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Scarcity as the ‘mother of invention’: can we consume less and still grow?

For over 200 years, since the industrial revolution, we have seen economic growth strongly coupled with the consumption of more and more resources. The more we grew, the more we consumed. This model works…

When resources are scarce, turning rubbish into something productive is a great business model. AAP

For over 200 years, since the industrial revolution, we have seen economic growth strongly coupled with the consumption of more and more resources. The more we grew, the more we consumed.

This model works well in a world without limits; with plenty of resources to go around. But we’re starting to realise that these resources – from ores to phosphates and water to topsoil – are not as plentiful as we once thought.

A report released at the World Economic Forum last year estimated we are already consuming 95% of the existing reliable supply of freshwater on the globe. The same report suggested that by 2030, demand for freshwater will increase by 61% in China alone.

Something has to give.

And what might give is the model that rewards converting as much resources as possible into outputs to drive growth. Instead we might start to see a model where resource scarcity drives many of our choices.

This is a shift from an old mode of operation where we have been harvesting resources that were plentiful and cheap, to one where we are managing resources that are scarce and valuable.

In this future world we might start to decouple economic growth from resource consumption.

But does this mean we will see any less growth in our economy? Not if we rise to the challenge.

In a recent book – “The Sixth Wave: How to succeed in a resource-limited world” – Bianca Nogrady and I identified areas of massive business opportunity that come from focusing on scarcity as an opportunity, not a challenge.

The first place to look for growth without resource consumption is in waste.

If you want to succeed in a resource-limited world, find a major source of waste and develop an innovation that either dramatically reduces that waste or does away with it entirely.

New and old businesses are extracting methane from landfill to generate electricity, turning organic waste from supermarkets into compost and minimising heat and light waste from houses and office buildings.

Many companies are also finding business models that take waste and turn it into something productive, such as the Canadian brewery that found it could use its grain waste to grow Shitake mushrooms.

Car share businesses are finding that as many as ten families are sharing a single car, providing far greater use from a single capital asset.

The second big idea for separating growth from resource consumption is this: sell the service, not the product.

Companies and nations are learning that the best way to create value without consuming resources is through services. This has far-reaching implications for the world economy, the internet and our way of life as we know it.

Do you want a car or do you want mobility? Perhaps a car share service might be good for you.

Do you want energy or do you want heat and light? Woking Borough Council in the UK has found a way to sell “heat” to households and then how to deliver that heat expending as little energy as possible.

Businesses that sell services rather than products quickly find it’s in everyone’s interest to deliver the service with the least consumption possible. Unlike business models based on selling as much product as you can, services have the potential to decouple value creation from resource consumption.

Given the importance of monitoring our natural resources (and how much we are using), more and more devices will emerge that connect the digital and the natural worlds. It will be like having everything around you connected to the net (you already have your digital analogue – the mobile phone).

The whole planet and all of its natural resources will be measured and monitored to the point that everything in the natural world will one day have a digital counterpart. Companies will emerge to manage and take advantage of this rich source of information.

Put these together and you get a fourth idea: information is global, consumption is local.

Reducing the consumption of natural resources will drive everything to do with natural resources to become more local, while services that don’t consume resources will be truly global endeavours.

Energy production will be distributed and localised and resources will be recycled to the point of consumption as possible.

So, what if we are able to decouple incresed resource consumption from economic growth? What will our world look like then?

It will be a world where nothing is wasted and everything has a value. It will be a world in which we don’t think so often in terms of “products”, but of “services”, and a world where resources are mapped and measured to a degree never before seen.

We still enjoy the quality of life that we expect, but we have changed our business models and incentive structures to reward what we really value and get rid of everything else.

James Moody will be speaking at the Innovation Series in Sydney on 21 October.