A Path to a Green Recovery: Time to Get Lean
It's been a long, hard recession and many companies are gun-shy about investing in anything right now. Unfortunately, some are sidelining environmental initiatives, claiming it's too expensive to go green right now. That's a big mistake.
In my new book, Green Recovery, I make the case that going green is a critical path out of this downturn. Companies that use the environmental lens wisely will get lean quickly. They'll save lots of money, both to survive and to reinvest in people and innovation for the longer haul. We will exit this recession, and the smart companies are getting ready now.
One of the core principles of green thinking is doing more with less. Who couldn't use some cash right now? Cutting back on energy, water, and other resources often pays back shockingly fast.
This isn't a discussion about changes at the margins. Getting lean can save real money - millions and even billions - and give a noticeable boost to earnings: shipper Con-way slowed its fleet down to 62 mph, which will save upwards of $15 million, or up to 20% of the company's net income last year. At the macro level, getting lean can change the discussion of how companies handle downturns. Instead of firing people every time we want to save money, I say it's time to get lean on stuff, not people.
The green wave marches on, from increasingly clear environmental challenges like climate change and water stress to rising stakeholder pressures from customers, consumers, and employees. Green Recovery lays out a plan for getting ready for a resource-constrained future by accelerating both green cost-cutting programs and green innovation. In this e-letter, we focus just on the former: five areas for getting lean today and freeing up capital for tomorrow.
Below are some quick examples of smart work going on in five operational areas: facilities, IT, fleet, telework, and waste. Changing lights (or just turning them off), packing trucks tighter, redesigning data centers and tech equipment, using teleconferencing instead of flying - all of these areas and more are ripe for quick savings. These ideas are meant to get you thinking and foment discussion. A fuller view of these five areas - the entire chapter on getting lean from Green Recovery - is available for free as a pdf at the book's website (www.thegreenrecovery.com). And of course the full book - which puts the "get lean" discussion in a larger context of also getting smart, getting creative, and getting your people engaged - is available online and in stores.
One last point…most changes below do take some investment, but the paybacks are fast - usually weeks and months, not years. There may be no better investment right now. Getting lean is the right starting point for a recovery, so let's get going.
~Andrew Winston, Founder, Winston Eco-Strategies.
The Lights and the Heat: Facilities
Turning off lights may be the easiest green action in the world. It can be a cultural thing at a company or, better yet, automated. Retailers are using daylighting technology to dim the lights when sun is streaming in. Or you can switch to lower-energy-use bulbs such as high-intensity fluorescents. As fast as people are switching to CFLs, the newer light-emitting diode (LED) technology is gathering steam as prices drop - as part of Starbuck's quest to open only LEED certified stores from now on, the company will be moving from incandescent right to LEDs, and AT&T will be shifting all signage to LED. Companies are also redesigning manufacturing facilities - such as Pepsi's new LEED plant in China - or just updating the systems they have; a small engineering firm, Bes-Tech, helped Applied Materials optimize its heating and cooling system at one corporate campus to the tune of $1.2 million in savings annually (a one-year payback).
Cooling or Shutting Down IT
The great race is on to make infotech far less energy-intensive. IT equipment gets hot and requires a ton of energy both to use and to cool - energy now represents more than half of the variable cost of running a data center. A few best practices for big IT…(1) outside air cooling which basically means opening the door to let all that heat out - according to one Intel study, a 10 megawatt data center in the right climate would save $3 million (see also Google's efforts to make a chiller-less data center); 2) virtualization technology, which gets more processing out of idle servers, and, (3) change the culture by adding the power bill to the CIO's budget! For more on the the large IT side, check out the organization Green Grid which posts papers and studies on how to reduce energy use. At the smaller level - as in all those computers sitting on people's desks - use automation software such as Verdiem's to automatically put computers to sleep at night (one company, Partners Healthcare in Boston, is using this technology on 27,000 computers and saving $1.4MM a year)!
Filling Trucks and Driving Fewer Miles
For a seemingly staid industry, trucking and distribution is in the middle of a major innovation cycle. In just 3 years, Wal-Mart improved its fleet efficiency by 25%. The opportunities for savings are everywhere. Some low-cost options: train drivers to accelerate and decelerate smoother, keep tires filled (and with nitrogen), and set maximum speeds - an engine function that comes standard on all trucks now. Slightly larger capital investments, such as installing auxiliary power units (APUs) to cut back on idling, pay off with greater savings. Idling is the great scourge of fleet efficiency and Wal-Mart's purchase of APUs for its entire fleet improved overall efficiency a stunning 8%. All of this adds up, but sometimes larger redesigns are in order. Asian shipping company Cosco cut back from 100 distribution centers to just 40, saving miles and cutting 23% from logistics costs. See the EPA's SmartWay site for much more information.
Working in your Pajamas
Telecommuting and telework have enormous potential to save money and energy. British Telecom has saved over $300 million a year by using telecom to keep its employees from traveling so much, and Cisco now estimates that it's saving $277 million as well. Granted, these are telecom giants "eating their own dog food" as the saying goes, but other lower tech companies are seeing significant savings as well. High end systems from the likes of Cisco and HP, combined with more everyday solutions such as WebEx, may slash business travel and improve life balance. At the national level, teleworking and videoconferencing could save billions of tons of greenhouse gases.
Waste Not, Waste Not
It sounds obvious, but waste costs money. For most companies, waste is likely the smallest category of the five in terms of financial savings, but it's important for establishing a mindset. Companies that aim to turn waste from a cost center to a profit center think differently. For some, setting and achieving the goal of "zero landfill waste" drives new thinking - Subaru's Lafayette, Indiana plant has not sent anything to the dump in over five years, saving the company millions. Companies that help customers reduce their waste through smart product and packaging design will win loyalty - see Xerox's recent development of a new ink system that reduces waste 90%. Even seemingly wasteful products, like single use coffee capsules, can benefit from a concerted effort to think through the lifecycle waste issues (see a two-part story here and here). In the end, all of the categories of lean opportunities here are about reducing waste and doing more with less.
Download the full story on Getting Lean at www.thegreenrecovery.com.
Get the conversation going! Click here to post your comments on this issue of "Eco-Advantage Strategies."
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