Running the planet like a company

Globe - blueBusinesses win or fail on some very basic principles.  These include: knowing the customer proposition, accurately forecasting customer growth and sales per transaction; transparent, well-nurtured supply chains capable of meeting growth plans; a good price model, trusted brand and solid governance. The planet could learn from such basic principles and the application of those principles is what I believe sustainability has to offer.

Okay, congratulations to your promotion to the management team of the entire planet. Maybe you are a supermarket manager who has been hired to sit on the board, maybe you are an investor looking to buy shares in the planet, maybe you work at an insurance company which has been asked to insure the planet or maybe you are Sir Richard Branson looking for your next major investment. What would your due diligence reveal, how would you respond to your first week’s induction or what would you as the CEO of the planet say to your shareholders at the AGM?

So, I have chosen to be specific. I am the new CEO of Planet Earth and this is my first feedback to the board. Here are my main headlines and some observations:

The purpose of our business is simple.  We supply human beings with food, shelter and wellbeing.”

Sales growth and forecast
We have experienced an unprecedented growth in our customer count and the amount some of those customers buy from us.

Mankind, as we know it, appeared 160,000 years ago. This means that you could argue that my hypothetical Planet Earth company is 160,000 years old. To make this metaphor work better I have condensed the timescale into 100 years which for a company is still quite a long time. For the first 98 years of Planet Earth plc customer count growth was steady, solid and predictable. We enjoyed growth from one million customers in our first year to 250 million by year 99 but by the end of the first half of the last financial year our customer base quadrupled to 1 billion.  In the last two days this has increased sixfold with the forecast of nine billion customers within around 10 days!

Until recently transaction value per customer was low with people hunting and gathering near where they lived. But during our last quarter there has been an unprecedented explosion in demand with some customers demanding complex transport, different diets and bigger homes to fill with more furniture and gadgets.  Basic food has become more sophisticated and instead of being locally sourced, food for some markets now comes from all over the world.

Supplier growth plans aligned with our forecasted growth
If everyone in the world enjoyed more affluent lifestyles we would need three times the entire production capacity of this company. This is the conclusion of the Worldwide Fund for Nature.

All this consumption has another price:  it produces huge volumes of waste and the type of waste which has the greatest potential impact on the business, is one that we can’t even see – carbon dioxide. Our customers’ activities from driving their cars to raising cattle for meat generate huge volumes of carbon dioxide, more than the planet can absorb.  Over the last quarter CO2 has started to accumulate in the atmosphere and the rate of accumulation is accelerating.

The need for a resilient and well nurtured supply base
Planet Earth plc has many diverse and complex suppliers.  Forests produce wood, some food and medicines, water systems, clean air and they absorb carbon dioxide and make oxygen.  Oceans provide warmth, habitat diversity and fish for food.  Glaciers and ice sheets act as air conditioning and the sun provides us with warmth.  This is a very simplistic description of an immensely complex supply base – in fact it’s so complex that nobody really knows how the production sites operate. Key is recognising that they are all interconnected: if you damage one, the others wobble too.

Even we on the Board at Planet Earth have to admit that we do not understand the intricacies of how all these production sites are dependent on each other and how a shut down at one production site will influence and impact another.

Price and margin
The cost of the product is not always reflected in the selling price. Producing a kilo of coffee consumes 20,000 litres of water, a quarter pound hamburger requires 11,000 litres and a kilo of cheese, 5,000 litres.

In the UK a customer pays 0.1p for a litre of mains water which would value the quarter pounder at £11!

Food is now so relatively cheap that many of our customers place little value on it, evidenced by the fact that up to a quarter of food in the UK is thrown away.

Customer satisfaction and a brand we can all be proud of
Growing food, absorbing carbon, providing water.  These are the positive elements of our brand values. However, some of our customers are still more likely to complain about how far they have to walk to collect water, how their families are stricken with malaria or HIV/Aids, how their forests are being decimated and how their fish stocks are disappearing because other fishermen have over-fished their waters.

On the other hand, you would expect that all this new stuff we are supplying our more affluent customers would lead to very high rates of satisfaction, but that is not the case. Life satisfaction has begun to decline with depression and suicides rising.  Our most affluent customers’ spiritual and emotional needs are proving hard to predict and are far more complex and demanding than in all our previous years.

I hope by now you can see that Planet Earth is not well run. Customer count is soaring, demand is going up but our supply base and pricing model is not designed for long term growth. Without turnaround our business will collapse because of its own success. We need to improve, radically and now.

The Board has a considerable amount of work to do over the next few quarters to balance the problems of under- and over-supply.  We have failed to understand what our customers mean by wellbeing. We need to understand our customers’ emotional needs better and find new ways to meet them.  But this is difficult because these needs are not well articulated by the customers themselves.

Thank you

Repositioning

We need to reposition sustainable development as a discipline borrowed from business, rather than a new discipline being imposed on business.

The Planet Earth metaphor is a stretched metaphor but it does illustrate that what we take for granted in good business management is what is missing in how we look after the planet. Sustainable development is no more than running the planet with the same disciplines as we run companies.

This counters many real business leaders’ desire for there to be a clear and robust business case for sustainable development, since it is they as business leaders who invented the principles of discipline and good governance.

In this metaphor lies a new position for a sustainable development narrative – it is no more or less than building global business plan to deliver nine billion quality lifestyles by 2050). This positions sustainable development as a dynamic, exciting project that can draw upon the success and learning of businesses large and small around the world.

All businesses should be asking themselves, ‘how can we contribute to making nine billion quality lifestyles possible by 2050? But that starts with the most basic of business disciplines: vision, strategy and teamwork.