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Jun 3, 2014

Inside the Book Resource Revolution

From patterns of scarcity to patterns of abundance

 

During the first Industrial Revolution of the late 18th and early 19th centuries, economic growth and societal progress faced a problem of relative scarcity—not of resources, which were then considered inexhaustibly abundant, but of people. Making people (and the labor processes by which they manufactured goods and provided services) radically more productive, the Industrial Revolution unlocked orders-of-magnitude gains in economic growth.

Today, patterns of scarcity have shifted. People are now abundant, but many of the resources that metaphorically and literally fuel our economy, and the nature that absorbs their wastes and impacts, are becoming scarce. Continued progress must thus liberate consumption and scarcity from economic growth. We must define the next Industrial Revolution, one that makes business and the environment mutually supportive, rather than one buoyed at the expense of the other.

Natural Capitalism, published in 1999, charted just such a pathway, based on four principles: 1) radically increase the productivity of natural resources, 2) shift to biologically inspired production models and materials with closed loops, no waste, and no toxicity, 3) move to a “service-and-flow” business model that rewards the first two shifts, and 4) reinvest in natural capital. Along the way, companies will necessarily adopt new technologies, new manufacturing processes, and new management practices—all of which will drive innovation faster.

Now the new book Resource Revolution, by Stefan Heck and Matt Rogers, similarly argues that companies have enormous opportunity to improve resource productivity dramatically, sparking the next industrial revolution. Companies like Tesla Motors, Zipcar, Opower, SolarCity, and Nest Labs, write Heck and Rogers, have capitalized on the resource revolution through five approaches: substitution, optimization, virtualization, circularity, and waste elimination.

Substitution

As Heck and Rogers explain, many new materials have begun to reshape industrial and consumer products. Companies must consider every resource they use and substitute higher-performing and less expensive, less risky, or less scarce materials. One example is carbon fiber. As we showed in Reinventing Fire, automotive manufacturing investment can be cut by 80 percent with carbon fiber-based autos vs. steel-based ones, while providing lighter, more efficient, better performing, cleaner, and as safe or safer cars.

Optimization

The second approach to resource revolution is optimizing a resource’s use, akin to Natural Capitalism’s charge to radically increase the productivity of natural resources. Through fundamental changes in technology, design, and processes, farsighted companies are developing ways to make natural resources—energy, minerals, water, forests—stretch five, ten, even 100 times further than they do today. For example, UPS rerouted its trucks to avoid left turns, thus reducing fuel consumption, improving safety and speed, and saving the company money. Similarly, OPower has used behavioral science and cloud-based software to motivate consumers to cut their energy consumption by two to four percent annually. RMI’s integrative design further expands the resource-productivity potential, often at lower cost and hence with expanding returns.

Virtualization

Virtualization encompasses moving processes out of the physical world, or not doing things actively because they’ve been automated. In some regards this is similar to Natural Capitalism’s service and flow model, in which businesses shift from selling physical goods to delivering a flow of virtual service. Why sell light bulbs when customers really want illumination? (Thomas Edison figured this out, but was overruled in 1892, and apart from street lighting, utilities have been selling kilowatt-hours ever since.)

Heck and Rogers highlight Nest Labs as one of the companies that has practiced virtualization with great success. The company took a traditional thermostat and turned it into a digital platform that provides multiple dynamic energy and security services. Another example of virtualization is telecommuting. The need to physically commute by car, bus, or train is replaced by the ability to virtually commute via telephone, email, video chat, and other forms of connectivity. Meanwhile, commuting’s resource consumption is replaced by more productive time for employees.

Circularity

Finding value in products after their initial use is what happens in closed-loop, cradle-to-grave product management. Producers of goods need to be responsible for their fabrication, maintenance, and ultimate complete reuse and recycling, with zero waste. In closed-loop production systems, modeled on nature’s designs, every output either is returned harmlessly to the ecosystem as a nutrient, like compost, or becomes an input for manufacturing another product.

Heck and Rogers use the example of cars to show how circularity can produce greater gains. Systems or components can be upgraded, refurbished, reused, or materials reclaimed and recycled, leading to multiple uses, longer life, and much higher productivity. Tesla created a recycling program for its battery packs, recapturing the cobalt and separating out the lithium, allowing for much greater reuse. Another example is DuPont, which actually transforms its industrial scrap and post-consumer waste into higher-value products.

Waste Elimination

In this country the amount of material we dig up and move around and process and use and throw away amounts to about twenty times one’s body weight per person per day. Worldwide this amounts to close to a half trillion tons per year—and yet only 1 percent of it is going into durable products; the other 99 percent is waste. The second principle in Natural Capitalism, a shift to biologically inspired designs, seeks not merely to reduce waste but to design out the very concept of waste. So too write Heck and Rogers in Resource Revolution. With 3-D printers, they note, many manufacturing processes can drastically cut waste because material will only be used exactly where it’s needed, and “subtractive” manufacturing will become a thing of the past. Another example is Interface, a global manufacturer of carpets and interior furnishings. Interface built the least oil-dependent cost structure in the industry while cutting its greenhouse gas emissions by 82 percent in 11 years. A quarter of its profit comes from systematically eliminating waste.

The Next Industrial Revolution

The next industrial revolution, perhaps, will be not about shifting patterns of scarcity—from people to resources—but about shifting to a new pattern of abundance and resourcefulness. Natural Capitalism offered one such pathway, creating abundance by design. Now, Resource Revolution offers a resounding and renewed call for such a shift, highlighting the necessary steps and the innovative companies leading the way.

Book cover courtesy of Houghton Mifflin Harcourt.

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June 7, 2014

"...resources...are becoming scarce." Capitalism is an economic system that utilizes the #1 resource, i.e., people, most efficiently. Higher population density means more minds to solve problems. However, our biggest asset is our biggest problem when voluntary interaction is taxed and regulated. As population increases govt. failure increases. But the problem is not too many people. The problem is centralized control based on force or threat of force. Humanity is not sustainable under coercion. Slavery does not work, even when the populace labors under the illusion they are free.

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