Wednesday, February 07, 2007

Green Squared: MIT Sloan School's S-Lab

The Sloan School of Management at MIT is initiating "a program to train students on the connection between business practices and environmental change." The Laboratory for Sustainable Business - called, in inimitable MIT style, the S-Lab - launches today, and, in the words of their press release:

"...recognizes climate change as one of the most daunting challenges mankind faces in creating a sustainable society, says [Sloan Professor Richard] Locke. "A critical issue for global warming is the ways in which the risks are communicated, and the framing of the solutions, both for specific organizations and for communities," he says. "S-Lab will teach future CEOs and business leaders the challenges of implementation and how the science of sustainability can be best communicated to policymakers and citizens."

Key to addressing sustainability, says Locke, is in re-defining it. "Up until now we have considered aspects of sustainability - climate, energy, water, food, poverty, and social development - in isolation," he says. "S-Lab is developing an integrated framework to consider the system-wide dynamics of human society along with tools and methodologies for measuring and monitoring sustainability efforts and their applications."

With the just-published U.N. study on global warming forcing the issue front and center - for once and for all, one might fervently wish - this program is well timed, and - once you cut through the academ-ese, well defined.

So much of the foot-dragging around addressing human activities that contribute to environmental degradation stems from fears - real or imagined - about the negative impact on jobs and the economy.

Factoring in the environmental impact will and must become a cost of doing business. And, let's face it, while the start up costs of transitioning to cleaner and greener may be steep, in the longer run the new products and services spawned by the need to be better stewards of Mother Earth will become important elements of the economy. I suspect that, as with globalization, in which there are winners (multi-national companies, investors, and "the consumer") and losers (the displaced workers, their families, and their communities), there will be some of both when environmentalism becomes a more ascendant force.  Polluting and "old energy" industries will lose out. The businesses that come up with alternative energy and technological fixes to damage done will obviously win. So will those that development more environmentally friendly practices, as this will give them a marketing edge as the citizenry inreasingly demands it. (So, of course, will those that start claiming that they're "green" even if they aren't - but that win will be temporary, as their green spin gets outed.) At the macro level, it will be an overall long term win.

S-Labs may also turn out to be a smart move in terms of job opportunities for Sloan grads:  the U.S. Climate Action Partnership is a group that includes the Natural Resources Defense Council AND 10 A-list CEOs (including those of GE, Alcoa, BP, Dupont and Lehman Brothers) is pulling together to push for a market-sensible approach to greenhouse gases (trading of emission credits). Those organizations will no doubt be looking for the type of environment and business savvy MBAs that will come out of S-Labs.

In any case, the S-Lab is good news.  And, of course, since it's MIT, "will include role-playing computer simulations requiring students to balance profit maximization with practices that factor in environmental impact."

When I was at Sloan - lo, these many years ago: in June I went to my 25th reunion - the main case study in our Operations Research class was about a company called "Red Brand Canners" that, if I remember correctly, made ketchup (or something else to do with tomatoes).  The problem sets were around maximizing production - or was it profit -  subject to certain constraints.* 

Kudos to Sloan for doing something that's more relevant and interesting than Red Brand Canners.

If we want to hang on to the world as we know it for at least a couple of generations to come, it's time to start thinking - an acting - more seriously about "balancing profit maximization" subject to the very real constraints imposed by our all-too fragile environment. Tim to figure out the formula for green-squared: how you can be green without giving up on the greenbacks.


*While we did, in fact, have computers and calculators in those days of yore, we also did things the old-fashioned way: by hand. Probably because my understanding of the whole process was so tenuous to begin with, I have only vague memories of how we solved the Red Brand Canners OR problems. I recall filling in matrices, and doing something called "pivoting on the dual" (or was it "dueling with the pivot".

Source for this blog idea, and for the quoted material that did not come from the press release, came from the Business Briefs section of The Boston Globe (February 3, 2007).

1 comment:

Anonymous said...

And what do you think about green business?Have you any good ideas?