Gil Friend: The Truth about Green Business

We talk to ex-Chief Sustainability Officer for the city of Palo Alto, CEO of Natural Logic and sustainability veteran, Gil Friend on the state of sustainability and what organisations can to to make their sustainability efforts a growth factor.
 
00:35 Insights & Takeaways
10:00 Interview

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Transcript

Marcus Kirsch: 0:15

Welcome to the wicked podcast where we read business books you don't have time for. I'm Marcus Kirsch.

Troy Norcross: 0:21

And I'm Troy Norcross,

Marcus Kirsch: 0:23

and we are your co hosts for the wicked podcast.

Troy Norcross: 0:26

We take from the 1000s of business books out there and test the author's ideas by comparing them to real world challenges. With over 40 years or projects between us, we've got quite a bit to compare against. We give you the condensed takeaways followed by an interview with the author's

Marcus Kirsch: 0:41

we know you want actions, not theories and his actions that we want to help shape because that's what the wicked podcast is all about. helping you to become a wicked company.

Troy Norcross: 0:53

Marcus, I can see you what's going on.

Marcus Kirsch: 0:58

I'm trying to refurnish studio now that we're doing video, I think and I think I better use a green screen. So you can see.

Troy Norcross: 1:08

I'm really glad you got the grey t shirt memo. So we're kind of wearing wearing the same thing.

Marcus Kirsch: 1:13

There we go.

Troy Norcross: 1:14

There we go. There we go. Um, so tell us who will be talking to you today.

Marcus Kirsch: 1:17

So today is a very nice special episode cause we are talking to girlfriend and his book, The Truth About green business, the book seven years old. But I've been knowing Gil now for good three years I've been trying to knowing are annoying Gil, mainly annoying. Yeah. But he's he's very patient. He's very kind man. So he finally gave us one of his valuable hours to talk to. So and having said that, so what are your sort of actions? What what what did the conversation make you think to?

Troy Norcross: 1:50

Well then tell, it was a great conversation, we talked about so many different things. I like that we're reinforcing this concept that you need to be able to experiment and to be able to fail, and to find your way towards new things. But then he anchored it with a really clear call for a vision, you need something to hang your hat on, we're going to put somebody on the moon, we're going to be carbon neutral by 2030, or by 2025. And I think that's so important for organisations to have a really clear vision and directions to what they're doing. And then being able to push that down throughout the organisation all the way to people on the front lines at the edge of the organisation, or in as we discussed throughout, even outside the organisation down the supply chain. So everybody knows what's what's the goal, and what's the objective. I think the other thing that that we talked about only very briefly, but I could have talked about for quite a long time is, you know, the the old mantra for me is I'm going to keep it for more than five years, I'll buy the best I can afford. And I always want to buy really, really good quality things that will indeed be lasting, that will be serviceable. And all of those things kind of reduce waste, but then you have this kind of capitalism, you know, mass consumerism kind of economy and the struggles that go on back and forth with that. So we talked about sustainability and talked about green business being profitable. But we also talked about other things like how do you action that in an organisation and and what are the things that you can start doing today? What about you?

Marcus Kirsch: 3:24

Yeah, so I'm probably quite a lot of things this time. Sometimes it's not like quite like so. So from a from a design thinking or general change perspective of companies of what I would recommend people to do. There's there's yet again, he described it as, so you use a division but also to division, a division that can give a particular direction without claiming to know how it's done, or that it can be biassed. Right? So he's very aware as we are, that the way forward is not to give a broad a too broad of a question to your teams and to the people in our organisation, but actually give something and so what if you know, what is that like is like a big goal, right? But then let your people figure out how to do it. And you said most of the time, organisations will be blown away, if they give a bit more purpose to the organisation. Because an organisation is supposed to make no profit because they're aiming at profit. They should make profit because they're good at what they're doing. Right. So I think giving a bit of direction and then being open enough. And again, you know, we had this a couple of times, that leadership can say, look, we're biassed, we don't know how to figure this out. We're just people. We need to have more people on the table and more views on those otherwise we're never going to practice. So that was very, very good. And you talked a bit about you know, different languages and different practices and so on. And that's a big, big challenge to bring this together. Which is, you know, one of the aim that this podcast is trying to help with or contribute towards. And I think the other one more thing to say is, so he made very good cases around. If you're still thinking that you have to invest or pay for sustainability, then you're doing it wrong. Right, actually, and he gave an amazing case study on how much not doing it is costing the business, you know, and the thing to get there often is asking different questions. I think that's the tricky part to do you know, how can you ask different questions? What questions is probably what an organisation would ask first, and that's where you know, people like us come in and go, Well, have a look at this. Have a look at that. Have you looked at your supply chain differently? Have you looked at the systems you're using differently and what you're doing with it? But as he said, You know, you're doing it wrong. If you think you're losing money on it, you're actually gaining value, you're gaining money from it, when you look at it, because you're gonna you're gonna fix all the holes. And you're gonna do something with whatever wastage you have, and you're gonna feed it into something else creating actual value for someone else if you do it. Right, right. So the whole thinking of it costs you money, is the wrong way around. As you said, we have it backwards. And I think that was a really interesting point for me to start as an organisation to look at it the other way, and stop treating it like a cost.

Troy Norcross: 6:28

Before we give away the entire interview. Should we go to the interview?

Marcus Kirsch: 6:32

Yes, we should. Let's do that. So Hello, everyone. This episode, we have Gil friend that we're talking to. Hello, Gil, thanks for being here. And hello.

Gil Friend: 6:51

Hello, Marcus. Glad to be with you.

Marcus Kirsch: 6:53

So as usual, we're gonna start at the top. And just for our listeners, please tell us a bit about who you are and why you wrote the book.

Gil Friend: 7:02

Sure. Marcus. I'm Gil friend, I'm Chief Executive Officer and founder of natural logic Incorporated. This is a 20 or so year old strategic consulting firm, working with companies large and small, primarily around making sustainability or whatever we call that these days, a core driver of business innovation and business value. People sometimes say we're environmental consulting firm, we're not. We don't do regulatory, we don't do compliance. We don't do remediation, we've always been focused on generating strategic value by helping businesses put the 3.8 billion years of research and development of living systems at the heart of their business strategy and operations. So that's been the core of my work. I'm also founder of critical path capital, an investment firm in development mode, which we'll have more to say about later this year.

Troy Norcross: 8:00

And what was the genesis for writing the book?

Gil Friend: 8:04

Well, the book The the truth about green business was something I'd been cooking for a while building case studies and distilling principles from our work with, you know, companies ranging from Hewlett Packard and Levi Strauss to Steelcase and Coca Cola really a wide span of companies and, and younger upstart companies, like Odwalla juice company, equal exchange, the Coffee Company, and many others. And the Genesis was that I wanted to share what we've learned and what we've seen and provide much more reach and service then we could do as a small consultancy, the immediate trigger was the Financial Times called instead we have this series called The Truth About it's like, it's like, it's like the for dummies series, if you would. And I said, Will you do a book on green business, you know, so in effect, it's it's green business for dummies, except not for Dummies. But it's kind of the idea was to make it simple and bite size, give people a logical structure that had a big sweep to it, but very compact, you know, 234 page chapters that would hit an issue, explain what it was, why it was important, how to deal with it effectively, and then move on to the next one. So it's a book that can be read, cover to cover, but more likely, somebody's going to flip it open, say anything about supply chain, anything about operations? What about energy efficiency, whatever. And so, pick up on that piece, it's framed very practically, usually with specific questions or specific actions to take. And I was delighted last year was speaking at a conference and someone came up afterwards and held out a dog eared copy of the book said, I've had this with me every day for eight years. And in my brief guess on it, that was that's pretty good. That was that that was what we were hoping would happen. That have become a really practical handbook for people. Whether they are advanced and sophisticated or beginning in basic Yeah.

Marcus Kirsch: 10:00

I think I read someone some notes or quotes around the book as well, that's a really great kind of wrap up of what this what all the bits and pieces mean. So talking about this, um, you know, another book was written about 11 years ago. And you said earlier before we started recording that you tried to make it a bit timeless as much as you could, or you made it with progress in mind. So what is it? What does it mean today? Or maybe even in comparison to 11 years ago? What does it mean to be a green company or sustainable business today? What's your, your Now,

Gil Friend: 10:34

let me respond to the first part. First, we tried to make a book timeless, it's a little bit arrogant, I don't mean it quite that way. But we we wrote it with with basic principles in mind knowing that the principles are not going to change. And the state of practice will change the case studies will evolve and get better, we'll learn more, but the basic principles are sound and are there so we wrote for that? I think that's why it's been enduring and valuable. What's changed? A lot, let me try to be very brief about I think the main thing that's changed in the last 11 years and that this, this has become much more of a mainstream story. In 2009, we were still considered a bit out on the edge, this is strange stuff. Now, sustainability or regenerative, restorative, or impact, the May different words that are being used for this world today is front and centre in business, there's not a major company that doesn't have this as a serious part of their strategy and commitments typically will have a chief Sustainability Officer typically will have chromatic or less dramatic greenhouse gas emission goals, hundreds of companies have signed on to the Business Roundtable statement around purpose as a driver of business. So there's a lot more both talk and action. And that, of course, is always a challenge, because there's always more talk than action. There are a lot of companies who are stepping up to the to the bar around climate crisis, and greenhouse gas emissions. performance, unfortunately, is lagging. And that's why the, the the the position that we've always articulated that this must become an integral part of business, not a night, not an add on not a nice to have not a corporate social responsibility. We do this because we're nice people, but something that is core to the purpose of the business, what the business is there to do, how it operates, how it understands and manages its finances, how it rewards and incentivize its people, it has to be integrated, to be powerful. And so the other changes that we are seeing more of that not enough. But certainly among the leadership companies, we are seeing that understanding and that commitment, taking root more and more deeply.

Marcus Kirsch: 12:55

reminds me a bit of, because over here in London, in the in the Hackney area, close to where I live, I was working with the government aspect does a unit called zen, they're doing similar things where they're trying to go or talk to businesses, local businesses, in particular, to talk about some of those aspects. And there's there's a big drive from the from the local government drive down co2 emissions and those kind of things. And they still telling sort of similar story. They have a lot of people subscribing to it, but very few actually eat and being able to do something like that. So in the book, you're talking about something like, like a triple bottom line. Can you tell us a bit about what

Gil Friend: 13:38

that means? Well, the triple bottom line was was a phrase invented by your neighbour there in London, john Elkington. At the time was with the company sustainability now with Poland's and john articulated the triple bottom line as far as encouraging businesses to focus on not just profit, but profit, and people and planet. The three those three elements, and rather than just to financial bottom line, think about the bottom line in each of those realms of, you know, sometimes called three legged stool. And there have been many names for that concept over the years as it's evolved. But the basic notion is that well, you know, if you if you stop any 10 people on the street and say, what's the purpose of business, they're likely to say it's to maximise profit and maximise return to shareholders. But that's a very young concept that dates back to the early 1970s when Milton Friedman articulated that as the purpose of business, but in fact, most people know that the purpose of business is much more than that. That's not what motivates people in their careers or getting up in the morning. Yes, you know, you need to make money. And, but I would, I would argue that the purpose of business is what the business is there to do. And if it does that, well, it makes money. And if it makes money, it pays its shareholders for the use of their capital, just as it pays the utility company for the use of Electrons are the supply company for the use of its fabric, or profit I would see as a cost of doing business not the purpose of doing this. But the good news is that with that perspective, and with the approach to sustainability that we've been articulating, businesses are actually more successful and make more money. And this is the, this is the hidden joke at the heart of the story. Even today, after you know, decades in this field, I find that companies will often say to me something like, Well, we'd like to be more sustainable, but we can't afford it. And they've got it completely backwards as Ray Anderson, the late founder of interface floor, used to say, if your sustainability programme is costing you money, you're doing it wrong. It should actually be a driver of exceptional profits and done right. And that's what we see again, and again, both in our own work with companies and attracting the research around the world.

Troy Norcross: 15:57

And we talked about Milton Friedman, quite quite a lot in the Milton Friedman kind of insistence that the only purpose of business is to maximise shareholder value. And I'm a big proponent of what I call stakeholder capitalism, as opposed to shareholder capitalism.

Gil Friend: 16:12

Yeah, exactly. So and stakeholder would include, you know, the employees would include the customers, the community that you're setting, but also the ecosystems that you're setting, currently, and so on, because the game doesn't continue, unless all those stakeholders are healthy.

Troy Norcross: 16:27

And a lot of times people do look at sustainability as a cost. It's like one of those things that, yeah, it's going to cost us more than we're going to make it. So I'm really encouraged to hear there are a number of businesses showing the profitability is not only possible with sustainability, but almost as a byproduct of doing things in a sustainable fashion. Do you see the overall economy changing to be able to support that, and kind of the, the share analysts, you know, and the rest of the world kind of saying, Yeah, we need to look at this and apply multiple metrics for value? Sure, well, let

Gil Friend: 16:59

me first say to try, it's not a number of businesses, it's a large number of businesses and the great, first of all, and, you know, we don't have time to get into the data examples here. But there's ample research that confirms this, the share analyst is an important place to look because they're still in the game of money. And they're gonna, you know, as fiduciaries for the people whose money they're managing, they have to produce handsome returns. And I think the important metric there is to see the the growth now in the trillions of dollars of investment assets that are under some sort of ESG environmental, social, and governance or impact or sustainability kind of management screens, the money allocated under those screens is growing steadily has been for the last 1015 years. And so that's where the proof in the pudding is. You know, the metrics are have become complex, this is a you know, you know, how do you how do you, it's easy to measure profit, it's harder to measure sustainability, because there's so many more factors involved in it. So there's an industry head that is involved in articulating those metrics, measuring them, feeding them to the asset managers. And then people, as you know, as in any business game, or, or horse race, people bet on the information in different ways. Some of it very sophisticated, you know, certainly core there is greenhouse gas emissions, the climate crisis is a front and centre issue for us sitting, you know, a hair behind the COVID crisis. And so that's very central. But people also looking at supply chain issues and water balance at labour practices. And the list goes on and on.

Marcus Kirsch: 18:40

So when you when you when you look at is not obviously a really wide big field, and a lot of companies will probably be able to do various different things, depending on what industry they're working in. How How is it? What sort of the easiest go to, let's say, example or thing most companies you'd say can do, because most companies still, let's say have, they have people that have a space and all the ecosystem around that alone just might be something there but what's usually sort of the low hanging fruit that you can talk about with organisations?

Gil Friend: 19:18

Well, the low hanging fruit is waste. You know, every company no matter how efficient it is, is wasting prodigious quantities of resources of all kinds. Let's start with energy because that connects to climate. If you're using more energy than you need to accomplish what you're trying to accomplish, you're not only impacting climate, you're you're you're wasting shareholders money. I would say you're actually violating your fiduciary duty to your shareholders spending more on resources than you need to fulfil the purpose of your company. So the first thing to do is cut waste. easy place to start is energy in terms of efficiency of operations of all sorts, and increasingly now the economics of change moving from fossil based energy through renewable energy. So we're seeing more and more companies making zero emissions commitments, initially on a 2050 timeframe, but now we're seeing leading companies ratcheting that forward to 2040 2030 2025. There's a growing trend for companies to commit to being zero waste, to not producing any waste. This is an evolution from a long standing effort to reduce waste, minimise waste, prevent pollution, and so forth. But you know, think about it end of the day, if you're a manufacturing company, you're shipping two kinds of things out of your factory one is the products that are going to a store to be sold to a customer, and the other wastes that are going to landfill or some other kind of treatment facility. The product makes you money, the waste costs you money, you have to pay someone to take it away and treat it. So from a purely business point of view, not even an environmental point of view, Why the hell would you do that? Why would you make stuff that you have to pay people to take away rather than stuff that people pay you to take? It's it's, you know, it's it's folly as a business proposition, and that's getting translated more and more into companies figuring out how to shift manufacturing processes, supply chain, closed loop, or what's now being called circular relationship. So the waste products of one entity become the feedstock materials of another entity. Like in living systems, where there is no waste. waste is a purely contextual definition that we have created in living systems stuff is stuff, it's, it's, it's, it's not used by one organism, it's used by another. And so again, and again, we return to the model of living ecosystems, which, you know, are efficient, and adaptive, and resilient and productive, operate entirely on renewable energy, generate no waste, have no long term accumulated toxic materials. There's, you know, there's the basic game plan for an industry and Marcus's you separate, transforming the economy. That's the model. It has an evidentiary base of billions of years, it makes logical sense. And good news for the chief financial officer, it makes money.

Troy Norcross: 22:16

And one of the things that we always try to do for the listeners on the show is to give them actionable things that they can start doing immediately. And a lot of the books and a lot of the authors that we've had on the show talk about teams, and talk about leadership's and pushing kind of decision making down to down to the coalface you know, right into the front lines of the organisation. What can organisations do to help the people on the front lines, change their mindset to be more mindful about the kind of things in sustainable as in, you're reducing waste or reducing energy usage, etc?

Gil Friend: 22:51

Well, first of all, invite them in know, the people on the front line know a lot more about the company in many ways than the people in the executive suite. None of us is as smart as all of us. And so, one of the first things we'll do with our clients, if they're willing, not all of them are, but if they're willing is to engage in all hands process or at least a multi stakeholder process bring together depending on the size of the company, of course, at least representatives from every functional aspect of the company. In terms of the you know, the the the horizontal divisions, and also the vertical levels. So in other words, you know, executives, managers, people on the shop floor, janitor secretaries, people at every level, because we find that different people see different things just given where they are today, and where they are in their lives. That's one aspect. And we couple that with a, a, a brief, provocative learning experience, where we help people orient to the way that the principles by which things work on this planet I've been alluding to, and then look at their company through that lens and ask questions like, first of all, what business are we really in? What is the value that we're creating? How well are we doing at that? What waste or waste? are we creating? Or what value are we losing along the way, and help them build a framework so they can just look at the company through a different lens and then invite them to explore and question and challenge and see where that might be done differently? Where could those leakages in the value chain, be closed and cycled and turned into value? And it's remarkable process because first of all, everybody gets it again, you know, we're low rank too high rank people get. Second, it's once. Once you start to step into these principles, it's hard to step out of that. And so we basically build a box, invite people to step into it, and then challenge them to see what they can do. Typically They will ask us for specific recommendations. And typically we will decline to give them saying what do you think? What you've just learned? What do you see now, and we'll help and advise, but we're not going to direct at that point because they're going to be smarter than we are. My favourite Case in point $6 billion manufacturing company, I'm not going to name their name, but they're very well known. One of the more sophisticated companies on sustainability of any in the world had done eight years of work on that before they came to us, they asked us to help them reset their sustainability goals and strategies to the next level. And in the course of doing that, we said, one of the issues we see here is massive leakage in your value chain. They said, How could that be, we're efficient and top notch, we said, let's spend a couple of days together, map out value chain from the minds and the forests and the places the raw materials come from three manufacturing processes, distribution systems, and so forth. We sketch the framework, they identified the examples. It was kind of stunning. Because it meant not just operational changes, but shifts in the business model. We suggested that the next thing to do is to calibrate to estimate what this what these changes could be worth. And we offered to do that assessment for them. They said, No, we'll do it ourselves.

Troy Norcross: 26:24

We don't want you to know how bad it is.

Gil Friend: 26:26

We don't want you to know, I think I think it was, you know, it may have been proprietary information that they didn't want to share with us. Even though we were under NDA, it may have been that they knew that a consultant who does an analysis is going to come back with a proposal for more work, right? The plan they didn't want maybe they didn't want that. It was it was it was collegial. But they said no, we'll we'll do the analysis. I said great. Would you let us know what you come up with? And they said, Sure. And as we left to hit in the airport, I said, I'll just I'm going to predict one thing, I'm going to predict that this will be a very large number. And they said, Are you okay? You know, you consultants all say that we'll see, go and go. Thank you for your work go home. I got a call Two weeks later from the Global Head of strategy. He said, you'll be interested to know that we have a number. Great, he said, and you'll be interested to know that it was not a large number. And I just you know, if if the camera had been on me, you would have seen my eyes spinning in my head, I will constantly be and this guy must have been a stand up comic in his previous life because he waited the requisite to be said he said it wasn't a large number. It was a massive number, right. And I took a deep sigh of breath of relief. And I said Can you can you tell me how massive? He said yeah, he said it was about as big as our total global revenue.

Marcus Kirsch: 27:51

What.

Troy Norcross: 27:54

And that's what they found was wasted.

Gil Friend: 27:57

That what they found not just being wasted. But the last business opportunity they were missing because they were asking the wrong questions about their business, not the wrong questions. They were questions they weren't asking, they needed to ask about what's possible value upside of looking at your business through this lens and closing the valves that are leaking value and building the circular channels and re articulating the business model to capture this value. And so for the common executive says we can't afford to being sustainable. We can't afford to be sustainable. Well, I say here, look at this, where they found that they were pletely overlooking value equal to their total global revenue. And this is not a run of the mill average company, this is one of the best in the world. So you can extrapolate from that the value potential that lives downstream through the rest of the corporate population.

Marcus Kirsch: 28:53

So all of this all of this is part from music to my ears, it's test as plenty of parallels as well to sort of my background and change and transformation and design thinking which is a lot as well about asking different questions and therefore unlocking different value in companies and it goes a lot into sometimes efficiency, sometimes effectiveness. And the surprising part I found is that, you know, when you when you when you go when you talk about you know, being efficient, not using waste using that as an example, it's like that is pretty much in a in a in a in an engineer's mindset, be it a software engineer or hardware, whatever it is right? They will look at these things. And for them, it should be obvious, but it seems to be that organisations are often often structured in a way in siloed in a way that people sitting in a particular point, are not allowed to look at other bits and pieces of the ecosystem of the chain of the system in order to even potentially see the knock on effects or the inefficiencies of what they're doing in there. Smaller bubbles that are put into

Gil Friend: 30:02

the allow to they may not be used to doing that they may not be doing that they may not know how to do that. One thing that I've learned about engineers is that, you know, engineers are great at solving problems, you've given them a problem where you given them a question, and they will run it to ground and figure out how to deal with it. But they're not going to necessarily jump on the question that you didn't ask them.

Marcus Kirsch: 30:27

What did you do

Gil Friend: 30:29

yesterday, that's why it's so important in our methodology is not just to ask them different questions, but to try to embed different questions in their minds, so that they will ask different questions every time they encounter an issue or an opportunity. A couple things to the checklist.

Marcus Kirsch: 30:49

So what what often comes with the whole design thinking thing is to hold Monica have wanted to kind of principle of saying, you know, treat everything as an assumption, right. So that a lot of that has to do with then a difference between sort of tainment wicked problems and wicked problems constantly evolving. And I think, especially with the kind of problems and challenges you're dealing with, and the organisations you're working with, I'm surely most of those are systemic issues, and therefore, likely wicked problems, because they just whenever you introduce something new to the system, it will evolve around it and you know, it will not be solved, it will be better, but never quite, fully solved. So, what what do you see, for example, in terms of this, when you say often there are big operating, operational and even business model changes required in order to be considered in order to really step forward? And, and and what do you see in terms of the roles of, let's say, people further down the line or in the field closer to reality, essentially, and the people in leadership and how that dynamic works? What what sort of the biggest shift and change, you you think needs to be happening in organisations? Because one thing you already mentioned is that, bring them all in the room, you know, have have have everyone have a voice? So did he actually get a better idea, different viewpoints on the problem, and you can more holistically approach it. But what sort of some of the aspects you see that companies can do to say, right, this is how this comes better together, or this is what you should shift a bit in order to get better, more easily in those into those changes.

Gil Friend: 32:25

It's a great question, Marcus. And there's not one answer, there's many answers. And it's all true of the company that you're dealing with. But in simplest forms, one way this can happen is that the CEO, or the leadership can say, this is what we're here for. This is our purpose as a company. Or they could say, this is our goal, we're we're committed to becoming a carbon neutral company, by 2030. And then if they're honest, they're gonna say, we don't know how to do that, yet. So let's all pitch in and figure out how to do that. And that's going to require the knowledge of everybody up and down, the line up the organisation. A colleague of mine in the prior organisation was fond of asking, and just about every management meeting, she would say, what might be possible here? And she phrased it that way. She knew that if she asked specific questions, there'd be a wall of objections from every department. I mean, we can't possibly do that, because XYZ, and she would make it very soft, like inviting people to kind of speculate what might be possible. Or what if we could we don't know if we can? Maybe we can't, but what if we could? What would be the implications? If we could, Oh, that's interesting. Maybe we should think about what might be possible. So, you know, inviting that kind of inquiry based approach, not to detour too deterministic, too quickly. I think it's very powerful. And so the dynamic if the top says, here's where we're headed, and the bottom or the rest of the organisation says, Let's keep our eyes open, what might be possible? And let's have and the other other critically important thing from the topic, Atlantic Polaroid was one of the earliest articulators of this is that there has to be room for failure has to be permission for failure in the modern business, culture and even government culture. The name of the game is you screw up, you're out. Well, you know, Troy, I don't know your background. Marcus, I'm sure you know this, that without room for failure, you put a cap on innovation, and innovation without trial and error. And Bill McDonough is fond of saying that an oak tree produces 10s of 1000s of acorns in the hopes that one or two of them will take root and produce another tree. Those are not waste those other acorns. You know, personally, you don't know which one of them is going to be the one to take root. Also, we have in this case their food for squirrels or fertility for the soil or what have you. So that open invitation to experiment and try things out that are new is critical. That means not only to your fruit management culture, but different reward systems in the organisation, and ultimately a much more collaborative and participatory organisation,

Troy Norcross: 35:11

your tiny experiments, permission to fail. Those are some really significant themes that we hear a lot. And it's great to hear more and more enterprises, large and small beginning to embrace those and move forward with it. Yeah, and I'm adding to add a powerful, motivating goal. You know, let's

Gil Friend: 35:29

do better is great. Let's be Climate Neutral in 10 years. It's like, Oh, my God. Yeah, the big thing people actually care about it, you actually get not just the functional participation from your employees, but you get the heart and passion of your employees. And again, and again, we see that, you know, folks down, so called down in the organisation will blow the leadership away.

Troy Norcross: 35:56

I like the idea of smart goals. I mean, the the acronym for smart has been around for a very long time. Specific, Measurable, Attainable, Realistic and timed. And being carbon neutral, you know, within X number of years is exactly that kind of a goal, which makes it much more easy for people to get onto

Gil Friend: 36:13

with with a caution because attainable and realistic, can be showstoppers.

Troy Norcross: 36:17

Yeah, they can be

Gil Friend: 36:19

before about recognising that there's assumptions in the process, you have to unpack the assumptions about whether you think something is attainable and realistic. Okay, you know, when when President Kennedy in 1962, said, to put a man on the moon within 10 years and bring it back alive.

Unknown: 36:35

Right,

Gil Friend: 36:35

wasn't realistic, right? NASA said, we don't know how to do it. But with that clear goal, we can invent the process and the technologies that will make that attainable and realistic, even though it isn't now. So smart goals. I'm all for it. But with that caution.

Troy Norcross: 36:53

Yeah. And I think you've made a really nice clarity point there. They've got to be stretch goals, they need to be aspirational goals, and push us kind of beyond our comfort zone. I don't know if you've met or not. But I do quite a lot of work with blockchain. And blockchain is being used a lot in supply chain transparency, and blockchain is being used to record and track and prove your gs 17 compliance, you know, all the global sustainability goals and companies are doing that. And I don't think blockchain 11 years ago, when the book came out was was even around

Gil Friend: 37:27

what it was not the a couple of years later, we worked with a company that was using the semantic web technology to try to do some of those same things with supply chain, it's a little ahead of its time, right. But the notion was to provide both complete transparency across supply chains as well as confidentiality of proprietary information, apparently conflicting problems and find a solution that would provide both. That was not the right technology, blockchain a bunch of companies trying to do the same thing with blockchain.

Troy Norcross: 37:58

So what do you see as far as the exciting projects, being focused on sustainability in the broader space, and applying or trying to apply blockchains whether it's blockchain technology DLT, or whether it's a whole consortium trying to work together collectively?

Gil Friend: 38:16

I think I'm not up on the latest system, not up on the latest names in the game. It's proliferated faster than I've been able to keep track of. We're advising a company called v flow, which is one of these players attempting to build exactly what you're talking about that kind of supply chain dynamics, supply chain transparency, sustainable apparel coalition in the fashion and fabric industry, which is turns out to be one of the most polluting in the world has been working on this for years and is trying to build that kind of transparency. And I can't list the names. I don't I don't know the current players well enough. But a lot of there's a lot of, should we say promise or should we say hope? Yeah. technology being able to provide a solution will say.

Marcus Kirsch: 39:03

So when you when we talk about this, something like blockchain and other other systemic aspects, and I've been to a few talks, I think, particularly here at the RSA as well, in London, they are having a closer look at circular economy. So and it always sounds. So there's a lot of great slides I've been seeing about it, as much as we had a bit of a chat with at gillaspie heroes who's been working in sustainable consulting for a long time and solving moving back a bit into activism. And, but he what, in general, it seems to be a very big, scary beast. And sort of looking at where to start and what aspects it needs. You know, when I look at this, and I look a lot at systems and I'm like, Okay, so how, because if it circulates start sometimes and a bit like some of the systems that start running and then have to keep running so There must require an immense amount of new kind of partnerships and different discussions amongst different stakeholders. So where where, where is that at the moment? Or where do you see examples? And how can organisations sort of sort of join in

Unknown: 40:15

shortly to?

Gil Friend: 40:16

Well, I don't know. You said it's scary. I don't see the scary I see this challenge. And exciting.

Marcus Kirsch: 40:22

Let's use positive language. Yes. You know,

Gil Friend: 40:31

there was a, there was analysis done back in, I think the late 80s, by Robert pears looked at the United States economy and material flows in the US economy. And based on that, we asked, we asked for, they'll ask you to think about if you if you look at the flows of stuff through the US economy, what percentage of it at the end of the day would you say is product, stuff that you're making and shipping to a customer? And what percentage of it was non product, the stuff that you can't sell on that goes to a landfill or a smokestack or whatever, on a mass basis? What percentage product? What percentage nonprofit?

Troy Norcross: 41:13

No idea what I'm sure I'm going to be shocked when you tell us? Of course you are. Nobody

Gil Friend: 41:16

ever gets it. Right. It's 6% product

Troy Norcross: 41:19

6% product.

Gil Friend: 41:21

In the US economy, one of the most, you know, advanced in the world. 94% non product, stuff that we make the cancel. It's worse than that. Because if you follow that, that if you follow the 6% product through the economy, at the end of six months, 80% of that is now waste. So 1.2% of the stuff that flows through our economy has durable value lasting more than six months. So there's your opportunity markets for circularity, what could we do a little bit better than that? If we could cut our waste 10%, we've increased the productivity 15 150% boom. So the opportunity is vast. And the question is, how do you unlock that? The first thing you do is ask the question like, what does that look like? For us that number is for you know, as an aggregate across the economy, it can be different in the food industry, even the steel industry in the fashion industry, and the home building industry. But I think any organisation can start by asking, Where are we doing things that do not add value, but in fact drain value, sometimes we're gonna see that in the form of physical stuff. That's where the circular conversation is, what could be done to either reduce the amount of non value adding flow through our system, what could be done to take that stuff and make it valuable to somebody. And at a surface level, it's transactional at a deeper level, it's it will take you all the way into design chemistry, which is our different ways to make the stuff that we're using, so that it's not just useful for the product I'm building. But it's useful, anticipatory to someone down the supply chain, but on the downstream end, how do we work the chemistry so that we engineer out the materials that make stuff not just not valuable, but dangerous, or toxic chemical engineering out of the process, world of green chemistry? So you talked about design thinking, but there's design chemistry, which of course, all chemistry is, but now we start to add some different criteria, not just the performance specs that we've always had, but the biological constraints, toxic issues, greenhouse gas loading reusability physical structure that allows for that, can't you moving away from combinations materials that cannot be reused because they're in combination. So or, or combinations that can be brought, you know, effectively unzipped so they can be used as a whole host of opportunity here, I was a meeting at University of California, Berkeley, must have been about 15 years ago, where the green chemistry programme kicked off. And they expected a couple of dozen students, they had a room Packed to the Rafters with 250 graduate students who were there because they recognise that this is the beginning an entirely new career path for them. Hmm. They were just I was blown away by the enthusiasm and the creativity in that room. And we've seen some of the results that over the last decade. So circular, I think is very exciting. It's certainly captured a lot of imagination. You've got the MacArthur Foundation in there in London, right in your body. One of the the leaders and drivers in this both in doing the baseline research of what's the problem and what might be possible here and then building the coalition's and funding the research and work to advance this and pay off is that we're seeing now in addition to their carbon goals, more and more companies are saying we're going to be zero waste companies, or we're going to be circular companies. IKEA just last week, announced the programme to buy back furniture from their customers. Boom. So there's there's an example of not just the technical innovation, but a business model innovation, that that will require technical changes, not just in terms of what they do with that stuff that when it comes back or, or, you know, take it apart or remanufacture it when it comes back, but now they're going to start thinking about the front end. Okay, so very much a design driven company, they're gonna think about the front end about how do we make our stuff so that when we take it back, at end of life, we can do that advantageously. So there, you start to see, circularity, not just the materials, but in the design process, as well. Very exciting, new territory

Marcus Kirsch: 45:41

grew lovely, as usual, many questions, little time. And so I want to finish with maybe, probably not gonna be a quick one. But as most of those questions aren't. But when we look at a lot of how our economic system is still working incentives that is been driving and we look at anything from, as you mentioned, before, you know, the fashion industry or textile industry, being big polluters. And, you know, when I look at having work in advertising and other aspects and looking at some of those industries, like Zara, for example, who became famous by rolling out every two weeks, something new into the shop. So an amazing or hearing from gap that is shredding the textiles in the backend and dumping them out those kinds of things. And the same with Apple and other companies continuously turning out new versions of the same thing with very small, incremental, additional value. And if I look back, and you know, back at the 70s 80s, when things were, especially in Germany, were when you were proud to build things that last, like a decade or longer, and how far we are away from that. And it also reminds me of that one story about the is seemingly still, I think, one or two light bulbs that been on for like nearly 100 years or something, I think it's somewhere over in a in a fire department house somewhere in Australia, and they don't want to turn it off because they don't know if they're going to break it if to turn it off. So it's been on just for the longest time ever. And I think they found one other that they're trying to take apart and see how it was built that it lasts so long. But it's one of those symbolic examples of, of things that just were a times built to last, and we're so far away from that. Do you have a comment on that evolution? And is that is that is that a clock? We can wind back or something? Or is it just something we have to deal with? And we need a revolution? Or I don't know,

Gil Friend: 47:46

do we have another hour?

Troy Norcross: 47:48

Exactly? No, you

Marcus Kirsch: 47:49

have about one minute.

Troy Norcross: 47:53

consumerism consumerism is a huge problem when you're trying to

Gil Friend: 47:57

without getting into the nature of capitalism, modern capitalism and consumerism. Let me say this. Well, yeah, maybe some of those. I've long been concerned with the question of getting the prices right. We live as economic beings and economic organisation we respond to financial incentives in the financial incentives are distorted. The prices we charge, the prices we pay for things don't reflect their real costs. We don't pay for pollution, we don't pay for toxic impacts we don't pay for health impacts. Henry Levin's from Rocky Mountain Institute estimated a dozen or so years ago that the that the true cost of a gallon of gasoline in United States and, you know, we pay where I am now about three and a half dollars a gallon. So whatever that is at 90 cents a litre for gasoline, and people complain that it's too high. And then we're sitting out if you look at the actual costs, including environmental costs, health costs, and military costs, protect supply lines to keep that oil flowing. It's more like 15 to $20 a gallon. For gasoline. Now, the question is people said, if you had to pay 15 or $20 a gallon at the pump for your gasoline, would you be driving the car? You're driving today? And everybody says Of course not. And the next question, of course, is would anybody be manufacturing the car that you're driving today? And the answer is, well, probably not. So the price signals are wrong. Adam Smith said a few 100 years ago that perfect markets, and on perfect information. We don't have perfect information. We have distorted information that in effect provides a societal subsidy for pollution by not having the polluter pay.

Troy Norcross: 49:43

society does wind up paying but the polluter doesn't pay.

Gil Friend: 49:46

Right. And in that case, how will I as a conscious caring individual at the pump, make an intelligent solution if I'm paying three bucks at the pump and the other $15 in my taxes, in my health bills in my cleaning bills, et cetera. I can't be a rational actor without accurate information. So that's question number one. Question number two is not an economic one. It's a moral one and a personal one, which is what do we care about? My friend Nora Bateson is fond of asking the roomful of people, when we're talking to them say how many of you here are not wearing a single item of exploitation or oppression on your body? And the room goes quiet. And I've never I one time I saw one hand go up in a room of 300 people. But mostly, there's an uncomfortable shifting in our seats. And we at the podium, confess, you know, not us either. Yeah, we're in the game. We're embedded in it. And it's very, very difficult to fully extricate yourself from it without big systemic changes. But we can each of us start asking those questions about how am I going to purchase for durability? Am I going to purchase for fair trade, for soil building for decent treatment of workers? Will I will I where I can at least be aware of those choices and make those choices where I can individually, and then work as a citizen or as an activist, as a person and accompany as an investor to make those choices more and more possible, in the way that we work as an economic society. Really, really

Troy Norcross: 51:26

good kind of short answer compared to we could have been here for the next two hours talking about that topic. You wrote the book originally 11 years ago, I hear you've got some other things that are in the works. not quite ready yet. what's what's coming down the line?

Gil Friend: 51:40

Well, a couple things. So we're gonna we're gonna repurpose this book, the truth about green business into into a more modern format, probably online in a variety of ways. So with some updating of cases and so forth, but basically making it much more accessible. More broadly. Number one, on the question of getting the prices, right, which I was just speaking about, we're putting together a multi author book diving into that what I say book shows you how old multi author thing in some format somewhere, providing a bunch of perspectives into what is that mess, and how might we untangle it? And then, and then some other other things in the pipeline in the realm of online education or engagement, because clearly, we need to find ways to engage many more people in much more accessible ways in in, in the conversation of intervention

Troy Norcross: 52:40

of well, we'll we'll put your contact details down in the show notes. It's been a real pleasure having you on the show this morning for you this evening for us. Thank you so much.

Gil Friend: 52:51

My pleasure. Thank you guys.

Marcus Kirsch: 52:53

Thank you. Take care.

Troy Norcross: 52:56

You've been listening to the wicked podcast with co host Marcus Kirsch and me Troy Norcross,

Marcus Kirsch: 53:02

please subscribe on podomatic iTunes or Spotify. You can find all relevant links in the show notes. Please tell us your thoughts in the comment section and let us know about any books for future episodes.

Troy Norcross: 53:15

You can also get in touch with us directly on Twitter on at wicked and beyond or at Troy underscore Norcross also learn more about the wicked company book and the wicked company project at wicked company calm