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Are energy saving matters working ? from HBS

Nada Almutawa
10/09/2008 12:00 AM

Are These Energy-Saving Measures Wise...or Wacky?

As we all know, energy prices have skyrocketed. Organizations of all kinds are trying new ...

Andrew Winston

As we all know, energy prices have skyrocketed. Organizations of all kinds are trying new ways of doing business to cut costs. Some ideas, like Wal-Mart putting doors on refrigerated cases and cutting energy use 70% in that aisle, are head-slappingly obvious. Even seemingly wacky ideas can seem downright wise once you run the numbers. One of my favorites is the UPS "no left turns" program. To avoid waiting to cross traffic - and thus wasting time, energy, and money - UPS used GPS data to program new routes that basically go in concentric circles to the right. The company has saved about 28 million miles of driving and 3 million gallons of gas.

But other ideas to cut energy use just seem desperate or short-sighted. I`ve been thinking a lot about a story in Time Magazine last week about what schools are doing to deal with high gas prices. Some districts, particularly in rural areas, are going to four-day weeks. About 1 in 7 school boards nationwide are apparently considering this option. They`re also eliminating field trips and extracurricular activities and even laying off teachers. While some schools and communities like the shortened schedule, most research shows that more school hours are generally better (the countries with longer school years seem to produce higher scoring kids).

Cutting school days as a way to get more efficient certainly sounds wacky at first glance. But unlike UPS`s solution, this one is also wacky at second glance. Aren`t there better ways for us to reduce fuel use and costs? Unless I`m getting the very simple math wrong, improving school bus efficiency by 20% would generate the same fuel savings as cutting a day of school.

There are solutions in the private sector, as companies focus more and more on logistics and improving efficiency (see one report on logistics here). Wal-Mart has enacted a range of efficiency initiatives for its fleet, from cheap "wind skirts" that streamline vehicles to auxiliary power units that reduce idling. (All idling in the US, by some measures, may amount to a shocking five percent of the country`s energy use). Xerox put together a logistics streamlining plan that reduced fleet energy use 10%, including "right-sizing" vehicles to fit the load to using metrics and GPS. And office retailer Staples cut fuel use 15% just by placing a 60 mph limit on its drivers. The trucks move slower, but stop for gas less frequently. The total delivery time is the same.

These corporate examples demonstrate that ideas are out there to help school districts, but I`m making a larger point about finding innovative solutions. UPS, Staples, Wal-Mart and many others are saving a ton of money through seemingly wacky ideas that turn out to be very wise.

So how do you know which is which? Here are a few signs that an initiative or idea is wacky and wise, not just wacky. The new idea or initiative...

  • Seems obvious in retrospect, even if it seems a bit silly at first. "You mean if we slow down the trucks, or put doors on refrigerators, we`ll use less energy?!"
  • Reduces total footprint, even if that footprint is a strange shape. Sam`s Club is selling milk in square cartons. Since they`re a new design, they probably cost more to make. But the square shape means they stack a lot better, and without the crates. They pack much tighter, fitting nearly three times as many in every cooler, saving money and energy, and requiring 60% fewer trucks. 
  • Does not create other significant problems. Cutting school days means many parents have a day of childcare to deal with and pay for, one of those important unintended consequences. "Significant" is the critical word here. Extra daycare is significant. Getting used to pouring out of square milk cartons, which some customers complain about, is not.
  • May actually solve other problems. School buses produce tremendous air pollution and health risks as kids sit in diesel fumes. Reducing miles reduces pollution and also shortens the time kids spend on buses (sometimes over an hour for what would be a 10 minute trip directly). And if school districts can raise the capital, larger solutions are available. Navistar, the big truck manufacturer (disclosure: I spoke at an annual meeting of their dealers recently) has launched a hybrid school bus which nearly eliminates the local air pollution problem.

Also keep in mind that wise ideas depend on context. While cutting school days is counterproductive and possibly disastrous for learning, cutting workweeks to four days to save employees on commuting expense can be very smart. In business, we can shift workloads effectively or work at home if need be.

The best innovations always strike you as odd the first time you hear them. Then they get you thinking. Then you wonder how you could`ve ever lived without them.

Andrew Winston helps companies use environmental thinking to grow and prosper. He is co-author of the best-seller Green to Gold, writes a monthly e-letter Eco-Advantage Strategies, and regularly blogs on green business.