Have We Reached a Green Business Tipping Point?

futurelab default header

by: Joel Makower

Where are we, exactly, in the trajectory of green business? Things seem to have changed decidedly in the past six to twelve months, as more and more companies do more and more things. But what should we make of it?

I've done close to 100 media interviews since New Year's, a wide assortment of publications, websites, broadcasts, and podcasts. And two questions keep popping up from reporters: Is there a green business bubble? And have we achieved a tipping point?

I've already largely addressed the bubble question. In short, the greening of business isn't a bubble simply because it's a bell that can't be unrung. Once companies wring out the resource waste, toxic ingredients, embedded energy, and carbon intensity of their products and services, there's no turning back. Even if energy prices were to take a sharp dive, the old inefficiencies won't return. (Indeed, cheap energy would exacerbate the problem, by increasing energy use and, hence, carbon emissions.)

The quality movement of yore represents a good analogy. During the late 1980s and early 1990s, "total quality management," popularized by American statistician W. Edwards Deming, was the rage. There were books, magazines, conferences, and untold experts making the rounds, preaching the gospel of kaizen, quality circles, and other business practices. Inevitably, it ran its course.

But when TQM faded from the limelight and the business media turned its collective gaze elsewhere, quality didn't go away; companies didn't revert to their old, inefficient ways. Quality became part of the fabric, eventually showing up in the form of six sigma, lean manufacturing, just-in-time inventory, and other business processes and strategies.

So, too, with the greening of business. Yes, some green products and companies will, inevitably, fail or lose favor. But the hardcore (and largely unsexy) stuff — energy efficiency, waste reduction, pollution prevention, supply-chain management, environmental reporting, etc. — will be around in one form or another for decades. So will the innovations, which are increasingly coming into the marketplace: green chemistry, biobased materials, nature-inspired design, cradle-to-cradle products, and all the rest. They're not going away once the green fever cools down.

The "bubble," to the extent there is one, is in media reporting. (And there are many days lately that I wish it would finally burst.)

So, what about the "tipping point"? It's become a hot topic at many of the business gatherings I've attended in recent weeks. With good reason: Those in the field are riding a surging wave of activity. Consultants who had not very long ago had trouble getting calls returned are turning away clients. Those that already were busy are now oversubscribed. Corporate environmental managers, once marginalized in their organizations, are becoming valued players. New headlines appear almost daily trumpeting companies' green initiatives, and it's no longer just the usual suspects of corporate names.

Many of my colleagues seem downright tipsy. "We've finally reached a tipping point!" they proclaim.

Have we? Not even close.

First, a refresher: Malcolm Gladwell popularized "tipping point" in his 2000 bestselling book of that title. "Ideas and behavior and messages and products sometimes behave just like outbreaks of infectious disease," explained Gladwell. "They are social epidemics."

As human beings, we always expect everyday change to happen slowly and steadily, and for there to be some relationship between cause and effect. And when there isn't — when crime drops dramatically in New York for no apparent reason, or when a movie made on a shoestring budget ends up making hundreds of millions of dollars — we're surprised. I'm saying, don't be surprised. This is the way social epidemics work.

The "tipping point," Gladwell told us, is "the name given to that moment in an epidemic when a virus reaches critical mass."

The virus called "green business" has not hit critical mass. The number of large companies that have embraced sustainability as a core business strategy remains small — no more than a dozen of the Fortune 500, if that. True, more companies are paying attention. From where I sit, it seems as if nearly every company is asking some form of the question, "What's our green strategy?" They don't necessarily understand what that means, but they know they need one. And that's a sea change.

But for the most part, the answers they're coming up with are more programmatic than strategic — a few noteworthy changes here and there, but mostly business as usual.

And small and midsized companies — 98 percent of all firms in the U.S. (and probably most other countries) have fewer than 100 employees — remain largely uninvolved. Look around your community and you'll find that most local business haven't changed much: dry cleaners, auto mechanics, small parts manufacturers, metal finishers, printers, butchers, bakers, and candlestick makers have largely been AWOL from this conversation, except in rare instances. They represent a large chunk of the economy that hasn't yet discovered "green."

Of course, there's little reason for most companies, large or small, to make such a discovery. The incentives simply don't exist — whether from government, customers, suppliers, employees, job seekers, bankers, or most other business partners and stakeholders — to spur companies to adopt cleaner and more efficient practices. For most firms, going green remains an investment with questionable or underwhelming payoffs.

None of this is to say that the conversation about green business hasn't changed. As I've said, the amount of activity has grown steadily and immeasurably in recent months. But a high level of interest and inquiry does not a tipping point make.

What would a green business tipping point look like? How would things change? I can't honestly say. Can you?