Lean is Green, Green is

Lean
GREEN

AND
COMPETITIVE: ENDING
THE STALEMATE
BY
GROUP 2

ISSUE AT HAND
Does going green mean companies lose their Competitive Advantage?

i)

Preventive
Measures
ii) TCO
iii) NonCompliance
Costs

i)

Sustainable
Growth
ii) Social
responsibility
and benefits

ENDING THE STALEMATE

Everyone focuses on static elements instead of the dynamic ones.
A vicious cycle is apparent.
Pollution = inefficiency.
Change metrics from pollution control to resource productivity.

Regulators frame laws which

make innovation difficult.

Companies find ways to oppose

and delay regulations; resources
which otherwise could be
allocated to other relevant
innovations/breakthroughs.

INNOVATION FRIENDLY REGULATION

Focus on outcomes and not on technologies
Enact strict rather than lax regulations.
Regulate as close to end user as practical, while encouraging upstream solutions.
Employ phase in periods.
Use market incentives.
Develop regulations in sync with other countries or slightly ahead of them.
Require industry participation in setting standards from the beginning.
Minimize the time and resources consumed in the regulatory process itself.

INNOVATION AND RESOURCE

PRODUCTIVITY
The cost of addressing environmental regulations can be minimised, if not eliminated,
through innovation that delivers other competitive benefits.

29 plants innovation offsets enhanced resource productivity.

1 of 181 waste prevention activities reported net cost increase.

68 of 70 reported increase in product yield.

Quarter of 48 initiatives required no capital investments.

Two-thirds of 38 initiatives with data on payback period recouped investments within 6

months.

Main motivating factors were waste disposal costs and environmental regulation.

Innovation in response to
Environmental regulations.
New technologies and
approaches that
minimize the cost of
dealing with pollution
once it occurs.
Eg. Rhone Poulenc
Nylon by products
diacids

Innovation addressing
the root causes of
pollution by improving
resource productivity.
Eg. Dow Chemicals
caustic soda scrubs

INNOVATION AND RESOURCE PRODUCTIVITY

Resource productivity increases when less costly materials are substituted or existing
ones better utilized.

3M avoided solvents by coating products with water based solutions.

Company gained early mover advantage as well as shortened time to market.

Innovations can improve process consistency, reduce downtime and lower costs.

3M developed rapid quality tests technique. Reduced wastes by 110 tons and yielded
$200000 annual savings.

Du Pont installed High quality monitoring equipment .It reduced production interruption and
cut non productive time in start ups.

Process changes to reduce emissions and use resources more productively result in
higher yields.

Ciba-Geigy Corporation replaced sludge creating iron with less harmful chemical and
eliminated release of potentially toxic product into water stream.

INNOVATION AND RESOURCE PRODUCTIVITY

Process innovations to comply with environmental regulation can even improve

product consistency and quality.

US Clean Air Act required electronics company to eliminate CFCs. Raytheon found alternate
cleaning agent which reduced operating cost and average product quality.

Innovations to address environmental regulations can also lower product costs and
boost resource productivity by reducing unnecessary packaging or simplifying designs.

Hitachi redesigning products to reduce disassembly time by cutting parts to 16% in washing
machines and 30% in vacuum cleaner.

DO WE REALLY NEED REGULATIONS?

Create pressure that motivates companies to innovate.
Improve environmental quality in cases where innovation and improvement in
resource productivity do not completely offset the cost of compliance.
Alert and educate companies about likely resource inefficiencies and potential areas
for technological improvement.
Raise the likelihood that product innovations and process innovations in general will
be environmental friendly.
Create demand for environmental improvement until companies and customers are
able to perceive and measure the resource inefficiencies of pollution better.
Level field during transition period to innovation based environmental solutions ,
ensuring one company cannot gain position without environmental investments.

COST OF STATIC MIND-SET

Current adversarial climate drives up cost of meeting environmental standards
thereby hindering the innovation benefits.
Cost of enforcing environmental regulations is enormous.
1986-1989 superfund money- 88% was went pay legal and administrative costs
while only 12% used for actual purpose.
Adversarial lock company into static thinking and pushes regulation cost upwards.
Static thinking causes companies to fight environmental standards which could
otherwise enhance competitiveness.

GOOD REGULATION VS BAD REGULATION

Bad regulation can damage competitiveness while a good regulation can enhance
it.
Problem is not with strictness but the way standards are written and inefficiently
administered.
US government ignored two critical principle of good regulation for their Paper and
Pulp sector.
US never achieved first mover advantage compared to Swedish counter parts.
US mandated strict emission goals and established tight compliance deadlines.
Sweden started with looser standards and communicated tougher ones will follow.

INNOVATING TO BE COMPETITIVE
Innovation offset the lack of competitive advantage
Dutch flower industry is responsible for 65% of cut flowers export
In early 1990s awareness about the environmental problems created a niche market
German and Japanese developed cars that were light and fuel efficient adhering to
new regulations.
Environmental regulations as an economic and competitive opportunity
External consultants favour end of pipe solutions
Internal experts are separated from line responsibility and line regulation

INNOVATING TO BE COMPETITIVE
Environmental issues should become an issue of general management
Resource productivity model must be emphasised
Conventional accounting systems are not efficient in tracking under utilized
resources
Create innovation based productivity enhancing solutions
Globalization makes competitive advantage obsolete

Rapidly emerging technologies and innovation can offset high cost inputs.

A competitive industry will take up new regulation as a challenge and innovate and
succeed

THANK YOU