In Brief: Sustainability is a confusing term primarily used in three contexts: environmental, lean, and financial. This is a short overview of how these terms are used today, and of the linkages between all three contexts.
“Sustainability” implies the capability of anything to continue indefinitely. The most common context is environmental sustainability, living and consuming so that the earth can sustain human life indefinitely. But for those involved in it, lean sustainability means sustaining lean gains over an indefinite future. A third context is financial sustainability, as when Ford recently stated that its earnings uptick is sustainable, not from special transactions, but it’s usually applied to government and non-profit operations.
When used in different contexts, sustainability is confusing. For example, AME members have been disappointed attending sessions on environmental sustainability when they expected to hear about lean sustainability. To further the confusion, sustainability doesn’t conjure the same images in the minds of everyone using the term in the same context. Sustainability implies a daunting objective in whatever context it is used. To check this out yourself, Google all three phrases and see what you get.
Environmental Sustainability
In this context, sustainability has been a popular term since the 1980s. The most quoted source is the Bruntland Commission Report in 1987, “sustainable development is
development that meets the needs of the present without compromising the needs of future generations to meet their own needs.” While succinct, this description offered no operational guidance, so environmentalists attempt to estimate the world’s carrying capacity, assuming that sustainability avoids overrunning that capacity. An early methodology was by Erlich and Holdren in 1971.1 In the mid-1990s Wackernagel and Rees proposed a now-popular approach for comparison with carrying capacity, the ecological footprint.2 Sustainability is maintaining an ecological footprint within the carrying capacity of a region, or of the entire earth.
Models to estimate the earth’s carrying capacity are loaded with assumptions and approximations, so modelers and their critics jawbone the subject. However, various models of earth’s carrying capacity agree that at the current rate of resource consumption, the whole world has been exceeding its carrying capacity for the past 20 years or so. However, data to estimate resource footprints or ecological footprints are skimpy, so industries applying them are still dealing with approximations.
The first carrying capacity models stemmed from old models of organic growth, as with bacteria outgrowing the food supply in a Petri dish, so they were mostly quantity models. Critics note that besides shortages of food and materials, humans have many other ways to do themselves in, from nuclear war to filling the environment with endocrine disruptors so that we can no longer procreate. We must pay attention to them all. Humans also have the ability to dramatically change how resources are used, and sometimes do. Using any level of computing power, stacking all these possibilities in one model seems impossible. The modelers add caveats, that their projections assume specific changes in how resources are presently consumed, and no sudden disasters like nuclear war.
Much-maligned Thomas Malthus proposed the “original” sustainability model in 1798. He predicted nothing specific, but merely observed that when humans multiply faster than their food supply can expand, die-off is inescapable. He wrote when the Industrial Revolution had barely begun. Die-offs from famines, plagues, and wars were part of life. Big families were needed to offset the high mortality rate. For example, many of the first Europeans landing in what is now the United States died off quickly, and they subjected the people meeting them to epidemiological disasters. So great was the success of the Industrial Revolution that such circumstances are historical dust, outside personal experience. However, it is also so recent that we haven’t fully adjusted to it; for example huge migrations from rural to urban living and relatively flat population age profiles.
Over the past 100 years it was increasingly recognized that deploying almost any technology on a large scale has unintended consequences. Environmental sustainability tries to counter the downsides of the Industrial Revolution while prolonging its magical effects so that poor old Malthus isn’t finally proved right. Sustainability is an umbrella term covering a broad swath of interrelated complexity, from climate cataclysms to how to design a carrot package — science, engineering, economics — and behavior. Are humans psychological capable of foreseeing major changes and dealing with them before being in crisis? Sustainability affects everything; therefore it encompasses almost everything. Focusing on just one aspect of it blurs the overall picture. Consequently, as commonly used in its environmental context the term sustainability is akin to vague ideals like “liberty” or “justice” that people interpret as they wish.
Lean Sustainability
Sustainability of lean covers a smaller domain than the environmental kind, but it shares the same semantic issues. How “lean sustainability” is interpreted depends on one’s concept of lean. In all cases, lean sustainability presumes that lean practices have conferred advantages that we would like to continue, and if possible increase. We don't want processes to revert to a pre-lean condition.
If one has a tool view of lean (implement the tools and you’ve installed it), sustainability means continued use of those tools, and whatever gains came with them — reduced
space, leadtimes, defects, and so on. If one is cost-oriented, it means to continue having low costs. But this approach usually runs into trouble when it conflicts with practices of a company that do not support it, for example the cost accounting system, product design systems — or staff and managerial practices. Without support, lean conversions produce temporary demonstrations that frequently fall victim to “flavor of the month” impatience.
Therefore lean sustainability has more and more come to mean the development and preservation of a “lean culture.” To do this the senior leadership has to understand lean thinking and guide everyone in an entire company toward it. Then support systems for lean begin to take shape. But to avoid being only a “lean island,” the company must also draw key suppliers and maybe even customers into lean thinking. This is no short, swift undertaking. Development is sustained over several years.
Converting to a “learning organization” is the intent of lean. Lean tools are meant to expose problems, not hide them. This does little good if problems are not addressed. Developing everyone in a company to participate in seeing problems, large and small, and working through them creates a mature lean culture. Learning to do this takes time and practice. Unfortunately, for many of us, this is an abnormal way of working — and leading by stimulating people to learn and solve problems is an abnormal way of managing. Left to our own instincts, most of us will revert to procrastination and fire fighting, so a lean culture has to constantly reinforce itself to prevent this from happening. Processes always need further “leaning out.” A process well-tuned to today’s needs doesn’t stay that way. Products change. Markets shift. Technology changes. Workers, staff, and managers turn over. Sustainability means constantly adapting and improving, so that creeping little changes don’t degrade it. Lean sustainability is constant revision of operations to weed out the waste from every change as fast as possible.
If you “Googled” lean sustainability, you found that many lean blogs now make the lean and green connection to environmental sustainability. Successful, sustained lean initiatives almost always conserve energy and resources — and capital, avoiding building new capacity that really isn’t needed. It’s a great start, but there’s more than that to environmental sustainability, like avoiding toxic releases.
Financial Sustainability
Sustainability is sometimes used to describe the earnings or revenue of for-profit companies. However, after the global financial meltdown, financial sustainability of operations became a top priority for government and non-profit operations. Tax bases and sponsorship sources dried up. It's a hot topic for every operation from local schools to global immunization programs. Typical strategy is to develop diversified sources of income so as to survive the hit if one disappears and to keep reserve funds in diverse investments for the same reason.
A typical financial sustainability strategy is illustrated by microfinance operations in poor regions. While socially beneficial, this is financially risky, so an operation usually starts on a small no-strings grant of seed money from a benefactor. But with no assets, loan rates are high to compensate for risks. A strategy to work toward financial sustainability is to attract both local equity capital and deposits into the institution so that it can begin to function more like a bank or credit union. This may be a dribble at first, but keep plugging until one has a stable local institution that can hopefully lower its loan rates.
And yes, financial sustainability is very important to organizations dedicated to environmental sustainability. Organizations from water conservation districts to wildlife preserves are developing strategies for financial sustainability.
And what does financial sustainability have in common with lean? They both look long term. A common complaint among those struggling with lean is that financial control is too impatient. Managers desperate for anything that promises to boost revenue or earnings won’t stick with anything long enough to develop people. Creating a symbiosis between financial sustainability concepts and lean sustainability is more like a winning long-term combination.
Robert W. “Doc” Hall is editor emeritus of Target and a founding member of AME.
Footnotes:
1. Erlich, P.R. and Holdren, J.P., “Impact of Population Growth,” Science 171(3977), 1212-1217, (1971).
2. Wackernagel, M. and Rees, W., Our Ecological Footprint: Reducing Human Impact on the Earth, New Society Publishers, 1996.
