Posts Categorized: BlogPost

Few would debate the need for radical social change (RSC). It feels that we’re facing myriad problems, as a global society, that, while RSC wouldn’t be sufficient to solve all of them, it is necessary to solve all of them (ambiguity acknowledged).

I come to this through a lens of climate change. In my opinion, technology is an important part of the solution and we have all the technological know-how and capacity that we need to move rapidly to carbon-free world. So, the challenge at this point is not technical. This problem is ‘solvable’ (ambiguity acknowledged). The challenge is swaying hearts and minds to make the RSC we need to make.

I think that we’re seeing some organic, grass-roots RSC but that won’t be enough to solve climate change. We need leadership to inspire broad-based RSC. We’re facing a threat far more existential than WW-II and yet our willingness to make change in the face of this threat pales in comparison to the civic-engagement and the willingness of the masses to make sacrifices during WW-II (think the Victory Garden Movement or Rosie the Riveter). We need leaders.

Which leads me to contemplate leadership styles. I want your help here, dear reader, in thinking through a specific question on the relative merits of two leadership styles; I’ll call them the AG style and the GT style.

Both AG and GT leaders are equivalent in terms of their morals, their sense of service and commitment, and their understanding of the science of climate change. We’re making no judgment as to their relative moralities, we’re just evaluating the capacity of their leadership to inspire global RSC.

Here’s how their styles differ:

• AG leaders will not hesitate to hop on a private jet to fly from (say) Virginia to Oslo to attend important meetings on climate change. In so, they incur quite a bit more carbon emissions than they might do had they chosen alternate modes of travel.
• GT leaders will choose to sail from Sweden to the Americas to attend important meetings on climate change. While their chosen mode of travel is practically carbon-free, it’s time-consuming and effortful.

Which style will be more effective in inspiring the RSC that we need?

I don’t think that this important question has one right answer but in contemplating it out loud, I’ve come across the opinion that the leader must lead by example. This opinion often leads to disqualification of the AG style, in favor of the GT style, often with a hint of judgment.

I struggled with the conclusion that the AG leader should be disqualified. Should he or she be disqualified? Even if we may find the style hypocritical or morally problematic, is that grounds for disqualification?

Now the answer is pretty simple. When we look back in 50 years, either the leader’s actions, regardless of the carbon costs of their lifestyle choices¹, will have been credited with inspiring the RSC needed to save the world or not. If the AG leader’s work clearly succeeded in saving the world, then their actions and leadership style are entirely justifiable.

While the AG model may be justifiable, and even perhaps required, I do admire and respect the integrity of the GT style – so much that I often choose that style. But – we must be careful to not let the moral appeal of the GT style dissuade us from also supporting a different style that might ultimately, save the world.

What do you think?

¹ For the sake of this discussion, we’ll assume that while one leader may make more extravagant lifestyle choices than the other, neither leader will contribute enough CO₂ emissions through their lifestyle choices to significantly impact the fate of the planet.

Over the past several months, we’ve seen increased interest from medium to large organizations in implementing some sort of carbon pricing. To a large degree, this seems to have been inspired by Microsoft’s success in implementing an internal carbon fee (ICF), which, they claim, now saves them over $10 million each year. It’s an exciting time to be in the carbon accounting practice.

At Scope 5, we’re discussing carbon fees with a number of customers and partners, and I’ve been thinking about how best to explain the value of an ICF to various stakeholders in different organizations.

One example that occurred to me and that seems to resonate with most people is the analogy to the value of sub-metering. Let me explain…

Many organizations lease space for their operations. For instance, several of our clients lease office space in various buildings around the world. In most cases, these organizations are not billed directly for their utility usage.

Instead, the building operator pays each utility company for all the occupants’ usage in aggregate. The cost is passed on to the lessees in some form or another. In many cases, the cost of utilities manifests as an invisible premium built into the rent that the occupant pays.

This state of affairs leads to waste. In the abstract, it leads to waste because the actors that could reduce waste have no visibility into the external costs of their actions and perceive no pain linked to these costs.

Enter sub-metering (a.k.a. branch-metering).

Usually, building operators pay utility charges on behalf of their occupants in aggregate simply because they don’t have the means to apportion actual usage among the building occupants. Until recently, there was little impetus to do so.

Today, various technologies, simple and complex, are emerging that make it possible to measure usage for each occupant individually. These are various forms of sub-metering. When operators implement sub-metering, they pass utility costs to each occupant based on that occupant’s actual usage. Sub-metering is illustrated below: (image courtesy of energydeck):

Sub-metering accomplishes two things

• It gives each occupant visibility into their utility usage.
• It makes each occupant bear the cost of their utility usage.

This amounts to internalizing externalities, and it leads to reduced waste. From this study on sub-metering:

When building occupants got direct feedback regarding their usage (when they saw how much they were using and how much it cost them), lasting behavior changes resulted and costs decreased.

So what, you might ask, does this have to do with internal carbon fees?

Everything.

When correctly implemented, an internal carbon fee has the effect of passing the (otherwise externalized) cost of carbon emissions to the actors that can directly reduce carbon emissions.

This is the beauty of the internal carbon fee. It eliminates the tragedy of the commons. It internalizes externalities. It leads to reduced waste.

I have heard, many times, complaints along the lines of

I wish my company didn’t generate so much carbon emissions but oh well – what can you do?

 But that very employee just went on to book a business class seat on yet another business trip. A carbon fee could change that behavior.

We’re not there yet. Internal carbon fees are in their infancy. Few companies have implemented them and those that have, pass fees to emitting actors at coarse granularity, temporally and spatially.

For example, Walt Disney and Microsoft (both ICF early adopters) pass fees down to the business unit level, not further. Microsoft passes fees down quarterly – other early adopters may pass them down only annually.

Over time, we hope to see a shift towards finer granularity. Finer spatial granularity assures that the actors most able to reduce waste are the ones that will bear the cost of their actions.

Finer temporal granularity enables those actors to see the results of their actions in real time as opposed to ‘looking in the rear-view’ mirror once a year.

I am optimistic – just as sub-metering has been gathering steam and reducing waste in the built environment, so carbon fees will be more broadly adopted and more deeply implemented. So far, Microsoft claims $10 million in annual energy savings and emissions reductions on the order of 7.5 million tonnes of CO₂ and that’s just the start!

Over the years, I’ve played with Lego blocks side-by-side with my two young boys. This is precious time – a sweet and welcome change in pace from the frenetic work of running a growing, early stage, software company. Nonetheless, as I’m kneeled on the floor in their playroom building forts and space-ships, I often find myself thinking of my work. In particular, I’ve been dwelling a bit on the importance of sorting, storing and retrieving, be it in Lego play, maintaining and organizing the information that I rely on to effectively run Scope 5 or writing software.

Lego isn’t what it used to be when I was a kid. Back then you had 4×2 blocks, 8×2 blocks and 12×2 blocks. If you were lucky, you had your choice of red, white, yellow or blue in each size. Today it’s different – my boys have hundreds of different pieces – do you want the cowling for the Tie Fighter from Star Wars I or Star Wars V? Are we looking for the door with the clear four-pane window or the solid door? In red or fuchsia? My boys have thousands of Lego pieces in hundreds of different form factors and colors.

And so – when we’re building some new space-ship they’ve dreamed up and they ask me to help find ‘that piece’, I’ll find myself digging through boxes for a long long time. Sometimes, I pull my head out of a box moments later, declaring success but more often than not I find something that I hope will do as a substitute. In fact, I’ve become their ‘finder’.

A few months ago, in a moment of deluded inspiration, I decided that we were going to fix this ‘problem’. I went to the local ‘Storables’ store and came home with a few dozen trays and sub-trays and sub-sub-trays that all nestled neatly inside each other. “Boys – we’re going to sort your Legos”, I announced, “so that we can always easily find that piece you need”. My announcement was greeted with groans from the boys but my wife and I dutifully spent the next few weeks sorting in our spare time.

Slowly, we got the Lego pieces organized. We now had two piles – the neat array of sorted pieces in their new bins and the boxes of unsorted pieces that represented remaining hours of sorting work. Building new space-ships was great. The boys would ask for that piece and I’d quickly find the piece in the right bin – “would you like that in green or turquoise?” I’d ask.

But our blissful order didn’t last for long. Projects were taken apart as frequently as they were put together and getting the boys to sort the pieces into the appropriate bins was an uphill battle. They were keen on building, not on sorting. My wife and I were losing ground – the unsorted pile was growing faster than the sorted pile.

In the abstract, we were faced with the same conundrum that we face in so many aspects of our lives – do we spend time sorting or searching? In the software world it’s a question of optimizing insertion of an object into a data structure or retrieval (a.k.a. search) of the object from the data structure.

The same abstraction applies at a higher level. Much of my work in running Scope 5 is a matter of being able to put my finger on the right information, quickly and efficiently. I know that I have what I need in that document, somewhere. Now where did I store that document, that bit of information? Usually, I’m easily able to find what I need but from time to time I spend far too much time searching.

On those occasions, I’ll pause and reflect – should I re-organize (spend time on insertion)? I’ve found what I need so any time invested in re-organizing is overhead – it won’t yield any immediate benefit but it might mean less time wasted on retrieval (search) in the future. Sometimes, I do reorganize. Most times, I don’t.

The software analogy presents an objective case – we can profile time spent in insertion and time spent in search and we can choose a data structure optimized accordingly for one or the other. But in the higher-level example of organizing information necessary to run the business, as in the Lego conundrum, there’s no obvious answer – sometimes we’ll spend too much time searching and sometimes we’ll spend too much time organizing. Ideally, we find a rhythm that alternates between the two for optimal efficiency. The value is in being mindful of the day-to-day choices we make around this conundrum wherever it may surface.