This is the sixth in a series of posts exploring the growing opportunities of strategic sustainability. The first summarised 10 hidden opportunities and the second explored 4 levels of sustainability strategy.
Then we started to explore the opportunities. First up was “The trap of one-way business thinking“. Then we discussed delivering value rather than volume and looked at new thinking about production.
Now lets look at the best place to find truly sustainable efficiency.
“More of the same, faster” has been the primary approach to efficiency, from bookkeeping to wide-acre farming. An exclusive focus on making a single production process that produces a single end product can hide a wealth of opportunity.
For smarter strategies, more innovative products and more profitable services, it’s much more “efficient” to optimise a system rather than maximise process throughput.
Industrial era thinking
There was a massive drive throughout the 20th century to maximise the efficiency of individual production processes. It actually started much earlier – in England’s early pottery factories when Josiah Wedgewood first differentiated between fixed and variable costs, and told his factory manager about “the vast consequence in most manufactures of making the greatest quantity possible in a given time”i.
This focus on process efficiency developed further on Henry Ford’s production lines, and got a further push during World War II, when all sorts of inexperienced labour was put to work in factories to supply “the war effort”.
So over time, we’ve become predominantly focused on increasing the output of individual processes – and in doing so we’ve lost sight of the impact we’re having on the overall performance of the systems each process is a part of.
The success of the Japanese post-war quality control movement started to challenge this way of thinking in the 1960s and 1970s. It continued through movements such as Total Quality Management and Lean Manufacturing, which address the many forms of waste created by over-focusing on throughput.
When you look at individual processes, you often develop blinkers that stop you seeing systems-level opportunities. This plays out in all sorts of ways. It can lead to factory machines being run with minimum downtime and changeovers – and big build ups of unsold products on warehouse shelves as hidden the price of “process efficiency”.
Process efficiency myopia can also stop us questioning the overall design of products, services and the built environment. It can lead us to focus on minimising the power consumed by domestic air-conditioning – instead of applying passive design principles to create a self-cooling house.
A focus on process cost could lead us to decide that solar panels on an office building are “too expensive” – because we didn’t count the overhead cost of days lost to power outages during summer.
SHIFT: Whole systems optimisation
Rather than maximising the efficiency of individual processes, what opportunities do we create when we look to optimise the system? If we step back what opportunities can we see?
Combined heat and power – win/win
Fossil fuel power plants make electricity by burning fuel in a furnace to create heat. The heat is then used to boil water and make steam, the steam drives a turbine, the turbine drives a generator, and the generator makes electricity.
Most fossil fuels are burned in remote power plants, so energy is wasted at every step – the water boiled into steam has to be cooled after it’s driven the turbines. Overall, remote fossil fuel power plants are around 30-40% efficient ii
Instead of letting that heat escape uselessly, why not use it? Instead of making power in a remote location, why not make it locally to a building and use the heat energy to supply hot water and heating?
If you’re in a factory, how can you leverage the heat produced by machinery and processes to maximum advantage? Combined heat and power onsite can increase energy efficiency from 30-40% to 90%.iii
If you were only looking at an individual process, process efficiency might orient you to using less power, or dropping required temperature to the minimum viable. Step back from individual processes and new opportunities emerge.
In the UK Borough of Woking in the 1990s, when they had to upgrade their district heating system, they took the opportunity to install gas-powered electricity turbines in local commercial buildings where the energy was used. Then they piped the “waste” hot water to local homes to provide heating and used heat exchangers to deliver summer coolingiv
Optimising the local heating, cooling and power production system saved rate-payers on energy costs, heating costs and created a new income stream for the council (electricity provision).v
In a Blue Economy project in Sardinia, a scan/screen/execute process at the regional level took optimisation and waste recovery to a whole new level – repurposing a fossil fuel refinery to make bioplastics, fuel, and vegetarian rennet from local noxious weeds (thistles) that proliferated because of past over-farming.
In Australia, when an electricity industry executive shifted jobs from working for an electricity generator to a supply authority, he got a different view of the network he had been feeding.
Looking at the supply process, he identified that installing voltage regulators where electricity was used would smooth energy demand. With smoother demand, less electricity generation was needed and less coal was burned.
But until he looked at the system, he hadn’t realised the opportunities on offer.
Where could you optimise a system?
Einstein is quoted as saying “You can’t solve a problem from the mindset that created it.” Understanding the wealth of opportunity in designing closed loop systems that circulate resources continually opens up new opportunities.
So start exploring approaches such as The Circular Economy, Biomimicry, Cradle to Cradle Design and Systemic Design. You’ll be joining Ford, Microsoft and Google in uncovering a profitable new world of business opportunity.
i Double Entry, p. 138
ii http://www.explainthatstuff.com/combinedheatpower_cogeneration.html as at 13 November 2017
iii http://www.explainthatstuff.com/combinedheatpower_cogeneration.html as at 13 November 2017