Being Green Profitably

Anita Brick: Hi, this is Anita Brick. And welcome to CareerCast at the Chicago GSB, helping you advance in your career. Today we're delighted to be speaking with Peter Senge, who is a senior lecturer at MIT and the founding chair of the Society for Organizational Learning.

He's the author or coauthor of several bestselling books, including The Fifth Discipline, Schools That Learn, and today we're actually focusing on your latest book, Peter, which is The Necessary Revolution. I find it really intriguing because many people talk about green and being green profitably, really from a process side, and you talk about it more as an organizational structure and a people side. And how does the people piece fit into the whole thing?

Peter Senge: It’s a pretty natural progression. Most businesses get into this stuff because, really, one of two motivations. One is there's regulatory pressure or our brand pressure, you might say. You know, external pressures—we better get our act together. And then very often from the standpoint of—there's a lot of waste in most businesses that we're actually paying for. Now, you know, a perfect example, of course, would be energy costs.

Most businesses have grown up with the idea that energy is free. What I mean by that is it's such a low-level concern strategically and operationally that, for all intents and purposes, off the radar screen. Well, that's not true so much anymore. And all of a sudden people are saying, wait a second, we're spending a lot of money because we're wasting all the heat going up our smokestack or under our poorly insulated windows or what have you.

So those are the typical entry points—either some combination of external pressure and internal perception of waste and cost. So in both cases, there's a fairly short-term business case. One is perceptual. You may want to be viewed in a certain way. In some cases that can be pretty extreme pressure. You know, many of the NGOs have become pretty sophisticated over the last 20 years of putting big-time pressure on very big companies who thought they were immune to that sort of thing.

And there's a very good short-term business case if you're spending more than you need to. Neither of which, in my opinion, are very fundamental. In other words, these are characteristic of a lot of businesses simply because they're simple. They're short term, they're immediate. You can see benefits in the short term, but the problems are much deeper than that. And they are at the heart of the whole global industrial process. Very few businesses have yet to really wrap their arms around what that really means.

Anita Brick: One of the students asked the question, can this whole focus of being green profitably actually be a differentiator, or is it going to be a commodity because everybody feels the pressure to do it?

Peter Senge: Oh, it's like anything having to do with innovation: you know, it will ultimately be a significant differentiator. But like anything that has to do with basic innovation, that's only for those relatively few organizations that take a fairly long-term and fundamental view and are willing to make major investments. I mean, innovation doesn't come for free. So there's no doubt about that.

It is already— you have to be a little wary because that also is still an individualistic view. I mean, you can say there's two fundamental views in this. One is that of the individual firm, which you've got to take. I mean, you know, you're managing a business, so you've got to think about your firm. But if your whole industry is collapsing, so what?

The global food system is a disaster. We have the wrong energy. We make more or less the wrong products. The gap between rich and poor has been growing throughout the industrial age. It hasn't gotten less. So when you really step back and look at the fundamental conditions for healthy business of any sort, they're at great risk.

So there is yet another point of view which I think is complementary, not a replacement, which is in many cases, you really have to get your whole industry to operate differently or larger value chains. A lot of the work we do today is on value chains, which are completely fragmented. Everybody buys from somebody. Very, very few think about the health of the whole value chain.

Well, your business is the value chain. And if the value chain is not healthy, doesn't matter how competitive you are, everybody ends up losing.

Anita Brick: But how do you shift the financial incentives? It seems like the financial incentives focus on this almost individualistic approach. And I mean, we're talking about this really macro mindset change. How do you do that? Obviously it needs to be on the industry level and on the company level, but it also needs to be on the individual level and it just seems so massive. Where do you start?

Peter Senge: Everywhere.

Anita Brick: OK.

Peter Senge: So I mean really first off, an awful lot of times this is more an excuse than anything fundamental. Innovation rarely has a short-term financial incentive behind it.

Anita Brick: That's true.

Peter Senge: OK. So in that sense, this is not unusual territory in that particular sense. And again, that's why fundamental innovation is not led by the majority. It's by people who have, you know, imaginative ideas, who can see a new possibility … and are willing and able to effectively deal with the risks associated. I mean, this is—business schools are pretty bad, basically.

Anita Brick: OK.

Peter Senge: I mean, frankly, they do so little to help people really understand the basics of building a great enterprise, one of which is innovation and the other of which is people, and not just people in your organization, but all the people in other organizations upon whom you depend in any kind of business ecosystem, which you always are in. You know, I get a little wary—and weary, I guess is the right word—of, well, what are the financial incentives?

You know, give me a break. What were the financial incentives for you to, you know, get married? Oh, well, let me see. I did a cost-benefit analysis and decided amongst these six partners, who said … we don't make decisions that way. You know, we don't make important decisions in our life that … we know when there's a cost-benefit analysis about having children.

The problem is we've reduced a lot of quite important decisions that affect a lot of people's lives to economic calculus. They're not. You know, that's a subset of a much larger set of considerations. I remember years ago, a friend of mine left business school, a very eminent strategy professor, and just took up residence in Silicon Valley. Said, I just don't understand innovation. And I’ve got to live here, with people who are really, I say the classic line, serial innovators—you know, people who are really good at creating new enterprises. And they've done it a lot. And I asked him about 3 or 4 years later, I said, OK, so everything you read in the business press says what really motivates the great entrepreneurs is the opportunity to get fabulously wealthy. Do you agree? He said, yes—all the mediocre ones.

He said, I've never met a great entrepreneur who didn't have the same motivation. They want to change the world, right?

Anita Brick: No, you're right, you're absolutely right.

Peter Senge: And so that's not a simple economic cost-benefit analysis. But, you know, of course you've got to be very good with economics, so you don't have a chance. You know, as Drucker said years ago, you know, a profit for a company is like oxygen for a person: You don't have it, you're not in the game. But it's not your purpose.

These changes, I really believe, are always—it’s all fundamental in innovation—an expression of deep personal passion and a sense of real purpose and then the skill to make it an effective business. So yeah, there's individual incentives. And yes, the financial world today is a big part of the problem. Obviously, I do believe sooner or later there'll be some fundamental changes in the whole privileged right of shareholders, which is pretty idiot … you know, high level of idiocy in my opinion.

Everybody ends up losing because businesses do not depend just on the holders of financial capital. And if you look at all the resources necessary to build a successful business over the long term, it's actually among the least important and most abundant. And yet it's driving the show. That's because of a lot of deep structural problems in the whole economic system.

Those will change. I'm quite sure, because they're really crazy. You know, the egg is definitely cracking. I mean, it's totally nuts. We have an abundance of financial capital, and we have great scarcity of other key resources like natural capital, social capital, human capital in a lot of businesses and types of roles. Our businesses are based on the most abundant resource. It makes no sense.

Anita Brick: Give us an example of an organization, or even an industry, where you see that they've already made the shift. They're in the middle of the revolution, the necessary revolution, rather than being part of the broken infrastructure.

Peter Senge: Well, of course, that's what most of the book is about. And all the experiences that led to it. We started the Society for Organizational Learning, which we often just refer to as SOL, like the Spanish for sun. The Sustainability Consortium was started in ’99 after 2 or 3 years of organizing by a small group of businesses at that time.

Today, there's a lot of NGOs involved. Over that time, they were all businesses who … basically, we had one ground rule: we don't want to waste any time convincing anybody that climate change is real, or that resource depletion is crucial, or the gap between rich and poor is a strategic issue. People can go elsewhere if they want to have those kinds of debates.

We're only interested in one thing for those companies who do consider these strategic issues that are going to grow in significance: how do we make progress? In 10 years, I'd say a few have made a little bit of progress. So if you look at individual companies, you know, there's oh, I don't know, 20 or 25 that pop up in different ways. And in the book …

Anita Brick: Give us a concrete example.

Peter Senge: The thing to keep in mind is nobody is more than 5% along the way.

Anita Brick: OK.

Peter Senge: There's also a really bad habit in the business literature in general to hoist up examples and say, see, here's how they do it. You too can be like them. You can forget that. Nobody has gone very far. But a lot ... You know, what does GE claim to have? The number changes monthly, and I don't know what it is today.

But you know it's way over $50 billion of backlog business in their eco imagination business. So OK so that's a whole suite of things of energy efficient motors and big projects like carbon sequestration and alternative energy and, you know, say bundle all those in this eco imagination portfolio. But anybody you know would look at it, it's pretty successful.

DuPont has managed to shift over 25% now of their business to bio-based feedstocks away from fossil fuel feedstocks, which is, you know, petrochemicals is the heart of the DuPont business; has been for, sure, well, 75 years. But, you know, their company has been around for 200 years and they've gone through fundamental shifts in underlying technology before. And they started this over 10 years ago.

I remember hearing the DuPont CEO give a talk at MIT, it must have been at least 10 years ago, in which he said, we were just sitting for a whole bunch of reasons. We don't … we shouldn't be strictly downstream of the fossil fuel business. Those are kind of really common stories. Most everybody kind of reached … the business press knows about those.

One of the really interesting ones are things that you don't read about much. Nike was one of the founders, as was BP and several other companies, of the Sustainability Consortium. Nike now has a product rating system for all new products. It's taken about 10 years to develop. All new products are rated based on embedded water, and that just means how much water in the entire value chain is needed to produce this product.

Embedded energy, waste, and toxicity. All new products get a gold medal, silver medal, bronze medal, no medal. You know, it's Nike. They're really into sports. This really started … I should say this has started—this has been a byproduct of a fundamental shift in the whole product design philosophy there that's been unfolding now for a decade. None of that by the way, is marketed.

You say, well, Nike's a marketing company. They'd be out there marketing this. What they've realized is, first off, nothing's more important than the passions and imaginations of real people. And Nike is first and foremost a design company who also knows how to market. You know, new products are really their lifeblood. About 10 years ago, they did a toxicological study of their entire product line.

This was commissioned by a small little research group at Nike, and they found out what most companies would find out in consumer goods businesses. And it's pretty disastrous. I mean, how many of our friends do we know have had cancers at the age of 30 that nobody used to get until their 60s before? This is not bad luck.

You know, there are a massive array of toxins in everyday products. You know, if you really want to do something about cancer, you have totally different standards for toxins in everyday products. They did this study. They found out some things that they were shocked to find out. You know, dyes, glues—athletic shoes are all put together with various kinds of glues, most of which are not probably toxic for the user.

They're very toxic for the people who are making the product, and they're potentially a significant source of toxicity when the products are eventually discarded, which of course, most of them are. They said, well, this doesn't quite fit our image. You know, our image is about athletes and health and people, you know, really living an active lifestyle.

We didn't think that we were poisoning people. And that sounds a little extreme, but it's not entirely.

Anita Brick: Right. No, I agree.

Peter Senge: So that's how it got started. And then they faced the kind of classic problem that I was alluding to earlier, which is, of course, this happened probably about a year after the exposures about the child labor in their Asian manufacturing facilities, which were a shock to the company. All of a sudden they had this huge hit to their brand.

I remember I said the two kinds of typical starting points, external pressure from regulators or customers on your brand or a perception of waste. They kind of went that route for the first year or two, obviously damage control on their brand. Phil Knight, the founder, was the first American CEO to sign up to the Global Compact in 1997, you know; they became very visible.

And in fact, we have a big labor compliance research group at MIT. And it’s generally regarded today that Nike's one of the best in the apparel industry. But they also realized that that didn't really fire anybody's imagination. It was really about being less bad. Right? You know, you know, how do we become more compliant? Nobody gets that excited about that.

It's a necessary thing to do, but it doesn't really give you any kind of innovation edge. That's what Nike's about. They're about innovation. So it took a couple of years and there were two women, literally two women who just went around talking, and they had this one simple idea. And again, the stories in the book that … Well, if we're going to really do something that gives us an opportunity to lead, Sarah Severn said, you have two options in this whole field. You either comply and stay with the pack, or you look at it as an opportunity to lead. And as you were saying before, build a distinct type of advantage. And so we clearly were much more interested in the latter. If that's the case, it's got to be about design. How do we get our designers involved?

We might have 30 or 40,000 employees at that time, but when you get right down to it, we've probably got 20 really influential designers and probably about 150 key designers. If we could get a subset of those people really excited, then maybe something starts to move. And that took about 4 or 5 years and they just went around door to door—literally, you know, knocking on doors.

And Darcy Winslow, who later became the president of the first women's division at Nike, but was at that time head of this advanced research group, said, you know, I could tell within about 2 or 3 minutes if this was something that somebody really was interested in and really … would say things like, well, you know, it really is, it's really bad. But, you know, everybody’s stuck. But then she would say, well, what if we could find a way to lead?

So anyhow, to make a long story short, within a few years they were designing compostable singlets. You know, they had all these individual products, you know, stuff you could … literally was biodegradable. They wanted to do a lot more with organic cotton.

Cotton is grown around the world, a lot of pesticides. And it's a pretty bad deal for cotton growers. Organic cotton is much better and the customers like it as well. But there was too little organic cotton in the world. They created something called the Organic Cotton Exchange to create incentives for organic cotton in the world. Notice, by the way, you're kind of bouncing back and forth between your company and your industry and all this.

Anita Brick: And the world, too.

Peter Senge: Yes, and the world. Their big unfortunate discovery was the Nike Air bag, which of course, was a huge product innovation five, six years earlier and had gotten into most of their running shoes. The only small problem was the air bag encased a molecule or quite a big molecule called SF6, which was a horrendous greenhouse gas. I mean, much worse than CO2—it stays in the atmosphere forever.

Took them over five years, Darcy said, and several hundred million dollars in research, which is a lot for a company like Nike, which is not a big R&D company, to find a way out. And they couldn't … by the way, they couldn't find any other gas that they could enclose in an air bag that would have the properties they wanted and wasn't a greenhouse gas. Eventually, she said, we actually—people find it hard to believe, but Nike actually pioneered breakthroughs in polymer chemistry to create a plastic that would seal in air. So the Nike air bag is now air.

Anita Brick: Wow, wow.

Peter Senge: But it's a much smaller molecule than FS6. So you had to have a very different kind of plastic. And of course they also wanted a recyclable plastic that could seal in air. All of this gets rolled up now into this product rating system, which they have a very interesting name for. They call it the Considered system. Now eventually it will become known to customers, but they were so clear that they had to lead from innovation that was credible to their people inside, because they could see how easily, particularly a company like Nike, could be accused of greenwashing.

So if you go to market too quickly with this, people are very skeptical. But if you build a whole movement inside, by the time you start to tell customers about it, you know, you've got all the evidence and you’ve got, you know, hundreds of people that anybody can talk to in the company who say, Oh, no, no, we've done this and we've done this, and we've done this.

Michael Jordan's new Air Jordan shoe, which will start to come out in about, oh, probably within weeks now and may already be being marketed someplace—I heard this story in April—is their first gold medal shoe. In addition to the air bag, which is now, of course, just air, the upper part of the shoe is not cut from cloth that produces a huge amount of waste.

It's actually sewn together, woven together. So there's almost no waste. And then the biggest single breakthrough on that shoe was—an athletic shoe takes a ton of pounding, obviously. One that an NBA basketball player uses gets a couple of tons of pounding, and they found a way economically to stitch the sole to the upper, which has never been done before on a world-class athletic shoe.

They're always put together with glues, which in turn, as I said, have all these solvents, which are their single biggest [..] environmental problem in Nike wear: solvents. And this shoe is all stitched together. And the designer of the shoe gave us a whole presentation back in April at Nike in our Sustainability Consortium meeting. It was really cool.

He said, Look, you know, we have experts in this company on all this waste and toxin stuff. You know, I'm a jock. I'm a pole vaulter in high school and I coach women's track. And I love to design shoes, and I do design … You know, the lead designer on Michael's shoe — they come up with a new one every 2 or 3 years, he said.

But you know, this is exciting stuff. He said, in my company, this is a home run. When a new Michael Jordan shoe embodies these kinds of breakthroughs, everybody in the company looks at it and says, wow, how do we top that? You know, a lot of the real breakthroughs and innovation is how do you create healthy internal competition in your own firm so that people are really jumping over each other to see who can do the next really big breakthrough?

But of course, you got to have a business system that guides all that. And that's why this metric system is really the key. And it's really quite impressive. They'll keep innovating it. But they can really rate every single product.

Anita Brick: So they're doing all these things certainly with a business model toward profitability. But that's not their primary driver.

Peter Senge: Well, long term it certainly is. Goes back to your question before, you know, it's a key question. You know, from a business—you've got to have a business strategy to make, you know, for innovation. You know, there's no—they're going to be a world leader. If anybody can make green cool, right, for a vast segment of markets, it’s going to be a company like Nike. And I think they will. But they also know it's complex. And again skepticism is understandably very high. It's definitely a business proposition.

And they're not planning on losing any money on the shoe. In fact, the guy who gave us the presentation—his name is Tinker Evans. This Jordan shoe is now in the pipeline; it’s being brought out now, and he said he got a call from Michael Jordan the night before he was doing this presentation to us. He said, Michael said, hey, well, you know, this green shoe you made for me? You know, I kind of understood the point when you explained to me about the waste and toxins and you know, all that. He said, but look at, you know, I gave it to my friends, and they played with it for a week or two. And they said, it's a really great shoe.

And by the way, it's a beautiful shoe, too. And he said, I don't think we should do any more that don't meet these standards. I'm getting all this great publicity now. These bloggers are all talking about my new green shoe. Well, that's, you know, that's how the economic system works.

So no, no, they're not doing this for charity.

Anita Brick: No, I got it. I got—well, it's very interesting. I met this leader of … he used to be a very senior-level leader at a manufacturing firm. People didn't treat each other very well. He could not believe when he got the financials that this largest division of this mega company was not profitable. And he had to really revolutionize himself and ultimately the leadership, the entire leadership of the organization, to turn it around.

And the thing that was amazing was they have these like nine principles. And if people couldn't follow them—and they were things like be nice to one another, you know, they were just common human courtesies. And then leaders had another 101 because they were responsible. But they were only measured on these very revolutionary kind of leadership things. How must current leaders revolutionize themselves?

Peter Senge: First off, I'm not a big fan of the word leader because we misuse it all the time. When you said what you said there, as I'm listening, I'm assuming that you mean bosses, right? You mean people in hierarchically senior positions?

Anita Brick: Well, in their case, they meant everybody. So it was a very …

Peter Senge: Everybody like in the whole company?

Anita Brick: Yeah.

Peter Senge: Well, that's where it has to be eventually. That's the whole point. Usually we use the word leader as a synonym for boss, which is just stupid. And it's very common though. So it's really hard to stop it. It's pretty universal around the world, as opposed to something more fundamental. I mean, those two women at Nike, Darcy Winslow and Sarah Severn.

I would say anybody would look back 10 years later and say, wow, that was extraordinary leadership. You know, one was in a staff job. Sarah was like, before they had a CSR job, she was kind of like a CSR director job, so she was very much dealing with a lot of external stakeholders. And Darcy was head of this little fancy research group, like five people.

But today, I mean, within Nike, they're both almost legendary figures for the work they've done. And that's the story we see again and again, because these are long-term changes and because they're fundamental, they're very rarely led by CEOs. Now, don't get me wrong. CEOs have a role to play. And in a lot of examples, CEOs played a pretty useful role.

Chad Holliday at DuPont. I mean, he got this idea with a half a dozen people that they really need to shift their underlying technological dependence on fossil fuels, you know, 10, 15 years ago. And I don't think there's any doubt that GE has had some pretty effective leadership from the top. But these are the stories that often obscure the deeper and more important story, which is the leadership that comes from all over the place, from lots and lots of people, usually in a whole variety of key line positions and maybe in a few staff positions as well.

I'm not too fond of a language like how do leaders need to revolutionize themselves? I think that is kind of describing it backwards.

Anita Brick: OK.

Peter Senge: Let me tell you, what do we— I would say it is that first off, leadership is critical, that's for sure. And it's this kind of distributed leadership. It's leadership all over. It includes executive leadership, to be sure, but usually a lot of the most important types of leadership, again, because we're talking about things that unfold over five, 10, 15 years are coming from a lot of people in a lot of different positions.

In a sense, you have to build a community of leaders, and if you don't build a community of leaders, you can forget it. No CEO will have success over 10 or 15 or 20 years, because very few of them are in the job half that long. Secondly, I think that the first kind of fundamental of leadership is basically more or less lost today.

Again, I think business schools are the primary culprit. Business school—I remember years ago, MBA students say, well, a leader is getting people to do what you want them to do. And I thought, you know, he's probably right. That is exactly the image of what a leader is to most MBA students. How do I get people to do what I want them to do?

So to become a human being. That's the oldest— I mean, now like thousands of years old notion of leadership. In the Chinese tradition—I do spend a lot of time in China, in part because I think there's a lot of wisdom deeply embedded in traditional Chinese culture. They're struggling mightily today in the rapid pace of modernization to not lose that wisdom because they desperately need it.

That's the first principle. You know, if you read The Great Learning, which is one of the four famous Confucian texts— every Chinese person almost knows it by heart. It doesn't mean they understand the meaning—you'll see a line that says, to become a leader, you must first become a human being. What does that mean? Well, we've lost that notion entirely.

I mean, by the way, it's not just a Chinese notion. You can find that in old traditions every place. Who am I? Why am I here? What am I supposed to do? What's my sense of purpose? What really matters to me? What does it mean to really listen to another person? Listening is probably one of the hardest life skills to develop, and we spend very little time at it.

And yet if you look at really successful executives, particularly, in my opinion, it's probably the first defining feature. They're really good listeners. Now, in my opinion, these are a small number of people, but there aren't really too many really effective executives. Most of them are just, you know, making short-term decisions and focusing on their stock options. And we see the consequences.

What does it mean to really reflect? We don't do many programs very exclusive to top-level people, but since the leadership exhibited by senior people is an important signal in organizations—don't get me wrong, I'm not saying it's unimportant. I just think it's very misunderstood. So we do—once a year, we do something called an Executive Champions Workshop, and that's the only thing we do in the social network that's exclusive to people in top 2 or 3 levels.

And I'll never forget a comment by a guy in the closing little circle when people were making their final comments … at a three-day session up in northern Vermont. And Charlie, who was a good friend, had about 83,000 people in his organization at that time. He was actually the president of a very big division of a still bigger multinational.

He was … his closing comment. He said, I really enjoyed these three days because I look back at— I think it's actually the first time in two years that I've thought, wow, what the heck is he talking about? You know, he's making all these big decisions all the time. They influence, you know, lots of money and lots of people.

Right? But he saw something different in the three days he'd spent in really reflecting. You know, we got these executives running all around the world getting off of airplanes, you know, you know, hardly at their best, making all these big decisions, very short-term thinking, very reactive, very little real strategic thinking. It's a real skill to be able to reflect.

And what do I mean by reflect? Reflecting is an act that we make as human beings, when we actually recognize the nature of our thinking, we don't just think about something, we think about our thinking. We start to recognize an assumption that we've taken for granted. You know, maybe for decades, maybe most of our life, like the business of business is business.

And that, you know, no one can get very far away from the pack, or that all this green stuff, that's for your CSR or environmental safety experts. It's not strategic stuff. Whatever it is, these are nothing but assumptions. And they define the space within which people analyze and make decisions.

Anita Brick: And can come up with innovations.

Peter Senge: But innovation is almost always about challenging an assumption that somebody never thought about as an assumption. They took it as taken for granted. That's what Charlie meant by “thinking.” He was actually thinking. He was thinking about his thinking. He was starting to question things he had taken for granted. He was listening to people who thought about the world very differently than he did, and really listening to them and realizing, wait a second, this person is not crazy, but they see something I don't see.

Why don't I see it? See, those are the subtle skills of leadership and by the way, understood, I'm convinced, for thousands of years.

Anita Brick: Yeah. And I would agree with you. And so if someone wanted to craft their career to actually succeed in this green space over time, what kind of things do you think that they fundamentally need to look at within themselves?

Peter Senge: Well, first off, they need to organize their life so they actually have time to … to slow down. I mean, part of this is habituation. You know, everybody is running at this ridiculous speed, and again, keeping … Charlie's phrasing, actually doing very little real thinking. There was a study done by the British Institute of Health about 2 or 3 years ago.

I don't know if there’s been a repeat in the US, but it was really interesting. They actually traced a person's IQ over the course of a day and found that there was, on average, a 10 to 15 point drop in IQ by the end of the day for people who used personal devices for more than 3 to 4 hours.

Anita Brick: That makes perfect sense, though.

Peter Senge: Doesn't it?

Anita Brick: Yeah, it does.

Peter Senge: You're in a perpetual state of interruptions. You don't have time to think about anything.

Anita Brick: Yep.

Peter Senge: So what do you do about that? I mean, going back to your question, that's a personal choice, you know, how do you unplug? How do you give yourself the time—I would say every day, but certainly every week—to really slow down, to really pause? Who are your circle of co-thinkers? When you look closely, you find all these people who are really good at kind of challenging the status quo, usually have their own kind of kitchen cabinet, whatever you want to call it.

But basically it's a circle of friends. And you can pretty well count on the people in that circle to tell you you're nuts. To say no, no, no—you think that, but you're looking at it in a very particular way. You know, you don't see this and you know, and you should go off and talk to those people over there that you don't usually talk to.

They could be in your own company, by the way, or they could be in a different organization or even a different business, because I was blown away when I heard some of what they're doing and how they're thinking about our market or this technology. So that's the very first thing. How do I make sure that my time is organized, daily and weekly, so I can unplug, I can actually slow down, take in different points of view, and continually cultivate my ability to listen to and recognize my own assumptions?

Second thing is this little question about purpose. I remember years ago, one of our more standard courses, a three-day leadership course. When we can, we often do it with different ages. We had some teenagers in this one. I’ll never forget—teenagers saying, oh, we don't call them grown-ups. We call them given-ups.

Anita Brick: Oh yeah, there you go.

Peter Senge: Because that evolution from, you know, orienting my life around what I really care about to how I get ahead. You know, that's the lost vision.

Anita Brick: That's really profound.

Peter Senge: And that happens everywhere. And organizations collude in it. They create continual signals. You know, somebody who passes up the promotion because, you know, I actually don't want to be away from home that much. Well, they're off the fast track. That's too bad. They're a good person. But you know, they're not going to really have much influence in the company, blah, blah, blah, blah, blah.

So this is an organizational phenomenon as well as personal. So you got to really, you know, ask, you know, what matters to me? Am I really, you know, continually focusing on what truly matters in my life, which is actually not the amount of money I make. Never is, never was. I never met anybody for whom it is. And yet we all collude like that's actually the most important thing until, you know, you hit that, you know, midlife crisis of the age of 43 or whatever, and you go, what the hell have I been doing for the last 20 years?

Anita Brick: And what would the final thing be for right now?

Peter Senge: Well, the final thing is a little more technical. So I always, you know, tend to be a little careful about how I talk about it. It dovetails with these two. It and that's how you see the larger system. You know, the book is organized around a recasting of what's always been the fundamentals of the organization learning work, which is about sense of purpose, vision, reflection, reflective conversation, and systems thinking.

So you could throw out the word sustainability, you know, green, all that garbage. You know, this is all jargon terms. And you can get at the basics of all these issues with one single point. Every business operates within a larger system about which it's mostly blind, you know. So for example, one of our biggest initiatives is, what we call the Global Sustainable Food Lab.

It was started by Unilever and Oxfam — two organizations that never really worked together before. But people are realizing that one, the global food systems are an absolute disaster, the largest cause of poverty in the world. Our global agricultural systems, as they drive farmers around the world into poverty, they migrate to cities 50 million a year, you know, to live in shantytowns.

You know, whoever would have thought that was going on when you bought your cantaloupe in the middle of winter? But that's because the whole global food system has been skewed to serve the rich northern consumer. And the big multinational companies who are right in the thick of this, a few of them really see the problem. They really see the massive loss of topsoil all around the world, the degradation of the environmental conditions, and of course, hand in glove with all of that is the destruction of farming communities.

And they say, how are we going to have a food system without farmers? You know, is just more pesticides and more chemicals, you know, the key to the future or, you know, we know everywhere that people are saying, hey, I don't want to eat this food. You know, it's not just that the system as a whole is a disaster; the product of producers, by and large, is a disaster. So we have this whole countermovement, right, of the Whole Foods movement and the healthy foods movement. So the problem is you're sitting in the middle of that system, you know, I'm a retailer. I buy food from a wholesaler. I don't have a clue who the wholesaler buys the food from.

Anita Brick: Right.

Peter Senge: And by the way, I'm not really very clear about what's in the food, anyhow, except maybe a very few toxins, which we've learned how to test for now, because there was some kind of scandal. So seeing systems simply means whenever you're operating a business and you just think about it in terms of a value chain, you know, you're in the midst of some vast, complex network of activities that collectively operates in a way to produce value and value for a lot of different people. Who looks at that whole value system?

The answer is nobody.

Anita Brick: So that could be — for an individual wanting to craft this career or craft the next stage of his or her career …

Peter Senge: That's right.

Anita Brick: That could be a really key differentiator.

Peter Senge: A huge one. I'll tell you one short story just to illustrate. One of the more interesting projects in the global Sustainable Food Lab—we just refer to it as the Food Lab—is now over 50, 60 organizations, about two-thirds business, about one third NGO. So Nature Conservancy, World Wildlife—almost all the big NGOs are part of this because everybody realizes that the food system is such a fundamental system for everybody all around the world.

Sheri Flies was the corporate counsel at Costco. She started reading about these issues. She actually read the book Presence. And we had a little bit about food systems in there. She said, well, I got to do something, you know. So she said, this is her story. She said, well, you know, I'm buying my fair-trade coffee and I'm doing everything I can.

And I keep thinking, there's got to be more I can do. And of course, then she goes, well, wait a second. Costco, second-largest seller of food in America, right?

Anita Brick: Right, right.

Peter Senge: You know, so she starts talking to people at Costco, and she finds a few who are really passionate about it, doing some really good work, but they're kind of tucked away in little corners and don't have a lot of support. And she goes to the senior people, who—in this case, she knew a lot of them because as the corporate counsel, you get to know all the senior executives, and she’d been in the job for about 12 or 13 years—and she found this really interesting response.

They say, well, Sheri, we know you're right. These are huge problems. But that's why there are charities in the world. And we give a lot of money to those charities. And they weren't trying to blow her off. They were sincere. Their mindset was, well, business is business, and you deal with these bigger issues through the Oxfams of the world.

And she said, no, no, you're missing the point. We're in the middle of this. So make a long story short, she quit her job. She went into the logistics and supply chain part of the business. She had to be retrained, because Costco takes you right back into the factories. And now she's got half a dozen supply chain projects around the world where she's coordinating right back to the farming communities. And the cooperatives, the wholesalers and up to Costco's buyers.

And they’re gradually shifting a lot of their contracting practices. And she said, in all the sustainability stuff, you know, people hear about it. And we, you know, people at our board meetings will bring it up. But she said in Costco, it's really starting to have a very different meaning. And this took a few years to sort out. It's how we build healthy value chains that will assure us in the long term of high-quality, reliable supply at the standards and costs we need.

And we can't do that unless we are involved in the whole value chain.

Anita Brick: Wow. Well, it sounds like it sounds like you are very passionate about this work.

Peter Senge: Well, that's kind of what I've always been interested in. I never had an interest in business per say.

Anita Brick: Oh, but that’s OK. But this is good, and this is great. Thank you. I know how busy you are. I know you travel all the time. So you gave us a lot to think about and to kind of look at this whole being green profitably really from a different vantage point. But really from a fundamentally sound and kind of profound vantage point too.

So thank you so much.

Peter Senge: You're welcome.

Anita Brick: And thank you all for listening. This is Anita Brick with CareerCast at the Chicago GSB. Keep advancing.