Providential Living

Ray Anderson is CEO and founder of Interface, one of the world’s leading commercial carpet manufacturers. Founded in 1974, Interface expanded to meet the needs of a global economy, increasing sales, profits, and employment. Twenty years after starting the company, Anderson had a life-changing experience when he accepted an invitation to speak about his company’s environmental vision. The trouble was the company didn’t have one. Coasting toward a comfortable retirement, Anderson admitted he had never thought about environmental issues beyond legal compliance.¹

Before delivering his speech, a book arrived on his doorstep, The Ecology of Commerce by Paul Hawken. As Anderson read the book, he identified with passages describing how our modern industrial system is compromising the quality of life for future generations. As he read, he experienced feelings of self-doubt and remorse. He realized that he had been an unwitting accomplice to the diminishing quality of life. He set thoughts of retirement aside and was determined to change his company. Seven years later, he is still on fire, driven by his vision of a company with zero waste—one that returns more to the earth than it uses, provides jobs and incomes, and enhances the quality of life for future generations. Interface’s 2000 Annual Report, “A Better Way to Bigger Profits,” states, “Today, no company is sustainable. But one is trying hard to be the first: Ours.”²

Jaime Lerner is an architect and the governor of Parana state in Brazil. He is a bear of a man with thick, strong fingers that sketch rapidly as he explains his plan to reduce urban sprawl by helping people support themselves on small plots of land in rural Parana. Before becoming governor, he served three nonconsecutive terms as mayor of Parana’s capital city, Curitiba. When he began his first term in 1971, he inherited an abundance of challenges and a scarcity of resources. Facing the challenges of urban blight and deterioration, he determined that his administration would turn Curitiba’s scarcity of resources into a blessing rather than a curse. To do this, they learned to use resources frugally and to stimulate ingenuity, innovation, creativity, and a culture of co-responsibility for the city’s success.³ The familiar pioneer motto, “Fix it up, wear it out, make it do, or do without,” describes well the philosophy Lerner used to lead Curitiba.

Curitiba’s success has been attributed to the implementation of hundreds of multipurpose, cheap, fast, simple, homegrown, people-centered initiatives used to harness market mechanisms, common sense, and local skills. The city has flourished by treating all its citizens—most of all its children—not as its burden but as its most precious resource, builders of its future. It has succeeded not by central planning but by combining farsighted and pragmatic leadership with an integrated design process, strong public and business participation, and a widely shared public vision that transcends partisanship. The lessons of Curitiba’s transformation hold promise and hope for all cities and people throughout the world.⁴ What these stories from private and public sectors have in common is the use of providential living to achieve economic success. Many other organizations throughout the world are catching on and stepping up, applying similar principles, and reaching their economic goals—all the while conserving resources and providing a better quality of life for future generations.

Providential Living

Recently, a church leader, speaking about providential living, jokingly described our economy as one where we “buy things we don’t need, with money we don’t have, to impress people we don’t like.”⁵ This description would be more humorous if it didn’t sound so uncomfortably close to reality. Conventional commentary on the economy prescribes additional consumer spending as the cure for any ailment. For example, a recent NBC news report, 15 June, contrasted the bad news that NASDAQ was showing record losses with the good news that consumer spending was still healthy. That same week statistics showed high levels of consumer debt, concerns about job security, and an alarming increase in late mortgage payments. Putting these observations together, it appears that we are pinning our hopes for a strong economy on the continued spending of a group buried in debt, worried about employment, and struggling to make mortgage payments.

When asked what business would be like if everyone were as frugal as he is, an old friend replied in concern, “The economy would collapse!” This answer reveals a common but irrational fear that if people become frugal and conserve money and resources, the economy will fail. It is true that the economy would undergo a significant transformation; but with foresight, we can avoid economic collapse and achieve a smooth transition. The concept of a free market is fundamentally sound; therefore, it will hold up and even prosper without unwise consumer spending and wasteful use of resources. President Gordon B. Hinckley offers another perspective on prosperity. He says, “Ours is a wasteful generation,” and extols the virtues of work and thrift, calling them “virtues to be exploited, virtues to be admired, virtues vital to the stability of any healthy society, family, or individual.”⁶ Thrift and conservation are known as sound principles for managing a household, but we turn to an emphasis on spending and consumption to manage our businesses and communities. The challenge we consider is significant: How can we combine the essential features of free market capitalism with an ethos of thrift and conservation consistent with the principles of providential living?

Natural Capitalism

Natural Capitalism, whose tenets are explained in a recent Harvard Business Review (HBR) article, is a significant response to this challenge.⁷ Proponents of Natural Capitalism are optimists. They believe that it is possible for modern industrial nations to reduce resource use by 80 percent while maintaining current quality of life. They see that wasteful processes of the past create abundant opportunities for the future. They believe that new businesses and even new industries can be created by people who recognize the true value of nonfinancial capital.

Amory Lovins, cofounder of Rocky Mountain Institute near Aspen, Colorado, has popularized the term Natural Capitalism to describe a form of capitalism that considers the value of natural and human capital in economic decision making. The concepts of natural and human capital were well understood by Brigham Young when he said: “The riches of the kingdom or nation do not consist so much in the fullness of its treasury as in the fertility of the soil and the industry of its people.”⁸

Brigham Young identified three distinct types of capital: financial capital, fullness of the treasury; human capital, industriousness of the people; and natural capital, fertility of the soil. He also recognized the primacy of human and natural capital over financial capital as the key to prosperity.

We can use the familiar example of a stake orchard to illustrate the three types of capital. Financial capital is used to buy such things as land, equipment, and seeds. Human capital is added in the form of agricultural knowledge and willing hands. An additional, yet subtler, form of human capital is the culture and set of beliefs that motivates volunteers. The trees are one form of natural capital, a product of nature. But the more basic forms of natural capital are the soil, sun, rain, and other services of nature that make it possible to grow trees that bear fruit. The fundamental importance of natural and human capital was emphasized to the early Israelites when the Lord declared, “But thou shalt remember the Lord thy God: for it is he that giveth thee power to get wealth.”⁹

There are differences between conventional and natural capitalism. The conventional view, driven by tradition and sophisticated tools for measuring financial capital, treats financial capital as the primary measure of wealth, including natural and human capital only to the extent that they have a market value. The alternate view highlights natural and human capital as the foundation for building a strong and lasting economy.

“The Roadmap to Natural Capitalism,” published in HBR, describes a transition path from conventional to natural capitalism. This roadmap has four steps: resource productivity; elimination of waste, service, and flow strategies; and reinvestment in natural capital. The comprehensive text by the same authors, “Natural Capitalism: Creating the Next Industrial Revolution,” describes in detail the many ways in which the transition has already taken place.

Relationships Between Types of Capital Conventional Capitalism Natural Capital Human Capital Financial Capital

Natural Capitalism Financial Capital Human Capital Natural Capital

Resource Productivity

Productivity is usually measured in terms of labor productivity only. In contrast, resource productivity strives to use all resources—space, money, energy, material, and timeæin just the right amount, at the right time and place, in the right manner.

Singaporean engineer Eng Lock Lee is a leading expert in building design that uses all resources effectively. His innovative designs are characterized by a frugal use of energy, recapturing and reusing it until almost nothing is left. Upon receiving congratulations for an ingenious design to use a building’s outgoing air to pre-dry its incoming fresh air, using no energy and no moving parts, he compared his design to Chinese cooking: “Use everything. Eat the feet.”¹⁰

Measuring resource productivity presents some interesting challenges since quality and pattern are key factors. Consider energy productivity. The work done by energy is due more to the type and concentrations of energy than to the quantity of energy entering and leaving a system.

Energy flows are like water flows. A meandering stream nourishes more plant and animal life than a straight canal covering the same linear distance. The energy flows in Lee’s air-drying system are much more like a meandering stream than a straight canal. Important mathematical developments in chaos theory and fractal geometry have the potential to measure the qualitative aspects of energy flows so important to the effective use of limited energy.

Elimination of Waste: Closing the Loops

Taiichi Ohno, father of the Toyota production system, was dubbed by one author “the most ferocious foe of waste human history has produced.”¹¹ While this may be true, imagine what the author would have thought after hearing Brigham Young say the following:

“Never let anything go to waste. Be prudent, save everything. . . . Never consider that you have enough around you to suffer your children to waste a crumb of it. If a man is worth millions of bushels of wheat and corn, he is not wealthy enough to . . . sweep a single kernel of it into the fire; let it be eaten by something and pass again into the earth, and thus fulfill the purpose for which it grew. Remember it, do not waste anything, but take care of everything.”¹²

Through work initiated at MIT,¹³ James Womack and Daniel Jones have developed a business approach called Lean Thinking to help companies become more profitable through the elimination of all forms of waste. Part of their process is technique—providing tools to identify different types of waste. More importantly, they have created an intellectual and cultural framework for eliminating waste.

At a community level, Jaime Lerner and other leaders in Curitiba became masters at closing loops and reuse. They converted old buses into job-training centers, a garbage dump into a botanical garden, an old quarry into a community center for learning about the environment, and created a system for poor people to pay for food by recycling. Elimination of waste through reuse is a key to the way in which Curitiba has been able to increase quality of life with limited amounts of financial capital.

Interface has also created a culture of eliminating waste. Their company’s Shanghai factory faced a common manufacturing challenge that required pumping liquid through a series of machines. The original design required 95hp pumps. An Interface engineer, committed to waste reduction, made two simple design changes that reduced power needs to 7hp, a 92 percent savings in energy.¹⁴

The design changes were more common sense than rocket science. To reduce friction they used fatter pipes and paid for them with the money saved buying smaller pumps. The second design change was to place the machines in a straight line so that long, crooked pipes could be replaced with short, straight pipes, reducing both pipe and pump costs. It is no accident that a company committed to zero waste uncovered major cost and energy savings.

Service and Flow Strategies

Another important innovation growing out of Interface’s drive for zero waste is a modular carpet tile product, Solenium, which makes it possible to replace only worn sections. Furthermore, old carpet tiles are remanufactured into production identical to new carpet tiles. The skills that Interface has built through resource productivity and waste reduction put them in a position to better capture this competitive advantage by maintaining ownership of the product and selling the service provided by the product. They are now in the transition phase of moving from a carpet selling company to a floor covering service provider.

The shift is profound. A focus on ends rather than means led Anderson to define waste as “any measurable input that does not add to customer value.”¹⁵ This definition of waste helps a company find waste not likely to be discovered while striving to sell as much product as possible. The discovery and elimination of the waste yields higher profits to the provider, lower prices to the customer, and less environmental impact to the community. This win-win-win situation occurs because service and flow strategies align the incentives of providers, customers, and communities.

Interface is not alone in the transition to service provider. Furnace and air-conditioner companies become warmth and “coolth” providers. Chemical companies lease organic solvents and the list goes on.¹⁶ Think of your own businesses. Are there opportunities to develop service and flow strategies that better align your incentives with those of your customers and communities?

Curitiba’s leaders thought about transportation design from a service and flow perspective. They recognized that citizens needed reliable, affordable, timely, and safe transportation. A subway was ruled out as too expensive, but they were determined to reduce auto congestion without spending money they didn’t have, so they began with the resources they did have—old buses and an entrepreneurial spirit. Careful design of routes and fare structures attracted ridership. They designed portable waiting stations, described as space-age pods, where people could pay their fares before the bus arrived. These pods were raised to the level of the bus floor, making entry and exit from the bus easy and fast. They then attracted a Volvo plant to their city to build better buses and provide quality employment.

Reinvesting in Natural Capital

Curitiba’s flood control strategy provides an excellent example of the return from investment in natural capital. In the 1950s and 1960s, Curitiba followed a traditional flood prevention approach, spending millions of dollars on channelization projects.¹⁷ When Lerner came to office, Curitiba changed strategies from fighting floods to exploiting water as a gift of nature. They used strict laws to protect sensitive riparian zones and to restore the river’s capacity to contain floodwaters. The strategy of building nature’s flood control capacity leveraged the money spent on flood control. The result was increasingly effective flood control with a significant reduction in required financial capital.

The principle behind Curitiba’s flood control strategy is that nature will perform work for us if we take care of nature. This principle is also illustrated by an innovative do-nothing farming method developed by Masanobu Fukuoka in the highest altitude fields of Japan. Through careful design of an elegantly conceived sequence of plantings, nature provides weed control, composting, and other services automatically. The method yields enough to feed five to ten people on a quarter acre and requires only a few days labor.¹⁸

The role of natural capital is captured in the following humorous story. “A group of eminent scientists decided that Man had come a long way and no longer needed God. They could clone people and do many miraculous things, so they urged God to retire. God suggested that first they have a Man-making contest, just like in the days of Adam. One of the scientists said, ‘Sure, no problem’ and bent down and grabbed a handful of dirt. God just looked at him and said, ‘No, no, no. Go get your own dirt!’”¹⁹

It is easy to overlook the value of natural capital because we do not exchange it in dollars. However, we pay for it other ways. Ecologist Howard Odum constructed a framework, which he calls emergy analysis, for measuring the work of nature that goes into creating any product or service that we use. In spite of its strange name, emergy analysis is significant because its goal is to provide a way of determining real value rather than perceived value of nature’s products and services.²⁰

Because it focuses on real value rather than perceived value, emergy analysis helps managers to see costs better and provides them with effective tools for determining return on investment in natural capital. The overall effect is to favor decisions more in line with principles of providential living than those showing short-term gains at the expense of long-term costs in the form of natural capital.

An Opportunity

The examples presented here are still the exception, not the rule. The remaining question is whether these examples are anomalies or whether they are a glimpse into the future of business and economic development. Robert Greenleaf, who popularized the term Servant Leadership, said, “The skill of foresight is crucial. The ’lead’ that a leader has is his ability to foresee an event that must be dealt with before others see it so that he can act on it his way, the right way, while the initiative is his. If he waits until everybody sees it, he has waited too long; he cannot be a leader—at best, he is a mediator. Therefore cultivate the greatest of the creative skills, foresight.”²¹

If we are always found waiting for something to become mainstream before we embrace it, then we will forever be followers, not leaders. There is great upside potential for the Marriott School and its alumni and friends to establish leadership in the theory and practice of business and economic development based on principles of providential living.

By Donald L. Adolphson
Illustrations by Alina Nackos Murdock

about the author Donald L. Adolphson, professor in the Romney Institute of Public Management, joined the Marriott School faculty in 1981 after teaching in the University of Washington MBA program for eleven years. He earned his BS in mathematics, 1966, from the University of California-Berkeley and his MS, 1968, and PhD, 1973, in computer science from the University of Wisconsin. He teaches the popular Manager’s Toolkit class to both MPA and MBA students, putting Excel-based decision tools in their hands. He also developed an elective course in creativity and innovation. For more information about his research on providential living and natural capitalism, email donald_adolphson@byu.edu.

ENDNOTES

1. Ray Anderson, ECOTECH III Conference, Monterey, California. 18 September 1997.
2. INTERFACE INC, “A Better Way to Bigger Profit,” Annual Report 2000.
3. Jaime Lerner. Interview with Donald and Judith Adolphson. 29 June 2000.
4. Paul Hawken, Amory Lovins, and Hunter Lovins, Natural Capitalism:Creating the Next Industrial Revolution. (Little, Brown, and Company, 1999), 288-89.
5. Orem Cascade Stake Conference, August 1997.
6. Gorgon B. Hinckley, Standing for Something. (Times Books, 2000), 87.
7. Paul Hawken, Amory Lovins, and Hunter Lovins, “A Roadmap to Natural Capitalism,” Harvard Business Review, (May-June, 1999).
8. Teachings of Presidents of the Church: Brigham Young. (LDS Church, 1997), 228.
9. Deut: 8:18.
10. Hawken, Lovins, and Lovins, Natural Capitalism,123.
11. Hawken, Lovins, and Lovins, Natural Capitalism,125.
12. Teachings of Presidents of the Church: Brigham Young, 229.
13. James Womack and Daniel Jones, Lean Thinking: Banish Waste and Create Wealth in Your Corporation. (Simon and Schuster, 1996).
14. Hawken, Lovins, and Lovins, Natural Capitalism,148-49.
15. Paul Hawken, Amory Lovins, and Hunter Lovins, A Roadmap to Natural Capitalism,153.
16. Hawken, Lovins, and Lovins, Natural Capitalism,134-37.
17. Hawken, Lovins, and Lovins, Natural Capitalism,296.
18. Hawken, Lovins, and Lovins, Natural Capitalism,210.
19. Phil Ganezer, Marriott School MBA graduate `86. Interview with author. 2001.
20. Howard T. Odum, Environmental Accounting: Emergy and Environmental Decision Making. (John Wiley and Sons, Inc., 1996).
21. Robert Greenleaf, The Power of Servant Leadership, Ed. Larry C. Spears. (Berrett-Koehler, 1998), 97.