise of the enterprise is just a matter of time. </li></ul><ul><li>EPS (Earnings per Share): the net income divided by the # of common shares outstanding. Typically calculated on a quarterly and annual basis. </li></ul><ul><li>P/E Ratio: The ratio of the common stock price to the annual earnings per share. Companies/industries typically “enjoy” certain P/E ratios, therefore, increasing the E (earnings) often directly equates to a higher stock price. </li></ul><ul><li>* ROIC and EPS are what Rudzki called the “two biggies” </li></ul>
  65. 65. Sustainability Facts and Fiction <ul><li>CONSEQUENCES? </li></ul>
  66. 66. Sustainability Facts and Fiction <ul><li>Questions </li></ul>
  67. 67. Resource Index 1 © 2007-08 Hansen Consulting & Seminars Inc. ©
  68. 68. Resource Index 2 © 2007-08 Hansen Consulting & Seminars Inc. ©
  69. 69. Resource Index <ul><li>Resource Index 1 </li></ul><ul><li>AMMG http: //www.ammg.ca/ </li></ul><ul><li>Beyond Referrals http://www.beyondreferrals.blogspot.com/ </li></ul><ul><li>Canadian Public Procurement Council http://www.cppc-ccmp.ca/index.php </li></ul><ul><li>Contingency Workforce Solutions http://www.cwsolutions.ca/ </li></ul><ul><li>Enterprising non-profits http://www.enterprisingnonprofits.ca/ </li></ul><ul><li>Future Path http://www.futurepath.com/dnn/ </li></ul><ul><li>Grand & Toy http://www.grandandtoy.com/sites/corp/default.aspx </li></ul><ul><li>IACCM http://www.iaccm.com/ </li></ul><ul><li>MERX http://www.merx.com/ </li></ul><ul><li>Print Vision http://www.slideshare.net/piblogger/print-vision-presentation-august-2008-presentation </li></ul><ul><li>QStrat http://www.qstrat.com/index.html </li></ul><ul><li>Smarter Solutions http://www.smartersolutions.com/ </li></ul><ul><li>Summit Magazine http://www.summitconnects.com/index.htm </li></ul><ul><li>Toshiba http://www.toshiba.ca/web/home </li></ul><ul><li>Resource Index 2 </li></ul><ul><li>Baxter Planning Systems http://www.toshiba.ca/web/home </li></ul><ul><li>Bellwether Software http://www.bellwethercorp.com/ </li></ul><ul><li>CABiNET http://www.cabinet-business-network.ca/ </li></ul><ul><li>COUPA http://www.coupa.com/ </li></ul><ul><li>ecademy http://www.ecademy.com/?xref = </li></ul><ul><li>Katzscan http://www.katzscan.com/ </li></ul><ul><li>Network Global Logistics http://www.nglog.com/ </li></ul><ul><li>Source One http://www.sourceoneinc.com/ </li></ul><ul><li>Next Level Purchasing http://www.nextlevelpurchasing.com/ </li></ul><ul><li>VIADOR http://www.viador.com/ </li></ul><ul><li>WHY ABE http://www.whyabe.com/ </li></ul>© 2007-08 Hansen Consulting & Seminars Inc. ©
  70. 70. Resource Index <ul><li>The resource index was created as a means of responding the increasing number of audience questions regarding various services, solutions, associations as well as information resources. </li></ul><ul><li>The listings include direct links to the resource web sites. </li></ul><ul><li>To access Resource Profiles, Reports, PowerPoints, Videos and White Papers visit the Procurement Insights Blog at: http://procureinsights.wordpress.com/ </li></ul>© 2007-08 Hansen Consulting & Seminars Inc. ©
  71. 71. Procurement Insights Blog The Power of Insights – Procurement Insights <ul><li>URL Link </li></ul><ul><li>http://procureinsights.wordpress.com/ </li></ul><ul><li>Procurement Insights reaches 300,000 syndicated subscribers each month worldwide, and is available in English, Chinese, Portuguese and Russian </li></ul><ul><li>Procurement Insights was rated as the top supply chain/procurement Blog in North America by the Blogged Rating Service </li></ul><ul><li>The Procurement Insights Sponsorship Program offers the best value in terms of marketing in the industry – use the following link to learn more about promoting your organization: http://procureinsights.wordpress.com/pi-sponsorship-opportunities/ </li></ul>

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