The ferocious battle in Washington over the debt ceiling offers a clue as to how to attain a state of global sustainability. Republicans and Democrats locked horns in a battle over ideology. One side wanted to reduce US indebtedness by lowering governmental spending; the other side wanted to achieve the same goal by raising taxes. Instead of focusing on their common goal, each side worked to prove their approach is right. The end result? A camel when the US needed a horse. The need to reach a true resolution to the debt ceiling debate essentially was delayed until 2013, one year after the presidential election.
Why the focus on the approach instead of the goal? Republicans and Democrats sought to increase their share of US voters who support their respective party in the coming elections. The popular press was also not without fault; all-too-often mainstream media focused on figuring out “critical” questions such as ‘which side won the debate?’ As if there could truly be winners in a battle that brought the US to the brink of default.
Here’s where we find our clue. So called ‘zero-sum competition’—a competition where one side wins by taking customers away from the other side—is an enemy of sustainability. Industry needs to rise above zero-sum competition by focusing less on who is right and more on approaches to achieve common environmental, social, and economic goals.
Spotting signs of zero-sum competition is easy; look for industries locked in fierce price wars. Think the electronics retailers of the 1980s (growing up in New York I remember an electronics store called Crazy Eddie. The company’s commercials featured a wild-eyed pitchman who looked into the video camera and proudly said ‘Our prices are INSANE!!!!’). Consider the airlines of the 1990s (one company would cut the price of a round trip ticket to a destination, another company would lower its price for the same trip the same day). For a more contemporary example, look to the online retailers of the early 21st century (Amazon.com’s Marketplace offers consumers several smaller retailers from which the consumer can buy a product; often the difference between retailers is one penny).
Zero-sum competition is a fierce enemy of sustainability for at least two reasons. One reason is the pressure ultimately placed on suppliers by manufacturers (and their customers) to find ways to constantly lower their costs, so that the companies selling these products can continue to lower their prices to attract and retain customers. Suppliers, often located in developing countries, managed by teams with rudimentary management skills, and barely breaking even, will find ways to lower their costs…often at the expense of either the environment and/or society. If you were a supplier to one of these industries, would you invest long-term to retrofit your factories to use renewable energy when fossil fuel energy is available and cheaper per unit of energy consumed?
The second reason zero-sum competition is the enemy of sustainability is it reduces the flow of sharing good, proprietary thinking between competitors. If one competitor, focused on lowering costs, found a way to do so, what incentive does it have to share this new way with its competitors? Some will argue this lack of sharing among competitors fuels innovation, ultimately leading to lower prices. In turn this innovation produces a stream of new products, often making obsolete products sold last year. But where do these ‘obsolete’ products land? Sadly, all too often they reside in landfill garbage dumps. Where’s the innovation in that?
So how does industry move beyond zero-sum competition? In my humble opinion, we need to agree on the destination before we design the journey. I propose this as a destination for industry—endeavor to find a way to simultaneously grow and provide solutions to enable the global pursuit of sustainability.
While the goal seems straightforward, the means to achieve it are not. To be clear, industry is not short on ideas. Some pundits have called for the development of new business models. Others have called for advanced levels of cooperation among competitors (side note: pick up a copy of Co-opetition, a book written in the mid-1990s by Adam Brandenburger and Barry Nalebuff, for more on the theory behind getting competitors to collaborate). I believe both ideas are needed, as are tactics such as hybrid partnering (collaborations among competitors, public sector agencies, and other stakeholders) and hybrid financing (efforts to finance specific actions by combining capital from competitors, venture capitalists, value chain partners, public agencies, and the like).
To avoid kicking the proverbial sustainability can down the road, industry needs to rise above zero-sum competition. My challenge to industry – are there two fierce competitors willing to lay down their arms and work together, even if it means sharing proprietary intellectual property, in order to provide the market with a brilliant example of what we can accomplish by working together?
Eric Lowitt is a sustainability consultant, speaker and author of “The Future of Value: How Sustainability Creates Value Through Competitive Differentiation”. Learn more about Eric at www.EricLowitt.com and follow him on Twitter @EricLowitt