DC Velocity - February 2010

BY ART VAN BODEGRAVEN AND KENNETH B. ACKERMAN

basictraining

staying the “green” course

THERE WILL ALWAYS BE THOSE WHO SEE THE green movement as more fad than force of change. And the booming business in green conferences, books, webinars, and so forth has only given cynics further reason to sneer.

But the prevailing evidence suggests the green movement is more than a passing fancy and further, that green initiatives can deliver real benefits, including, believe it or not, long-term cost savings. Re-use, recycling, reduction, and renewability will ultimately all pay off some day. Pegging “some day” on the calendar is a bit of a challenge, but looking past tomorrow—or next quarter’s earnings imperative—can help develop confidence in the economic, as well as moral, correctness of doing smart green things.

The question of the moment is how much momentum the green movement may have lost as a result of the economic slump. When the economy headed south, businesses began curtailing even essential expenditures—travel, training, inventory investment, hiring, and more. Executives, understandably, haven’t had the stomach for initiatives— of any kind—with long payback periods. Any project lengthy enough to warrant talking about net present value or discounted cash flow has had virtually no chance of seeing the light of day.

Guess what—green initiatives tend not to be quick fixes and frequently take years and years to deliver payback. And quantum leaps are in short supply. Take solar power, for example. High cost is admittedly solar power’s dark side. Although recent advances in technology have led to the development of a thin-film panel that costs 40 percent less than the popular silicon panels, there’s a catch. The thin-film panels generate only half as much energy as their silicon counterparts, so the net gain is not yet exactly a breakthrough and won’t change the long-term payback equation by all that much.

Maybe volume and some level of critical mass
could change the cost equation a bit more. But it
seems to us that the efficiency of panels of any type
ought to be a focus area for improvement. The
newer thin-film products convert anywhere from
10 to 14 percent of sunlight into electricity; that
compares with 19 percent for silicon.

That vision thing

In the short term, however, it appears that when it comes to eco-initiatives, the focus will remain squarely on programs that offer a speedy payback. A

2009 survey of DC VELOCITY’s readers showed a clear bias toward short-term, tried-and-true measures that deliver nearly immediate savings— notably in energy costs (see “into the green,” www.dcvelocity.com/arti- cles/20090201greenlogis- tics/). Bigger, longer-hori-zon efforts, especially those with less-certain paybacks, barely made the list.

We wish that companies and their leaders would avoid knee-jerk reactions in periods of transient difficulty. Somebody’s going to break a jaw that way. We wish that every business leader had the courage and the vision to take the long view and do the right thing(s).

But sadly, only a few do. And the pressure to make a profit—and make it now—is immense. Not to mention how important it is in publicly held companies to not disappoint The Street. So, with a little luck, enough organizations will pursue the simple, short-term things that look like they’ll keep the boss out of trouble in enough cases to make a bit of a difference.