New Bottom Line Volume 4.20 – Upstream, Downstream

October 11, 1995

The astronauts who first orbited Earth twenty-odd years ago reported that they could see “no frames, no boundaries” when they looked down at the planet below. We earthbound humans, on the other hand, live in a world of boundaries, and frames, and categories, all of our own creation, that bring our lives structure, and convenience, and a certain risk. For all too often we take imagined boundaries for real. All too often we operate in one frame, while thinking we’re in another, or when another might be more appropriate. All too often we live our lives, and make our choices, blind to what Gregory Bateson called “the pattern that connects.”

Consider, for a moment: what are the boundaries of your product? of your company? We’re increasingly familiar with the global product, assembled from parts made in dozens of countries, and targeted in turn to a multinational market. It’s an issue in the domestic content requirements that affect automobiles, for example, as lawmakers grapple with shifting economic realities trying to find meaningful definitions of place in an increasingly boundary-less world.

From an ecological perspective, the boundaries of a product include its entire life cycle, from cradle to grave–the raw materials mined or harvested to produce it, the processes used to manufacture it, package and distribute it, the consequences of its use, its disposition at the end of its useful life. All of these impacts are in effect “embodied” in the product itself, since the manufacture and use of the product sets this chain of impacts in motion.

From a legal perspective, this is matter is far from settled, and a critical conflict looms. In its attempt to harmonize trade policies, the World Trade Organization that implements the Global Agreement on Tariffs and Trade considers products with a “what you see is what you get” simplicity, and treats regulatory criteria that reflect embodied characteristics –like how something was produced, or its environmental impact–as unreasonable restraints on free trade. In its efforts to harmonize environmental policies and practices, the International Standards Organization’s ISO 14000 environmental standards have been working on a unified approach to “life cycle analysis” or LCA. It would be ironic if this important tool was sidetracked by a myopic application of free trade principles.

Perhaps it’s ironic too that as commerce transcends boundaries, in many ways outstripping the ability of political institutions to regulate it. The only other force that so transcends boundaries are scientific principles, like the laws of thermodynamics, which operate everywhere, and are not subject to repeal by shifting political whims.

But how can business accurately reflect these things? and do we do it without onerous bureaucracy? One answer may be to shift the frame of our thinking.

Most environmental policy and strategy looks downstream—at consequences, which proliferate widely in a probabilistic chain reaction of infinite variety. One alternative may be what Dr. Karl-Henrik Robert of The Natural Step of Sweden’s TNS [NBL 3.12 & 3.13] calls thinking “upstream”.

“The Natural Step works with a scientific dialog method that we have termed ‘Simplicity without Reduction’. The aim is to create real understanding of ecological connections without ever having to resort to reductionism, i.e. reduction of the whole into a collection of details.

“It is easier to gain overview going ‘upstream’ than ‘downstream’ because of the reduced complexity,” Robert writes. “By stimulating professionals to interpret upstream information into concrete measures downstream, one creates engagement and mutual respect instead of opposition.

“For a management team, upstream principles are generally more important, easier to gain commitment to, and more readily agreed upon than details.”

From a public policy point of view, it’s a matter of design (as this space has often discussed)–but design that must include all relevant stakeholders, and that must be exceptionally clear about intended results.

From business strategy point of view, it’s a more difficult challenge. To avoid being financially penalized for being ahead of the curve demands the greatest creativity to find financial advantage within today’s limited accounting framework. Downstream thinking seems to have locked us into polarized debate (such as “automobile fuel efficiency standards are bad because efficient cars are lighter and thus less safe” when in fact good design can yield cars that are both efficient and safe) that blocks that creativity. Upstream thinking, by combining a continual, systematic focus on intended results with an unblinking attention to the upstream principles, may provide encourage and enable it.

How well does it work? You may soon have a chance to find out. The Natural Step-US plans to train one million people—in corporations, government, education and communities—in the TNS “pedagogy” in the next five years. It’s not only an ambitious goal, it’s one that may have startling consequences–like reasoned discourse, attention to both upstream and downstream, and a new, more profitable path for both business and environment.

(c) 1995 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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