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Applying BioSphere Design Rules to Business - Gregory Unruh
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Applying BioSphere Design Rules to Business - Gregory Unruh

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The traditional value chain was flawed and narrow-scoped to reality. Natural capital wasn't accounted for, externalizations were to be simply legally assessed for liability, and remediation was the …

The traditional value chain was flawed and narrow-scoped to reality. Natural capital wasn't accounted for, externalizations were to be simply legally assessed for liability, and remediation was the old rule. Gregory Unruh, Author of Earth Inc. and Director of Thunderbird School of Global Management, humorously about being a kid writing a letter to the EPA, becoming a remediator for companies wanting to minimize their environmental liability, and how a sustainable business relationship with nature is just barely being explored. The facts are in though. The case has been made. From so much waste in mass product/service lifecycles and value chains, we've enabled mass destruction. The future of business must take care for the biosphere into account by embedding sustainability into the fabric of entrepreneurship, innovation, and management.

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  • For me, the environmental sustainability quest began back in 1974 Now I don’t know where you were back in 1974 but I was in MS Bright’s 4 th grade class
  • This is me.
  • And this is Ms. Bright. .
  • I chose the EPA which was a new agency at the time, founded by the Nixon Adminstration. Here’s the letter I wrote Notice the groovy Peter Max save the planet stamp.
  • And here is the report, my conservation scrap book.
  • And this is what I learned the EPA was concerned about the impacts of our economy on the environment. Industrial activities were causing ecological damage. And if we didn’t do anything about it, then we would have problems in the future.
  • In the future ecosystem might disappear In the future species might go extinction In the future we would have growing resource scarcity
  • And if all this continued there would be dramatic ecological consequences Including prolonged droughts and floods. And after writing the report I became really concerned about our environmental future and I think it was there that I committed my life to doing something about it. And when I graduated HS I went on to study the earth science and environmental engineering.
  • The approach to sustainability was called remediation, fancy name but it was basically janitorial work.
  • I would go to places like this and devise ways to try and clean up the pollution that had escaped into the soil and groundwater. And when I graduated in the 1980’s I became and environmental consultant working to clean up industrial messes like these. We called our work was called remediation, fancy name but it was basically janitorial work. Even today over 80% of environmental management expenditures are on control and remediation efforts. Now while it wasn’t the premediation I had hoped for, I have to admit its been pretty darn successful. You don’t see many sights like this, at least in the industrial world. We’ve done a pretty good job at remeditating much of the obvious pollution. But the visual success hides a problem. The pollution hasn’t gone away. Its just been captured. You still have to load it up in trucks and dump it in a landfill somewhere. So remediation never really solved the problem. It was a Band-Aid. It just treated the symptoms. And it comes with an ongoing cost. The scrubber and filters and waste disposal add no value to the production process, just costs.
  • That’s because trying to remediate a contaminated industrial site is like putting toothpaste back into the tube. Once it escapes into the soil and groundwater you can never get it all back in. And because many chemicals are toxic a very low concentrations A little is a big deal.
  • That said, I have to admit its been pretty darn successful. You don’t see many sights like this, at least in the industrial world. We’ve done a pretty good job at remediating much of the obvious pollution. But the visual success hides a problem. The pollution hasn’t gone away. Its just been captured. You still have to load it up in trucks and dump it in a landfill somewhere. So remediation was a limited solution And what we are finding now, is there are problems remediation can never solve
  • We can’t remediate a species driven to extinction. We can’t remediate an acidified ocean And we can’t remediate a climate system that’s been pushed past a critical tipping point.
  • We can’t remediate an acidified ocean
  • And we can’t remediate a climate system that’s been pushed past a critical tipping point.
  • And we can’t remediate toxic chemicals that bioacculumate in the tissue of every living thing and find their highest concentrations at the top of he food chain in human breast milk.
  • and that we need a new one. And we are lucky, because we have a perfect model of sustainability A model that is incredibly productive manufacturing huge quantities of very sophisticated products And constantly innovating and progressing But does so in ways that do not jeopardize the livability of the planet
  • And that is the earth’s biosphere. In fact we have only one model of a sustainable system has operated on sustainably on this planet for 3.5 billion years.
  • And that is the premise of my new book Earth Inc. the Earth’s biosphere is our only model of a sustainable system We can decipher the principles that account for the biosphere’s sustainability and splice them into the corporate DNA And when we do so, sustainability disappears as a management concern.
  • Because we’re doing business with the earth incorporated. Right now the earth is not incorporated into business thinking. In fact it is systematically excluded. And I say that because I teach in a business school where we brainwash MBAs
  • The value chain describes a linear process that converts input to products a fast and cost efficiently as possible. The model has been incredibly helpful to managers for planning and strategizing about how to organize operations. But there is a problem. The model leaves out the connections to the environment. It ignores the harvesting and extraction of raw materials at the front end and it ignores the fact that customers dump the products back into the environment when they are done with them at the back end. It’s focus is through-putting materials as fast as possible to multiply that margin.
  • And the value chain is incredibly efficient at through-putting resources. My business school colleague Robert Ayers at INSEAD has calculated that how much raw material actually gets through-put and converted into durable products. He found that over 90% of raw materials become waste even before the product is finished. This huge number is easy to understand when you think about a mineral deposit A rich iron ore find could be 2% iron, the other 98% is waste. The pharmaceutical industry is another good example To make 1 ton of saleable pills, you need 100 tons of raw material inputs. That means only 6% of the original inputs are converted into products. Of this, about 5% become waste within 6 weeks Think about the life span of a yogurt cup or a Bic pen. In the end only a little more than 1% becomes durable goods like cars, refrigerators or buildings. It’s hard to know if we should call it mass production or mass destruction.
  • We call it mass production, but the truth is mass destruction
  • The Biosphere doesn’t work on a value chain model It uses what I like to call a “Value Cycle” model. The Value Cycle is the constant innovative rotation of material assets from one high value application to the next. Materials are not extracted and rapidly through-put The are cycled from one use to another. The tree grows, the chipmunk feeds on its fruit, the owl feeds on the chipmunk and when the owl dies its materials can be reincarnated back into the tree. There is no waste accumulation or depletion of resources. This is the C2C closed loop system that companies have been told to copy. But the problem is you can’t take an existing value chain, bend it around on itself and hope to make a viable value cycle. Video sequence of fruit decaying? Residual value in end of life organisms -Business needs to build residual value in -Don’t ecoefficiency it out.
  • This is something the ancients understood and we have forgotten The ubiquitous symbols like the Ouroboros of a dragon or snake consuming itseld
  • What you make is a big mess, and we know this because it has been tried in the carpet industry In the late 1990s carpet manufactures were under fire because over 98% of waste carpet was ending up in the dump Which was a problem for municipalities because they were running out of landfill space So they threatened to band carpet from landfills, which got the manufacturer’s attention
  • When you bent carpet value chain around on itself you got a mess the system was overwhelmed by a proliferation of carpet materials Polyester, wool, ramie, cotton , two different types of nylon, polypropylene. Polyamid was choked on this chaotic and messy waste stream And that provided an important lesson. In order to create a viable VC, you have to put certain foundational steps in place first. So this is one of the principle things business has to do. Move from the Value Chain to a Value Cycle model. The problem is you just cant take your current value cycle and bend it around on itself. Doing so will create a huge mess. In order to build a value cycle that is environmentally and economically sustainable, you have to follow some foundational rules. These are the biosphere rules A great example of how materials proliferation inhibits effective value cycling can be seen in the case of Polyamid. Polyamid was the industrial solution to carpet waste, over 90% of which was going to landfills After governments began to threaten to ban carpet from landfills, industry looked for a recycling solution Polyamid was going to collect waste carpets and recycle them profitably. However, of all the carpet types only a special type of nylon could be recycled profitable. It was shuttered within 2 years of opening.
  • I call these foundational steps the five biosphere rules And they are the five principles that help explain the sustainability of the biosphere. They work together as a system We’ll take a look at them and Don’t have time to go thru all, so I will illustrate only the first rule. If you want to know more you’ll have to buy the book. In fact buy two, one for you and one for father’s day gift And they can be translated into business practice. Take for starters the Biosphere Rule of Materials Parsimony. This is the exact opposite of what industry does.
  • So the end game is simple. Does a snail get up in the morning and ask “How can I be sustainable today?” It doesn’t have to. Sustainability is coded into its being. In effect, the biosphere has fool-proofed sustainability for us. And that’s the goal. When the bio rules are successfully implemented sustainability becomes embedded in the DNA of business practice. Like snails, managers wont have to ask “How can my company be more sustainable today?”
  • Because they will be doing business with the Earth Incorporated.
  • Transcript

    • 1. Applying BioSphere Design Rules to Business Gregory C. Unruh, Ph.D Professor, Director – Thunderbird School of Global Management
    • 2. Doing Business with the Earth Incorporated Gregory Unruh Director of the Lincoln Center at the Thunderbird School of Global Management
    • 3.  
    • 4.  
    • 5.  
    • 6.  
    • 7.  
    • 8.  
    • 9.  
    • 10. REMEDIATION
    • 11.  
    • 12.  
    • 13.  
    • 14.  
    • 15. INCREASING ACIDITY
    • 16.  
    • 17.  
    • 18. We Need a New Model
    • 19. Our Only Sustainable Model
    • 20.  
    • 21.  
    • 22. The Value Chain
    • 23.   INPUTS Product     Source: Robert Ayres, Industrial Metabolism 94% 94% waste before product sold 4.8% waste within 6 weeks   1.2%
    • 24. MASS PRODUCTION MASS DESTRUCTION
    • 25. Value Cycle
    • 26.  
    • 27.  
    • 28. Polyamid/Evergreen
    • 29. The Biosphere Rules Nature’s sustainability principles translated to business.
    • 30. EMBEDDED SUSTAINABILITY “ Embed it and Forget it.”
    • 31.  
    • 32. Doing Business with the Earth Incorporated
    • 33. Gregory C. Unruh, Ph.D Professor and Director, The Lincoln Center Thunderbird School of Global Management Visit me at www.gregoryunruh.com Follow me on Twitter: http://twitter.com/gregoryunruh Connect on Linked-In: gregoryunruh Thank You!!
    • 34.  

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