Peter McManners
‘’T
Thinking ahead will help an
industry to survive and thrive
he mantra that “the cus- tomer is always right” is good advice to salespeople. It can be bad advice when making strategic decisions over particular product lines, particularly when customers are perpetuating unsustainable behaviours. The US car industry listened for many years to its customers’ demand for thirsty SUVs, leading the industry into a cul-de-sac from which it is finding it extremely hard to extract itself. A strategic assessment of what cus- tomers will require in a sustain- able society would have brought out a very different set of parame- ters. The designers would have been working on smaller efficient cars and engineers working on solving the challenges of electric and hybrid-power trains. The shift in customer demand to more sustainable vehicles may have been slow but fashion can change almost overnight.
Another example is the makers of incandescent light bulbs. They have been able to sit back on the heritage of a product that had not changed appreciably in over 100 years. Even as calls for greater efficiency were made, manufac- turers could take comfort from the demands of a vocal group of customers unhappy with the quality of the light coming from low-energy bulbs and not pre- pared to wait a few seconds for them to reach full power. From a sustainability viewpoint it has been clear for many years that the incandescent light bulb is obsoles- cent. The industry was bound to be killed off by a combination of a collapse in customer demand and government regulation. Hiding behind customer inertia has not served the industry well. Some elements of the lighting industry are listening to cus-
Demand for photovoltaic panels has hit new heights
tomers that baulk at the expense of LED lights. Through the lens of sustainability, the extremely efficient LED will become univer- sal. The strategic business plan requires the development of LED lights that deliver an ambience people like at a cost less than other LED manufacturers. Relying on people to continue buying first- generation low-energy bulbs is not sustainable. It may be prof- itable over the short-term but it is better to back out of this interim industry while facilities and equipment have value and can be sold to companies and investors with a short-term outlook. These examples make an important assumption; that socie- ty will make the transformation to sustainability. You can argue this is an unsound assumption; but this also argues that humanity is blind, and determined to remain so, to the problems of an over- consuming and wasteful society. I believe that it makes commer- cial sense to bet on a sustainable future, even if this means a loss of short-term profitability while lay- ing sustainable foundations for
the future. This view is not wide- ly accepted – which is why it can be such a powerful driver of future profits. While businesses navigate through the coming changes with a myopic focus on the bottom line, their heads are down looking at their toes trying to take the next small step. Taking the time to stand tall and look beyond the immediate challenges and past the current competition is how to grow a green business. Companies that manufacture and install photovoltaic (PV) pan- els are a good example. In the future, PV panels will be standard fittings on all roofs. Until the gov- ernment brought in the grants and feed-in tariffs these systems were hard to sell. Now PV companies are struggling to cope with demand. The leading companies launched long before any guaran- tee of government support. I examined a business plan of one company a few years back, and the figures didn’t look good. But there was a persuasive case that this was a business that would thrive. Another related example comes from a conversation with an
architect. We both agreed that design for maximising solar gain would be vital in the future. He understood that most clients did- n’t share his view. Even so, he had started designing roofs with the saw-tooth profile, which is ideal for the installation of PV. When we had the conversation some years back he could not estimate the expense of PV; this was not what his customers wanted. His view was that clients would remember in the future when they discovered that their buildings were ideal for retrofitting solar PV and bolster the long-term reputa- tion for his architectural practice. The ability to think beyond the immediate profit of giving cus- tomers what they want, to per- suade customers to change their habits, is tough. A salesman that says, “No, what you are asking for is not in your long-term inter- ests” takes courage. The bottom- line profit may come years later, when the customer returns remembering the advice and is unhappy with the product that was sold to them. These are not easy issues to navigate, but I believe that companies taking a sustainable stance, and then stick- ing with it, will prosper over the long-term.
Sustainable strategy requires deep thinking about the nature of society in the future. Not only should we be listening to cus- tomers but we should also be thinking about how customer demand will change – even if they don’t yet know it.
Peter McManners is a visiting executive fellow of Henley Business School of Reading University and author of the
book, Victim of Success: Civilization at Risk
>
www.victimofsuccess.co.uk
Sustainab le Business ❘ May 2010 15
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36