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Business sustainability through innovation

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FINEX Folio -- Reynaldo C. Lugtu, Jr.

FINEX Folio

“La Mesa Dam has already dried up!” This is what a local water agency told me when we recently spoke, referring to its lowest point in over a decade because of the effects of El Niño. According to the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA), the dam’s current level is at 69.54 meters — less than half a meter from the very critical level of 69 meters. The standard operating level is between 78 to 80.15 meters, it is currently.

This dam in Quezon City supplies most of Metro Manila’s water through the water concessionaires which are already signalling the high likelihood of water shortage and interruptions if the dry spell continues.

But this is not the first time that we’re hearing this news. The last periods the Philippines suffered from similar El Niño effects were from 2015 to 2016 and 2009 to 2010. El Niño is a part of a routine climate pattern that occurs when sea surface temperatures in the tropical Pacific Ocean rise to above-normal levels for an extended period of time. This phenomenon, by its very definition, is “routine”; hence, we already know that it will happen again and again in a near-predictable pattern. But why is our government and the water companies still unable to prepare for its predictable impact?

In the meantime, in 2015, the Los Angeles Department of Water and Power (LADWP) released 96 million black shade balls into the Los Angeles Reservoir to reduce evaporation and save water in the midst of the worst drought in California history. Los Angeles Mayor Eric Garcetti described this move as “emblematic of the kind of creative thinking we need to meet [the drought’s] challenges,” according to LADWP website.

The utility agency reported that the shade balls reduce evaporation by 85% to 90%, equating to saving nearly 300 million gallons a year and enough to provide drinking water for 8,100 people.

Last year in Japan, Kyocera TCL Solar has started operation of Japan’s largest 13.7 megawatt (MW) floating solar plant located on the Yamakura Dam reservoir in Ichihara, Chiba Prefecture. The floating solar panels are the solution to keep the water from evaporating while generating electricity for 5,000 households.




These innovative approaches to saving a precious environmental resource such as water, are part of the concept of ‘Triple Bottom Line’ (TBL) in order to make business sustainable. Three dimensions of the TBL are also referred to as the 3Ps; Planet, Profit, and People, based on the work of Hammer and Pivo in 2016.

According to this framework, the lesser the impact a company has on social and environmental aspects (i.e. fewer natural resources consumed), higher the long-term success of the business would be. But how do you do this? The answer is innovation.

Similar to the innovative approaches in conserving the “Planet” (e.g. water resource), companies and organizations can also innovate in the areas of “People” and “Profit”. A lot of examples can be gleaned from the technology sector and popular brands, known for their innovation in these areas.

As an example in the “Planet” aspect, Nike Grind, a program to collect and recycle old rubber shoes of any brand, produces premium recycled and regenerated materials which are used in everything from premium new Nike products to sports surfaces around the world. Today, Nike Grind materials are used in 75% of Nike footwear and apparel.

In the “People” aspect, for example, Google “committed over $160 million in the last 5 years toward philanthropic grants to tackle global education gaps, while empowering Googlers to volunteer their technical expertise.” Its “goal is to help more people—especially those in underserved communities—benefit from the promise of technology, in the classroom and beyond.” Just last year, “Google made its first substantial foray into postsecondary education in January, with the creation of a new online certificate program aimed at people who are interested in working in entry-level IT support roles.”

In the area of “Profit”, the sharing economy spawned sustainable profit models that enable the sharing of limited resources. Uber, Grab, AirBnB, and others are just examples of tech companies that generate shareholder value while maximizing the use of resources.

But innovation in the 3Ps, essentially, is about solving problems and finding innovative solutions. Companies in the Philippines should employ innovation to solve pressing social and environment issues such as water management and supply, waste management, worsening traffic, lack of internet connectivity in thousands of public schools, the worsening state of agriculture, among others. A business can still be profitable by solving many of the ills we have in society.

As Tesla founder Elon Musk said, “For me it was never about money, but solving problems for the future of humanity”.

 

Reynaldo C. Lugtu, Jr. is President & CEO of Hungry Workhorse Consulting, a digital and culture transformation firm. He is the Chairman of the Information and Communications Technology Committee of the Financial Executives Institute of the Philippines. He teaches strategic management in the MBA Program of De La Salle University. The author may be emailed at rey.lugtu@hungryworkhorse.com