Jan 05, 2009 02:23PM

2009: The Year of Light Green

It's always fun to predict what's going to happen. The risk of being spectacularly wrong is very high, but that's what makes the exercise so entertaining. 'Tis the season for dwelling, quickly, on what we've learned this year -- de-leveraging is really painful and when gas prices are high, people want smaller cars -- and for pontificating about what to expect in 2009.

For my predictions, I'll stick to my area of knowledge, the greening of business. Over the past two years "green" has become part of nearly every serious business discussion. But what will happen now in this damaged economy? It would be silly to suggest that the intensity of the focus on green will continue unabated. But we'll see a form of what I'll call "light green" this year.

Some of the green pressure on companies will lessen, but I believe that the underlying forces driving the green wave will continue over the coming years - from volatile commodity prices (which will rise again aggressively after the recession) to a rise in transparency to tougher questions from key stakeholders (such as your business customers, consumers, and employees). Those big picture trends will continue over years, but here now are a few specific predictions for 2009.

"Light Green" will focus primarily on cost reduction...

Going green drives innovation and creates value in four fundamental ways: cost reduction, risk mitigation, revenue growth, and brand value enhancement. But for 2009, the top priority will be the first one, lowering costs (primarily through so-called "eco-efficiency"). Few companies will have the stomach for deep investments in R&D to create new green products.

...but, companies (and banks in particular) will also broaden the definition of "risk"

If we learned one thing this year, it's that the business and financial communities are not so great at measuring and accounting for risk. It's in our nature to overestimate some risks and drastically underestimate others (like the possibility that housing prices could actually drop). On climate change, we're realizing that the risk of inaction is too great.

Citigroup, JP Morgan and Morgan Stanley launched the Carbon Principles early in 2008. In short, this agreement committed the companies to look very hard at any coal investments and ask tough questions about how climate change and a cost on carbon would affect the risk profile. And at the end of '08, other financial and insurance giants -- including HSBC, Munich Re, Standard Chartered, and Swiss Re -- created the Climate Principles. These guidelines are admittedly aspirational, but they also increase awareness of the impact of climate change on all aspects of their businesses, including their investment portfolios.

Leading companies (read: Wal-Mart) will continue pressing suppliers.

To be a bit cynical for a moment, greening the supply chain is perhaps the easiest path to take in hard times. After all, you basically push the problem and cost onto others, and if you're as big as Wal-Mart, you get your way. To be less cynical, the companies that have learned to take a value-chain perspective have discovered real value in lower costs and better products. So why go back if you've discovered a better way of doing business? Wal-Mart and others clearly believe that reducing environmental impacts up and down the chain creates value for all. The retail giant convened a historic meeting in Beijing, China in October 2008 (see my first-hand account of the meeting here). Wal-Mart's top execs made it very clear that the green agenda was not going away and, in fact, that it was accelerating. Of course global recessions can put a damper on anyone's plans, but there are few indications the big guns are pulling back on supply chain pressure.

Innovation will become even more important.

This may sound like a contradiction to my "cost reduction will rule" prediction. But innovation is about more than just flashy new products; it's also central to reducing costs in a smart way. But beyond getting lean, 2009 will be a good time to truly rethink business models and ask new heretical questions. Innovation guru Clayton Christensen recently told the Wall Street Journal that the economic downturn "will have an unmitigated positive effect on innovation." Say what? By his counterintuitive logic, tight times "force innovators to not waste nearly so much money."

So use 2009 to seek out green innovation opportunities. Find ways to drastically reduce energy and other resource use both in your own operations and through your products (that is, help customers reduce their footprint). Even if investment dollars remain scarce, be ready to run with good ideas when cash frees up. We may look back at the end of 2009 and see that staying green during the recession, at least in mindset, not only drove creativity, but even saved some companies.

Yes, 2009 will be a tough year. But the Green Wave, albeit a bit diminished, will roll on. The smartest companies will continue to pour the foundations for a new form of capitalism - one that takes into account the resource constraints we face. After this recession, when capital is more readily available, green investments will begin in earnest again. Sustainable business will no longer be a side pursuit, but the core focus of successful companies.

Andrew Winston helps companies use environmental thinking to grow and prosper. He is co-author of the best-seller Green to Gold, writes a monthly e-letter Eco-Advantage Strategies, and regularly blogs on green business.

Jan 05, 2009 02:05PM

The Greatest Product Demo Ever and What to Learn From It

Last month celebrated the 40th anniversary of the greatest product and technology innovation demo of all time. In a single day Douglas Engelbart showed the world new hi-tech ideas that dominate our world today: The mouse, the hyperlink, hierarchical lists, user testing, and on it goes.

What people often forget is that despite the importance and success of his ideas, it took 20 years for many of them to become widely adopted, and 40 years for them to become so ubiquitous we no longer even think about them anymore.

One might ask "Why are we so stupid that we can't adopt good ideas faster?" But the problem isn't about being smart or stupid. New ideas travel through cultures at much slower rates that we realize, especially if the idea requires 1) throwing something away and replacing it with something else 2) re-learning skills or 3) co-ordination by large independent organizations.

For fun, imagine you invent a device to replace QWERTY keyboards. You know it's fantastic and you have endorsements from the brightest minds in the world. How would you convince people to stop typing the normal way and use your new idea? How would you convince manufacturers to take a risk? Consumers? How long would it take?

Well, don't ask Engelbart. One of the ideas he demoed on the same day was the chording keyboard (in the video watch his left hand) -- a small device with five piano-like keys designed to replace the keyboard. 40-plus years later, his idea is generally unknown.

All new ideas gain adoption or face rejection due in part to factors beyond our control. It's rare for one new idea to entirely replace another -- we may very well be using mice and keyboards in the year 2108. That's because finding better ideas is only the first step. We also need an opportunity to make the change.

Jan 05, 2009 09:00AM

Don't Cancel That Meeting

Winter is prime time for corporate meetings; these include meetings with dealers, vendors, franchisees, as well as with sales teams. These meetings are used to get perspective on the year as well as prepare for the future. But these times with tight credit and plunging revenues are hardly traditional, and from what I hear from colleagues in the communication business, meetings are being scaled back or canceled to a large degree. Scaling back makes sense; canceling meetings does not.

Now more than ever, senior leaders need to be seen and especially heard by the people who are counting on them for direction and focus. Independent businesspeople who represent a corporation's products and services need to hear how the company is planning for the coming year. Sales people and other employees need to know what they should be doing to buttress the company for the short-term. Both constituencies need to take the measure of their leaders and to discover for themselves if those at the top have the right stuff to lead. Meetings are essential. Here are three tactics to consider for staging a successful meeting:

Be focused. Meetings are an important opportunity for senior leaders to address the economic situation as well as reveal plans for how they are coping. Executives need to demonstrate their knowledge of the situation as well as their command of the situation. Not everything they promise will come to fruition, but they need to present themselves as prepared.

Tell stories. Talk about how people are coping with hard times. Share stories from the field. Cite examples of how vendors and customers are succeeding. Emphasize resilience. Veteran managers have been through hard times before. Take the long-term perspective and create narratives that share that perspective.

Hear from the field. Create panel discussions and breakout sessions for attendees. Allow for the sharing of best practices as well as detailed planning. These get-togethers can provide sales people and vendors with insights into their customers. In turn, customers need to have the opportunity to talk about how they are coping and surviving.

Meetings are far more than a collection of speeches or talking points. They are an opportunity for people of similar interests to come together and share their stories about how they are coping as well as what they are doing to increase business. Customers need to mingle with executives and employees and vice versa. People need to hear each other out.

Tough times are a great time to renew trust. When customers and employees see the leadership team standing front and center and delivering the message, it demonstrates that that management cares about them and considers them essential to weathering the storm. Cancelling such meetings, except when there are no other alternatives, sends the message that employees and even vendors and customers are expendable. Folks will remember that attitude when the good times roll. So use the down time wisely and get together with your people.

Jan 05, 2009 06:00AM

The Year Ahead: Make Better Decisions

2008 and several years preceding it will not go down in history as the best years for good decisions. While we did make a groundbreaking (and, so far it seems, pretty good) decision to elect a different kind of man as U.S. president, we have made a lot of bad ones, both individually and organizationally. We invested poorly, we committed resources in the wrong places, some of our friends turned out to be not so friendly, and we didn't prepare for tough times.

So let's make 2009 the Year of Better Decisions. In what better way could we improve our personal lives and our organizational effectiveness? In the rest of this post, I'll describe what it means to focus on making better decisions.

One key step for individuals or organizations is to make a list of key decisions--key by whatever criteria the person or organization cares about. It could be the "five key decisions for my financial future" or the "top ten decisions required to execute our strategy" or "the top 20 decisions that have to go well for us to meet our financial goals." Without some inventory, all decisions will be treated as equal--which probably means that decisions won't be addressed at all.

In addition to an inventory of decisions, it's important to classify each major decision by its type. Is it financial, personal, strategic, or tactical? How frequently does it recur? How structured is it? What information is available to support it? Such a classification would begin to allow an organization or an individual to understand what interventions might make the decision more effective, and would establish a common language for discussing a decision.

Decision-oriented firms and individuals would probably also have some way to track decisions and their outcomes. This can get a little political, so few organizations do it yet. But it's probably coming. Eventually this will probably be possible in software, but for 2009 feel free to use paper and pencil.

Individuals who want to make better decisions probably have to rely on themselves, but a decision-focused organization would probably have a group of decision "engineers"--or coaches or consultants--whose jobs involved improving decisions. At GE Money, for example, a group of about 400 analysts reside within a "Decision Management" organization. Instead of just supplying analytics and correct answers, the goal of the analysts is to work with executives to improve decision processes.

There is one other key attribute that will need to happen if decisions are going to be improved. It's a key behavior that is fundamental to any decision intervention. I call it "meta-decision analysis." It simply means that before making a decision, a person or organization should ask, "How should we make this decision?" At Air Products and Chemicals, for example, key decisions are expected to follow a five-step process.

Step 1 is to define the decision to be made.

Steps 2 and 3 are what might be called meta-decision analysis; they are to "determine method" and "establish governance." The method to be adopted involves the level of participation; options include:

• Unilateral
• Consultative
• Majority
• Consensus

The governance approach in the decision analysis follows the well-established RACI approach in project management: who is expected to be responsible, accountable, consulted, or informed?

Step 4 in Air Products' approach is to make the decision; Step 5 is to communicate and implement it.

Why is such a meta-decision approach important? It's because there are many different ways to make decisions today, but they all require stepping back and thinking about the decision process and the best ways to accomplish it. Air Products' approach is far better than what most organizations do, but there are many more possibilities and options to choose from. Just the meta-decision about how participative should the decision process be, for example, can require a great deal of analysis. Victor Vroom, a Yale School of Management professor, has devoted much of his academic career to the study of that issue. He's developed a meta-decision framework to help managers decide how participative their decisions should be. The framework addresses issues such as:

• How significant is the decision?
• How much does the decision-maker know about the decision?
• Are stakeholders likely to commit to the decision if they don't act on it?
• How important is speed in the decision process?

This participation issue is one that works at the individual level too; for example, it's probably a very smart idea to consult your spouse on investment decisions!

Vroom even developed a software program that takes managers through a set of questions and then recommends a level of participation. This would be a useful tool, but the problem is that participation is only one variable to be considered in meta-decision-making. How about the information to be used in the decision? Should the decision itself be automated, or should it rely on human brainpower alone? Should a prediction or opinion market be employed? Should some sort of devil's advocate be employed? That technique has been shown to be a useful addition to many decision processes. What other roles should be adopted, and who should play them?

Eventually there will be software tools that help us manage and improve our decision processes. Don't look for them in 2009, but it probably won't be long thereafter. For the year ahead, however, don't be held back by technology--do what you can with manual systems.

Jan 05, 2009 04:00AM

A New Year's Resolution: Schedule regular meetings with yourself

Welcome to 2009. After the roller coaster ride of 2008, leaders will be bracing themselves for all manner of challenges this year. We all know we are venturing into uncharted and dangerous waters, so what can leaders do to prepare themselves?

From my experience of coaching international leaders, there is no shortage of strong implementation skills or strategic planning, although the events of 2008 challenged everyone's strategy in many respects. Most leaders have also become more flexible in their thinking and nimble in their execution. Some are developing good people skills and can communicate effectively (although this is by no means common), and a few are becoming more creative and innovative.

What still seems to be missing is the ability to reflect: to stand back and consider issues deeply - and to look honestly at themselves as leaders. It isn't surprising that leaders find this difficult, given the unparalleled changes businesses have faced in recent years. And as the pressures mount for 2009, it is likely that time spent on such reflection will be regarded as a luxury that no-one can afford. This is a big mistake.

I tell all my clients that they are failing themselves, their teams and their organizations if they do not discipline themselves to spend at least one hour (preferably two) each week in a meeting with themselves. They should use the time to reflect on what they have spent the week (month or year) doing, what they have learned from their actions and interactions, what they have not been doing and what more they could do in their role.

I am often met with howls of protest: as leaders, they don't have the time, it would appear indulgent to others, or they could not justify such a meeting. I disagree. One hour spent in such reflection - on themselves, the issues they face, their people, their career, their boss, their contribution to the organization - is invaluable. Consider how those hours might build into something truly valuable - transformational even - over the space of a week, a month or a year.

Of course, many leaders employ executive coaches like myself for this reflective time. Coaches are valuable, but meeting a professional is not the same as taking a regular honest looks at oneself. Most people only do this once a year - around now in fact! I suggest that leaders should make a meeting with themselves a regular practice - as important as regular meetings with the boss, managing work/life balance and time at the gym or exercising.

So, to start you off on the right foot, here are some guidelines:

• Schedule the meeting during working hours: not on weekends, on the train or late on Friday afternoon just before you leave work. Your meeting with yourself is important enough to merit a regular slot, like any other business meeting.
• Invest in a good quality notebook or open a file on your computer. During the week, make brief notes of 'critical incidents' (such as discussions, opportunities you had to contribute, clashes or conflict, feedback from others, observations of others' behaviour) and then go back and reflect on them: what happened, how did you act/react, what did you do well/not so well, what might you have done differently? Learn from these incidents and think of new ways to act in future. Jot these points down and refer to them regularly.
• Consider longer-term issues: your career, developing your skills or those of your team, the direction of your business, your challenges ahead and how you might tackle them. These are critical aspects of your role.
• Reflect on your own successes and achievements. Savour them. This will build your confidence and give you the strength and resilience to carry on and perhaps even inspire others during tough times.
• Never, never shift or cancel your meeting with yourself. It is one of the most important hours in your working week. Consider how many pointless meetings you have to attend and cancel one of those before you cancel your own. Put yourself first.

In my next post, I will look at another aspect of managing yourself and your team during 2009 - building resilience for the tough times ahead.

In the meantime, let me know what you think about scheduling a meeting with yourself. Have you ever done this? Did it help? What did you learn about yourself, your team and your organization? And if you have not tried having such a meeting, would you be prepared to start in 2009 and let me know how you get on? I look forward to hearing all your thoughts.