Business

Why the economy and the environment don't need to be in conflict

In current politics we often hear that environmental issues should be put on hold, as we need to first protect the economy.

The first argument against this is that if we have severe degradation of the environment there will no doubt be a detrimental effect on the economy, which will have significantly higher remedial costs compared to taking preventative action beforehand.

The second point is that those businesses and national economies that more quickly adapt to green products and practices will gain market share, which will then be difficult for followers to take. Being in early will provide a competitive advantage as late comers will not want to reinvent the wheel, but rather buy from established providers.

Why the Global Financial Crisis can be a good time to do business

We expect that in a recession all businesses will have lower sales. However consider the movie business during the Great Depression. If any industry should have shrunk it would have been it, as it was non essential discretionary spending. Instead it thrived as people wanted a diversion. In current times companies like JB HiFi (http://business.smh.com.au/business/jb-hifi-turns-up-earnings-volume-20080819-3y7p.html) can still report larger profits and sales, so some businesses do have demand increase if they can adapt to the conditions.

Also customers will often question brand loyalties that they considered unbreakable before. So there comes an opportunity to win business that was previously unavailable.

Often the first things to be cut back in a recession are marketing and IT. However, it is during a recession that it is easier to pick up market share as customers are more mobile and often costs associated with marketing are lower. Often what is needed is a more creative approach to ensure a high level of market awareness, whilst still protecting vital cash flow.

Green projects are often popular with staff, clients, investors and share holders, so as well as doing the right thing - businesses also gain a marketing advantage.

You can be green AND save costs

Cutting back on energy usage and material waste have green benefits and directly improve the bottom line. There are a number of areas that are frequently taken for granted by companies in good times, but which can provide extremely sizable gains when properly reviewed when times are more challenging.

Books by some inspiring business leaders, past and present:

Henry Ford's books My Life and Work - An Autobiography of Henry Ford and Henry Ford Today and Tomorrow - Special Edition of Ford's 1926 Classic cover periods disturbed by World War and depression, however they provide excellent guidance for today. They also make you wonder whether when we are faced with extraordinary times we need to invent new systems, or whether society already has much of the information that has just been forgotten or ignored. His ideas on reducing waste, inventing better methods, looking after staff and serving the customer are outstanding.

Lee Iaccoca's autobiographical book Iacocca was written in the 1980s. Lee was a protege of Henry Ford II, and rose to be the company president before being fired for what some described as "flying too close to the sun". He was famous as the "Father of the Mustang" and moved across to the financially troubled Chrysler. He had to go to the government for bailout funds at a time when other car companies thought they should be allowed to sink. Foregoing his own wages, he pulled together the staff, suppliers, financiers, unions and shareholders to get the company back on its feet. The story makes fascinating reading with many leadership examples, given the current parallels.

Richard Branson is from our current era. His ability to build up underdog companies in some of the toughest industries is legendary. His books are excellent reading to consider his views on customer and staff relations. Interestingly he has become a champion of the environment referring to James Lovelock's work (see Climate Change) in his latest book Business Stripped Bare: Adventures of a Global Entrepreneur. Also in this book it tells of "The Virgin Earth Challenge, a prize of $25m for whoever can demonstrate to the judges' satisfaction a commercially viable design which results in the removal of anthropogenic, atmospheric greenhouse gases so as to contribute materially to the stability of Earth’s climate".

For businesses that wish to explore these ideas further,
please see our Executive Briefings section.