Management in Practice

Solving problems on the scale of climate change will require that businesses change what they sell and how they operate. The founder of a consulting firm specializing in sustainable business talks about how environmental issues are seen by executives and the business opportunities in sustainability.

Will medical costs in the United States swamp our ability to pay? Can information technology continue to get faster, lighter, and more effective? Will global trade go on increasing and generating wealth? Asking if a system is sustainable forces one to project far into the future — and then to look back at the present from that vantage.

One study in 1997 estimated the value of all the functions performed by ecosystems at $33 trillion per year — substantially more than the entire world economy. But in most instances, functions such as purification of water and air, nutrient cycling in soil, or the resilience created by biodiversity don't have a clear economic value. A number of firms around the world see opportunity in monetizing those functions.

In an era when it's possible to surf in Phoenix and ski in Dubai, places are becoming interchangeable. Even areas with stunning natural resources can find themselves under pressure from this flattening effect. For communities, sustainability might mean strengthening their distinctive characteristics.

A step as simple as reducing the time that trucks idle can save money and cut emissions. An environmental advocacy group and a private equity firm have teamed up to uncover the sorts of efficiencies that further both of their missions.

Behavioral economist Dan Ariely's research has found that the cumulative impact of various forms of cheating has a significant effect on the world economy. His experiments show that people, across a wide range of situations, will cheat just a little bit, even when given the opportunity to get away with more; but reminders of core values can reduce cheating. He discusses the implications of these ideas for managers and professional organizations.

Economists have begun to use research into happiness to explore questions in economics, policy, and management. Betsey Stevenson of the Wharton School of the University of Pennsylvania surveys the work in this emerging field.

A nonprofit is teaching business skills to East African farmers in order to let them enter the high-profit global market for specialty coffee. The project showed enough promise to get $50 million in underwriting from the Gates Foundation, and now aims to reach 180,000 growers. David Browning ’99 of Technoserve describes how to educate small-hold farmers to plug into the global market.

James Chanos, the founder and president of the hedge fund Kynikos Associates, is a noted short-seller. He was one of the early doubters of Enron and more recently questioned the sustainability of the housing boom. In these videos, Chanos discusses a series of issues critical to hedge funds and short-sellers. Chanos also presented a Leaders Forum lecture at Yale SOM on October 26, 2009.

The new field of neuroeconomics looks at how economic decision-making actually happens inside the brain. Jonathan Cohen, co-director of the Princeton Neuroscience Institute at Princeton University, describes insights that are emerging from the collaborative work of neuroscientists, psychologists, and economists.