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Management in Practice

Is uniqueness sustainable?

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.

Here are ten lessons I've learned from working in sustainability for over a decade.

1 As currently used, the term "sustainability" is essentially meaningless.
When preparing lectures, I'll often Google the subject matter to gauge its relative popularity. Last time I checked, "sustainability," "trendy," and "bull shit" all yielded about the same number of hits. I'm not sure this means anything, but my SOM organizational behavior professor often observed: "There's no such thing as coincidence."

My Google search strengthened a feeling I've had for a while, namely that "sustainability" has been so overused and misused that the term has become essentially meaningless. 

2 Sustain" is a transitive verb in need of an object.
How to make "sustainability" more rigorous? Start by going to the dictionary.

The root of "sustainability" — "sustain" — is a transitive verb; i.e., a word describing an action which, in order to have meaning, requires an object.

As "sustainability" is currently used, though, the entity being sustained — the noun upon which the verb acts — is rarely specified. Absent that critical noun, "sustain" has no fundamental meaning.
So we need to sustain something. But what? The short answer is "anything someone cares about." For one person, it's himself; for another, her family, business, or community. How best to think about such a range of entities? By recognizing that each is a system.

Combined, the verb "sustain" and the noun "system" describe a complete concept — not just an action; not just an object.

We can begin to grasp what it means to "sustain a system" by examining the most successful system known: nature. Life on earth has existed for billions of years. From this perspective, there is only one measure of a truly successful system: its ability to replicate itself — specifically, its essential qualities — over multiple generations. If a system can accomplish this, it's sustainable. If it can't, it's not.

3 Systems are linked by externalities. Sustainability addresses human-created negative externalities.
In nature, one system's externalities become another's inputs. The quintessential example is the sun’s primary externality: energy. Solar energy powers the earth and all the systems on it, each of which has evolved to take advantage of other systems' externalities.

The balance inherent in this process was disrupted by the Industrial Revolution, which allowed humans to create negative externalities far faster than other systems could evolve to exploit them. At its core, sustainability is an effort to address the resulting imbalances. As currently practiced, though, sustainability primarily focuses on the symptoms of these imbalances. In contrast, "true sustainability" starts by focusing on how and why such imbalances occur, then addresses their root causes.

4 "True sustainability" transcends the triple bottom line.
To fully address negative externalities, true sustainability must consider every effect one system has on another. This goes beyond the conventional "triple bottom line" of social, economic, and environmental metrics to include qualitative effects, such as emotions and aesthetics. Such a comprehensive approach creates manifold management challenges, but all other approaches fall short of true sustainability.

The management challenge presented by true sustainability is complicated by two additional realities. First, there aren't many good tools for measuring externalities, whether positive or negative. As a result, there is no GAAP-like, widely accepted way of measuring the "triple bottom line," much less other, less quantifiable externalities.
Second, the implicit goal of true sustainability is to maximize a system's positive externalities and minimize its negative ones. This challenge is hard enough without adequate measurement tools. It's made harder still by the fact that human systems are hallmarked by complex interactions between large numbers of rapidly changing variables. Merely identifying those variables is difficult; addressing them in a truly sustainable fashion is far more so.

5 It's hard to make money in sustainability.
Unless you can clearly define an activity, it's hard to make money doing it. This is why "sustainability" has proven to be such a slippery business opportunity. Currently "sustainability" is not clearly defined. Instead, like beauty, it lies in the eye of the beholder. (One inevitable consequence of this has been the rise of "sustainability washing," for absent a clear definition, just about anything can be labeled "sustainable.")

Because it's hard to accurately define sustainability, it's even harder to quantify and monetize sustainable activities. Until that can happen, the economic incentive for acting sustainably will be limited.

So how to make money from sustainability? Generally speaking, only four categories of sustainability-related activities can be quantified and monetized. Call these the "Four Pillars of the Sustainability Industry":

1. Increase efficiency (e.g., install energy-efficient light bulbs). 
This isn't new or revolutionary — producing the same outcome for lower cost has been good business for centuries.

2. Decrease toxicity (e.g., reduce pollution).
Such activities are usually driven by government regulation, and the direct benefit usually involves avoiding penalties.

3. Monetize a once-free natural resource (e.g., sell purified water).
Due to rapid population growth and the rapid rise of negative externalities, there's increasing demand for things nature once provided for free.

4. Sell sustainability-related "aspirational products" (e.g., a Prius or locally produced food).
Consumers of such products may not act as textbook "rational actors," but neither do many early adopters.

6 Sustainability's future lies in "aspirational products."
The first three pillars of the sustainability industry exist because they address negative externalities which can be easily measured and monetized. As a result, each of these pillars is becoming its own industry.

The real potential in sustainability, though, lies in providing "aspirational products." Aspirational products address humans' core values and desires, rather than their basic needs. In this way, they connect people to the ideals that are most dear to them and, in that sense, to their best selves. 

Aspirational products have always existed. What's new is the growing market for products that address sustainability-related aspirations; for example, products related to our increasing awareness of the environment. While social scientists may not be able to measure or explain why people buy local food or drive a Prius, that doesn't keep such markets from existing — nor from gaining increasing economic heft.

The market for sustainability-related aspirational products will grow in sync with our ever-increasing understanding of the environment. In particular, people will respond as the systems they care about most deeply are threatened, in turn creating markets for products and services related to those systems. As a result, not only will the concept of sustainability continue to resonate (and continue to be misused), but selling sustainability-related aspirational products will become as important a pillar as the other three.

7 Commodification is at odds with true sustainability.
The Industrial Revolution allowed humans to harness the insights of the scientific method to more easily exploit the natural world. When combined with the rise of market economies, this has led to dramatic improvements not only in economic well-being, but overall quality of life. Today, once-scarce necessities have gone from being the purview of the elite to mere commodities.

But by allowing people to more efficiently exploit nature, this Industrial Revolution-plus-market-economy synergy has also led to the rapid increase in human-caused negative externalities. Combined, these negative externalities have made increasingly scarce something which used to be commonplace: environmental quality (hence the second and third of the "Four Pillars").

The advance of technology and markets has also led to increasing homogenization, a dynamic evident in phenomena ranging from smart phones to sprawling suburbs. Even geographically isolated resort towns — think of destination ski areas — have increasingly come to resemble one another, for each has targeted high-end lodging, retail, and other amenities as the way to recoup their huge investments in infrastructure.

This homogenization process is only going to accelerate. Now that it's possible to surf in Phoenix and ski in Dubai, it doesn't take a visionary to realize that, over the next few decades, technology will make it increasingly easy to replicate, if not flat-out duplicate, many of the qualities that currently distinguish one locale from another.

Why does this matter? Because basic economics teaches that scarce products command a high price, while plentiful ones are cheap. Assuming sufficient demand, a corollary is that there are basically only two ways to make money: develop a distinctive product and charge a premium, or commoditize a distinctive product and become the lowest-cost provider. 

As homogenization accelerates, one consequence will be that communities, regions, and nations will increasingly come to resemble one another, and thereby find themselves competing at the commodity end of the spectrum. When this happens, the "winners" will be those with the lowest costs, with all the attendant implications for quality of life. Much of what people cared about in their communities will be lost.

Many communities and organizations will fall victim to commodification because they don’t recognize they can control their own destinies. True sustainability offers them the means to do so — a framework for identifying and maintaining truly meaningful distinctions, and with them the economic strength needed to resist commodification. From this perspective, a truly sustainable community, organization, or nation will be one which consciously and systematically pursues two goals simultaneously: minimizing its net negative externalities while identifying and sustaining the qualities that make it truly distinctive. 

8 True sustainability requires involving all aspects of a community or organization.
Much of the work I've done in sustainability has been under the aegis of the Charture Institute, a nonprofit think tank I founded in 2001. Through its activities, Charture has tried to lay a foundation for "true sustainability" in my community, Jackson Hole, Wyoming.

Jackson Hole is an isolated mountain valley in the southern half of Teton County, Wyoming. Lying within Jackson Hole are the Jackson Hole Mountain Resort and Grand Teton National Park; in other parts of the county are the southern half of Yellowstone National Park and portions of two national forests.

Thanks to its remote location and the fact that 97% of the county is publicly owned, Teton County has arguably the healthiest natural environment of any area in America's lower 48. Perhaps coincidentally, on a per capita basis it has also become the wealthiest county in America. If, as conventional wisdom holds, sustainability is a combination of economic, social, and environmental health, Teton County's combination of extraordinary wealth and extraordinary environmental quality gives it a solid claim to being the most sustainable community in America.

But there are three catches. First, thanks to the public lands around us, Jackson Hole has lucked into its environmental health. To a large measure, we take our good fortune for granted, and do little to understand, much less sustain, that which makes our community distinctive. Second, globalization is rapidly reaching into even isolated pockets of the northern Rockies, making us increasingly susceptible to homogenization. Third, America has a remarkable track record of taking nice places and defiling them.

It's not at all clear whether Jackson Hole can successfully maintain its state of grace. However, because it's relatively untrammeled, Jackson Hole has a chance not merely to sustain itself, but to establish a sustainability model for the world. Viewed more negatively, with all its advantages, if Jackson Hole can't achieve true sustainability, what place possibly can?

Recognizing this potential, Charture started a process called Sustaining Jackson Hole (SJH). At its essence, SJH is an effort to apply the principles of the Toyota Production System to community sustainability. In practice, this means establishing a clear vision of what a truly sustainable Jackson Hole would look like, then pursuing that goal through a systematic process of continual incremental improvements.

Recognizing that a community is more than just its economy or environment, SJH examined every facet of the community — from agriculture and the arts through philanthropy and religion — and asked the fundamental question of true sustainability: What qualities about each facet does the current generation want to sustain for future generations?

In practice, this meant dividing the community into multiple "areas of interest," and forming working groups of volunteers in each. Groups met for three two-hour meetings per year, and were asked the three basic questions of strategic planning: Where are you? Where do you want to be? How will you get there? In response, participants provided meaningful data about their area of interest, identified what they did and didn't know, and developed a "Statement of Ideal," which, in measurable, unambiguous terms, identified the qualities that their group wanted to see sustained for future generations.

The effort succeeded at first, but as much from serendipity as design. By attracting people with similar backgrounds and affinities to discuss topics of mutual interest, the working groups functioned like miniature professional conferences, creating a safe environment in which participants found it easy to both share with and learn from their colleagues. The effort struggled, though, when it came time to act.

9 No sustainability margin, no sustainability mission.
Sustaining Jackson Hole stimulated members' creativity, resulting in numerous suggestions for projects that could sustain the community's essential qualities. Unfortunately, rarely did these suggestions get beyond the proposal stage, for members quickly ran into the two basic challenges facing any effort to fund sustainability:

  • The private sector funds sustainability-related projects only if they might make money.
  • Public and nonprofit funders tend to avoid projects — sustainable or otherwise — which involve doing something new, different, or, God forbid, risky.

Without any mechanism for funding their ideas, SJH volunteers quickly became frustrated with the process (an outcome any organizational behavior professor could have predicted). Because of that frustration, SJH faced the loss of participants and with them the core of the process.

Into this breach stepped fate, in the form of Yvon Chouinard, the founder of the Patagonia sporting goods company. In 2002, Chouinard and his friend Craig Mathews, owner of Blue Ribbon Flies in West Yellowstone, Montana, founded 1% for the Planet (1%P), an association of member businesses which donate one percent of their sales to environmental concerns of their choice. During his October 2005 keynote address to the Sustaining Jackson Hole "State of Our Community" conference, Chouinard described 1%P. That talk inspired the formation of 1% for the Tetons (1%T), the founding local chapter of the 1% movement, which is run by Charture.

10 The best time to plant a tree was 20 years ago; the second best time is today.

The future promises both despair and opportunity. Despair results from technology racing ahead, creating new negative externalities at a rapid rate. Opportunity results from the fact that each negative externality represents a potential new market.

This reality presents tremendous first-mover opportunities for any organization or community that adopts the "Four Pillars":

  • Entities that systematically increase efficiency will enjoy an ever-increasing cost advantage.
  • Entities that systematically decrease toxicity will thrive in an increasingly regulated environment.
  • Entities that monetize once-free natural resources will find that rapidly growing populations provide them with rapidly growing markets.
  • Entities that systematically focus on sustainability-related "aspirational products" will develop a competitive advantage in both identifying and providing such products.

In our rapidly changing future, the most successful entities — whether organizations, communities, or nations — will be the most adaptable entities. To be truly sustainable, though, such entities must be not just adaptable, but able to adapt without fundamentally compromising their essential qualities. Those entities that embrace true sustainability earliest will have the best chance of controlling their own destiny; those that wait will be hard-pressed to avoid becoming just another commodity.