Heretical ideas have swept industries many times. If someone in the advertising, television, or music businesses had asked 15 years ago, “What if people stop watching commercials?” or “What if everyone thinks music should be free?” they would’ve gotten strange looks. Then TiVo and Napster asked those questions. Of course, the latter one failed to consider some serious legal issues, but it did lay the groundwork for other (legal) business models, like iTunes. For their part, digital video recorders have forced innovation as advertisers try to replace the traditional 60-second spot with sponsored shows and product placements.
Innovate: Andrew S. Winston.
The failure to ask big, heretical questions can sink a business or industry—the music industry is still suffering from this mistake, and sales have been down nearly every year since Napster appeared. A failure of imagination can even tank the global economy. Arguably, one major contributor to the financial meltdown was the inability of nearly everyone in that sector to ask one question: what would happen if housing prices actually dropped instead of rising every year? Most of the ratings agencies’ financial models did not allow for a negative number in the “growth” cell. The few that did ask themselves tougher questions and largely moved out of mortgage-backed securities, such as Goldman Sachs, came through the crisis in better shape than competitors.
Even though serious economic downturns change industries and markets in profound ways, those shifts may pale in comparison to what the green wave will do to business as usual. Resource constraints and megaregulation on carbon, for example, will change how we work, play, travel, eat, and live. The time for small measures to solve environmental challenges is quickly passing.
What will these pressures mean for your industry and business?
Predicting the future is difficult enough, but it’s even harder when dealing with environmental challenges. Jim Butcher, the former head of Morgan Stanley’s global environmental office and a scenario-planning consultant, says that we all make one serious error: “Most people think linearly, assuming next year will be a minor variation from this year. But environmental issues are often nonlinear and not gradual.” How do you prepare for a tipping point change that can come upon you suddenly?
I suggest asking more radical questions. What would happen to your business—and to all the companies or consumers in your value chain—if oil were $500 (about Rs24,200) per barrel? It sounds absurd, but the price of oil rose from below $20 to $145 in four years, so why not $50 to $500? Or how about asking this: what if there’s no water? How would you, or your major suppliers, handle a shortage?
The megaforces—like the prospect of very expensive oil—can prompt some interesting questions. But the green lens has more value than just helping you respond to green wave pressures. It can be a powerful tool for innovation in its own right. Asking provocative questions with a green tint can unleash new ways of thinking. When times are tight and you’re feeling strapped for cash, you may need heretical ideas that help you find completely new, and much cheaper, ways of operating today.
So, what’s your heresy?
Let me share a few examples of some big picture heresies and show how some companies are grappling with tough questions.
Can a plane fly with no jet fuel? The aviation industry is starting to ask itself this surprising question. In fact, I first heard the germ of the idea for “heretical” innovation at Boeing, a company I’ve advised on green strategy. In one meeting with the company’s environmental executives, a few of them joked about starting a “Project Heresy” to house disruptive initiatives. Although they were kidding, I thought it was a brilliant way to help people think differently.
Boeing has run biofuel test flights with multiple airlines, including Virgin Atlantic, Japan Airlines, Air New Zealand, and Continental. The planes flew with fuels derived from various mixtures of coconut oil, the jatropha and camelina plants, and even algae. Boeing has also flown a small plane on fuel cells that the company imagines can eventually power the auxiliary equipment on jumbo jets. All these tests are a first step toward building aircraft that can fly without fossil fuels.
Nobody can predict perfectly what the costs of biofuels will be at scale, but early tests show that the yields and energy density from fuels like algae may significantly improve on jet fuel. And when fuel costs can run to more than 40 per cent of your operating expense—as it did for airlines in mid-2008—isn’t it worth exploring some new options?
Can we send no waste to the landfill? For the employees of Subaru’s facility in Lafayette, Indiana, the date May 4, 2004 holds special significance—it was the last day that anyone from the plant sent garbage to the dump. Subaru and a few other companies have reduced landfill waste not just a lot, but to zero. The automaker’s program of employee engagement, incentives, and new systems for sorting everything is extensive, but the cost savings easily pay for all the effort. In the process, the company has slashed toxic emissions and carbon dioxide per vehicle by 55 percent and 20 percent, respectively. These benefits, and the millions of dollars Subaru saved, stemmed directly from a focus on getting lean and from asking a seemingly wacky question.
What if cars were a service, not a product? Even with the extremely dire economic situation for automakers, it’s a time of incredible innovation. For the auto industry, innovation is not just good business; it’s do-or-die. All the car companies are pushing hard on new technologies, from hybrids to electrics to fuel cells. But the real heretical innovations may change the nature of car ownership entirely. Car-sharing services like Zipcar, which allow you to buy hours of car time, are still relatively small at 200,000 members, but the big rental companies are getting into the game now as well.
A different challenge to the car business comes from a highly touted start-up run by tech executive and entrepreneur Shai Agassi. Israel and Denmark have agreed to let his company, Better Place, build charging stations all over the country. Agassi’s company will sell electric vehicles built by Renault-Nissan, but will maintain ownership of one core technology in the car, the battery. Drivers will pull into a station and switch out the old battery for a newly charged one. Since drivers will be renting the battery, they will effectively pay for the power and miles driven, not the battery itself.
These business models are new, but are shaking up one of the world’s largest and most far-reaching industries by asking new questions. As The New York Times reported in a February 2009 profile, “Agassi appears to be tapping into the anything-is-possible spirit of the times... ‘I start with the question, how do you run a country without oil?’” Apparently, Agassi is full of heretical questions.
Green marketing expert Jacquie Ottman suggests that you “ask the big question: what would it take to meet our consumers’ needs with zero impact...or in a way that actually restores the environment?” And if you don’t ask the deeper question about what your customers really need, says Bruce Klafter from Applied Materials, then “you run the risk of simply trying to build a better mousetrap rather than understanding whether your customers still need one at all.” Heretical questions like these are changing industries. Which side of the transformation do you want to be on?
To be sure, innovation can cost your existing lines of business some revenue. I spoke to Xerox’s Ursula Burns about the company’s new ink technology, which may replace current machines. Burns posed the important question, “Will this new product cannibalize our machines?”
Her quick answer was instructive: “Maybe, but someone else doing it is much worse.” In short: You’re much better off creating a disruption than being on the other side of it.
The problem of undermining your own successful products is the classic “innovator’s dilemma,” and Burns suggests embracing it. Green pressures will force this dilemma on anyone whose product or service uses more energy or resources than it could (that is, everyone).
It may be obvious, but if you want to ask heretical questions, you need some heretics. In his book Tribes, marketing guru Seth Godin talks extensively about how heretics are the new leaders in organizations (a big change, I’d say, from the days where the “organization man” was valued above all). As Godin says, “Suddenly, heretics, troublemakers, and change agents aren’t merely thorns in our side—they are the keys to our success.”
So cultivate the radical thinkers and give them some structure. Attacking your own brands requires nerves of steel. It also requires focus and an organization tuned to find these opportunities and act on them.