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Posted 11.8.05

“We should start on a note of consonance,” Stuart Hart, the S.C. Johnson Chair of Sustainable Global Enterprise and Professor of Management at Cornell University’s Johnson School of Management, told attendees at the November 8th B·A·W·B Colloquium Series. “It is not about more philanthropy and shaming people into doing things because it is the right thing to do - it is about creating a new level of commerce”

Hart, author of Capitalism at the Crossroads: The Unlimited Business Opportunities in Solving the World’s Most Difficult Problems,stressed the importance of juxtaposing the two elements in the book’s title. The first part of the title is about what you need and the other is about how you get there. With “Capitalism at the crossroads,” Hart says, he put his “cards on table”.

“I absolutely think we stand at a very historic time in human history,” said Hart. “This is a very unique time. Everyone thinks it is their time that is the most important in human history. But I am claiming that we live at a very important time in human history.”

To back up that claim, he took the audience back in time to 1905 when the world of business and innovation was experiencing incredible dynamism. The Wright brothers had just proven they could fly. It was great to be British because the sun never set on the British empire and thus they could travel anywhere without a passport. The world was interconnected and it was the first year of globalization. According to Hart, those who were chronicling those times weren’t particularly worried about war because the world was so interconnected. They thought war had become obsolete.

“No one could have imagined that a scant 8-9 years later the world would descend into WWI, fascism, Nazism,” said Hart. “The world teetered on the edge by the 1940’s, and it wasn’t sure it would come out of the tailspin. If it hadn’t, the capitalism we know today might never have been born.”

“There is a tendency to think this is how things are and how they have always been, but things are actually very transient and subject to change,” he added.

The U.S. government pulled the country out of the Great Depression in the 1940’s and Hart told the audience to scroll forward to today, 2005, because the world is standing on a precipice once again. People had more foresight than 1945, more foreboding, but today things are more vexing, difficult and challenging than they were 100 years ago. The human population is 6.5 billion today as opposed to 2.2 billion or so when the baby boomer generation came along.

“I made a conscious choice to center my strategy on environment and business a long time ago, said Hart. “In 1990 the population was 5 billion. 2.2 to 6.5 billion increase in one lifetime. Nothing like that has ever happened before in the history of the planet.”

Hart’s motto is “never say never, especially when you are dealing with geologic time,” and he believes the choices and strategies we make over next 10-12 years will tell the story. There has never before been this much force behind business or this much inequity on the planet. That is why he believes capitalism stands at the crossroads, and we need to invent a more inclusive form of capitalism – one that includes all 6.5 billion, not just the rich, not just the U.S. Hart finds it difficult to see how capitalism will continue otherwise.

“The next 10-15 years will tell the story,” said Hart. “I don’t want to imagine what that descent, like in 1914, will look like.”

Hart told his audience that the U.S. had arrived at a point in history where it will not be the government that will bring the country out of its problems. He believes it will be the private sector that makes the change because no other institution can step up to the challenge. The questions, he said, are how did we get to this place and how do we make it work in business terms?

“The old business formula of “take make waste” will eventually result in problems like those in the 60’s when the Cuyahoga River caught fire,” he said. “Federal regulations were then created to slam companies because they showed no inclination to do anything about it. I was convinced at that time that the corporation was the enemy and the only way to beat them in to submission was with a big stick.”

But Hart learned that every solution to a problem inevitably creates new problems. Many of the solutions from that time created bigger problems than the problems they solved. Although he sees the legacy of command and control as alive and well in the U.S., he believes business needs to outgrow it. We are still dominated by a trade-off way of thinking which doesn’t require much creativity or problem solving.

“When you think of green products what comes to mind?” Hart asked the audience.

The audience responded with words like “niche”, “expensive”, “hippies”, and “sub-par”. Hart admitted the early “green” products in 1990’s were developed by sloppy thinking and were just trendy. Business, he said, is still trying to live that one down; still trying to overcome the green product problem. Most companies think talking about sustainability is the end of the road. They put their product in lifecycle management and they are done. Hart thinks this is just the starting point for incremental improvement of existing products and processes.

“Beyond greening is about tomorrow’s technologies and unserved or underserved markets of the future,” said Hart “technologies that will make obsolete the current ways of doing things. We have to think about what are the next, inherently clean, leap frog technologies.”

The U.S., he said, is last place you will see these technologies come forward on a permanent basis. The early market for many next generation leap frog technologies will be at the bottom of the pyramid, in places that are strange and unusual to us. Hart believes that the U.S. business sector should focus its energy there.

“We are now solving trivial problems for rich people,” he said. “The big problems are at the base of the pyramid. Unless we figure out how to really enlist everyone in the world in the capitalist dream it is going to boomerang on us. We can have fundamentally sustainable technology combined with the people who have been left out and are at the bottom of the pyramid.”

Hart and his colleagues are working on a base of the pyramid model and design for business to build partnerships there. In answer to a question from the audience regarding whether this protocol would work in East Cleveland, Hart responded that they are in the beginning stages of putting this “BOP Protocol” together and East Cleveland is one of the projects they will be working with.

“We have to have a big enough imagination to figure out how to service these people (at the base of they pyramid) and do business with them,” said Hart. “In 1965 we tried to beat companies into submission and that has evolved to (enlightened companies) companies on the leading edge with people who are forward thinking.”

He sees government as being locked in the dark ages in an odd role reversal from the early 1900’s. Government is no longer the absolute answer, says Hart, business is the answer.

“Sustainability does not mean “no growth.” We need a different kind of growth, and we need to make it succeed wildly rendering old companies obsolete,” he said. We need to imagine trillions of new products and a more sustainable way of doing things. This is the challenge and these are the opportunities. Society is like a flight that has lost its lift and is hurtling down. Can we create a civilization that can fly?”

By Janet Roberts

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