Earth Day 2018April 16, 2018
Environmental stewardship and corporate profitability do not have to be mutually exclusive endeavors… If that statement ruffles some feathers, good. I hope that it provokes some contemplation.
Having been witness to the process of vetting cost reduction initiatives in several publicly traded corporations, it is astounding how often environmental initiatives are seemingly minimized, over-looked, or simply brushed aside. Is it because corporate America could care less about negative impacts their processes have on the environment?
Of course not. The people in position to make decisions that affect a corporation’s environmental impact are no different than you and I. Holistically, everyone would prefer to leave the world a better place than it was when we entered it.
Why then are environmental initiatives typically an afterthought in corporate strategy? Is it because corporate America is so conditioned to seek profit that they are willing to do so despite the impact their actions may have on mother earth? Or, could it be that by nature we get distracted too easily to follow through on incremental improvements necessary to drive meaningful positive change to the environment. Or, could we be so focused on short term goals we miss long term opportunities?
Imagine yourself in the shoes of a manager tasked with cutting $100,000 worth of costs out of his operation to satisfy commitments to company shareholders.
Where would you start looking? Like most managers, you would most likely start by analyzing labor and material costs. You would probably also give some consideration to your operations overhead costs.
You would likely enlist your support staff to help develop a list of potential cost savings initiatives including investment requirement, savings potential, resource and time requirements.
Now imagine the team coming back together with a list of 100 initiatives that you need to pare down to a select few to work on. What would you do if you have one engineer and had to decide whether to assign her to either work on a $150,000 robotic packaging line that would save the company $100,000 per year or a $5,000 initiative to replace plastic sample bags with reusable containers that would save the company $3,000 per year? In this scenario, the answer is obvious.
Does it mean you don’t care about the environment? Or, does it mean that our typical approach to process improvement is inherently flawed?
Now, imagine yourself in the same situation but instead of being challenged to reduce operating cost by $100,000 this year, you were challenged with reducing operating costs by $100,000 each of the next 3 years? Would your list look different now? Of course, it would. Now, rather than assigning your sole engineer to a single high yield initiative, you would likely include some “filler” work that may include some things like re-usable sample containers.
Not only does this approach open opportunities that are more apt to benefit the environment, but it lays the ground work for a much more competitive operation. Rather than focusing on the $100,000 bump in the road directly in front of us, we are focusing on what is 3 years out on the horizon.
Doesn’t take a rocket scientist to see that what I am suggesting makes a lot of sense does it? So, why doesn’t it work that way?
Could it be related to our quest for instant gratification?
As suppliers develop their market strategies, are they inadvertently contributing to the problem as they focus on short-term big returns?
What would happen if we started embracing long term initiatives and marketing long term strategic partnerships?
I’m not suggesting we temper our quest to save money, I am just suggesting we lift our heads and look at the horizon. If we want to drive meaningful improvement to the health of the environment, that is exactly what we must be prepared to do.