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As world leaders prepare to gather in Paris to renew the battle against climate change, we ask: What would it take for individuals, cities, businesses and the nation to cut our carbon? Today: What the country’s innovators must do
Let’s stick with what we do best.
That sums up the response from top Kodak executives when the company’s own scientists spoke of this amazing new way to snap photos without using film.
Steve Sasson, an engineer at Kodak credited for inventing the first digital camera 40 years ago, recalls being told “that’s cute — but don’t tell anyone about it. ”
We know how that story ended. Film production and photo processing was Eastman Kodak’s bread and butter. It chose to stay within that comfort zone and give up what leadership it could have had in the emerging world of digital photography. This assured its demise.
Does the same fate lie ahead for Canadian companies that exist to find, produce, refine, distribute and burn fossil fuels at a time when reducing greenhousegas emissions has become a moral imperative?
Will zero-carbon technologies and lower-impact business models build new giants of industry and destroy old ones that fail to adapt?
History is littered with companies, even entire industries, blindsided by innovation because they were dismissive of a seemingly distant threat. Streaming and downloads destroyed Blockbuster. Mobile phones killed the pay-phone business. LED lighting has dimmed the future of Thomas Edison’s incandescent bulb.
This could explain, at least partially, why 88 per cent of firms on the Fortune 500 in 1955 don’t exist today. Companies such as Tesla Motors, SolarCity, Uber and AirBnB could very well send a few more packing.
“The ability and willingness to think completely out of the box and to see the opportunity in this new energy reality as opposed to the threat, is really what is required,” said Jules Kortenhorst, chief executive of Carbon War Room, a non-profit think tank founded by billionaire Richard Branson.
“For corporate executives who have spent their lives within the constraints of the old model, or for government officials who have seen tax revenue and job creation derived from the old energy reality, it is incredibly hard to make that mental shift.”
Management at both Kodak and Japanese rival Fujifilm both found this shift difficult and both suffered by arriving too late to the digital party. But Fujifilm is thriving today, partly because when it did take action, it did so with the kind of commitment, urgency and long view that Kodak lacked.
One move that paid off, for example, was Fujifilm’s decision to diversify its business beyond photography. Rather than just hunt the world for easy acquisitions, it invested big dollars internally in research and development.
The company did an inventory of its core skills, assets and technological know-how and identified emerging markets where they could be repurposed to capture new revenue.
Fujifilm still sells digital cameras, but is no longer just a photo company. It makes film that goes on solar panels and touch-screen displays, and has made a big push into medical imaging, cosmetics and pharmaceuticals. Having developed in-house expertise in nanotechnology, the company has reach into dozens of new industries.
Investing to realize this longer-term vision was costly, and it hurt the company’s profitability in the short term, but the effort was worth it. Fujifilm is a highly profitable giant today, with a market value of $21 billion (U.S.). Kodak, which emerged from bankruptcy protection in 2013, is worth $500 million and is still in the red.
With climate change, the stakes are higher, and the challenges much greater, but there are lessons here for 20th-century industries and companies that have built their existence around fossil fuels.
One is that it would be a mistake to underestimate the speed of transition to a low-carbon economy just because previous energy transitions took decades to catch fire.
“We often fall into what we know and view the world by looking to the past,” said Leah Lawrence, CEO of Sustainable Development Technology Canada, a federal agency that helps fund emerging clean technologies.
In this case, what the past doesn’t reveal is today’s unprecedented awareness of climate change as a threat to global security, health, biodiversity, food supply and water resources.
The past also doesn’t reflect the dramatic cost declines of clean energy technologies, particularly solar, and the growing political will to start reining in greenhouse-gas emissions.
And past knowns don’t reflect future unknowns — or what writer Nassim Nicholas Taleb famously called rare and unforeseeable “black swans.”
“Innovation is a very uncertain process,” Microsoft founder and philanthropist Bill Gates said in a recent interview with The Atlantic, in which he talks of a need for energy miracles. “For all I know, even if we don’t up our R&D, 10 years from now some guy will invent something and it’ll take care of this (climate change) thing.” You can bet thousands are trying. For observers such as Kortenhorst, energy miracles are welcome but not necessarily required. There’s plenty of core technology that exists today that could be better, cheaper and scaled up more quickly.
What it requires is a fresh perspective not constrained by an old energy paradigm that sees fossil fuels as a forever fuel — too important to give up, too dominant to challenge, and too big to fail.
An innovation hub such as the Silicon Valley in California doesn’t feel this kind of constraint, Kortenhorst argues.
“The reality within which Silicon Valley looks at energy is, I don’t know anything about energy, but I know all about new business models, and ITenabled change, and I’m just going to do what I’m going to do at the pace that I want to do it at,” he says.
For established industries — from mining or steelmaking to energy production or agriculture — the message is that sticking with what you do best isn’t always the best path to take when the world around you starts to shift.
Just as likely, it can lead down the road to decline.