THE POWER OF GREEN:
Toward Sustainable Prosperity in Washington

William K. Shireman

Keynote Address to
Northwest Environmental Summit
October 17, 2007

Flying into SeaTac airport two nights ago, I had the opportunity to see – from the Cascades to the Puget Sound to the long expanse of lights that define the Seattle and Tacoma regions – what an extraordinarily beautiful home you have.

I first fully appreciated this nearly a decade ago, when I came to this region to visit the Hoh Rainforest in Olympic National Park – as part of a program to end a series of battles between companies like Mitsubishi and Weyerhaeuser, and activists like Greenpeace and Rainforest Action Network.

In the past few years, I have learned some of the ways you have sustained this home, and its beauty, through centuries of development.

Washington today reflects your SETTLEMENT history

From all these SEEDS – many peoples, many cultures, many failed experiments –
A very few seeds took root and GREW:

Then – much more recently – in little more than the last generation, a new set of industries grew up to OVERSHADOW the primary industries – a much more DIVERSE set of industries – providing for a much more RESILIENT economy:

An economy – of higher education, high technology, telecommunications, biotechnology.

Now THAT sector, the early INFORMATION sector, is in some ways undermining and overshadowing ITSELF, through evolutionary, revolutionary and DISRUPTIVE technologies – in high tech and biotech and the KNOWLEDGE economy.

These may seem to be CHALLENGES to sustainability, because they compel CHANGE in Nova Scotia.
But just the opposite – they are the SEEDS of sustainability. If you plant the seeds, and tend them well, you will GROW the next economy, right here.

YOU ARE NOT ALONE in these changes driving innovation in Washington.

Today THREE FORCES are transforming the economy. These forces are:

The decline of OIL – as the fundamental resource driving economic growth
The rise of INFORMATION – as the NEW fundamental catalyst to growth
The spread of GLOBALIZATION – as info techs link the world's SUPPLY CHAINS and CULTURES and PEOPLES.

This is NOT an altogether COMFORTABLE process.

Because change induces FEAR.

And fear induces ANGER – toward an enemy perceived as the CAUSE of change.

And anger, if harnessed and reinforced by terrorists or by politicians, solidifies into HATRED.

And HATRED makes the world a less secure, stable, and comfortable place.

We see this process from an unusual vantage point: we see it happen when OPPOSITES come together. We work to unify groups that misunderstand, distrust, and often HATE each other. We work between MAJOR BRAND-NAME CORPORATIONS like Coca-Cola, GM, HP, Mattel, Mitsubishi – and ACTIVIST GROUPS like Greenpeace, Human Rights Watch, and Rainforest Action Network. My colleagues Juliette and Janet work with groups in the Middle East and Africa. Jin Zhouying and Eric Stryson lead our group in China. Tachi Kiuchi and Peter David run the process in Japan. And I and my colleagues work from North America.

We have learned – through this process – the power of OPPOSITES to drive innovation. By bringing adversaries together – in respectful and collaborative processes – we trigger insights and innovations that neither would have discovered on their own.

We have also learned that – in seeking to understand how we can help save the environment, we can learn how the environment can save us. We can learn, for example, how the same principles that foster sustainability in nature can do so in our economy.

This is what we learned in the rainforest.

In 1994, I boarded a helicopter in Bintulu, Malaysia, with executives from Mitsubishi, and sped out over rainforests of Bornea. Below we could see hundreds of miles of rainforest, stretched out. It looked like the rainforest must be a place of great resource abundance – but it's not.

The rainforest is ALWAYS in the midst of an energy and resource shortage. Its soils are thin – minerals are washed from them by the continuous rain; sunlight is scarce on the forest floor, blocked by the dense canopy above; even water is hard to come by there, because it is siphoned off by plants and animals above.

Yet despite this scarcity – or because of it – the rainforest is the most innovative system in the world. It is home to two-thirds of all biodiversity. It is the kind of place where all advanced life, including our own, was born.

The process of innovation in the rainforest happens over four phases.

Phase 1: I-Strategy: Breakthrough Innovation. Two forces come together – male and female – and generate a seed of possibilities. From tens of thousands of seeds, a few take root and grow.

Phase 2: R-Strategy: Replication and Growth. Pioneer species – those that grow fast and produce lots of offspring, like grasses and shrubs – explode and quickly dominate the ecosystem.
But these energy guzzlers are like the Hummers of the forest. They quickly use up the available sunlight, even shading themselves into oblivion. But that's OK, because they have done their job. In the niches between them, they create windows of opportunity for NEW species to emerge:

Phase 3: Now the K-Strategists begin to take hold – K for "carrying capacity." Their strategy is VARIATION. They adapt to fill the tens of thousands of NICHES created by pioneers. Within each of their niches, they are like the Prius's of the forest – highly energy efficient. Now the forest grows more COMPLEX and DIVERSE, with myriad species. Because each K-strategist is so perfectly matched to its niche, it is more efficient, less energy intensive. And it is less competitive – more integrated with, dependent on, and in this sense cooperative with the species that surround it, and define its niche.

But inevitably, the forest system grows old and overconnected, overly bureaucratic. Dead wood accumulates, and fire comes, to clear a space, for a new phase of innovation.

We see this repeating path of innovation in EVERY living system – in our companies, our economies, and even in ourselves.

For example, seven thousand years ago, with the AGRICULTURAL revolution, the TRADITIONAL culture emerged.

It began with the I-phase of innovation – the Breakthrough Innovations of farming and animal husbandry –
Freeing people from hunting and gathering lifestyles, enabling them to invent stable villages, cities, and nation-states. The human population exploded, in this R-phase.

The interplay of people over time led them to invent elaborate forms of art, music, philosophy, and science. And society entered a K-phase of innovation, the Variation phase, when every prior innovation was refined, adapted, differentiated, improved.

And then, as the aristocracy began to grow inflexible, it began to crumble under the very innovations it helped create: the rise of the scientists, technologists, the merchant class. Which led, in Schumpeter's words, to the "creative destruction" of the traditional culture, and to the emergence of the Industrial.

Now we stand near the end of the NEXT economy – the industrial.

Its start is symbolically marked by the invention of the Steam Engine, the Internal Combustion Engine, and the process of refining fossils into fuel.

There followed the rapid GROWTH of the economy, with resource-hungry generalists – pioneer species like GM, Standard Oil, General Electric, Consolidated Edison, and so on. Alongside those came our GENERIC MATERIALISTIC CULTURE, where most of us grew up like good R-Strategist pioneers – in a monoculture of standardized families, standardized desires, and standardized beliefs.

That culture took a battering with the FIRST energy crises of 1974 and 1979.

These energy crises helped trigger the explosion of the INFORMATION sector. And as computers, microchips, and telecommunications spread through the economy, they triggered a broad K-STRATEGY response. We saw an explosion of new EFFICIENCY AND VARIETY in our products and services. And the world began to grow more INTERDEPENDENT.

In this world of continuous change and improvement – CONTINUOUS innovation – old rigid industrial structures couldn't survive. The Soviet economy, Chinese communism, and old corporate giants like GM, IBM, had to either adapt, or die.

But the INDUSTRIAL SYSTEM ITSELF is gradually being undermined, by the products of its own invention: The decline of the OLD fundamental resource – FOSSIL FUELS. The rise of the NEW fundamental resource – INFORMATION TECHS, and the spread of GLOBALIZATION.

So what does the forest teach us about sustainability for Seattle, Tacoma, Puget Sound, and the state of Washington?

First, let's look at what you want:

Governor Gregoire and your economic development agencies say that your top priorities are:

Higher GDP per Capita – high value-added industries
Higher earnings per capita – "family wage jobs"
Lower business costs – "no new taxes"
Better education and skills – "lifelong learning"
Clean tech – growth with environment

How attain these, sustainably?

FEEDBACK – reward what you want, penalize what don't.

For example, what is the LOUDEST feedback signal we are feeling right now?

Bill Coors, the former head of Coors Brewing, is now at the age of 91 leading our clean tech initiative. Bill says that our addiction to PETROLEUM is sending us CLEAR FEEDBACK SIGNALS. He says, "Petroleum dependence is a risky, unreliable crutch that drives global insecurity, depletion, and pollution. Fortunately, our success doesn't come from fossil fuels. It comes from innovation, and there is plenty of that left. The technologies to free us from petroleum are at hand."

The problem is, we price petroleum not based on its cost of creation, but only on its cost of extraction. That's like valuing our life savings according to the cost of driving to the ATM to withdraw them.

That huge subsidy of petroleum HANDICAPS the growth of information technology, telecommunications, advanced materials, renewable energy – all the emerging companies and industries that can REPLACE our depletive R-Strategy economy with a more sustainable K phase.
Nevertheless, many companies are beginning to excel from the shift away from petroleum. Here are some of the companies that appear on Top 10 lists of the world's greenest:

Vestas – the world's leading maker of wind turbines
ABN-AMRO – considered the world's most sustainable bank
ABB, Ericsson, Philips, Sanyo, Sony – electronics companies that are driving toxic materials out of their products, and mass manufacturing clean technologies like solar cells.
Goin Green – mass manufacturer of electric cars in UK
Solar Century – integrating PVCs into commercial building designs
Ecotricity – UK renewable energy supplier

But GREEN technologies too are changing, following the same phases of innovation we see in the rainforest.

Solar cells – invented by Bell Labs in 1954 – are now mass manufactured in China, and used in an increasing variety of products. But even as the industry grows, it is being undermined by NEW solar technologies – organic solar cells that could be lower cost and more versatile.

Compact fluorescent lights (CFLs) used to all be the same – big, bulky, and expensive. Now they are low-cost and come in many sizes and varieties. But as they go mainstream, they are being chased by an emerging technology – LED, which promises to be cheaper and better yet.

And bioplastics – polymerized lactic acid, or PLA – began as an isolated chemical structure, and with a billion dollars or so from Cargill and Dow became a mass produced alternative to petroleum plastics. Now, new bioplastics are in development.

A truly sustainable economy needs organizations that can meet ALL of these demands for innovation.

It needs LABS, the organizational model for BREAKTHROUGH INNOVATION, like we have seen at Xerox PARC, Bell Labs, Lucent Technologies, and companies like Apple.

It needs MACHINE-style organizations, the top-down companies that excel in times of growth and mass production.

It needs CAMPUS-LIKE companies – learning organizations like H-P, 3M, Toyota and others, who specialize in K-Strategy growth.

And it needs organizations and people capable of managing BURNING PLATFORMS – companies that must make the leap to a whole new business model, all while keeping the old one alive for the transition.

All this demands NEW MANAGEMENT STRATEGIES, and these too follow the principles of the rainforest.

In the U.S., almost all formal management theory is based on two types: the SCIENTIFIC MANAGEMENT principles of Fredrick Taylor – which worked when the economy was driven by PHYSICAL growth through the 1970s. And the LEARNING ORGANIZATION principles of Edwards Deming, which took charge when the economy shifted to a primarily INFORMATION base.
But in reality, a sustainable economy needs companies and executives skilled in FOUR styles of management. In addition to SCIENTIFIC management and the LEARNING organization, it needs skills in managing a BURNING PLATFORM, and steering it into a new phase of BREAKTHROUGH INNOVATION.
It also needs to build all forms of capital – by rewarding what we want, and penalizing what we don't. For example:

FINANCIAL CAPITAL: Lower taxes on jobs, savings
NATURAL CAPITAL: Tax pollution and waste
BUILT CAPITAL: Tax land value, not built value
HUMAN CAPITAL: Students & Internationals
SOCIAL CAPITAL: Smart Growth

There is a distinct CULTURE to each phase, a set of VALUES that ADD VALUE during that phase.

The Innovation phase is short. It creates value by DESIGN …

The Replication or Hard Growth phase is short or long, depending …

The Variation of Soft Growth phase can be VERY LONG …

The Destruction phase is, hopefully, short.

ALL overlap in any complex system – a company, nation, even a person.

THE CULTURE OF SUSTAINABILITY is one that supports ALL these phases …

Its foundation now is the INFORMATION ECONOMY.

Imagine the implications after three centuries of growth.

The difference is like the difference between physical resources and knowledge resources: If I give you this this cup – you have it, I don't. But if I give you knowledge and design, you have it, and so do I.

Information and knowledge are REGENERATIVE resources: the more you use them, the more you have.

That brings me to the words of CHIEF SEATTLE – or, because of the controversy over whether he actually said this, to someone about 150 years ago who CLAIMED it to be Chief Seattle's words:

Version 1 (below) appeared in the Seattle Sunday Star on Oct. 29, 1887, in a column by Dr. Henry A. Smith.

"Every part of this soil is sacred in the estimation of my people. Every hillside, every valley, every plain and grove, has been hallowed by some sad or happy event in days long vanished. Even the rocks, which seem to be dumb and dead as the swelter in the sun along the silent shore, thrill with memories of stirring events connected with the lives of my people, and the very dust upon which you now stand responds more lovingly to their footsteps than yours, because it is rich with the blood of our ancestors, and our bare feet are conscious of the sympathetic touch. Our departed braves, fond mothers, glad, happy hearted maidens, and even the little children who lived here and rejoiced here for a brief season, will love these somber solitudes and at eventide they greet shadowy returning spirits. And when the last Red Man shall have perished, and the memory of my tribe shall have become a myth among the White Men, these shores will swarm with the invisible dead of my tribe, and when your children's children think themselves alone in the field, the store, the shop, upon the highway, or in the silence of the pathless woods, they will not be alone. In all the earth there is no place dedicated to solitude. At night when the streets of your cities and villages are silent and you think them deserted, they will throng with the returning hosts that once filled them and still love this beautiful land. The White Man will never be alone.

"Let him be just and deal kindly with my people, for the dead are not powerless. Dead, did I say? There is no death, only a change of worlds."

Now let me conclude with the words of our chairman, Tachi Kiuchi. In recent speeches he concludes with this:

"I am often asked whether the needs of the corporation and the world are in conflict. I do not believe they are. In the long run, they cannot be.

"Conventional wisdom is that the highest mission of a corporation is to maximize profits. Maximize return to shareholders.

"That is a myth. It has never been true. Profit is just money. And money is just a medium of exchange. You always trade it for something else.

"So profits are NOT an end. They are a means to an end.

"My philosophy is this: We don't run our companies to earn profits. We earn profits to run our companies. Our companies have meaning and purpose -- a reason to be here.

"That suggests the final lesson I learned -- so far -- from the rainforest:

"THE MISSION OF BUSINESS -- THE MISSION OF CIVILIZATION -- IS TO DEVELOP THE HUMAN ECOSYSTEM, SUSTAINABLY.

"To take our place in the global ecosystem. In all our diversity and complexity.

"What I learned from the rainforest is easy to understand. We can use less, and have more. Consume less, and be more. It is the ONLY way. For the interests of business, and the interests of environment, are not incompatible. They are the Japanese omote and ura, the Chinese yin and yang, Christianity and Islam, product and process, economy and ecology, mind and spirit -- two halves.

"Only together can we make the world whole."

We forge links between corporations and stakeholders to advance the triple bottom line

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