Why optimism trumps hope

Andy HoffmanForward Print HTML Share on Facebook Google Plus One Linkedin Share Button The following banter originates from the Ideas Roadshow ebook, “Saving the World at Business School,” which features a lengthy interview with Andrew J. Hoffman, the Holcim (US) Professor of Sustainable Enterprise at the University of Michigan’s Ross School of Business and co-author of “Flourishing.” Sustainable Industries previously published other excerpts of the Q&A:• “Saving the world at business school,” July 2013• “The dirty politics of climate change,” August 2013• “Winning hearts and minds,” September 2013A friend of mine has long argued that there is an inverse relationship between the popularity of a word and its meaning. The trendier a word has become, he says, the fuzzier …

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Andy Hoffman

The following banter originates from the Ideas Roadshow ebook, "Saving the World at Business School," which features a lengthy interview with Andrew J. Hoffman, the Holcim (US) Professor of Sustainable Enterprise at the University of Michigan's Ross School of Business and co-author of "Flourishing." Sustainable Industries previously published other excerpts of the Q&A:

• “Saving the world at business school,” July 2013

• “The dirty politics of climate change,” August 2013

• “Winning hearts and minds,” September 2013

A friend of mine has long argued that there is an inverse relationship between the popularity of a word and its meaning. The trendier a word has become, he says, the fuzzier it is, until eventually it’s used everywhere and means nothing.

“Sustainability” seems a perfect example for his theory. Once a word primarily associated with dour environmentalists, it’s hard to think of someone these days who does not avidly chatter away about its merits. Politicians of all stripes routinely vie to outdo one another to demonstrate their sustainability credentials. Corporations now have chief sustainability officers. We are all sustainability advocates now. But what are we actually talking about?

Into this yawning semantic void steps Andy Hoffman. A business school professor who regularly rubs shoulders with major players throughout America’s corporate landscape, Hoffman might seem an odd choice to be the driving force for a fundamental re-interpretation of the green lexicon.

– Howard Burton

Burton: I’ve heard President Obama talk on several occasions about the need to look at new and emerging technologies together with environmental issues as an opportunity upon which American innovation can flower. This strikes me as quite a reasonable thing to be thinking, because, like I said before, unquestionably one of the most impressive things about America is its ability to innovate, its ability to marry scientific thinking and entrepreneurship in a very substantial way.

Is this message getting through at all? It seems reasonable to me that there should be a kind of repositioning: 'We’re going to take this as an opportunity to innovate and create something new. There’s a lot of money to be made if you do environmentally creative, interesting things.' Is that spirit generally being adopted right now, or not so much?

Hoffman: At the risk of hyperbole, we’re in the midst of an energy renaissance. We’re shifting right now. It’s going to be so different 30 years from now.

[pagebreak]Let’s start with the grid. The grid’s a joke in this country; it’s falling apart. We’re going to spend over a trillion dollars improving the grid in the next 30 years. Is it going to be the same grid we have now? Absolutely not. Will it start taking advantage of smart grid technology? Will we start to unify the grid to be able to get energy from where it’s created to the demand loads in urban centers? What will be the future of distributed energy? And what will actually make parts of the grid less important?

Energy independence from the grid is actually important to many people. There are appliance manufacturers who have appliances ready to go that can actually talk to the grid and turn on when energy is cheapest, if we have real time pricing. Demand management is very strong and different kinds of energy sources are out there.

You can go to an auto dealer right now and buy one of many drive trains, hyper-efficient diesel, improvements in the internal combustion engine, hybrids, electrics. When will fuel cells come online? There’s a lot of research on that. There’s a lot of research on battery storage. Once that’s cracked you’re going to watch the automotive sector shift.

In a recent issue of The Economist, they were talking about the car of the future. We’re moving towards cars that can actually drive themselves. It sounds like science fiction but think of what information technology can do to the smart home: people’s awareness of their energy bill is increasing and that will drive behavior change. All these things are happening around us, and a lot of the political debate gets hung up on Solyndra – that’s all they see. There’s a lot more innovation going on, a lot more exciting stuff going on. And again, where we’ll be in 30 years is going to be so different.

Burton: So how can this be made to happen faster? There are real reasons for optimism, which is obviously what you’re saying, but at the same time there are all these cultural issues that are dragging us down. How can we move in a faster direction?

Hoffman: Well, it would help if we had an electorate that was more supportive of these issues so that their politicians would support shifts in the tax code that could move beyond the stale and bizarre idea that any kind of tax structure or subsidy is some kind of an intrusion on the market. The market is a man-made set of institutions. The government sets the rules. We can’t price fix, we can’t collude, but suddenly by having subsidies for solar companies, that’s somehow the government picking winners and losers, which is very bad – meanwhile, people say, 'Don’t touch my tax credit for my home mortgage!' which amounts to exactly the same thing. The government does this. This is what the government does. And if we see the future in a particular area, it’s a smart government that will push in that direction.

But now, we’re getting into the cultural debate: 'OK, so now you’re talking about industrial policy…' 'No, we’re a free economy. Don’t get into industrial policy…' That’s where these hot button issues start to emerge and people start to resist and say, 'No, the government shouldn’t be doing that.' We somehow have to get beyond that.

…

Burton: I want to get to this idea of fostering real impact and I’d like to get back to the issue of global cooperation. If we look at a global phenomenon like climate change, it seems that if we want anything significant to happen, we need to have the United States to play a significant role in that global mission, that global development.

[pagebreak]But there is the important issue you were speaking of earlier, that any sort of multilateral, multinational, global governance-type of solution is very much a political hard sell in this country. So, how can we get beyond that? How do we move towards some sort of progress on that front?

Hoffman: The first step is to get out of the recession we’re in. I think that that really causes a problem in this conversation. As for global governance, it’s not clear. We do have global governance in various forms, but we have to be creative. Maybe the UN isn’t the right body to do this. What if it was the WTO? I don’t know. But that doesn’t mean the conversation stops.

Burton: Absolutely not. And moreover the conversation has to recognize what’s worked and what hasn’t worked. I mean, it has to be a realistic conversation not a utopian conversation. What would you do? What would you do if you were Obama?

Hoffman: I don’t know. Now we’re getting a little outside of my area of expertise into international diplomacy and international politics.

Burton: Fair enough. But this is the speculative part of the conversation.

Hoffman: Well, when it comes to academics getting involved in the public debate, I think a good motto is, 'Stick to your knitting.' When I see economists giving opinions on climate science and climate scientists giving opinions on cap and trade, I cringe a little bit and say, 'Stay where you’re an expert before you step into the public debate.'

Jane Fonda should’ve stuck with acting and not gotten involved with nuclear power. I think the same is true with this area. Recommendations on international policy are a little tricky for me.

Burton: OK, but if I’m some guy who’s sitting in Wisconsin or wherever and I’m concerned about these things – I’m worried about my crops, I’m worried about the recession, I’m worried about all sorts of things, as everyone is – what should I do? I hear these calls for a cultural change. I understand that we have to make progress. I understand that we’re politically at some sense of a stalemate: something has to give. But what should I do? How should I go forward?

Hoffman: Well, first of all you don’t come out and say, 'We’re going to change a culture; we’re going to change your values.' No one has that power. You change behavior and values follow – in fact, sometimes they do and sometimes they don’t. You can have a set of policies and people can start to adopt the values behind them and sometimes they won’t. We had prohibition and it was a disastrous mistake; no one accepted it.

So you try to change behavior and then values will follow. What are the ways to do that? How do we get people to start to think differently? I think it’s starting to happen around certain technologies, certain changes. People are moving more into urban centers now, walk able cities are much more attractive than car habitats. There are some consistent shifts which are happening that foster a better style and standard of living.

[pagebreak]One thing that the environmentalist movement has been rightly criticized for is focusing overly on the negative: 'Go this direction or bad things are going to happen.' A much more profound message is, 'Go this way because it’s a better direction to go in.' That’s another element, I think, where people’s backs get up on climate change: they hear criticism. 'It’s your fault because you live in that big house and drive that fancy car.' People naturally get offended by that. In the area of green building there’s lots of exciting stuff. Anyone who doesn’t hyper-insulate his building in this day and age is out of his mind: he’s throwing money out the window.

There’s a really nice book series called "The Not So Big House," which says, 'Don’t build this big box with these huge rooms, and then worry about decorating: shrink it down. Use that extra money to make the space inside much more attractive, much more flexible.' It’s really cool stuff and a much more beautiful way to live. Those are the sort of concrete measures, I think, that we all need to focus on.

Burton: So are you optimistic, as a general rule?

Hoffman: As a general rule I am, yes. You’ve got to be. We make that point in the book, because I ask John about this – it’s one of my favorite parts of the book. We go through this little riff on the difference between hope and optimism. Optimism is looking at the odds and saying, 'You know, the odds tell me it’s going to work out.' Hope is a little bit more of faith, saying, 'You know, whatever the odds say, I still believe it’s going to work out.' And so you can be pessimistic and hopeful. You know, the odds are against it, but I still think it’s going to work. And if I wasn’t hopeful, I’d give up.

I’m hopeful because of the students I see and the younger people who really want to roll their sleeves up and get this done. David Orr describes hope as a verb with its sleeves rolled up. I really like that. I look at my students, these students in this program that I’m running where they get this dual degree in business and environment, oil and water, they want to find a way towards getting business solutions to our environmental and social issues. That’s exciting to me and that’s hopeful.

Burton: So now it all makes sense to me: it’s just your business students, they’re the statistical outliers, all the others are the usual rapacious, consuming, corporate….

Hoffman: These sorts of programs are popping up all over, because students want this stuff. They really do. And business wants it. The best signal I can give you right now is that our students are starting to be recruited more and more by the top management consulting firms: McKinsey, Deloitte, they see a need for it. It’s part of the business environment. It’s exciting stuff.

Burton: Ok, you lost me there. Because the fact that McKinsey and Deloitte are interested in them doesn’t exactly turn my crank…

Hoffman: Well, they can sell it. But the students also want to start their own business or go to work for Ford Motor Company on alternative forms of mobility. What’s the future of mobility? Changing the conversation from 'how do we make another car?' to 'how do we think about mobility?' – our students are going that direction.

[pgebreak]And it’s not just Michigan. There are programs around the country, these dual certificate programs. They’re popping up a lot. There are other schools that look at this and say 'Not our bag,' and that’s fine. But there are plenty of schools trying to focus on this: Stanford has a strong program, Duke, Yale, Santa Barbara, Northwestern, MIT, Harvard. I can go down the list: they’re all developing programs in this area.

Burton: And what about outside the United States?

Hoffman: That’s a great question, not only for programs like this, but business schools in general. It used to be that the American business school was the dominant player, but there’s a lot more serious competition from Europe and Asia in the business school world, and the idea of business as a social force in society is not as new, particularly in Europe, as it is here.

Burton: Is competition really the right way to look at it? I constantly question these things. Sure, schools are competing for individual faculty members and students. But on the other hand, in the overall scheme of things, if you’re right – and I hope you are – that there are all these young, dynamic, socially conscious individuals who are coming through business schools these days, then at some level it’s really not competition. At some level it’s in everyone’s interest to have more and more of these people being as successful as possible.

Hoffman: Right. And both of what you said is true. If a school calls me and asks, 'Would you come out and talk about how to develop a program like this?' I’d gladly help them. There are no proprietary secrets here. By the same token, business schools are competing for applicants. And right now the applicant pool for business schools is flat. That’s partly the economy, but partly viable business schools outside the United States: the United States is not the only game in town anymore. So in that sense there is a competition.

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