Food and fuel in the news

DrumBeat: April 25, 2008 offered two particularly interesting links.

First, Time offered How to End the Global Food Shortage, their suggestion on three actions we can take in the short term. I'm not sure I see a long-term solution there, for I sense that global population is still growing exponentially, while their solutions seem focused on taking current food production to a new level, not creating matching exponential growth in the production and distribution of food. Put in systems terms, I sense population is still driven by a reinforcing loop, while the three Time proposals seem driven by goal-seeking loops. The short-term effects do seem beneficial, as long as we don't forget the longer term.

Second, oil financier Matt Simmons has published more presentations. Check out The 21st Century Energy Crisis Has Arrived. Slides 9-10 should not be a surprise to any who took IMT 586 at the University of Washington last winter or who have worked the challenge on pages 212-213 in John Sterman's Business Dynamics: Systems Thinking and Modeling for a Complex World with CD-ROM.

While you're there, also see his Are We Nearing The Peak Of Fossil Fuel Energy? Has Twilight In The Desert Begun? He does offer optimism, but only if we act well and only after some, um, "transitional" times. If anything, I wonder if his estimate of the rate of decline of production is optimistic, for, with the high raw demand for petroleum these days, I suspect we will deplete available reserves at a rather rapid rate.

Followup to Bush and greenhouse gases

One of the claims about working on greenhouse gas emissions is that it costs too much. Business Week tries to put that in perspective.

Fooled by Randomness: some thoughts

I read and wrote about Nassim Taleb's The Black Swan some time ago; now I'm reading his Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets.

I'm struck by the application of his ideas to environmental and ecological issues. It seems as if we're placing most of our societal bets on growth, a bet that has played well for centuries. Given the current news, though, those seem like some of the investment bets Taleb describes as foolhardy. A prudent "investor" (citizen or business person) at this stage in the Earth's development might place most or all money on bets that can't lose much. Betting on the ability of the planet to absorb more growth, on nonrenewable energy sources to remain plentiful, or on technology to increase efficiencies sufficiently yet again seems like a risky bet, given the news of the day (and year and decade).

That's consistent with the precautionary principle; do check out THE YEAR IN IDEAS: A TO Z.; Precautionary Principle from The New York Times.

What do you think?

For more on Taleb's book, see words by Andrew Gelman, Wikipedia, and James Glassman.

Business, Earth Day, and other thoughts

After teaching at my first Bainbridge Graduate Institute Intensive, I am very impressed. The administration, faculty, and student body seem, in person, even more focused on and effective with both words in "sustainable business" than they say they are. I confess that this MBA program truly excites me, and I am glad to play a small part in its work.

That led me to think about business, business practices, and Earth Day tomorrow (there is another Earth Day that passed last month). A bit of looking turned up Nice Guys Don't Finish Last, a Business Week article that indicates that international executives seem to think being green helps them. You can see more in The Economist's report.

A bit more looking turned up Climate Counts, which promises to help us as consumers and as investors, think about which companies have made more strides than others. If you're in business, see their scorecard to think about various dimensions to climate impact. While we might quibble about the weighting of the various dimensions and the focus on climate alone instead of also including usage of nonrenewable resources, social justice, and other issues of corporate social responsibility, we can probably learn from reviewing their measures. Even though I think my overall footprint as a company is quite small, it's prompting me to make an assessment and to think about additional factors that I think might be important.

If you're looking for other thoughts for Earth Day, check out the Donella Meadows Archive at the Sustainability Institute. After being part of the team that did the research and produced the original Club of Rome report, she wrote the weekly Global Citizen, which you can peruse in that archive. There's plenty of food for thought there.

What suggestions and thoughts do you have?

President Bush and greenhouse gases

I haven't been a political blogger, and I'm not about to start now. Yet the news of the past few days does offer ways to illustrate systems concepts I've mentioned before, and so I thought I'd point out what I hope is obvious to all here.

For but one example, take US President Bush's goal of having greenhouse gas (GHG) emissions stop growing by 2025, which is stirring up comment world-wide.

In system dynamics terms, GHG emissions (largely CO₂) are a flow, and the amount of CO₂ in the atmosphere is a stock. If you recall what I've written before on stocks and flows, you'll see that stopping the increase of a flow does not mean that the stock will decrease; it simply means that it will increase less rapidly.

In other words, even if we do meet this goal, things may well continue to get worse well after 2025, but they will at least get worse less rapidly after then.

I want to show you a little model that demonstrates that behavior, but, to publish it here, I'd like to get the numbers at least close to right, and that would take a bit of research time I don't have tonight. Let me try an analogy, instead; those of you who studied and remember the calculus can probably make a more elegant argument, and those who do system dynamics models can create one on your own in a few minutes (if you have the needed parameters, let me know, or post a pointer to your model).

In the real world, we are emitting CO₂ into the atmosphere by breathing, burning fossil fuels, and the like. That stock of CO₂ in the atmosphere is growing and threatening climate havoc.

Some of that CO₂ is taken out of the atmosphere each year through the action of photosynthesis and perhaps other mechanisms.

According to the science I read, we have too much CO₂ in the atmosphere at present, and our global CO₂ emissions per year, already above what the environment can naturally purge, are increasing. If that weren't the case, there would be little reason for President Bush's call to action.

Let's look at an analogous situation. For example, let's say you have a bathtub that's three-fourths full of water. The drain is open, but it's partially clogged, and so it's draining slowly.

In addition, the faucet is turned on, putting more water in the tub. It so happens that the water is currently coming into the tub faster than the partially-stopped drain can take it out, so the water level is rising, causing fears for the well-being of the bathroom floor.

The person controlling the faucet is opening the faucet as we speak, letting water come into the tub at an ever faster rate. That person, realizing the risk to the floor, promises to stop opening the faucet anymore in about 15 minutes.

What do you think will happen to the floor?

Even with the rough data I supplied, I hope you can see that the water will rise increasingly rapidly for the next 15 minutes. If the person takes their hand off the faucet in 15 minutes, the water will continue to rise until it overflows the tub (assuming it doesn't overflow sooner). The only way to save the floor is to reduce the flow of water from the faucet to below the flow of water out of the drain before the tub overflows. Even if they started reducing the flow of water out of the faucet now, the water in the tub would still rise until the inflow was less than the outflow.

Of course, this is a silly little example; the real world of GHG emissions is much more complex. Yet the general principle of stocks and flows holds: as long as the inflow exceeds the outflow, the stock will rise.

I'm not about to use this short, informal essay to argue for or against specific GHG or climate proposals or to try to balance climate stability against economic stability. I am suggesting that we all remember the lesson of stocks and flows when we are thinking about or evaluating policies such as these.

PS: Thanks to colleague Wayne Wakeland for, in a totally different situation, reminding me of the effectiveness of simple bathtub models (and I hope it worked here!).

A sense of urgency and a great opportunity

Glen Hiemstra posted Peak Oil and Global Warming - the Cross Matrix linking to important material by Jeremy Leggett, Dr. James Hanson, and Al Gore. The Jeremy Leggett clip is about 10 minutes long and seems to be an excerpt of a longer talk; the Al Gore segment lasts about half an hour and seems complete.

All of the links in Glen's posting are worth checking out, but you may not find too much new in Leggett's lecture if you're familiar with basic arguments about climate change and peak oil.

I do encourage you to watch the entire Al Gore segment, though. What I find important there is his careful, passionate, and, yes, somewhat optimistic reframing of the issues we face. Do check it out, and then let me know what you think.

LTG redux

Just one more short posting on LTG (Limits to Growth), at least for now: in looking for something else, I found The Limits to Growth: Abstract established by Eduard Pestel. A Report to The Club of Rome (1972), by Donella H. Meadows, Dennis l. Meadows, Jorgen Randers, William W. Behrens III, which is well worth the time it takes to read, especially if you haven't read one of the original versions of LTG. It summarizes in very readable prose the essence of the entire LTG argument in just eight short pages.

Even though this was written 36 years ago, it seems very up-to-date. Or, perhaps better put (as Ugo Bardi did), because it was written 36 years ago and we've learned more, it seems more pertinent today than it did then. For a review of the changes since the original publication, see Limits to Growth: The 30-Year Update or Matthew Simmon's review linked from my prior posting.

Grow or die

The title is a rough quotation from an interview I read by a CEO recently. It doesn't matter who it was; it's a common business notion, I sense.

I understand the sentiment, really I do. There is a real fear that, if we don't grow, we'll be overtaken by those who do grow. Or that we'll become stagnant and stale.

Yet I'm mindful that, if we all grow, we'll surely die (or at least suffer), too. Read Limits to Growth, if you're uncertain about my statement. Note that "limits to growth" in that book is not a statement of an environmentalist's hope; it's a statement of fact. We will face limits to growth. We can choose the nature of those limits (or at least we have had the chance), but stop growing we will. You can't exceed the carrying capacity of an environment forever.

So, if it's true that we all (or most all) want to grow (our companies, our houses, ...), and if it's true that we will face (and are already facing) real limits to that growth, what do we do?

I've written about growth a number of times, but I admit that I don't have all or even many of the answers yet. Perhaps I'll find out more in the next few months, for I'm co-teaching a systems thinking course at Bainbridge Graduate Institute.

If you're not familiar with BGI yet, their vision is "To infuse environmentally and socially responsible business innovation into general business practice by transforming business education," and they've got a good reputation in this area.

As I did when I taught system dynamics at the University of Washington, I suspect I'll learn a lot here, this time with a distinct focus on sustainability and business. I'm really looking forward to this experience. (And, as I did last time, I will refrain from telling you anything that goes on in class unless I have explicit permission, but I may tell you a bit about how I grew.)

System dynamics in practice: lessons learned

Drew Jones, Don Seville, and Dana Meadows of the Sustainability Institute wrote Resource Sustainability In Commodity Systems: The Sawmill Industry In The Northern Forest. That provides a good example of a way to use system dynamics models (it's of course not the only way).

I like that paper for several reasons. The model seemed good (at least from the explanation; I haven't explored the model yet), and the explanation of the model and its implications seemed good. What may be especially interesting to some is that they spent the last third of the paper talking about what they learned about the human side of the equation: how people responded to their work, and what they learned from that. The top of page 26 seems noteworthy, although you'll probably have to read the preceding 25 pages to make good sense of it.

How It All Ends and John Sterman

Some time ago, I posted a note linking to a John Sterman comment about global climate change. This morning, thanks to a randomly found posting, I discovered How It All Ends, a video that says something quite similar.

Greg Craven, the creator of the video, has put together a monster series on risk management, our role in the world, and global climate change. The first video is not quite 10 minutes long, and it presents the basic idea. It leads to an index video, which presents a few more ideas and leads to the menu video. While those last two seem like they might be boring and useless, you might find they add more value and are thus worth watching (perhaps the index more than the menu), even if you eventually find Wondering Mind 42, his Web site that has the list with links to each of the videos.

So at least go watch the first and perhaps the second video now, and see what you think. You might discover it's worth watching more. You might learn new ways of thinking ... and acting. Learning new things is almost always good, right?

And don't forget to read John Sterman's comment, if you haven't already.

More on LTG

I'll try to stop writing about LTG for a bit, but, before I do, I did find one other interesting paper that some of you might want to read. Matthew Simmons of Simmons & Company International wrote Revisiting The Limits to Growth: Could The Club of Rome Have Been Correct, After All?" back in October 2000. It appears to be a very readable, data-rich analysis of the changes in key parts of the world by someone who has been active in the energy business for decades. Check it out.

Simmons is a prolific writer; he has published a series of speeches and papers online (check the archives and the Oldies but Goodies, too). I'll have to come back and read more later.

Postscript: While I should be doing other things, I'm reading more of his articles. I encourage you to read his PEAK OIL: Is It Real? When Might It Occur? from February 25, 2008. While you need to start at the beginning to get context, check out his recommendations starting on slide 48:

Only viable solution that can work now:

• The solution: TRAVEL LESS
  
  
  
  • Less long distance commuting
    
  • Grow foods at home
    
  • Make goods locally
    
  
  

What do you think?

Tipping points

A few years ago, thanks to a lead by John Sterman, I posted a note about a Proceedings of the National Academy of Sciences (PNAS) article that attempted to quantify the carrying capacity of this planet. The concept of carrying capacity is important; if you try to exceed the carrying capacity of an ecosystem, you will eventually be brought back. What's even more worrisome is the potential that you might eat up carrying capacity while you're in overshoot: if you do that, the equations suggest you'll eventually suffer a collapse.

There's another concept that's discussed both in the systems literature and the popular press: the tipping point. That's the claim (loosely) that systems may reach a point where a slight addititional change will lead to a qualitatively different state. Often the definition includes something about irreversibility (you can't go back) or at least about the difficulty of reversing a change due to the reaching of a tipping point.

Now John Schellnhuber and his colleagues have published Tipping elements in the Earth's climate system in the February 12, 2008 issue of PNAS. They've also published appendices, not in the printed version, that provide their formal definition of a tipping point, evaluate other potential tipping elements, and describe how they elicited the information for the main article.

Those of you interested in tying systems concepts to the real world (hopefully that's just about anyone doing systems work, although some may be more interested in some applications than others) might find this of real interest. Those of you wondering about the risks of climate change might find it informative.

For a report on Schellnhuber's lecture at the annual meeting of the AAAS, see John Schellnhuber’s Third Industrial Revolution, a New Approach to Addressing the Hazards of Global Warming by Julia Whitty in Mother Jones.

CSIS and climate change impacts

I've written about scenario planning as a way to prepare for the future. I think it's useful when we do it in our organizations; I think it's useful when we read well-done scenarios others have written.

The Center for Strategic & International Studies (CSIS) recently published The Age of Consequences, describing the likely impacts of three different climate change scenarios on "The Foreign Policy and National Security Implications of Global Climate Change," as it says in the report's subtitle. In a way, it's related to the Schwarz, Gilman, and Randall effort I've mentioned previously; indeed, they refer to it.

I've skimmed or read the first third of the report, including the executive summary, and I've found it worth reading further. Rather than delay letting you know about it while I find the time to finish it, I'll post this today. Rather than making you read more of my words when there are 124 pages in the report, I'll stop and let you start reading.

Thanks to RealClimate for the lead.

The voice of a child ...

I write here about the environment from time to time, for I think there is a significant likelihood that we will face important transitions in our lifetimes or the lifetimes of our offspring that will impact us in multiple ways: personally, in the way we live, and professionally, in the way we produce what we need to live and earn what we need to acquire those things we need to live. (If TIME is right, we may not have to wait that long for those transitions.)

Presentation Zen posted You can learn a lot from "a child", a speech by Severn Cullis-Suzuki at the 1992 Earth Summit in Rio De Janeiro. It touched on the big issues I perceive we face: figuring out how to make life sustainable on this planet, and figuring out how to live together. Watch it.

I also write about presentation skills from time to time. As Presentation Zen reports, Al Gore called this "the best speech at Rio."

Transitions

There was a statement in the article about the lack of water in Atlanta that gives me pause:

Scientists have warned of impending disaster.

And life has, for the most part, gone on just as before.

The evidence seems clear that we on this planet are likely facing major transitions in the way we live. Yet, until this year, I still sensed a basic assumption that life would go on as it has been, that we could accommodate all of these transitions without changing the way we do business or the way we live in any significant way. Perhaps technology would save us, perhaps others around us (government, business, utilities) would save us from having to make hard choices.

I don't think that's prudent. Whether we think of it as business risk management or business continuity planning, we need to think of what these changes might do to our businesses and our societies, and we need to make the appropriate preparations.

What will your business do if some of these predictions come to pass? What will my business do? Here's an Australian view.

Oil

Yesterday I wrote about water; today it's oil. The Association for the Study of Peak Oil and Gas (ASPO) just concluded a conference in Houston, and The Oil Drum has published a series of reports:

• Houston ASPO - the Workshop day
  
• ASPO Houston: Day 1, part 1
  
• Houston ASPO Day 1 part 2
  
• Houston ASPO Day 2 part 1
  
• Houston ASPO Day 2 part 2
  
• ASPO Houston - a comment
  

It's also been covered in the news.

If you're not careful, you can get to feeling depressed by reading all this, or you can get overwhelmed, decide it can't be as bad as this, and ignore it. I don't think either are useful. Perhaps one way out is to listen to an interview with T. Boone Pickens' at ASPO. He clearly thinks we've passed peak oil, and yet he's not gloomy and depressed. He does point out some of the adjustments we'll need to make in business and in our personal lives (e.g., natural gas for transportation instead of heating while we search for alternatives).

What's your take on all this? If these sorts of changes come to pass, will they affect our businesses? How? What are we doing in our businesses to prepare for the sort of shocks mentioned here yesterday and today? What can we do? What should we do? What opportunities do these changes open up?

Water

Climate change is in the news, as is peak oil. On Sunday, the New York Times reminded us that we need to think about water, too. In The Future Is Drying Up, Jon Gertner has taken an in-depth look at water and the American West.

If you think this pertains only to the American West, check out Monday's Atlanta Shudders at Prospect of Empty Faucets, also from the New York Times. As the BBC's Why world's taps are running dry points out, it's a global issue, too.

Why did I tag this business as well as environment? Because business will be affected, and business can make a difference.

We must be doing something right!

For the last seven and a half years, I've rarely seen a client. That doesn't mean I've been sitting idle in my office; it means we've been finding other ways to work together than getting into a car or onto a plane so we can sit in the same room.

I did that because I saw a need: companies who were spread out geographically, who needed to work together in groups, and who didn't have the funds or the time to get on a plane every time they needed to collaborate wanted alternatives. I also saw an opportunity: I could help more organizations more quickly and at less cost, because I could implement quick changeover in consulting and facilitating processes. Besides, when I'm working in my office, I have all my resources available to me, including any that aren't sufficiently portable to be carried to meetings.

Now WebEx is running a free promotion, focused on the amount of carbon dioxide emissions such an approach can eliminate. Sure, it's designed to sell more of their services, but they do seem to have a point (and they do plant trees!). Now if we only had an unbiased evaluation of the cost of, say, meeting, including the cost of running IT services in all the different alternatives. Their assessment may be fairly accurate, though; it's likely many of us would bring our laptops to meetings, and so travel would provide incremental, not substitute, emissions.

Give it a try, or look for another tool that meets your needs.

Thanks to Chief Learning Officer for making me aware of this promotion.

What else can we do to speed up our work and improve the environment at the same time?

Counterintuitive Behavior of Social Systems

Jay Forrester's (new: link to several of his papers) Counterintuitive Behavior of Social Systems (new URL) is another classic worth reading and re-reading. The article offers food for thought, not final answers. If you start, I encourage you to keep going to the end (I'm saying that, because I know it's 28 pages of text and everyone's time is short). As a bit of encouragement, here are two quotations. First, from p. 24:

Figure 8 shows the world system if several policy changes are adopted together in the year 1970. Population is stabilized. Quality of life rises about 50 per cent. Pollution remains at about the 1970 level. Would such a world be accepted? It implies an end to population and economic growth.

Then, on page 27, he writes, "Our greatest challenge now is handling the transition from growth to equilibrium."

Start at the beginning to get the context for both quotations, and see what you think by the end. These are important issues; don't blindly accept his admittedly somewhat preliminary ideas (see section XI), but don't blindly reject them, either.

Thanks to the HPSIGWiki for the reminder.

A classic: the tragedy of the commons

Every once in a while, it's useful to read or re-read some of the classics. We often hear of "the tragedy of the commons," but how many of us have read the original essay that led to that term? Check out the 1968 essay The Tragedy of the Commons by Garrett Hardin.

Manche mögen's heiß

"Some like it hot"—that's the title of a new study by Deutsche Bank Research about the effects of climate change on business out through 2030. To learn more and to find out who they think some of the business winners and losers might be (maybe you can position yourself to capitalize on some of these changes!), read the article by the same name from manager magazin. Better yet, read the full report.

For an English-language view, see the Grant Thornton International Business Report 2007 on energy and the environment.

A few comments to these essays:

• Sometimes it seems as if the people who talk about this issue are environmentalists who, some may fear, don't understand business. These two reports are part of a growing wave of business-oriented efforts to deal with climate change, peak oil, and their impacts. As Grant Thornton says, their report "highlights the incompatibility between continued rapid growth in the global economy and the sustainability of the environment...."
  
• The DB Research report is much more detailed than the Grant Thornton one, but it's also more geographically focused, looking mostly at Europe. However, if you live elsewhere, their report may prompt your thinking about the opportunities and risks in your region. The Grant Thornton report is generally at a higher level and more global. Read them both to get a fuller picture, both of what we may face in business and what thought leaders in business are thinking today.
  
• The DB Research report explicitly takes a ceteris paribus approach. A system dynamics approach might well eliminate that restriction and provide added insights. While one rarely succeeds in system dynamics when "modeling the system", it's certainly feasible to pick a problem, as they've done, and to model it as part of making sense of it and of testing solutions.
  

Incidentally, I realize that one of these reports is in German. I wish it were easy for everyone to read it, and I wish I could read good reports done in languages I don't know. While Google Language Tools, other automated tools, and multilingual friends and colleagues may help in the short term, I think it's important that we in the USA work multiple languages into the educational system at all levels. We can do it because it's a good thing to do, we can do it because it helps us communicate with those who speak or write in other languages, or we can do it because we realize that English may not always be the common language for business as it seems to have become today, and we want to treat others who have English as a second language today the same way we hope they'll treat us tomorrow if their language becomes the dominant language of trade and commerce.

There's another problem, too

In my last two postings, I've written about what I think is a very important issue we face as individuals, as businesses, and as a society. I think there's another issue that goes hand-in-hand with that issue: how we deal with tough, stressful problems, how we deal with conflict, and how we deal with perceived inequities. In almost any significant situation, we'll have differences of opinion, some small, some very large. (If we didn't, we should perhaps wonder if we're considering all the evidence.) How we deal with those differences can make all the difference as to what sort of outcomes we achieve.

No matter whether we're talking about differences between individuals, differences between groups in our companies or organizations, differences between factions involved in our local or national governments, or differences between nations, we have various approaches. Some approaches are violent; some are not. Some seem to lead to good resolutions; others do not. Some seem coercive, at least to some involved in those deliberations; others do not. Some seem to solve the problem today while creating new problems for the future; others don't.

If we can't figure out how to act effectively in such situations, I fear we'll have increasingly difficult times as stress mounts from climate change, from energy shortages, from perceived inequities (whether between individuals, groups, or nations), or simply from the challenges of doing business in competitive markets.

There are many ways to make communications in such situations more productive. As I've advocated for the use of multiple approaches (triangulation) in making sense of problems, I will say that I don't think any one approach has ability to save all deliberations about differences. Yet I have found the work of Chris Argyis, work he calls action science, to be impressively powerful in helping groups to hold productive discussions, to make breakthroughs in their organizations' abilities to get work done, and, as a nice side benefit, to help people feel good about working in their groups, not because they get their way, but because they get heard. It's based on three premises about productive decision-making in times of conflict and stress:

• Free and open decision making
  
• Testable and tested data
  
• Mutual commitment
  

The first, among other things, means I can't force you to use this approach. I can at best model the behavior I believe in and that I would like you to adopt; I have to give you the right to decide whether you want to follow suit.

The second means that we are willing to test data about all our important assumptions, not just the ones about quantitative data. Perhaps I (think I) know you'll never accept a certain proposal. If I'm following my principles, I'll figure out a effective way to test that assumption on my part (perhaps as simple as asking); otherwise, I'm unilaterally taking one possible solution off the table without us having the ability to talk about it.

While these are all hard in practice, while they require great attention to one's self, and while they sometimes require great courage, the third sometimes seems the hardest. Perhaps you and I disagree about a situation. Perhaps you've made your best case, and I see important issues I perceive as favorable to your position that you didn't bring up. If I'm committed to the first two premises of making free and open decisions with tested and testable data, then I'm committed to bringing up those issues, even if I perceive they weaken my case, for that's the path towards more productive, effective decisions. That may sound easy now; it isn't always so easy when I'm in a discussion involving a strongly-held belief.

I can introduce this approach to a group in perhaps 15 minutes, including some techniques for applying these premises in practice. It's hard work, though; it may take months of active help before a group begins to internalize these ideas in their routine interactions. This work is some of the hardest and yet some of the most rewarding I do. The first time I saw a group I had helped really begin to act this way, I was blown away by the progress they had made. Using these ideas along with others, they had shortened their process times by over 80%. They were highly effective at working together, cutting the time of making decisions from hours and days down to minutes, and the quality of those decisions had improved markedly. Deliberations were sometimes amazingly direct, and yet people felt really good about them. As one said (paraphrasing), "Now I know that people really hear me." If you're curious, you can read about that project in "Emphasis on Business, Technology, and People Cuts Turnaround Time at Hewlett-Packard's Lake Stevens Division." If you'd like to talk about this for your organization, give me a call.

And, when you're thinking about the topics of climate change and oil depletion (or business strategy and customer satisfaction), remember that how we talk about those issues may be as important as what we now think about those issues in achieving good results.

Why are we headed there?

Yesterday I posted a rather dark story about what we could be facing. As with any system dynamics model, it's showing the likely effect of the modeled policies; it's not predicting the future. (There is a difference; call if you'd like to chat about it.)

If that message is so dark, why don't we see much action to change our course? (Admittedly, we're beginning to see more action now.) The Oil Drum published Living for the Moment while Devaluing the Future, an essay exploring just that question. For a more academic approach, see Larry Karp's Global Warming and Hyperbolic Discounting, an article referenced at the bottom of The Oil Drum article (now on my reading list—I've only had time to skim it so far).

I think these ideas are important to understand and explore as we try to craft a "soft landing" from our ecological overshoot.

I think they may also be important to us in business. We get used to constant discount rates, because that's what we use. Do our customers and our bosses (they do have similar roles in our lives) really think that way, or do they do hyperbolic discounting, too? Would it it make a difference which they use? Would that difference imply we should act differently than we do?

Where are our policies leading us?

A policy is a set of guidelines or rules by which we make decisions. We have certain policies by which we work and live, even if we don't always make those explicit. If we see a pattern of decisions, decisions that seem cut out of the same mold, that's likely evidence of a policy.

François Cellier of the Institute of Computational Science of ETH Zürich, Switzerland has published an article, Ecological Footprint, Energy Consumption, and the Looming Collapse, at The Oil Drum that examines the potential effects of our policies towards growth. It's a high-level view, to be sure, but sometimes those offer great insights. Be sure to read both the article and the accompanying slide set (the article isn't that long; it's the 333 comments that take up most of the length).

I think this is a very important discussion. That's why I think it's important for each of us to be skeptical about such claims. It's not because I think he's wrong; his analysis, at least so far, seems good. It's not a call to wait for "proof," for, as John Sterman points out, we're not really waiting; we are doing things to the environment every day. It's not a call to ignore the claims, for that's not being skeptical; it's a call to test them and then to act based on what we determine. It's not a call for depression; Cellier does show a way forward (especially in the slides).

By suggesting we be skeptical, I may give the impression I think we can ignore this for a bit. I want to re-emphasize that the IPCC and others have given some pretty clear signals that the time to act is now (actually, the time to act was some years in the past; the next available time to act is now).

What does this mean for our businesses and for business in general? I think it means figuring out what to do to ensure the sustainability of our businesses and our economic system in the face of the challenges the best science says await us. The key lesson from "Out of Gas: A Systems Perspective on Potential Petroleum-Fuel Depletion" was that we not wait too long to attend to signals we get, for our systems have inertia, and we can't, as much as we might wish, always change direction instantaneously. Pay attention to Cellier's description of easy and difficult problems starting on slide 38; the signals may not be as we'd normally expect. Sometimes we can't wait to feel the wind from an impending storm; we have to rely on forecasts from meteorologists to know when to board up windows in the face of an approaching hurricane.

We can also apply that message to more typical business decisions. Do we discover we will need to add (or remove) capacity well in advance, so we can react smoothly, or do we make such discoveries only when the market begins to complain loudly? How do we figure out whether our latest initiative is about to make real progress or it's about to fail and we should abandon it and change course?

Reacting too soon can lead to the Chicken Little trap: if we respond too quickly, we diffuse our energies by responding to simple noise; if we respond too slowly, we're trapped. One of the lessons I've learned is that feedback models (of the sort I've sometimes discussed here, also called system dynamics models) can help us find what things to monitor so that we have a clearer picture to guide our decisions.

What do you think?

A climate change primer

Why do I write about climate change and the environment on Making Sense With Facilitated Systems? Because I think climate change will affect (and has already begun to affect) all of our businesses and all of our lives.

How do we get up to speed, if we need help? RealClimate posted Start here, which has information for those just getting started at understanding the issue and information for those who want more in-depth specifics.

For a slightly different take on the matter, see Gristmill's How to Talk to a Climate Skeptic (perhaps you're the skeptic you'll be talking with :-). Thanks to Brad DeLong's Grasping Reality with Both Hands for that pointer.

No such thing as a free (or even cheap) lunch

We read in the papers of biofuels replacing petroleum. Now the Financial Times reports that food prices are experiencing their biggest increases in 30 years ("Fears over food price inflation"), fueled by expanding use of biofuels, climate change, and growing prosperity in India and China.

Maybe conservation will have to play a bigger role compared to substitution than we may have thought (or at least than we act as if we thought).

Does sustainability in business mean companies have to die?

I've written about growth and sustainability from both a business and an environmental perspective. Now John O'Leary posted a note on the Tom Peters site that blew me away with a suggestion that was both obvious and unexpected: sustainability means that companies die. It's the sustainability of the economic system, not of the company, that matters.

That's obvious in your garden and in the forest. Older trees eventually die to give way to the younger trees. Last year's tomato plants are pulled and composted, and this year's crop is planted.

As sequoias may last for centuries and tomatoes last a season, different companies have different lifespans. We shouldn't uproot a healthy sequoia seedling after a season, anymore than we should try to keep that tomato plant producing into the next century.

And there are indeed challenges. When companies fold, people have to find new work, and that doesn't always happen at favorable times. When companies fold, we may lose access to products and services that provide part of the support for our businesses or our lives. We have to think well about how to deal with such transitions.

Yet a key factor in enabling births in an environment with finite capacity is deaths. A key factor in enabling growth in companies and opportunity for people may well be to allow companies to die with dignity.

Thoughts?

Some energy fundamentals

I've written before about the risk of running out of petroleum as a viable energy source. Obviously, I'm not the only one, and many an idea has been broached regarding potential replacements.

Don Lancaster's Guru's Lair News newsfeed turned up his now-several-years-old article called Some Energy Fundamentals today. It might be worth your while to read, if you figure the transition to the replacement for gasoline is going to be easy. While I haven't checked all his calculations and statements, it seems more scientifically based (or engineering-based) and less alarmist than many such essays. It doesn't paint a rosy picture, though. I'll be curious regarding the critiques any of you might provide.