When We Measure The Wrong Things
By Claus Schafhalter | July 19, 2010
Today I read a report by Bloomberg Businessweek that the Senate climate bill, which aims to cut greenhouse gas (GHG) emissions 17 percent from the 2005 level by 2020, could cut U.S. gross domestic product (GDP) by $452 billion , and cost the average household $206 annually from 2013 to 2035.
I do not want to discuss the merits of the Senate climate bill in its current state — if there are merits at all, but I cannot wonder if we are really measuring the right things.
The problem that I see is that GDP calculation measures and weighs everything the same way, without accounting for effectiveness. A simple example: After we change a power generating process to use less coal to put the same amount of energy into the grid, GDP goes down. Being more efficient means a negative impact on GDP. Because we consume less, even if we get a better outcome.
GDP rewards waste. Once we increase waste, GDP goes up. This is totally contradictory to any lean management approach, where we try to reduce waste to get more efficient, and where we measure the output of a process by its effectiveness.
To do more with less is sane, responsible and should be rewarded. Measuring the wrong things punishes otherwise useful initiatives. Should we not come up with other metrics than plain GDP to make sure we go into the right direction?
Your thoughts?
Claus Schafhalter, Management Consultant @ Sunogos
Topics: News, Sustainability Concepts | No Comments »
Germany Plans To Switch To 100% Alternative Energy By 2050
By Claus Schafhalter | July 8, 2010
A new study issued by the German “Umweltbundesamt” comes to the conclusion that Germany should be able to switch energy production to 100% renewable sources within 40 years. Interestingly the head of the agency, Jochen Flasbarth, states that this is doable with technology that is available today. Building the necessary infrastructure would need decisive action and investment money.
One shortcoming of the study is that they do not include a quantitative cost — benefit analysis. Jochen Flasbarth is quoted “he feels on the save side, as the cost of the switch to alternative energy should be less than the cost of climate change.”
Here is my take: Switch to alternative energy can not come fast enough. Any economy that acts on a well thought out master plan to make the switch could very well be the leader in a wide range of energy technologies and reap economical and ecological benefits. Studies that concentrate on technological feasibility are very well, but not sufficient. There has to be a convincing business case that shows that this switch is beneficial so that investors and entrepreneurs will invest. The German Umweltbundesamt would be very well advised to augment their study with cost — benefit scenarios and to come up with firm recommendations to the political leadership in Germany. It is very likely that other institutions like the European Union or other sovereign governments could take up the ball and advance the move away from a fossil economy to a sustainable economy.
Leaves me to wonder what the decision maker in our country will be able to do. Looks like any energy plan is stuck in the same old politics between the major parties as so many other things are stuck today. Will the US Administration and Congress be able to come up with a plan to lead us to a sustainable future? I do not hold my breath just yet, looks like climate change, Gulf oil spill and the huge amount of money for fossil fuel paid to foreign countries is not enough to initiate meaningful change.
Your thoughts?
Claus Schafhalter, Management Consultant @ Sunogos
Topics: News, Sustainability Concepts | No Comments »
E-Bikes Take Off In Europe
By Claus Schafhalter | June 30, 2010
It is no secret that many cities in Europe are bike-friendly, with dedicated bike lanes, paths solely for use by bicyclists, and generally a higher acceptance of bicycle in general traffic.
Still, if you are a person of the more lazy kind, the idea to work out just to get to work or do your shopping, might not be that appealing to you.
Bring on the E-Bike, a (usually) two-wheeler powered by a small electric motor (and still by your muscles in many cases).
Stuttgart, Germany, known as the city where the Mercedes cars come from, will have a meet of 500 e-bikers on July 4th. This seems to be the biggest e-biker event so far. In Austria, the state of Upper Austria has a successful program to spread e-bikes to its citizens. Applicants can get a small subsidy from the state and enjoy their effortless movements.
Many holiday regions offer e-bikes for rent to discover scenic routes. I remember years ago when my family did a vacation bicycling from Passau to Vienna along the river of Danube. Although the route follows the river downwards all the time, there are many hills and side-trips where the help of an electric motor would have been very welcome. So why not try it out on you next vacation?
Sure, the e-bike will not solve our carbon addiction and use of fossil fuels for most of our transportation needs, but it is a small step into the right direction and has the ability to make m0re people comfortable with electric propulsion.
Claus Schafhalter, Management Consultant @ Sunogos
Topics: Sustainable Technology | No Comments »
Low Sustainability Ratings For Oil And Gas Corporations
By Claus Schafhalter | June 24, 2010
An Oekom Study looking at 27 leading oil and gas corporations rates organizations regarding their sustainability. The study’s authors granted that corporations try to do the right things, however overall their activities are not focused enough and lack tangible results.
On a scale from A+ to D-, the small Austrian company OMV ranked first with a “B”, followed by Snam Rete (Italy) and Total (France). Norway’s Statoil is rated only “C”.
What about the company behind the oil spill in the Gulf of Mexico? BP is also rated “C”, and the authors of the study stated problems with save operation of assets and higher than normal risk for workers to get injured.
While the Deepwater Horizon — the oil rig that exploded and sunk killing 11 people — was owned and operated by Transocean, BP is said to had a major role in making decisions that lead to the tragedy and the catastrophic oil spill that followed. Maybe a “D” would have been in order for BP?
Claus Schafhalter, Management Consultant @ Sunogos
Topics: News | No Comments »
Lean Means Sustainability — Step 4 — Improve
By Claus Schafhalter | June 21, 2010
In earlier posts I wrote about “Define”, “Measure” and “Analyze” as part of Lean Six Sigma’s DMAIC cycle. The example I used in these previous posts showed that our office is not energy efficient, and we also analyzed where and why. Remember, the most important results of the Analysis phase are well determined problem causes.
Within the Improve phase, creativity techniques are used to find and evaluate ideas to address the problems. Let’s assume one of the issues we want to tackle is the waste of energy due to offices that are heated or cooled, even when they are not occupied. Ideas to improve might be installation of occupancy sensors (motion sensors) that turn off heating or A/C when no one is there. Or maybe a connection to the light switch — no light, then no heating or cooling. A different approach could be to control temperature based on daytime, weekend and holidays. And there maybe many more ways to reduce energy (more efficient heating / cooling system, better insulation, etc.).
Once we have collected ideas, we need to evaluate these ideas against benefits, cost, risk, time to implement, and other criteria suitable for our situation. We select the best improvement ideas, and — using plain old project management tools — implement the improvements.
Some advice: Especially if your organization is new to structured improvement processes, it is better to concentrate on solutions that can be implemented fast using small (or no) investment money. These solutions should show positive results very soon, and therefore motivate employees to go along, prepare for future changes, and convince management that the solutions are worth while.
Lean Six Sigma improvements should be seen as part of a targeted continuous improvement process, and the really successful organizations are in for the long haul. They set an overall goal, and break this goal down into smaller targets to be accomplished along the way.
But how do we know if our improvement efforts are successful? Lean Six Sigma has the answer in Step 5 — Control, which I will describe in a following post.
Claus Schafhalter, Management Consultant @ Sunogos
Topics: Tools & Methodologies | No Comments »