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strategy and business
 / Summer 2008 / Issue 51(originally published by Booz & Company)


The Next Industrial Imperative

Photograph © Mariko Harada/
Think the Earth Project
To Carstedt’s surprise, his small pilot inspired many more. Soon, it started to draw media attention from around the world. Between 2000 and 2006, the Green Zone attracted more than 500 official study visits. “A lot of my talks about biofuels, and climate change, and the ‘whole systems approach’ were too theoretical for most people,” he notes. But after seeing the Green Zone’s tangible example, others “could start to take the next steps by themselves,” explains Carstedt. “They didn’t need me or others to tell them what had to happen.”

Eventually, the idea of a scaled-up Green Zone — an entire industrial region free of fossil fuels — started to take shape. Participants articulated three goals: increasing energy efficiency (producing enough renewable fuel to provide for their energy needs and then some), building a regional industrial base that could provide jobs and business development, and pushing the envelope of innovation. “If [our part of Sweden] is to be seen by the world as a leader,” says Carstedt, “we have to engage universities and other institutions in continual knowledge creation.”

Today, the BioFuel Region initiative in northern Sweden includes more than 200 people working actively for sustainability through student research projects and innovative efforts in local businesses, and in the fields of building and urban design, feedstock development, and ethanol production. In mid-2004, a pilot plant opened for producing cellulosic ethanol from wood chips, currently a waste by-product of Sweden’s large forestry industry. “There will be lots of process improvements that we can share with others,” says Carstedt. “The new production plant involves technologies that can be viable in many other parts of the world.”

Businesses, local governments, designers, and students are engaged in deep and ongoing conversations to establish common goals and visions. Carstedt is also helping coordinate a €25 million (US$39.4 million) global project sponsored by the E.U., involving 10 regions seeking to follow in northern Sweden’s footsteps. “The key is to be thinking 30 to 50 years ahead,” says Carstedt, “and developing processes, designs, and sources of energy supply that are sustainable over that time horizon. To get the reduction in emissions we need in the world, we need systems change. This means people working together to create different automobiles, buildings, energy infrastructures — and lots of things that have never existed.”

Skillful Innovation
Other success stories share many characteristics with the Sweden experience. Some, like the Leadership in Energy and Environ­mental Design (LEED) building certification system, were developed and championed by industry groups (in this case, the United States Green Building Council). Some have been led by companies, others by government agencies. In all cases, people learn to seek allies outside their own organizations, and al­though the long-term benefits require both courage and the willingness to adapt and learn along the way, the short-term benefits often tend to exceed expectations.

For example, there is significant money to be saved. Companies in all sectors, including IBM, Alcoa, and Wal-Mart, have achieved massive savings from reducing waste and energy usage. DuPont saved $3 billion. General Electric Industrial saved $12.8 million per year just by upgrading the lighting in its plants to its own high-efficiency products. Ford has dramatically reduced the amount of time it takes to paint a new car as it comes down the assembly line, by inventing a technology that applies three coats of paint simultaneously. This eliminates the need for costly, energy-intensive drying equipment. The change will allow Ford to reduce CO2 emissions from production by 15 percent and volatile organic compound emissions by 10 percent. The process will also reduce painting time by 20 percent. Some computer companies, Google and IBM among them, have found that energy effi­ciency gives them a competitive edge — because powering and cooling computers over time can cost more than the hardware.

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  1. Mark Borden, Jeff Chu, Charles Fishman, Michael A. Prospero, and Danielle Sacks, “50 Ways to Green Your Business,” Fast Company, November 2007: Discusses the use of oat hulls as fuel.
  2. Lars Christensen, Formation for Collective Action: The Development of BioFuel Region,” Visanu (Swedish National Programme for Development of Innovation Systems and Clusters), October 2005: Case study of Sweden’s BioFuel Region.
  3. Jared Diamond, Collapse: How Societies Choose to Fail or Succeed (Viking, 2004): The sweeping history of human impact on the environment, and its evolution into today’s bubble — and potential crisis.
  4. Viren Doshi, Gary Schulman, and Daniel Gabaldon, “Lights! Water! Motion!s+b, Spring 2007: Complementary challenge in urban infrastructure.
  5. General Electric, Delivering on Ecomagination” 2006, Statement of aspiration, profit, and impact of this high-profile endeavor.
  6. Intergovernmental Panel on Climate Change, Climate Change 2007 — The Physical Science Basis (Cambridge University Press, 2007): Definitive, comprehensive source on the atmospheric science of climate change.
  7. Kate Raworth et al., “Adapting to Climate Change: What’s Needed in Poor Countries, and Who Should Pay,” Oxfam Briefing Paper No. 104, May 29, 2007: Covers the $50 billion per year current costs, the greater potential costs, and the responsibility of rich countries.
  8. Peter Senge, The Fifth Discipline: The Art and Practice of the Learning Organization (1990; 2nd ed., Doubleday, 2006): Conceptual and practical guide to “learning disciplines” that transform collective capabilities, including the capability of moving beyond the bubble.
  9. Peter Senge, Bryan Smith, Nina Kruschwitz, Joe Laur, and Sara Schley, The Necessary Revolution: How Individuals and Organizations Are Working Together to Create a Sustainable World (Doubleday, 2008): Describes the shift in thinking and action needed to meet the 80-20 challenge.
  10. Nicholas Stern, The Economics of Climate Change: The Stern Review (Cambridge University Press, 2007): Impact and benefits of early action.
  11. Linda Booth Sweeney and John Sterman, “Understanding Public Complacency about Climate Change: Adults’ Mental Models of Climate Change Violate Conservation of Matter,” Climatic Change, vol. 80, no. 3–4, February 2007: Explains the stocks and flows of climate change.
  12. Edward O. Wilson, “The Ecological Footprint,” 2000 Kistler Prize Acceptance Speech, Carnegie Foundation, 2001: “In the real real world governed by both the market and natural economies, all of life together is locked in a Cadmean struggle. Left unabated, the struggle will be lost, first by the biosphere, and then by us.”
  13. For more on global perspectives, sign up for s+b’s RSS feeds.
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