Sloan Fellows Program Newsletter

Spring/Summer 2013, Issue 14

 In this issue

Stephen Sacca, SF '90, Director, MIT Sloan Fellows Program

Sustainability Rebranded

Spinning an old Churchill quip, MIT Sloan professor John Sterman once remarked that sustainability was the worst possible word—except for all the others. He’s right. While the concept of sustainability is profound, the word itself is profoundly underwhelming. It does not inspire us to envision a society where all living systems thrive.

“Sustainability” cautions us to be prudent, and prudence does not inspire bold invention. In this newsletter, you’ll read about what MIT Sloan is doing to change the way we think about sustainability. You’ll also hear from alumni across the world who have advanced beyond prudence to the very frontier of innovation. I think you’ll agree that there’s nothing boring about saving the Amazon rainforest—or millions of dollars annually in electricity costs. Enjoy the newsletter!

Stephen Sacca, SF ’90, Director, MIT Sloan Fellows Program

Growth vs. Green? At MIT Sloan They’re on the Same Team

In the management school realm, MIT Sloan is often thought of as the “Sustainability B-School.” Early on, the School took a leadership role in the field when much of society underestimated sustainability as admirable but not essential to the progress of commerce and society.

In part because of charismatic pioneers like John Sterman, head of MIT Sloan’s System Dynamics Group, society and business are finally coming around to the realization that we are depleting nonrenewable resources at an alarming rate. They are also beginning to understand that “framing sustainability as loggers versus spotted owls, growth versus green, economy versus environment doesn’t work,” as Sterman has observed. “These things are fundamentally aligned.”

More harm than good?

Sterman, of course, takes a systems approach to sustainability. The idea is that you cannot isolate and “fix” one part of a complex system without setting off a potentially disastrous chain reaction of events elsewhere in the system. “From California’s failed electricity reforms to road building programs that create suburban sprawl to pathogens that develop resistance to antibiotics,” Sterman says, “our best efforts to solve problems often make them worse.”

John Sterman

Sterman is a key figure in the annual MIT Sustainability Summit, one of the most influential conferences in the industry. The 2013 summit, held at the MIT Media Lab in April, brought together sustainability leaders from academia, business, and government to discuss ways to reduce consumption and improve the environment.

Too many people are buying too much stuff

Sterman opened the conference by calling for a reduction in consumerism. He warned that technological innovation alone cannot mitigate the current rate of consumption of the Earth’s resources. Individuals must take charge by consuming less or risk an unavoidable “day of reckoning” that could occur “within our lifetimes.”

Summit guest speaker Rick Ridgeway, Vice President of Environmental Affairs at the clothing company Patagonia, agreed. “Too many people are buying too much stuff. It’s absolutely a crisis.” On Black Friday in November 2011, Patagonia denounced consumerism in a full-page ad in The New York Times. The ad, which read “Don’t Buy This Jacket,” entreated customers to avoid unsustainable products and to reuse, repair, and recycle what they did buy from Patagonia. During his speech at the Summit, Ridgeway admitted to tension among Patagonia executives over the initiative, but the risky move did not hurt sales. The company saw revenues leap to $540 million a year later.

A break-out session during the 2013 MIT Sustainability Summit A break-out session during the 2013 MIT Sustainability Summit

The summit, the fifth organized by MIT Sloan, included a day of workshops, giving organizations facing sustainability challenges a chance to strategize on how to turn their new knowledge into impact.

Read more about the 2013 Sustainability Summit.

Jason Jay

The New Sustainability Initiative at MIT Sloan:
An Innovation Designed to Promote Innovation

When the best thinkers across fields put their heads together, we have a better shot at tackling the most pressing challenges of our time. That philosophy is a core ingredient of the MIT gestalt and the idea underlying the new Sustainability Initiative at MIT Sloan. A dynamic vehicle for teaching, research, experimentation, and collaboration with industry, the effort will leverage the vast and varied resources across the Institute to advance sustainable practices.

Jason Jay, director of the initiative, says that he aims to develop a powerful interdisciplinary community of innovators from engineering, management, urban planning, finance, political science, and other fields who see themselves as leaders for a sustainable world. “Introducing new technologies to the marketplace,” he emphasizes, “relies on the alignment of technological, political, and commercial ingenuity. We need fresh management practices to accelerate adoption of sustainable technologies.”

Jay offers the example of Robin Chase, SM ’86, founder of Zipcar, the car-sharing business that frees people from the hassle and expense of owning a car while reducing parking demand, traffic congestion, and fuel consumption. Through strategic marketing and the development of a financially sustainable business model, Chase has inspired communities across the auto-obsessed United States to adopt a fairly radical transportation alternative and spurred a host of startups with a similar model around the world.

Designed for impact

Jay says the Sustainability Initiative at MIT Sloan will build on specific resources across MIT to generate solutions, such as:

To inspire the interdisciplinary collaborations that will develop such innovations, the Sustainability Initiative at MIT Sloan will bring students, faculty, alumni, and industry partners together regularly in educational environments—a new action-learning course, for example, and a revamped Sustainability Certificate program. Jay is also launching a weekly Sustainability Salon that will convene members of the wider community who are passionate about redefining the kind of world we want to live in and who are game to map out strategies for achieving those goals. The Salon will debut in September 2013.

Jay believes that through programs like the Salon, the Sustainability Initiative can generate new management practices, business models, and market structures that will lead to the overall advancement of human welfare, which is what the sustainability movement is all about.

MIT Sloan Fellows Peer Review:
Alumni Find Smarter Ways to Think Sustainably

Earth will soon host nine billion people demanding resources that don’t exist on this planet. We should all be contributing to the ecosystem, rather than taking away from it. But where do we start? How can companies, in particular, embark on a productive, strategic path to meaningful sustainability?

Carrie Hunter

Early this year, Carrie (CJ) Hunter, SF ’84, put 12,000 miles on her Subaru in search of all things sustainable on a road trip from coast to coast. Head of the corporate consulting firm Leading Sustainability, Hunter wanted to see for herself the successes and failures of sustainable efforts and enterprises in business, industry, farming and ranching as they tried to meet market demand within the parameters of sustainability principles and practices. She will feature articles and artifacts gathered on the excursion in a new blog “On the Road to Sustainability.” [Watch the Leading Sustainability website for the launch of Hunter’s blog.]

One of the key lessons that was reinforced on this trip, Hunter says, was the importance of mindset. “Individually and collectively, we shouldn’t be thinking about sustainability as sacrifice, but as a new route to abundance. For instance upcycling, as a framework, can help manufacturers design and produce products with renewable life cycles—office chairs that can be dismantled for reuse or composting is one example. The idea is to eliminate waste of any kind. It’s being done successfully and economically.”

People, planet, prosperity

When Hunter consults with organizations to help them devise and carry out sustainability strategies, she urges them to take the “three-pillar approach” to sustainability, a holistic model that integrates environmental, economic, and social responsibility into business practices. She stresses that any strategy that does not incorporate these elements cannot be described as sustainable—and can jeopardize the business on a number of fronts. Hunter offers as an example the effort to make supply chains transparent in the electronics industry. That transparency has uncovered, for example, egregious labor practices in some manufacturing sites in China as well as the use of “blood coltan” from Eastern Congo, which has contributed to intense regional conflict and millions of deaths.

The ensuing public firestorms have taught multinationals like IBM and Apple that they will suffer serious economic fall-out if they don’t pay full attention to their social and environmental practices. Such companies have signed on to various initiatives that address social and environmental responsibility, Hunter observes, for all the right reasons. But they also understand that if they don’t exercise ethical principals, the resulting public relations fall-out can do lasting damage to their brands. “The three pillars,” she says, “are inextricably interlocked.”

Transforming the corporate culture

Hunter believes that mid-level managers within organizations can often serve as Trojan horses—change agents who enjoy both close communications with employees and with the C-suite. “Many times, they are in the best position to inspire individuals at all levels of the company to step up their sustainability efforts.” She also urges her clients to partner with their employees on sustainability issues as a requisite step to achieving the sustainability mission. Including them in the mission builds loyalty and inspires employees to be ambassadors for sustainability and for the company itself.

David Hess, CEO of Pratt & Whitney (featured below), agrees with that philosophy. His company’s leadership in sustainability has inspired employees to embrace the cause. Launched in 2008, the company’s Green Power Grant Program provides funds to U.S. employee volunteers for cleanup, habitat restoration, and environmental education programs. Hess also notes that Pratt & Whitney is now attracting an exciting breed of new hires drawn to UTC companies because of that environmentally responsible culture.

What are the practical efforts that companies can undertake to increase their sustainability quotient? We asked several MIT Sloan Fellows alumni what they are doing to improve their SQ.

Julian Ho, SF ’12
Assistant Managing Director, Cluster Group Engineering
Singapore Economic Development Board (EDB)

Julian Ho

Without a single natural lake or aquifer, the country of Singapore recognized 50 years ago that it needed to innovate to solve one of its key vulnerabilities—access to water. Today, says Julian Ho, Assistant Managing Director of the Singapore Economic Board, Singapore is the only country that has “closed the water loop,” employing a complex system for capturing rainwater through a comprehensive network of drains, canals, rivers, and storm water collection ponds, which is then channeled to 17 manmade reservoirs for storage. With an innovation called NEWater—using advanced membrane technologies and ultra-violet disinfection to purify reclaimed water—Singapore is harvesting “dirty” water and making it clean and safe to drink.

One of the business clusters that Ho oversees on the EDB is clean technology. “We have turned our national need into a forum for innovation. We think of our country as a living laboratory and work with companies to invent and test pioneering solutions like NEWater.” Ho and his team approach sustainability solutions holistically. “Sustainability doesn’t happen in a vacuum. The more integrated your water, housing, transportation, and environmental solutions are, the more environmentally, socially, and economically sustainable they are.” Companies don’t have to make tradeoffs, Ho says. “Sustainability can be economically, environmentally, and socially smart all at the same time.”

Nadia Shalaby, SF ’11
CEO & Founder
Arctic Sand

Nadia Shalaby

Did you know that 80% of all the energy we generate worldwide gets lost during transmission and conversion? Dr. Nadia Shalaby is out to change that dismal equation with her startup Arctic Sand. The company, which has just closed on $9.6 million in financing, has invented a power-conversion device that could save the world billions of dollars annually in electricity costs and millions of tons in CO2 emissions. Arctic Sand’s Transformative Integrated Power Solutions platform consolidates multiple power components into one chip, maximizing the power of electronic devices. Dr. Shalaby is commercializing the technology for mass markets, like telecom, datacom, and mobile.

Dr. Shalaby spun the startup out of an i-Teams assignment while she was an MIT Sloan Fellow. Her original concept had been to spearhead solar energy across Egypt, but the political crisis made that effort impossible—at least temporarily—so she shifted her focus to another form of energy conservation. The secret to her success with Arctic Sand, she says, was learning to see problems from a broader perspective, thanks to the MIT Sloan Fellows experience. “It’s essential to get out of your silo and expand the breadth of your lens when solving problems. In this case, when I stepped back to look at the big picture of energy efficiency, I saw a wider system that wasn’t working. My team and I suddenly comprehended the vast waste of energy that is taking place in powering up electronic devices. It doesn’t have to be that way.” And when Arctic Sand begins rolling out converters to electronics manufacturers in 2014, it won’t be.

Joerg Sommer, SF ’08
Worldwide Sales Director e-Mobility
Volkswagen Group

Joerg Sommer

While automakers usually integrate a token alternative fuel model into their conventional vehicle programs, Volkswagen has taken a bolder approach. The German automaker has appointed Joerg Sommer to head an all-new e-mobility (alternative fuel) division. Sommer is leading the sales and marketing effort across all of Volkswagen Group’s brands to introduce into the global marketplace a wide range of vehicles, including compact cars like the E-Up!, the Golf Blue e-motion, and the E-Jetta, as well as ultra high-end, high-performance vehicles like the leading-edge Porsche Panamera Hybrid. Sommer has worked in the automotive industry most of his career, from Daimler AG to General Motors Europe to Mercedes to Renault, where he was director of electric vehicles before being wooed to Germany to take on this latest challenge.

“The future,” Sommer says, “is the electric car and a new generation of hybrid vehicles, so-called ‘plug-ins.’ The challenge: convincing the world of that.” One obstacle, he says, is that every country has different prejudices when it comes to alternative fuels. Europe has never taken to the hybrid, for example, and the U.S. has never warmed to diesel. He must also counter an anti-electric lobby, which contends that the lithium ion batteries that power electric vehicles require too much energy to produce. That is a non-issue, however, where hydroelectric or clean power plants have been installed. Sommer’s job, then, is to respond individually and effectively to the varied cultural mindsets of decision-makers—and consumers—in each market around the world. He admits he spends a good amount of his time on overnight flights to accomplish that and to make Volkswagen Group the market leader by 2018. With multiple models and multiple brands at multiple price points, VW has a good shot at the title.

Megan Brennan, SF ’03
COO and Executive VP
United States Postal Service

Megan Brennan

Unlike other federal agencies, the U.S. Postal Service is not funded by Congress. But with a 25% decline in mail volume over the last decade or so, it’s also seen a severe cut in revenue. Even the federal government has gone over to e-commerce. To make up the shortfall, the USPS has been aggressive at cutting costs—and many of those savings have been driven by comprehensive facility energy projects. The postal service saved $52+ million in 2012 alone with green initiatives. USPS COO and Executive VP Megan Brennan says that the economic success of those efforts shows that sustainability can be as much a financial boon as an environmental boon when tackled strategically.

“We have 900 active lean-green teams across the country advancing sustainability efforts,” Brennan notes. “In under 10 years, we decreased our total facility energy use by 33.9% and water consumption is down 38.8% since 2008.” The project Brennan’s most proud of is located in midtown Manhattan—a 2.5-acre green roof that tops the 109,000 sq. ft. Morgan Processing and Distribution Center. “We’re saving nearly $30,000 annually on heating and cooling costs,” she notes. The green roof, which is expected to last 50 years (twice the life of a traditional roof), will also reduce storm water runoff into the municipal water system by as much as 75% in summer. Brennan says that inspired by those numbers, the USPS is about to complete its second green roof at a postal facility in Syracuse, NY. “Our successes are inspiring us to be more and more innovative when it comes to energy conservation,” she notes, “so stay tuned!”

Pedro Villares, SF ’97
Director of Projects
Natura

Pedro Villares

Although environmental sustainability was in its infancy as a major academic focus when Pedro Villares was at MIT 15 years ago, he never forgot a certain seminar on system dynamics. “We learned that if every citizen on earth depleted resources at the pace being set by the first-world rich, we would need four or five planets to sustain the population before long.” Today, as part of the leadership of the Brazilian cosmetics giant Natura, Villares is helping to shape the company’s audacious environmental agenda, which includes efforts to renew the Amazon rainforest.

Covering more than a billion acres in Brazil, Venezuela, Columbia, Ecuador and Peru, the Amazon rainforest has been described as the “lungs of our planet” because more than 20 percent of the world’s oxygen is produced there, not to mention one fifth of its fresh water. Gutting the rainforest, then, has been risky business for planet Earth. As part of a multi-pronged plan of action, Natura—recently ranked the world’s second most sustainable company by the Corporate Knights—has pledged to buy 30% of its raw ingredients from sustainable sources in the Amazon. The company will also invest half a billion US dollars in the development of an interdisciplinary network of 1,000 researchers focused on the Amazon, involving more than 10,000 small producers in its supply chain. “I learned from my MIT Sloan guru—and thesis advisor—Tom Malone about the importance of integrating soul into management, and that’s what Natura is about.”

David Hess, SF ’90
CEO
Pratt & Whitney
a United Technologies Company

David Hess

When it comes to sustainable practices, Pratt & Whitney and parent company United Technologies have emerged, over the last decade, as corporate role models, their environmental efforts benchmarked by companies around the world. Pratt & Whitney CEO David Hess says that sustainability was a natural impulse for the company because there is a clear bottom-line advantage to energy efficiency. “In the airline industry, a third to a half of operating cost is fuel. The more we can improve on that number, the less airlines have to struggle to stay solvent. Hess says that Pratt & Whitney has decreased fuel burn by 75% since the 1960s—which also means a 75% reduction in emissions released into the atmosphere.

With a real estate portfolio of more than 100 million square feet around the world, parent company UTC has worked equally aggressively to decrease the environmental footprint of its facilities with operational efficiencies like the latest energy-efficient HVAC systems and water catchment and recycling. Between 2006 and 2012, the company reduced greenhouse gas emissions by 30%, water usage by 39%, and industrial process waste by 31%. Hess is especially proud that UTC received LEED Platinum certification for its 265,000 sq. ft. plant in Shanghai, the first facility in China to earn that distinction from the U.S. Green Building Council. But Hess says that his company has no intention of resting on its laurels. “It’s not what you did yesterday that counts, but what you’re doing today and what you intend to do tomorrow. To be a leader, you have to keep innovating and raising the bar.”




We’re already at work on the next MIT Sloan Fellows Program Newsletter. Please drop us a line at fellows@sloan.mit.edu if you have ideas about themes and news items for future issues.

Stephen Sacca, Director
Marsha Warren, Associate Director
Mary Marshall, Associate Director
Marc O’Mansky, Assistant Director
Libby Dilling, Marketing Associate
Marni Powers, Program Coordinator
Saul Horowitz, Program Assistant
Elizabeth Mackell, Program Assistant

MIT Sloan is a registered trademark. All trademarks are the property of their respective owners.
© MIT Sloan. All rights reserved


MIT logo©2013 MIT Sloan