Recent frenzies in the climate debate have in my opinion made a mockery out of what should be one legitimate piece of a much broader initiative. One can argue that recent climate summits are in fact distracting our leaders from other more pressing missions. Do we really believe that a significant portion of our natural disasters are caused by "climate change?" Isn't it convenient to just blame polluters and consumers without looking at the larger framework within which they try to co-exist? The armchair pundits will of course say "of course we know it’s not just about the climate, it’s more about finding an emotionally legitimate ploy to rally people towards new sustainable solutions for energy and development." Sorry, that argument’s not going to fly any longer with your electorates or shareholders. There are larger burning issues, no pun intended. The fulcrum policy shifts what will truly enable man-induced climate change and other issues to be alleviated will need to center around mitigating special interest’s clout over policy-making. Once this core issue is tackled in the larger economies, while allowing for grassroots entrepreneurial innovation, many would argue that energy could in fact become a very cheap and abundant commodity, and in many cases not requiring the grid.
If the word ‘battle’ is viewed as synonymous with suffering and death, our corporate boardrooms are surely battlefields because many decisions result in the sub-optimal use of innovation. These boardroom battles often identify, co-opt, and then bury innovations that could cannibalize their current product line. There are countless examples of commercially viable patents and inventions that have been put into deep cold storage, until for example it seems like crude oil is running out, as is now the case. And the core issue is the inherent weaknesses of political and business frameworks, and the hierarchical governance that pervades them. How else can one explain why it took successive oil wars for American politicians and businesses to finally take notice of Brazil's use of ethanol as a full-scale alternative fuel? How else can one explain why the biggest financial meltdown in history was born out of the oldest and most advanced free market democracy? How else can one explain why the largest proportion of the world’s poor live in the world’s largest democracy?
If the word ‘battle’ is viewed as synonymous with suffering and death, our corporate boardrooms are surely battlefields because many decisions result in the sub-optimal use of innovation. These boardroom battles often identify, co-opt, and then bury innovations that could cannibalize their current product line. There are countless examples of commercially viable patents and inventions that have been put into deep cold storage, until for example it seems like crude oil is running out, as is now the case. And the core issue is the inherent weaknesses of political and business frameworks, and the hierarchical governance that pervades them. How else can one explain why it took successive oil wars for American politicians and businesses to finally take notice of Brazil's use of ethanol as a full-scale alternative fuel? How else can one explain why the biggest financial meltdown in history was born out of the oldest and most advanced free market democracy? How else can one explain why the largest proportion of the world’s poor live in the world’s largest democracy?
Much as we appreciate the good intentions of climate-change advocates, we need to keep in mind that a compromised system can only beget yet another compromised system, unless the system itself is recast. It is not our intentions or even our actions that ultimately matter, it’s the outcome and impact. And that’s where most of us live in a continual disconnect. Our motives and intentions are what we typically use to judge our leaders and politicians by, rather than the probability and actuality of their policies materializing in result beyond their tenure in office. And in my opinion it’s no coincidence that most seemingly democratic processes allow this disconnect to persist across administrations.
So, now that the context is established, how do we limit ourselves to acting upon a few key levers for sparking innovation and its un-hampered commercialization? How can we steer our ship on course while driving stakeholder value not just from business profit but also social and environmental advancement? How can we keep subversive elements from hijacking climate change and the alternative energy free market? The last thing we need is for alternative energies to go the way of conventional ones, where they once again become expensive and inaccessible to many, and served to us only by a small list of monopolistic energy utilities.
I believe the answer lies in strongly incentivizing business to develop more and more low-energy based appliances for use by families at the bottom of the pyramid. In countries like India and China, even as democratic systems slowly lumber towards meaningful reform, a grassroots shift towards creating new consumers who can then buy goods and services will inherently shift the focus towards innovation on a very grand scale. I'm optimistic that the recent meltdown-inspired race to reinvent heavy industries, supported by an unprecedented global mobility of intellectual property and venture funding, may finally provide the tipping point that we've all been waiting for. Skunkworks projects in developing countries may now have the space and resources to rapidly bring game-changer innovations to market. And I believe most of these innovations will come from the developing world, where vested interests are less coupled to the underground economy, and where a billion poor person need to survive on less than $2 a day. Incidentally, supporting climate-change through reduced consumption can hardly be a priority for these struggling masses. These people have needed cheaper (and healthier burning) fuels for ages, and now that they are starting to become "consumers", local industries especially those with grandiose visions of local and then international domination, will bend the rules to find ways to serve this need of the recently-poor. These firms will have a large commercial interest in using innovations to serve the bottom of the pyramid.
Remember, it takes having cheap energy to drive a cheap appliance, especially in a place that's off the utilities grid. And that is where the leap will happen. When these Indian, Chinese and other innovations flood local markets, and then international markets (and very upset corporates and voters) sit up and take note, the full loop of reverse innovation will be complete. And then maybe, just maybe, energy independence and security will stop governing this planet. Oh and I almost forgot, Friedman will then write yet another "oh I figured it out again" silly book about the world being elliptical or something odd like that.
I believe the answer lies in strongly incentivizing business to develop more and more low-energy based appliances for use by families at the bottom of the pyramid. In countries like India and China, even as democratic systems slowly lumber towards meaningful reform, a grassroots shift towards creating new consumers who can then buy goods and services will inherently shift the focus towards innovation on a very grand scale. I'm optimistic that the recent meltdown-inspired race to reinvent heavy industries, supported by an unprecedented global mobility of intellectual property and venture funding, may finally provide the tipping point that we've all been waiting for. Skunkworks projects in developing countries may now have the space and resources to rapidly bring game-changer innovations to market. And I believe most of these innovations will come from the developing world, where vested interests are less coupled to the underground economy, and where a billion poor person need to survive on less than $2 a day. Incidentally, supporting climate-change through reduced consumption can hardly be a priority for these struggling masses. These people have needed cheaper (and healthier burning) fuels for ages, and now that they are starting to become "consumers", local industries especially those with grandiose visions of local and then international domination, will bend the rules to find ways to serve this need of the recently-poor. These firms will have a large commercial interest in using innovations to serve the bottom of the pyramid.
Remember, it takes having cheap energy to drive a cheap appliance, especially in a place that's off the utilities grid. And that is where the leap will happen. When these Indian, Chinese and other innovations flood local markets, and then international markets (and very upset corporates and voters) sit up and take note, the full loop of reverse innovation will be complete. And then maybe, just maybe, energy independence and security will stop governing this planet. Oh and I almost forgot, Friedman will then write yet another "oh I figured it out again" silly book about the world being elliptical or something odd like that.
-vikram
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