New Bottom Line Volume 13.7 – The Long and the Short of It

Tuesday, November 30, 2004

It may not be as simple as it seems.

“Think globally, act locally” has been catechism on the lips of the eco-minded for decades. Thinking that strives to encompass, and engage, the whole — diverse stakeholders, rich interconnections, long lag times, hidden externalities, unintended consequences — is an essential part of bringing broader system wisdom into the calculus of individual action.

Tailoring actions to the character, resources, and constraints of “place” — whether in building design, political action or market strategies — is equally essential to gain approaches that are “fit” (in both senses of the word — suited and healthy), that rely less on the transport of goods that represents a third of the US energy budget (and perhaps half the global budget), and that gain both the efficiency and the beauty that suitability can bring.

But we live in an increasingly interconnected world, comprised of systems, relationships, technologies both big and small, that defy neat categories or simple judgments. The consistency and infrastructure of big systems may support the propagation of sustainability strategies — in some cases, perhaps, even more effectively than governments and NGOs, at the same time that their sheer scale, market dominance and control of capital and capitols seems to increasingly enforce the homogenization that is death of living systems.

So how do we move wisely from principles of faith to situationally appropriate wisdom and action in the moment? How are we to understand the role and the potential of large multinational corporations in fostering sustainability strategies, strategies that must — at least in part — be sensitive to place, and ever less dependent on the energy- and atmosphere-intensive shipping of ever more stuff across the surface of the planet? What are the options and implications of short loops strategies in a big companies world? Can a global company — and its global supply chains — ever be truly sustainable?

The logic of locally focused, short loop strategies is clear — better suited to place, more responsive to conditions, less energy embodied in transport, less invisibility of consequences.

When the Brattleboro Food Coop engaged us to help them design a “green” grocery store, our material flow analysis determined that a far greater contributor to their ecological footprint was embedded in the transport of the food they sold. The average morsel on their shelf traveled some 1600 miles, while much of their stock traveled much farther. Think California strawberries, Chilean sea bass, even bottled water from Fiji. (I’m one who thinks that bottled water is a measure of system decline, not sophistication) The “modern” insistence on the global marketplace, shopping basket, or menu, on whatever we want whenever we want it — like oranges in winter in New England — locks in patterns of energy use, climate impact and economic impact. (That eight ounce glass of orange juice at breakfast in Boston could mean two pounds of CO2 contributed to the atmosphere and the climate system; enough of that and you’ll be able to grow those oranges in New England!)

Chicago’s has taken a creative approach to restoring vibrant, local, short loops markets. Noting that the Chicago market for organic produce could be $300 million (with the surrounding region adding another one to two and a half billion dollars more) — arguably enough to revive and sustain a regional agricultural economy now in decline — is certifying local farmers, and developing marketing pipelines to supermarkets, restaurants and institutional buyers. The strategy is simple, and broadly applicable: close the loops, reduce the impact, capture the value.

On the other hand, the global reach, market penetration and massive purchasing power of multinational corporations may in some cases be positive contributors to a sustainable future, by enforcing standards that governments may be unable or unwilling to support. In October 2004, computing giants HP, Dell and IBM jointly issued a supplier code of conduct for the electronics industry that will become the de facto standard for labor and employment practices, health and safety, ethics, and environmental protection for the suppliers that manufacture most of what these giants sell under their brands.

Whether it’s Nike committing to drive out chlorine compounds from its products, or Unilever promulgating sustainable agriculture standards up its supply chain, big companies can use market position to aggregate and leverage consumer demand to shift producer practices. Conrad MacKerron, director of the Corporate Social Responsibility Program at As You Sow Foundation, observes that “Manufacturer insistence on strong code compliance is an efficient and effective way to drive social performance improvements.”

Not all large corporations use their market power compassionately (or wisely), of course, and not all that do can be counted on to do so consistently; consider, for example, automakers that tout their environmental programs and then lobby against higher fuel efficiency standards. Others throw their weight around with no subtlety at all; WalMart’s legendary ability to hammer suppliers on price is a more traditional way to use market power. Will this new approach prove to be lip service, or something substantially different?

In any case, it’s not a matter of small scale or large. Some things require scale: airlines, semiconductor manufacture, medical research, international express couriers. But how big is needed to achieve economies of scale is very much in question — and it’s an important landscape for strategic exploration. Maybe the answer to the age-old debate is that size doesn’t matter — except when it does. The issue — as with the globalization debate — is how it’s applied: toward what ends, with what values, with what metrics and results.

What does this bode? Under pressure of rising energy prices, local purchasing preferences, mass customization and the continued growth of standards-driven procurement, expect to see a growing emphasis on short transport loops, and long coordination loops. On the other hand, a complex industrial economy may not be sustainable on purely local level, since economies of scale — and constraints of climate — don’t justify or warrant local production of all things. (Coffee will always be a global commodity; running shoes might not be.) But many things– perhaps far more than we are used to today — can be local, and should be.

Some questions to consider:

  • How will big organizations get agile enough to serve small markets and local needs, and effectively compete with place based innovation — such as the “bottom of the pyramid” initiatives emerging in South Asia — in niches the global players may be hard pressed to exploit?
  • How effectively will system change be driven through voluntary standards rather than regulation and ownership — and will it be a reliable or fickle change?
  • How will the power of networks enable coordination of smaller enterprises — which are often far better innovators — into combinations that can effectively compete against global corporations?
  • How does your organization consider total system costs, risks and opportunities in making its siting, market and logistics decisions?

Small, short. Big, long. No, it’s not a South Park movie. It’s an important landscape for strategic exploration. Consider these questions part of your scenario planning for a world of $50/barrel — or $100/barrel — oil. It’s worth a conversation.

(c) 2004 Gil Friend. All rights reserved.

New Bottom Line is published periodically by Natural Logic, offering decision support software and strategic consulting that help companies and communities prosper by embedding the laws of nature at the heart of enterprise.

Gil Friend, systems ecologist and business strategist, is President and CEO of Natural Logic, Inc.

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