Friday, September 5, 2014

Moving to the next level

Or ... Mind the (data) gap

The interest and focus on sustainability is now more evident than ever before. Advertisements in increasing numbers trumpet some aspect of a product or a service as “sustainable”. Usually it is not but that doesn’t stop the attractiveness of using it to sell. Business has also noticed and there is increasing attention to “business plans for sustainability” and evidence that customers, if not investors, reward some businesses for trying to be sustainable. But, as mentioned last time, to is not clear if we are making any real progress.

Some attribute this to the presence of a “green gap.” The opening statement in a report from 2011 by Ogilvy and Mather sums up the “green gap” as follows:

“While we have been relatively good at getting people to believe in the importance of more sustainable behaviors, practices, and purchases, we have been unable to convert this belief fully into action” (p. 13).

For reference, the “green gap” is defined in the report as the gap between consumers’ green intentions and green actions. One might argue that this applies to business, and manufacturing, as well.

This is the other end of the equation with respect to increasing value while reducing impact (as it defines what consumers are willing to count as “value” in the domain of sustainable products) and it provides animation for implementing the circular economy. If there is no motivation or perceived reward and the value is not recognized then circular concepts, unless masked in conventional marketing or product functionality/value, will not be successful.

There was frustration expressed at the meeting held as part of the process to generate this report that, while many people in leadership positions - the so-called “thought leaders” - keep hammering away on the issues and need for action, the mainstream consumer is not really responding. Or, if responding, not responding rapidly or massively enough.

The chart below illustrates this point. In a survey of behavior in the US and China (PRC) respondents were asked indicate the importance of certain activities in terms of their definition of living a green or sustainable lifestyle (called “importance”). The then were then asked with respect to these activities whether or not they usually do the activity (called “behavior”). The gap between the two responses shows the divide between belief and action ... the “green gap.” The activities asked about were:
 

- taking public transportation,
- walking or biking to work
- purchasing locally grown food
- using eco-friendly cleaning products
- recycling bottles/cans/paper.

These are not, granted, the whole set of behaviors defining a green lifestyle or preferences (nothing about water, or reusing products, etc.) but are a reasonable set of trade-offs. And, of course, they are life style preferences and not directly related to production of goods and services.




China and the US were selected due to the impressive contributions to global warming of their economies.

The report mentions the desire of major corporations to assume more leadership in developing practices and products that address climate change, for example, but also the realization that in many cases the biggest impact of the product is in the use phase and not in the production or manufacturing phase. This has been discussed extensively in the past in this blog.

The suggestion was that rather than trying to get every one motivated to follow a better course on might need to talk to a larger audience than just the “committed greens” who already get it. Oglivy called this larger audience the “massive Middle!” This is not to be confused with the ‘silent majority’ of the Nixon-era (Google it if you don’t follow!) Ogilvy focuses on consumer issues, and angst about contrasting desires with needs, but  also gives a set of 12 ways to close the gap. Some of these have great applicability to business in general and manufacturing in specific. The objective is to “make green mainstream.”  


The 12 ways Ogilvy lists (with my translation to manufacturing space) are :

1) make it normal; in industry speak, institutionalize green behavior and practices.


2) make it personal; Oglivy intended this to be linking products to individual behavior; for manufacturing this is getting everyone in the enterprise connected to the activity.


3) create better defaults; in manufacturing this would be to have a series of options so that the fall back is not business as usual but another green alternative.


4) eliminate the sustainability tax; Oglivy relates this to the usually higher cost of green product; the manufacturing analogy is to insure that the economics are sound and there is a solid business model for this way of operating.


5) bribe shamelessly; this is not your usual bribe to get around regulations or influence decisions! This is rewarding products and services for behavior; in the manufacturing world, this means recognizing leaders, and their products and technologies.


6) punish wisely; shaming people into good behavior has some benefits if applied carefully they argue; in manufacturing, this is likely best done by benchmarking and providing metrics so that the organization can see where it is and where it needs to go. The days of “the flogging will continue ’til moral improves” are over!


7) keep innovating; this is easily translatable to manufacturing; in fact, sustainability drives innovation in manufacturing.


8) lose the crunch; Ogilvy is referring here to the image of green as Birkenstock wearing granola munchers (hence the “crunch”!) … which is not really an issue in Berkeley! It really means making green more mainstream; For manufacturing that is what this blog is all about.


9) turn eco-friendly into male ego friendly; This is Oglivy’s way of making green less “girly green” (their words … not mine!); This does not really relate to manufacturing as, for example, green machine tools are not considered less manly than conventional ones.


10) make it tangible; convert the tangible benefits of sustainable to something that can be easily visualized; manufacturing is attempting to do this all the time - from a cost, performance, impact, efficiency or effectiveness aspect.


11) make it easy to navigate; truth and transparency … easy to follow the dots; this maps directly to manufacturing and can relate to "eco-roadmaps" and similar to be discussed more in future postings.


12) tap into hedonism over altruism; help consumers see the fun on the green side of life; not sure how we can relate this; manufacturing is to many of us “fun” already - so one can suppose that green manufacturing can be “more fun”?! Let’s not push this one too far.

So now you are probably asking, how do we connect this back to big data?!  If one follows the above discussion about the key steps to address this massive middle as it relates to manufacturing, one can look at the ways outlined above and see some common elements
needed to enable these for manufacturing - all dependent on information.

The innovation, clarity and transparency, business model/economics, institutionalization, benchmarking, etc. are all driven by data. Data on what your process or system is doing, what it is consuming or emitting, what the impact per unit process output is, what is the efficiency of conversion of resources into product, what it the efficiency of my cycle, how does one system or process compare to another doing the same thing, how does my performance match up to my competitors in the same market, company, division, or factory, and so on. All determined by data. And data flowing from machines, systems, facilities and enterprises.

So we can close this gap, at least as it relates to green manufacturing, by leveraging the tools and capabilities of big data and the a digital view of our enterprise. This is where the story picks up next time with more details and some examples.


16 comments:

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  2. Dear Sir,

    The post is, indeed, a humorous one which keeps me reading it until the end with interest. The way you translated and implemented Oglivy’s thoughts from the Green Manufacturing perspective is fascinating. It makes understanding of the 12-way very easy. It also gives a broader meaning to the 12-way- means it is not just sticking to a particular domain of science, but also applicable to all.

    Thank you indeed for the valuable post.

    Sincerely,
    Mahesh Teli

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