Written by Gitte Jonsdatter and Martin Gronemann, ReD Associates Copenhagen | Autumn 2009

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WHAT'S IN IT FOR ME?
Judging from the mainstream media, it seems that the world is in pursuit of a magic technology bullet to solve global climate issues. Inside our walls however, once the group of business leaders got down to discussing the real issues they face, it became clear that the biggest problems are not technical at all but a matter of consumer adoption. We didn’t need to look far outside our front door for a case in point: the number of Danish households that would benefit financially from improved insulation and/or green micro-generation solutions are more than 5 times higher than the number of houses that actually have those solutions today (the factor would be even higher most other places in the world, when local regulatory environment and pricing structure is taken into account (ReD Associates research, 2008). Technological improvements would increase the likelihood of adoption, but the real issues here are around perception and incentives.

What became clear during the event and in the following interviews with the two presenters, Bjarke Ingels from BIG and Bo Lundberg from DONG Energy is that there is not one answer but many: and they lie not in inventing a new technology, but in understanding the balance between altruistic talk and the real behavior of individuals and businesses, and in acknowledging that ’what is in it for me financially?’ is a fundamental question factors into any consumer or business expenditure, particularly in the current economic climate. Both Ingels and Lundberg believe there is a need to shift the positioning of green from being a ‘duty’ to being a reward, that sustainable solutions require a systems approach that will may force organizations to change in fundamental ways, and that persuading the mainstream to adopt sustainable alternatives will require a far more sophisticated financial model than most now have.

Forget the doomsday scenarios
For the average consumer, an ’earth-friendly’ lifestyle has long conjured up visions of Richard Brautigan, a lack of deodorant, collective outhouses, and a counter-cultural rejection of the consumer society that the majority of people in the Western World enjoy. More recently, as the movement to save the planet has become mainstream, more well-heeled connotations have adapted sustainability to consumer culture: people can visibly signal a level of care for the planet while also displaying status, by buying more expensive products that communicate ‘sustainability’ (for example organic groceries or a Toyota Prius). The real impact of their choice is often intangible however, and worse, is suspected of being false advertising and the fact remains that the products are typically inferior in performance. Bjarke Ingels spoke about the types of messages and incentives that are typically used – and sees the current eco movement as populated with doomsday scenarios: ”People are threatened with dire consequences for the planet if they don’t act, but there’s no positive side on a per-sonal level to making a change.” A case in point is homes and appliances: historically, energy-sustainable homes and appliances have meant spending more money to live in buildings that are less comfortable, less attractive, and less reliable than the non-sustainable alter-native. One side effect of this is that those people willing to make the sacrifices have been seen by the mainstream as either naive yup-pies buying into greenwashing, or killjoys reminding the rest of us how we ’should’ live.

“Going green” has to make everyday life better
For sustainable options to be truly appealing to the mainstream, Ingels believes that they need to offer value at a personal level – for both our health and our wallets: ”You need to give people a vision for something better, instead of regulating and asking them to limit what they have.” Ingels has coined a term for this philosophy of hedonistic good will: Ecolomy.
A conjunction of ecology and economy, the concept of Ecolomy is also the driving idea behind BIG’s 2008 spring exhibit, ’Yes is More’ at the Danish Architecture Center. Ingels says ”We considered calling the exhibit ”Bigamy” instead – because it’s about the fact that you can have both: a building can both be engineered to consume far less power, and yet be designed in a way that makes it enjoyable and even luxurious to live in.” This design approach, illustrated below, underlies many of BIG’s recent projects.

A holistic approach is blocked by business silos
To provide sustainable solutions that deliver Ecolomy for both businesses and consumers, a multidisciplinary approach is required. An increasingly broad range of issues needs to be taken into account, as companies are forced to understand the sociological and economic rationale for how to create adjacencies, and also integrate engineering expertise about the energy requirements of those businesses. Bo Lundberg attributes the siloed thinking in the majority of businesses to rigid organizational structures and highly refined process guide-lines. These function well for producing incremental improvements in product or business systems, but can become a hindrance when an organization shifts strategy to deliver new or holistic solutions with real market pull. Functions and capabilities may need to be re-mixed to package a consumer solution, Lundberg’s advice to other executives is to not underestimate the amount of energy needed to persuade an organization to shift direction: ”It takes a real sales effort internally to get the kind of momentum you need to make a change.” and suggests using primary ethnographic methods to get buy-in. “This was one of the most important values of taking an ethnographic approach to understanding our market. Solid evidence from people’s lives made the case for the strategy and concept: once we added a supporting business case it was extremely difficult to argue against going forward with development.”

The right economic model is the linchpin
Regardless of whether the task is to build a new building complex or to sell microgeneration solutions to households, the key to become a successful vendor of green solutions is the same: you need to understand who is making the purchase decision, who will be required to invest and who stands to profit – and to apply economic incentives that have a clear payoff to the decision-maker. Ingels sees the failure to apply classic, free-market economic theory as the Achilles heel of most sustainability programs, illustrating the point with an example of green agenda that has been subverted by a misapplied economic incentive: Denmark’s strategy to lower the number of cars on the road by heavily taxing the purchase and registration of new cars: ”We want people to drive less, so we tax the hell out of ownership. This causes people to hold onto their gas-guzzling carcasses much longer than they should, which means that our cars create a lot more pollution with every kilometer than cars in Sweden or Germany do … effectively every car is polluting more here than in neighboring countries. It would be a lot smarter to let people buy the latest fancy car – but then raise the taxes on gas significantly. People will get the joy out of owning fancy cars designed to higher emissions standards, but will actually drive them less.”

Similarly, in the building industry the lack of financial incentives for developers to make the extra upfront investment is an obstacle to sustainable building: Ingels points out that while he can prove his designs will be economical over the long term, his client is typically a short-term owner: “I can prove to the developer that the extra investment has a pay back time of maximum 10 years but because the extra savings won’t be realized while they own the building, they can’t make the extra investment.”

Cleantech is a product platform recently launched by DONG Energy, that fills not just the technical, but also the human and business requirements that Ingels and Lundberg both see as necessary in order for an offering to succeed. The technology is right, the service and message appeal to the pleasure of upgrading our homes with new appliances, as well as the desire to be ‘greener’ without making a downgrade. The most impressive aspect of the program however, is that it is designed with the right economic model: one that does not expect a homeowner to make a large investment similar to financing a home or car for a long-term gain they may not be able to realize. DONG Energy has managed to rethink the value chain of cleantech solutions by creating a partnership system consisting of manufacturers, a financial service provider, installation companies, and homeowners. The result is a value chain where all partners profit from increased sales of cleantech solutions.

Cleantech has just launched, so the success remains to be seen but as it meets not just the technical, but also the human and economic model requirements, we at ReD Associates believe it stands a solid chance of realizing wide participation. We’ll be watching its progress, and be thinking about other opportunities to re-envison sustainable solutions that speak to aspirations, fit real-world behaviours, and offer the right financial incentives for both the businesses and consumers involved.


BJARKE INGELS, BIG
Having co-founded PLOT Architects in 2001, Bjarke Ingels started his own office in 2006: BIG / Bjarke Ingels Group. Through a series of award-winning design projects, Ingels has created an international reputation as a member of a new generation of architects that combine shrewd analysis, playful experimentation, social responsibility and humor. In 2004 he was awarded the Golden Lion at the Venice Bien-nale for the Stavanger Concert House and the following year received the Forum Award for the VM houses. Recently he has been nominated for the Mies van der Rohe Award as well as the International Iakov Chernikhov Prize. Recently, his project VM Bjerget in Copenhagen, Denmark, was voted as the ’world’s best housing’ at The World Architecture Festival in Barcelona.


BO LUNDBERG, DONG ENERGY
Bo Lundberg has a background in international sales and marketing for Coca Cola, and was Executive Vice President at Toms Gruppen A/S (1000-5000 employees), a Danish candy manufacturer. In 2008 he became Vice President in the Sales & Distribution Division of DONG Energy.

DONG Energy is a full-value chain energy company, from wind farms, oil & gas exploration, power plants, through wholesale and trading, to heat and electricity sales to business and private consumers. DONG Energy operates in Northern Europe and has a Danish headquarter. DONG Energy has approx. 5,500 employees and the 2008 revenues reached $ 11.5 billion. Lundberg is in charge of the Private Market unit that is responsible for the sales of energy and energy related solutions to households.