Practical idealism
Firms are unlikely to commit themselves to the alternative EMS model if they think it is pie-in-the-sky.
Practical experience shows just how hard it is to make relatively small changes in products or production processes. So how can the vast and seemingly impossible changes needed for ecological sustainability be achieved. And how can the complexity of the task be managed?
Goal-directed innovation can be used to achieve win-win solutions in, what appear to
be, impossibly demanding situations. A good illustration of this is
the Japanese pursuit of ´zero defects´ in manufacturing after
the Second World War.
To compete with the Americans, the Japanese needed to lift product
quality while maintaining their cost advantage.
To reduce their defect rate American firms´ inspected their
output. If a higher quality of shipped product was needed the
Americans simply increased the proportion of output inspected,
allowing them to weed out a higher proportion of defective units. But
in the process the cost per item despatched was significantly
increased.
To overtake the Americans the Japanese decided to adopt a much faster
and cheaper improvement process.
The Japanese set ´zero defects´ as their goal even though it
was technically and economically impossible to achieve at that
time.
Innovation programs were set in motion, inspired by the goal. Rather
than taking current best practice as their benchmark, the Japanese
used an ideal goal and then ´reverse engineered´ a solution
that approached the ideal ever more closely. Instead of controlling
quality using inspection, they concentrated on manufacturing
improvements to make it highly probable that the product was produced
correctly the first time. This quality improvement process
decreased costs and gave the Japanese a decisive competitive
advantage.
But if an effective innovation program is implemented, new methods or
solutions can lower the static cost curve for each time period (see
Figure 5), causing costs to plummet over time (see Figure 6).
Stretch goals are used to inspire both a steady stream of incremental
improvements and leapfrog or breakthrough innovations.
Inspirational ´green´ stretch goals
Du Pont, which has a 190 year history of pursuing a ´zero
accidents´ policy, now has an accident rate less than one
thirtieth of the average for all US industry and one tenth of the
average for comparable industries globally. With this experience
under its belt the company is now extending its approach to the
environment. In 1994 it established company goals of ´zero waste
and emissions´ (Du Pont, 1994). Many other companies have
similar inspirational goals.
So highly demanding inspirational goals are already a reality in
business. But for a sustainability-promoting firm it is necessary to
reformulate the stretch goals. This is because the inspirational
goals have to drive the firm´s sustainability-empowerment program
and not just its product-and-organisation improvement program.
Consequently the goals need to focus on what must be done to help
society to become ecologically sustainable.
Appropriate inspirational stretch goals for a sustainability-promoting firm would be to foster the
creation of an economy and society that aims to achieve:
Others have also discovered the magic of whole-system design, that
is, the potential for win-win solutions. It underpins, for example,
the power of TQM techniques, business process reengineering, Eli
Goldratt´s Theory of Constraints, cleaner production,
eco-redesign and life-cycle assessment.
When societies, economies and technologies become complex, most people
focus on incremental improvements in the parts of the system. This
leaves a vast reservoir of economic and environmental efficiency gains
to be made by those who can handle complexity.
If firms are to improve their chances of tapping this reservoir, they
must give their EMSs the widest possible scope. For example it
should cover (a) the development of new technologies, competencies
and products, (b) the use of influence to change the rules of the
game and to mobilise alliances of firms, (c) the lifecycle
improvement of products and (d) the upgrading of production processes
(see Figure 8).
Whole system design is not just a very good source of productivity
gains, it is also the only way that ecological sustainability can be
achieved - because, as stated earlier sustainability is system
characteristic and cannot be achieved by focussing on
uncoordinated changes in parts of the system. This is why the 'default' application of ISO 14001, which emphasises
introspective improvements in the firm´s own product and
organisational performance, cannot result in society becoming
ecologically sustainable.
Knowing that whole system design is the key
to achieving ecological sustainability with win-win productivity gains
is one thing. Doing something about it is another.
There are two reasons why whole system design is not undertaken often.
One is that most people have not been trained to handle this
approach. The other is simply that it is harder to do whole system
design and implement whole system changes than it is to deal with
incremental changes. That is why those looking for fast pay-off
action tend to leave the area alone.
One very important way to reduce the difficulty of handling whole
systems is to use techniques that reduce the complexity of change.
One reason that incremental change is easier than system change is
that most of the factors affecting the process are fixed or
predetermined. But once a change to the wider system is proposed
things become much more uncertain because, while there is one present
there can be many possible futures.
This uncertainty can be reduced however by creating shared visions
around which individual actions can coalesce. Commercial early mover
risk can be reduced even further if shared visions are adopted as
standardised system frameworks and are formalised as industry
standards.
Standardised system frameworks can also be used to maintain the
sustainability of the system over time. A number of standardised
system frameworks could be designed which, when combined, are known
to be sustainable. Then, as long as each product is designed to fit
into one of these frameworks, the sustainability of the system as a
whole is likely to be maintained.
For example all products could be required to be recycled through a
limited number of standard take-back and reprocessing systems (eg.
kerb-side mixed paper collection, parcel-post-style return system for
high value-low bulk products). A product would only be allowed onto
particular regional markets if it could be handled by the available
systems or if the product manager was prepared to develop and
implement a viable alternative return-recycling system, that is, they
take responsibility for creating a new standardised system
framework.
An analogous approach is now being used in software development, the
construction of very large office towers, sophisticated aircraft, and
to the coordination of inter-related product offerings from a range
of independent companies. In these areas systems are reaching such
high levels of complexity that no one person can comprehend all the
detail of the system.
To make it possible for many people to work together on these
products or projects, it is necessary to treat the components of the
products or indeed whole products as modules of a larger system. A
shared standard is developed, or adopted defacto. Then the
components or products can be designed and fabricated
semi-independently and yet they still work together finally.
It might be appropriate for standardised system frameworks to be
developed by joint government-industry-community working groups.
National and international standardisation bodies might play a role
too.
Standardised system frameworks should be considered in the EMS process
before the EMS objectives and targets are set. The need to fit into
existing standardised system frameworks would be determined in the
review stage of the EMS. Then, in the EMS strategy process, the need
for new frameworks would be considered. Applicable standardised
system frameworks would guide the setting of objectives and
targets.
How can all these ideas be brought together to create an interpretation of
ISO 14001 that promotes sustainability-promoting?
An EMS that conforms to ISO 14001 is a mechanism for ensuring that a
firm:
Zero defects? Impossible!
The economics and management theory of inspirational stretch
goals
In the short term it is almost always true that
the further a goal is pursued, the higher the unit costs will be (see
Figure 4 for a typical static cost curve).![[Fig. 4. The static 'optimum'.]](static.gif)
![[Fig. 5. The dynamic 'optimum'.]](dynamic.gif)
![[Fig. 6. The declining cost of a given level of activity.]](decost.gif)
These inspiration stretch goals will be more easily acted on if a vision of
what they mean can be developed and shared widely. For example a
closed-cycle economy (see Figure 7) could be pictured as one where
materials are cascaded down through applications that can use
recycled materials of ever lower quality. This is then followed by
regenerative recycling of these materials to restore their quality
ready for another cycle of cascade use (17).![[Fig. 7. The closed-cycle economy.]](closed.gif)
The magic of whole-system design
Over the last couple of decades, the Rocky Mountain Institute has
shown that large energy savings can often be achieved more
cheaply than small ones in buildings, motors and many other
technical systems through the use of whole-system redesign (Lovins et
al., 1996).![[Fig. 8. Areas for business action on the environment.]](business.gif)
Managing complexity: standardised
system frameworks
An EMS structure for a ´non-default´
sustainability-promoting interpretation of ISO 14001
For a sustainability-promoting firm, it is desirable to group these steps
into a four stage cycle (see Figure 9), starting with a review and
the setting of directions. See Figure 10 for an examination of the
differences between a by-the-book application of ISO 14001 and a
possible sustainability-promoting interpretation.![[Fig. 9. Implementation and continual improvement cycle.]](impcycle.gif)
![[Fig. 11. Environment as a goal and a constraint.]](goalcons.gif)
![[Fig. 12. A firm's potential, positive knock-on effects.]](knockon.gif)