The Green IT Payoff

By Peter Senge  |  Posted 06-05-2008

Peter Senge's The Fifth Discipline popularized the idea of the learning organization. His new book, written with Bryan Smith, Nina Kruschwitz, Joe Laur and Sara Schley, aims to further the green organization.

The Necessary Revolution: How Individuals and Organizations Are Working Together to Create a Sustainable World makes no bones about its environmentalist orientation and its call for a post-industrial mindset. But it also highlights some serious bottom-line payoffs as companies start innovating their way into "the regenerative economy."

Here's an excerpt:

In late 2007, Google announced plans to fund an internal research group with a mandate to develop cheaper renewable energy sources.

When the effort was announced in November, Jordan Rohan, an analyst with RBC Capital Markets who recommended Google's high-flying stock in the past, was astonished. "What the heck are they doing? It boggles the mind," said Rohan to the press. "This makes me worry about Google's priorities."

Rohan's quote gets to the heart of an important question: What are today's corporate priorities, and how do they align with an organization's place in the larger business universe?

Pressure for quarterly earnings growth from investment analysts such as Rohan has traditionally driven executive decision-making, but when these choices butt up against the realities of global warming and sustainability requirements, their priorities must be re-examined. The status quo can no longer hold.

In fact, Google, which uses an enormous amount of power to operate the servers at the heart of its business, is simply following its motto ("Do no evil") and being pragmatic to boot. If the company succeeds in its quest, says co-founder Larry Page, "the world will have the option to meet a substantial portion of electricity needs from renewable sources and significantly reduce carbon emissions."

Alternative energy is also vital for economic development in many places where there is "limited affordable energy of any kind," adds co-founder Sergey Brin. "We expect this would be good business for us as well."

Google is not undertaking its mission alone. Part of understanding real-world systems is realizing how the larger, integrated environment--partners, suppliers, customers, shareholders and competitors--has an impact on every player.

Scan any newspaper or business magazine and it's clear that the sustainability wave is breaking over the entire corporate shoreline. And the top-performing companies are leading the charge.

Goldman Sachs, one of the world's leading investment banks, recently examined six key industry sectors--energy, mining, steel, food, beverages and media--and studied the companies within those sectors that are considered leaders in implementing environmental, social, and governance policies and strategies. Goldman Sachs found that these companies have outperformed the general stock market by 25 percent since August 2005.

For business leaders, such studies prime their boards to ask: Can our company continue to be profitable, and even grow our profits and the value we provide, by committing to environmental issues?

When you ask questions concerning the business rationale for particular strategies, the issue always boils down to risk versus opportunity. If we continue to put more toxic waste into the environment and more CO2 into the atmosphere than can be naturally disposed of--or if we insist on extracting and wasting more natural resources than can be replaced--business in the traditional sense will cease to exist.

What is required today is a new way of thinking about facing these business risks head-on, and finding the opportunities on the other side of those risks.

Excerpted from The Necessary Revolution: How Individuals and Organizations Are Working Together to Create a Sustainable World, with permission from Doubleday Business, a division of Random House. Copyright © 2008 by Peter Senge, Bryan Smith, Nina Kruschwitz, Joe Laur and Sara Schley. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.