John Akerson's Thoughts

Business, technology and life

Lessons from Harvard Biz tip could help end the recession.

For August 27, 2009, The Harvard Biz Management Tip of the day is: Think Green to Fight the Next Recession ( http://bit.ly/3bBoPm ).  The tip’s premise and points are admirable. Harvard Biz is right to highlight Honda Insight and Toyota Prius sales as delightful during our challenging economic times. Harvard Biz is also correct that “many companies are launching environmentally friendly products, and being innovative in ways to creatively shrink resource usage.” I think they should at least briefly explain WHY it is important to think green to fight the next recession and I think it is important to consider how thinking green could help end the current recession. Explanations of the business benefits that come from environmental motivations originate in business lessons that from 1849 and 1973.  Harvard Biz should have emphasized both the corporate and consumer benefits of energy conservation. Harvard Biz was right in suggesting that businesses “use a green lens in selecting products for the future” but they could and should have emphasized the enormous “why.” Selling hybrid cars doesn’t produce such fantastic sales simply because the product appeals to consumers’ altruistic nature – although that is an important component. It produces sales because it helps the consumer lower their costs. Trading a gas guzzler for a car that can get 40 or 50 miles per gallon enables consumers; it gives them a significant tool to help conserve money that would have otherwise poured out of their possession – through their tank to oil companies and foreign oil producers. Selling hybrids helps consumers save their hard earned gold. The business side of the green lens shows a company selling hybrids as the 21st century version of the 1849 mining supply company. The miners demand for pans, supplies, and ways to get their gold may have exceeded the gold they found. Selling efficient products benefits the consumers who want to pan for the gold to be found in environmental responsibility. Lowering costs is such a powerful incentive for consumers – and companies gain advantages by offering those products. Beyond selling environmentally friendly products (that help customers lower their costs) the simple practice of lowering costs is powerful for companies too. The Harvard Biz green tip would have been a great business management tip in the 1970’s because of the 1973 oil crisis and the 1979 energy crisis. Energy costs have certainly been soaring for a long time. Focus on energy savings could have helped companies survive and thrive through the recession of the early 1980s. (regardless of the Fed’s contractionary monetary policy.) The focus on those energy savings would have been important then – and is more important than ever now – because energy savings equate to cost reduction.

Internal corporate energy savings help simultaneously increase productivity and return on investment in the same ways that producing energy efficiency for customers can help them reduce costs. Increasing efficiency is a win-win for everyone involved. That is a more important business tip that Harvard Biz missed. Here’s an important corollary: Energy savings enable cost reduction without any related headcount reduction. Hiring will be critical in ending the current recession. A company might look at energy efficiency and savings as a method for lowering costs – but if hundreds or thousands of companies start reducing energy consumption while retaining or increasing employment. Harvard Biz suggests that could help companies during the next recession.  Those lessons could have a significant impact – and contribute significantly to ending current recession.

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August 27, 2009 - Posted by | Uncategorized

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