New Bottom Line Volume 5.20 – Industries in Transition: A new business landscape

Sept 25, 1996

In “Marketing Myopia” Theodore Levitt outlined classic failures of industries who lost market share and critical opportunities because they didn’t really understand what business they were in. Railroads thought “rail and locomotives” rather than transportation, and stagnated in the face of the automobile and the interstate highway system. Hollywood thought “motion pictures” rather than entertainment, and was battered by television.

In a recent column (Who Knows What Business You’re Really In? The Dump Heap Knows., July 19, 1995), I suggested that the familiar consultant’s challenge of “what business are you really in” takes on a new dimension when seen through an ecological lens. I’d like to expand on some of those thoughts.

“To a certain extent,” I wrote, ” the “‘ecological re-engineering’ of key industries is a technical task–replacing technologies, transforming processes–but it is also something much more challenging–transforming the fundamental missions and identities of these industries. For example:”

“Is the pulp and paper industry in the business of turning trees into paper products? Or in the business of managing forest ecosystems and society’s fiber recycling systems?”

A Bronx NY company called City Forest specializes in harvesting its raw materials from–surprise!–the steady yield of wood and wood fiber “produced” each day by a city, while Quad Graphics has talked about siting a printing plant in conjunction with a paper mill sited at the periphery of what it calls the “urban forest.”

Researchers assert that the ongoing non-tree harvest of standing tropical rainforests–fruits, nuts, animals, medicinals–can exceed the financial and protein yields of the conventional “cut it down and raise beef” practice. And in the US, forests are worth more alive than dead–the recreation and tourism value of national forests now exceeds their logging value.

“Is the petroleum industry in the business of extracting and refining ancient biofuels from the earth’s crust, or producing and refining current biofuels from the earth’s surface? (Which would put them in an industry closely related to the future of forestry.)”

Sweden’s OK Petroleum has come to the conclusion that its “core competency” is not tied to fossil fuels, but to its skills in refining and distributing liquid fuels. So the company is its hitching its strategic wagon to biofuels, and has taken a startling leadership position in lobbying its government in _favor_ of carbon taxes.

“Will the chemical industry base its wizardry of synthesis on the hydrocarbons of the petroleum economy, or on what David Morris and Neil Seldman call the “carbohydrate economy” of biofuels and bioplastics?” For example, Business and the Environment reports on progress with both bio-degradable and bio-derived plastics, including a process developed by the US Department of Energy’s Alternative Feedstocks program to produce chemical feedstocks from corn that makes products both 20-50% less expensive and less corrosive than petroleum derived feedstocks.

“Is the metals industry–with its vast technical knowledge for refining metals–in the mining business, with its low grade ores? or the recycling business, mining the high grade “ores” already circulating in the human economy?”

Buckminster Fuller observed long ago that society had turned a corner when there was more copper above ground than below, and that efficient cycling of surface stocks was both more efficient and more important than mining fresh reserves.

The questions can go on and on: Is the automobile industry in the business of selling cars? or of moving people (mass transit)? or ensuring access (urban planning)? Is agriculture in the business of raising the greatest possible amounts of food? or in the business of enhancing the productive capacity of soils? We’ll look at these questions, and more, in future columns.

The point here is simple, if a bit dramatic: There is an opportunity in the next ten years for a few companies — perhaps one or two in each industry — to define the business landscape for the next 50 years. Some companies will wait for the map to be defined. Some companies will attempt to define the map — by making a strategic asset out of understanding and integrating the laws of nature into their operating systems, and new profit centers out of unprecedented resource efficiency. There will be successes and failures in both camps. Where will your company be?

(c) 1996 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.

May be posted intact–including this notice–in any non-commercial forum.
Please inquire at “reprint_rights at natlogic dot com” before reproduction in any commercial forum.