Photo credit: Brooklyn Cyclist.com

I’m not generally a fan of bike riders with the distraction of MP3 players but this ride seems like a great idea: a whole group listening to the same soundtrack and getting into the groove. If you can get an area free of cars, I say tune in and pedal on. The ride is organized by JoyRide and the ride is followed by a picnic so that you can get to know your fellow riders — a taste of the original social networking.

Check out the video Joyride 2010 from Joyrideo on Vimeo and read about one cyclist’s experience.

I’m going to reach out to fellow riders in Boston to see if we can arrange one for our fair city. Interested? Let me know.

Irial Finan of Coca-Cola

We’ll be talking about sustainability: How do you meet the mandate for significant business growth while also reducing its carbon footprint? Supply chain: What are the most vexing challenges of running one of the world’s most global and complex supply chains (the company has more than 300 bottling partners worldwide) given resource scarcity, price volatility, and local market expectations? And leadership: What qualities are most important for a leader in an high visibility, international organization like Coca-Cola today — and in 10 years time?

I find Coca-Cola to be an interesting company as they have embraced end-to-end life cycle responsibility for their product. They also operate locally through their bottlers around the globe and have one of the most diverse management teams I’ve come across; they may be headquartered in Atlanta but they are truly global. We’ll have a lot to talk about.

What questions would you like me to pose to Irial? I’ll be writing a summary of our conversation upon my return.

A greatly simplified view: Extraction, like mining, focuses on finding and capturing value and then moving on to do it all over again. Cultivation, like farming, seeks to harvest value in a way that makes it possible to replant and harvest again from the same land. Extraction has a more short-term focus than does cultivation. Extraction is based on the assumption that there are finite value in each activity and the goal is to glean as much as possible as fast as possible. Cultivation rests on the idea that, with proper stewardship, there can be a virtuous cycle that allows almost infinite value to be created over time.

Investors tend to be extractors and the market rewards executives (who, these days, tend to be major shareholders as well if they work for public companies) for short-term results. Market players don’t care if your firm falls off a cliff tomorrow — so long as they sell the stock today. In an interesting snapshot of how equity analysts can drive short-term mania, McKinsey Quarterly recently published a chart showing that these analysts have consistently over-forecast earnings growth over the past 25 years.  Analysts expect 10 – 12% but companies have delivered 6% — an over-estimation of about 100%.

Owner-operators, executives at private firms and social enterprises, and employees tend more toward cultivation: they are in it for the long haul and so don’t want to reap value to the detriment of future performance. They can be more prudent in their forecasts and profit-taking. This is a generalization in both cases but “making the quarterly numbers” is a do-or-die exercise in many public companies.

The rise of social enterprise and a heightened attention to sustainability issues, in my view, reflects a desire to reset the balance between these two forces. Cultivation was the norm in business for many years. Investors looked for income from dividends and steady growth of share price over time. This changed somewhere around 1980 with the growth of leveraged buyouts, arbitrageurs, private equity, and other variants on financial “services” that promised spectacular returns by unlocking value that was supposedly languishing in firms. Buy them up, tear them apart, lay off as many people as you can, and sell them off — the ultimate goal was to deliver immediate shareholder returns. The big shareholders, as you’ll recall, are short-term players (as opposed to average 401K-type investors saving for retirement and often using mutual funds rather than individual stocks). These weren’t activities focused on making things or delivering services but rather were pure financial plays.

There is a place in markets for quick-turn artists but it can’t be a dominant one.  This isn’t an anti-profit rant; profits are essential to financial sustainability. However, just as the Earth can’t support a global population that consumes as ferociously as do Americans, our economy can’t thrive when too many people are more focused on taking out than putting in. In case you hadn’t yet guessed, I’m a fan of cultivation and I think that it is in our collective best interest to support those companies that “farm” rather than “mine” for a living. More and more firms seem to be recognizing this — and that their environmental and social impact is as significant as their financial returns. So, too, are consumers and that’s good news.

How does your organization manage the tension between extraction and cultivation?

Both firms receive a greater percentage of my income than I’d like to admit though I can rationalize it through my insistence on fair trade coffee, organic veggies, grass fed beef, and all the rest. At the end of my reading adventure I found myself enthusiastic to give more of my business to Starbucks and feeling far less sanguine about Whole Foods.  I thought about this for a bit — I’m a writer and know that some people give a better interview than others. I also admit to having a bad feeling about Mackey ever since he tried to charge a fee when I asked him to speak while I was at Harvard Business Publishing (the only sitting CEO ever to do so — and he also wanted an administrative fee to cover the work of his assistant in arranging his travel and processing the paperwork). His stealth online commenting didn’t sit well either. I never thought much about Schultz except when thinking that celebrity CEOs tend to get too much credit for their organizations’ success.

Based on these two pieces, Schultz seems to believe in and act on behalf of values that are bigger than himself; Mackey appears to see himself as the ultimate embodiment of the values of Whole Foods. The distinction is important and I have increasingly come to see the ability to embrace values and interests bigger than the self and getting others to embrace them as well as the very essence of leadership. I got the feeling that Mackey hoped the I, and the rest of his customers, can someday live up to his ideal; Schultz seemed focused on helping his customers and workers attain the heights to which they aspire. The title of the HBR piece says it all: “We had to own the mistakes.” Owning up to accountability and responsibility are essential if one is to lead.

I’m still happy to have a Whole Foods within walking distance as are better than most at everything from vegetable selection to worker compensation, but I’d welcome a change at the top. On the other hand, I am glad to have Schultz at the helm at Starbucks and will feel better as I quaff my latte knowing that he refused to cut worker health care benefits during the downturn. It was just one of the ways that he stayed focused on long-term value (and values) and stood up to the demands of investors during the turnaround. I have no such confidence that Mackey would show similar strength.

What do you think about the CEOs value to the brand? Am I making too much of the actions of either Schultz or Mackey?

Introducing Rep. Markey

I had the pleasure of introducing Rep. Edward Markey for his opening keynote at the recent Executive Council Sustainable Cities leadership forum. Markey has been at the forefront of the Congressional response to the Deepwater Horizon oil spill in the Gulf of Mexico, is the co-author of the Waxman-Markey climate change bill, and author of the bill that increased auto mileage standards for the first time in three decades. The League of Conservation Voters calls him the environment’s best advocate in Congress.

Markey gave a fiery address about the need for the U.S. to become the leader in alternative energy. What I found interesting was his view that regulation can be a catalyst to those efforts. While many business leaders think that regulation in anathema to innovation, Markey disagrees. He pointed to his prior work on the Telecommunications Committee that shifted a segment of the broadcast spectrum into commercial use for cellular and other wireless communications. Without that regulatory move, the cell phone and broadband revolutions would have been greatly slowed or might never have happened at all.

The lesson is that the private and public sectors can be catalysts for each other. The private

These self-interests can, however, become enlarged interests that can have an impact far greater than the sum of the interests of the parties. Sustainability is a system-wide challenge that effects all sectors of society and will require efforts across all of those sectors. Climate change does not respect national borders nor is it particular about the tax status or brand image of the entities on which it has  impact. Our response must be equally broad in its view and intention. Sustainability professionals and advocates must have great peripheral vision.

Legislators must keep citizens’ interests first and foremost and there are times when Congress needs to give both businesses and regulatory agencies a whack in the back of the head (see: oil spill, Deepwater Horizon). But at other times they must give the free market a nudge to get nascent industries off the ground. They shouldn’t micromanage but they can open macro possibilities.

I found Markey’s message to be hopeful and constructive in that it spurred my thinking on how public and private leaders can be complementary as well as adversarial. Each has a role to play in the sustainbility revolution and each can spur the others toward productive action.

One of the more intriguing themes that coursed through the dialogue at the Sustainable Cities forum was the importance of a holistic view of corporate impact. IBM, the event’s co-host promotes such a perspective through its Smarter Planet and Sustainable Cities work. Rich Lechner, IBM’s Vice President of Energy & Environment, spoke with Fortune’s Brian Dumaine about the infrastructure challenges ahead for electric vehicles. The cars themselves are simply the beginning and any solution must incorporate myriad considerations for recharging, battery exchange and disposal, and other issues that will involve auto manufacturers, utilities, city planners, and many others. IBM is embracing the complexity as the first step to simplifying the solution.

He also spoke about the famous example of UPS eliminating as many left hand turns as possible for its drivers.  Yes, the move saves fuel and time — but it also improves public safety as left-hand turns result in more accidents than do right- hand turns.  Public safety is a critical component of a sustainable city and not one that should be relegated solely to law enforcement or public health officials.

Scott Vitters (Coca-Cola) and Harry West (Continuum) also addressed the broad view during the Sustainable by Design panel. Vitters noted that Coca-Cola believes that its accountability goes from the acquiring the raw materials for its products through the fate of its containers after use.  Vitters’ charge is packaging and he explained that the company is engaged in everything from developing bio-plastics to the recovery of used cans and bottles.

West, CEO of the design firm Continuum, offered the example of the Preserve toothbrush, a product his firm helped design. The toothbrush is made from recycled yogurt containers and other  #5 plastics which saves significant amounts of water and energy when compared to virgin polypropylene. Its package is also a postage-paid return envelope that lets the brusher easily return the used toothbrush for recycling.

“Preserve doesn’t just help consumers think differently about toothbrushes,” West said. “It helps them see new  possibilities in all products and product life cycles.”

In the afternoon, Relina Bulchandani of Cisco spoke about an “ERP (enterprise resource planning system) for a city,” which expressed the idea of enabling transparency and usability for the vast reservoirs of data being generated in cities.  Cisco’s work with client companies involves improving decision-making by improving data flow and unlocking discreet pockets of data that might exist in a single department so that a broader number of users can benefit from them. A city is like this only with more players and more fixed boundaries between entities as some data exists with public sector agencies and some with utilities and other private sector organizations. Bulchandani, participating on the Data-driven City panel, discussed the importance of bringing all of this data together to optimize system performance, minimize environmental impact, and maximize benefits to citizens.

Each of these perspectives was distinct yet, refreshingly, acknowledged that for cities to be sustainable, organizations and individuals must think and act across a broader purview that takes  externalities and full life-cycle impact into consideration.

Jonathan F.P. Rose, founder of the green real estate and development Jonathan Rose Companies, delivered an inspirational capstone address at the Executive Council Sustainable Cities leadership forum earlier this week. I served as editorial director for the event.

Rose asked participants to close their eyes and imagine the city they’d like to live in in 2040. A few minutes later, people reported back what they’d “seen”: green space, children playing unsupervised, transportation that was accessible but not intrusive, successful locally owned businesses, a short distance between work and home (“No one ever visualizes a long commute,” Rose quipped when hearing that last contribution.).

What was interesting was that though the participants came from different industries and geographies, their sustainable urban ideals were remarkably similar. They were human scale and community oriented.

Rose explained that we all have three hard-wired motivational “systems” in our brains. The first is triggered by fear: the amygdala-controlled response to a threat that generates a fight-flight-or-freeze response. The second is incentive-based: the delight one gets from buying a new car or getting a raise. The pleasure is intense but short-lived: for example, a person getting a raise will reset their expectations about pay in approximately two weeks and the raise will no longer be a source of pleasure. The third is affiliative. It is where we feel love and comfort. This is where we get the pleasure from being with a family member or pet — or in a community. It is long-lasting and satisfying.

Unfortunately, Rose said, the processes used for most urban planning do little to engage that last system and may be why we get so many unsatisfying urban spaces. Regulations — from height restrictions to open-space requirements — operate in the “fear” space. Incentives like tax breaks operate in, you guessed it, the incentive space. That’s where things most often stop. Rose mentioned that his development often have higher-than-market-average occupancy rates because they actively work to operate in the affiliative space through community building.

Rose echoed what Neil Takemoto, founder of Cooltown Beta Communities, had said on the Sustainable by Design session earlier in the day. Takemoto crowd sources urban spaces which, he explained, is all about understanding the values of the people who will use a space and then incorporating those values into the design (for some examples of what this looks like, check out Neil’s Cooltown Studios blog — he tracks projects around the country that live into this approach).

Most urban development is an engagement between institutions: city agencies interact with development companies who in turn engage with big banks, retail chains, and other large entities with little investment in the people who will inhabit a particular space. They are concerned with maximizing the revenue per square foot or building and leasing a structure as efficiently as possible. Making money and being efficient are not bad things, in fact they are essential to community viability, but they cannot be pursued to the exclusion of the human factors that will ultimately determine the vibrancy and sustainability of a community.

Close your eyes and imagine your ideal urban community. What do you see?

Alison Brown

I recently had the chance to interview Alison Brown and Garry West, the husband-and-wife team who run Compass Records in Nashville. I’ve known Alison since I recruited her to speak at a Harvard Business Publishing Burning Questions conference in 2003 — who could resist the story of an investment banker-turned Grammy Award-winning banjo player-turned record label founder? It was a tale of a passion for music that would not be denied and that turned not into a lark but into an ultimately more rewarding career.

I also interviewed her for Worthwhile magazine (Worthwhile A Brown interview).

I was in touch again recently because I am working on a book on leadership and wanted to get Alison and Garry’s insights into what it is like to lead people over whom you have little authority — musicians certainly fit the bill. While I have to save most of the leadership insights for the book, I did want to share part of the conversation that I found fascinating: the decision on whether to use an artist’s road band or session players when recording an album.

The road band will give you an original sound but there may be egos and agendas to manage. Session players will show up, and get it done in a couple of takes — but the sound can be a bit generic because they move from studio to studio all day playing what they are asked to play.  The road band will be invested in the music but they may also be interested in pushing themselves forward rather than serving the music (this is their big chance to record, too). Session players are expensive, but they’ll get job done fast (and studio time is costly) and can adapt easily to changes made during the session. Road band members are less expensive may not have a lot of formal training — or may not even read music — making it hard to adjust during the session.

The producer — the leader — must make these decisions and unite whichever team is assembled into a unit that will create the best end product that will satisfy the label, the artist, and the listener. This may include convincing the lead talent that some tough choices have to be made.

The next time you listen to a song think about all that had to go in to making it worth listening to. It is more than a catchy melody and a lyric that resonates. It takes real leadership.

Photo: Wikipedia Commons

New York is Going Green

I’m serving as editorial director and moderator of the upcoming Executive Council Sustainability Leadership Forum –  Sustainable Cities: Smarter, Greener, and More Competitive. It has been an interesting event to put together as I’ve interviewed and recruited speakers from companies like Autodesk, Coca-Cola, IBM, Cisco, ARUP, and many others. I’ve learned a lot and look forward to a day of rich, robust discussion.

Amanda Crater, founder of CraterCom, recently interviewed me for apodcast preview of the event: Eric McNulty-Sustainable Cities.

Executives from these large companies all have highly polished stories to tell. Their firms are doing good work and the impact that can be had at the scale at which they operate is significant. My editorial challenge, of course, is to puncture the polish. Not to play “gotcha” but to be sure that the audience gets the insights it needs.

I’m working on my queries: What will the long-term implications of the Deepwater Horizon oil spill be for business in general — not just the extractive industries? Must the cities of the developed world go “brown” before they go “green”? What sustainability opportunities with short payback windows are businesses overlooking?

What are the questions you’d most like me to ask of these executives?