A Quality Lesson for the ‘Greens’

Most environmentalists vociferously want new “carbon� taxes, regulations and market mechanisms to get American business to clean up its act. But what the “greens� really need to capture corporate America is a W. Edwards Deming of industrial ecology.

Deming, of course, is the guru of quality control. The Japanese named their national quality prize after him. His work offers a fascinating model for the environmental movement. Indeed, the green movement in America today is where the quality movement was about 15 years ago.

Back then, American companies labored under the belief that high quality meant high cost. Quality was expensive. In fact, Deming’s best pupils--the Japanese--proved the opposite was true. If you consistently designed quality right into the process, quality wasn’t expensive at all. Doing it right the first time saved more money than it cost. This new reality is transforming how America now creates quality.

The challenge for the Green Deming will be to show that designing ecology right into the process can be similarly cost-effective. At the Ecotech Conference in Monterey this past week, some of the sharpest intellectuals in the environmental movement struggled with this approach.

Just as with the quality revolution, “We’re not going to ‘green’ our corporations by proclamation of the CEO,� asserted Denis Hayes, the 1990 Earth Day organizer who now runs Green Seal.

The question is how to get organizations to change their perceptions of value, waste and efficiency. Austin Tibbs, an environmental consultant with Arthur D. Little, argued that companies should think of their production processes as being part of “industrial ecosystems.�

“Perhaps the key to creating industrial ecosystems,� Tibbs said, “is to reconceptualize waste as products.� In other words, companies should try to make markets in their waste products. They should be willing to seek out both collaborators and customers who are prepared to forge ongoing relationships to extract economic value from those products. Tibbs pointed to the successful Kalundborg “industrial ecosystem� just outside Copenhagen, where an electric power generating plant, an oil refinery, a plasterboard factory, cement producers, a sulfuric acid producer and a biotechnology plant have created a prosperous ecology/economy.

Companies can make markets in “efficiency� as well as waste. Amory Lovins, who runs the Rocky Mountain Institute, has been instrumental in encouraging electric utilities to trade cost-effective power generation capacity between themselves. “We’re trying to decouple profits from sales volume,� Lovins said, “and that turns efficiency into a profit sector.�

These units of efficiency are called “negawatts�--and Lovins pointed out that it’s now more profitable and productive for some utilities to sell negawatts than to generate more electricity. Of course, creating mechanisms that reward efficiency is at the heart of Deming’s quality movement.

Indeed, it seems that both the quality movement and the ecology movement are converging into a mission statement originally coined by automobile industrialist Henry Ford: “If it doesn’t add value, it’s waste.�

That’s a mission statement that more and more American companies are coming to live by. Clearly, the economics of defect-free products and services--the quality revolution--is what’s now driving organizational behavior. But as the economics of environmentalism are gradually phased into the equation--the rising cost of filthy water and smoggy air--could quality and ecology begin to merge?

“Designing a product from cradle to grave isn’t enough anymore,� Arthur D. Little’s Tibbs told the Ecotech crowd. “We have to design now from cradle to cradle--to the point where the product is reincarnated as something else.�

Of course, it has taken American industry an awful long time to pick up on Deming’s design tenets and quality revolution. In fact, it took the Japanese to redefine America’s quality vocabulary. Most American companies would still rather pay lip service to quality than invest in it. That will probably hold true for industrial ecology as well.

But the fact that America’s brightest environmentalists are now speaking a vocabulary that business can appreciate, understand and profitably adapt now offers some reason for environmental optimism. We can only hope that the Green Deming is greeted with a little more speed and enthusiasm in this country than the Quality Deming.