What We Learned in the Rainforest: Business Lessons from Nature

WHAT PEOPLE ARE SAYING

What We Learned in the Rainforest is a monumental piece of work. All the knowledge we need to create sustainable, profitable businesses is right there in the forest, if only we can learn from it. Kiuchi and Shireman show us how.

—William K. Coors, Chairman of the Board,

Adolph Coors Company

A fascinating book bridging the chasm between business and nature by two people who have been there and done it. Immensely readable—a must for anyone who cares about profit or a livable world.

—Dee Hock, Founder and CEO Emeritus, VISA,

Author of Birth of the Chaordic Age

Business has much to learn from the natural world, and there are no better teachers than Tachi Kiuchi and Bill Shireman. Their book guides companies through the sustainability jungle, helping them see both the forest and the trees. Their message is clear and concise: To prosper in the 21st century, businesses of all sizes and sectors must heed not just the laws of governments and the marketplace but also the laws of nature.

—Joel Makower, Co-founder, Clean Edge, Inc.,

Editor, The Green Business Letter

Tachi Kiuchi and Bill Shireman offer a wonderfully fresh perspective on sustainable development. They explain potentially mind-twisting phenomena in a very entertaining, story-telling style that draws on, of course, what they learned in the rainforest but also sheds light on some things they couldn’t possibly have learned there … such as what some very innovative companies are doing in Colorado, Minnesota, and The Hague. An important contribution to a rapidly moving field.

—Matthew Arnold, CEO, World Resources Institute

WHAT WE LEARNED IN THE RAINFOREST

Business Lessons from Nature

INNOVATION, GROWTH, PROFIT, AND SUSTAINABILITY AT 20 OF THE WORLD’S TOP COMPANIES

A Future 500 Book

What We Learned in the Rainforest

Copyright © 2002 by Tachi Kiuchi and William K. Shireman.

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First Edition

Hardcover print edition ISBN 978-1-57675-127-5

PDF e-book ISBN 978-1-60994-174-1

IDPF e-book ISBN 978-1-62656-228-8

2013-1

Copyeditor: Stacey Sawyer

Text design: Detta Penna

Compositor/production service: Penna Design & Production

Indexer: Joan Dickey

Cover design: Mayapriya Long, Bookwrights

Table of Contents

Preface

Acknowledgments

INTRODUCTION How Can Business Profit from Nature?

PART I

Principles in Nature That Maximize Performance in Business

PART II

How to Use the Principles: Strategy, Tactics, and Tools

Bibliography

Index

About the Authors

Preface

How can business profit from nature? Here’s what we used to think: Business can profit from nature by conquering it and bringing it under human control, where our machines can turn its resources into products that we can buy and sell.

This approach delivered enormous wealth to people in the industrial age. But in the emerging economy, nature is not an enemy to be conquered. It is not a bank of wealth to be withdrawn from until used up. The energy and materials we extract from nature now offer business less and less value at higher and higher cost.

In today’s economy, nature’s real value to business lies in the lessons it teaches. Nature is a source of knowledge; an R&D lab with 3.8 billion years of product development and demonstration behind it; a storehouse of powerful principles that humanity can tap to cultivate more profitable businesses, a more abundant economy, a richer culture, and more fulfilling lives. By drawing on the physical resources of nature—extracting trees from its forests, minerals from its mountains, and fuels from its crust—business can profit for a day. But by drawing on the wisdom of nature—the principles that enable it to create extraordinary abundance in the face of extreme limits—business can profit over many human lifetimes.

This, therefore, is a how-to book about business—how to improve the bottom-line performance of business, economically, socially, and environmentally, by applying principles of nature. As we move beyond the industrial economy toward a more knowledge-based economy, business is beginning to recognize that the real profit to be earned from nature comes from the principles by which it flourishes—perhaps because in a knowledge economy, businesses run not just on fossil fuels and raw materials but on ideas, information, and inspiration; they begin more and more to resemble the creative systems of nature—systems like the prairie, the coral reef, and the rainforest.

In What We Learned in the Rainforest, we discuss the principles by which businesses maximize performance in the new economy, principles that became clear to us in our visits to the rainforests of Asia, the Pacific, and the Americas, and our observations of their application by business. Our thesis is that the old model of business—the machine model that pitted business against nature—is growing obsolete. In the emerging economy, businesses excel when they emulate what they once sought to conquer. They maximize performance as they become like nature, like a complex living system. In the process, they are changing our society’s relationship with nature. By moving beyond the industrial, machine model and applying the dynamic principles of the rainforest and all complex living systems, businesses can learn how to create more profit than ever, and to do so sustainably.

We use nature as our model for emulation not because the rainforest is always a place of gentleness and cooperation—it isn’t—but because in the patterns and cycles of the rainforest we can learn how the less savory, destructive phases we see in nature can evolve toward more creative, value-creating, life-affirming patterns. The question is not whether we will change, but when and how and with what level of discomfort and pain. If instead of controlling nature we listen to and learn from it, we can find our way with minimal pain and maximal gain.

To teach the principles of business as a living system, we use a personal approach. Each chapter is structured in the same way. It begins with a short segment of a continuing story to highlight a single principle or method. We then illustrate the principle with a lesson from the rainforest. Then, through a business case study that walks you through the business rainforest, we show how the principle or method can be practically applied.

The book is divided into two parts. The first presents core principles that maximize the performance of living businesses: feedback, information, profit, design, diversity, succession. The second describes how to apply the lessons learned in the first part. It provides a tool set for business management, measurement, strategy, and tactics.

To start off the book, we jump out of an airplane high above the rainforests of Costa Rica and begin our descent to the ground, where we plan to join our colleagues and start our exploration of the forest. We continue the story of our descent at the start of each chapter. The fall to earth is a metaphor for the fall of the industrial economy toward ecological limits, in a manner similar to the way in which the rainforest is always falling toward its limits. What happens on the way to the ground is what happens in nature and the economy as they speed toward their limits. They can slow their fall, change directions, gain capacities, and occasionally even reverse directions, at least for a time. We can do the same.

TEN POINTS ABOUT OUR PERSPECTIVE

You can understand our message—and develop, improve, or depart from it—if we tell you ten things about our ideas right away:

• First, we see humanity as a part of nature. Some scientists insist there is a solid line of demarcation that divides humanity from nature. We disagree. Humans do have some unique characteristics, as do other living things—but being a distinct creation of nature does not cancel our family membership.

• Second, because humanity is a part of nature, we see business as a part of nature, too. Not everyone agrees. Some people point to the profligate waste perpetuated by business, the over-consumption, pollution, and destruction, and find it offensive to call this natural. We take a different view. In nature, there are patterns of destruction and patterns of creation. Life learns to evolve from the former toward the latter; business can, too.

• Third, at its best, business is a noble endeavor. Some people believe that business is intrinsically amoral. Others insist that, because of its drive to maximize shareholder profit, business is not just amoral, it is selfish and immoral. A more enlightened understanding tells us that business is a living community: It exists to serve the whole as it serves its parts. Profits are a means to this end, not the end itself. The trick is to align the three parts of what John Elkington of SustainAbility calls the triple bottom line: economic, social, and environmental gains.

• Fourth, since business is a natural living system, the principles of living systems must apply to business. If they don’t, it doesn’t mean business isn’t natural; it means we don’t yet fully understand natural systems. Science, not nature, needs to catch up. If human institutions such as business don’t behave as the natural sciences say they should, don’t change the definition of nature—improve the science.

• Fifth, we are optimists. Some people feel we should paint a gloomier picture, sound the alarms, pound the point home that if humanity is to survive, business must change in radical ways. We agree: We are at a point of crisis. If we fail to meet it, not only will our businesses die—we will. Because of this, our priority is to focus on positive solutions.

• Sixth, we are pragmatic. Some people believe we must advocate draconian changes. However, we don’t believe change has to seem draconian to be fundamental. It’s hard to build a tree but easy to plant a seed. Building a tree is draconian, desperate, and ineffective. Planting a seed is fundamental, serene, and easy. Where do we seek to plant the seeds? Why do we focus on big, successful, industrial-era companies? Haven’t all these companies—Coca-Cola, Coors, Nike, VISA, Intel, Microsoft, Mitsubishi Electric, Weyerhaeuser, and so on—contributed to a system that perpetuates the endless growth-and-conquest cycle that epitomizes the industrial age? Absolutely. But we are all enmeshed in that system. We all contribute to its perpetuation. Those companies need to change. If they don’t change, they will decline and eventually fail. If they do change, they can transcend their old forms and emerge in new ones. So can we. This book highlights the principles and tools we can use to change.

• Seventh, this book is just a beginning. We have not exhausted the range of actions businesses can take to profit in nature’s way. The to do’s in each chapter, especially in Part Two, are just a start. For example, although we do have much to say on the topic, in this book we say little about the laws and regulations of government. Interested readers can visit our websites and refer to other books and reports for our opinions on the flexible, incentive-oriented, market- and performance-based laws that could promote sustainable, profitable business.

• Eighth, the emerging economy, which we suggest can be more sustainable than the industrial economy, is in its earliest stages. The Internet is much more than a shopping mall serving a billion online consumers. This narrow old-school vision doesn’t represent the emerging economy, as we use the term—it’s just an extension of the old economy. Today’s economy remains largely industrial, refined by information but not transformed by it. An economy founded on information—one whose values and lifestyles reflect the idea that knowledge and design are the root source of value—is what we regard as the emerging economy.

• Ninth, we share nature’s secrets. Many people have told us they fear that if business learns nature’s profit secrets, it will have even more power to destroy the earth. We understand their concern. However, nature teaches that business will prosper more by protecting the earth than exploiting it. Indeed, as we learn nature’s principles, we become less likely to damage the earth.

• Tenth, we try to live our work. Through the Future 500 and Global Futures, we resolve conflicts and forge partnerships between some of the world’s largest corporations and its most impassioned environmental activist groups. With them we find opportunities, implement programs, and pass laws. The secret is to dig to the root cause of conflict. There you find ways to reconcile interests and to correlate economic, social, and environmental imperatives, so advances in one area serve others.

In the midst of our optimism, we still see causes for pessimism: business leaders and employees who believe they are powerless to make positive change; governments that hold on to ineffective policies, afraid to try anything new; activists conveniently wedded to old military models—essential for creating awareness and forcing action but useless without the second half of activism: change. These types of blindness sometimes make us frustrated and angry—but not for long. We prefer to focus on the opportunities that crisis brings. Our role is to point to the possible and to provide tools to get there.

Is our call-to-action drastic enough? We propose a radical departure from business-as-usual. However, to some people our steps may sound mild, easy, practical. Read carefully. They are straightforward and practical, yet they are fundamental. They lead us toward a whole new place.

To make our points, we mix business and ecological terms. To convey the concept of gain, for example, we use terms like profit, net gain, synergy, and so on. Those people who view profit merely in its monetary form or who see it as an evil product of base human activity may be put off by talk about nature’s profits. However, nature lives on profit, in the broad sense of the word. Without its extraordinary creative capacities, without the net gain that emerges with the exquisite diversity and complexity of its forms, nature would never have evolved a world that could challenge, fascinate, support, and inspire us as ours does. We also speak of nature as an entity that chooses, selects, delivers, sustains itself, and has strategies, thus personifying her. This is fairly conventional even in scientific discussions of topics such as genetics (for instance, natural selection). But this convention occasionally violates the scientist’s code that forbids the use of language that even remotely suggests a purposeful or directional quality in nature—an often-exaggerated psychological fixation. However, we use such terms for the same reason scientists sometimes do—because they accurately reflect effects or outcomes of nature’s processes and help us relate to and understand the phenomena. And we do see evidence that there is a subtle directionality in nature. The perfunctory line in the sand that writers on this issue are expected to draw seems more ideological, even religious, than scientific to us. But we don’t mean to suggest that a typical ecosystem is willful or volitional in the way a human can be.

If our point of view differs from yours, then we have much to learn from each other. We hope that by offering a different perspective, we will stimulate your thinking, you will stimulate ours, and the gestalt will bring about new possibilities. We will all profit from the exchange.

As our economy speeds toward limits and we consume more of the earth’s ecological capital than any species in the history of the planet, we are learning the principles by which we can transcend those limits, as nature does, and succeed to a more adaptive, resilient, profitable, and sustainable economy. These principles lie waiting to be discovered, in the rainforest.

Bill Shireman

Tachi Kiuchi

October 2001

San Francisco, California

In the rainforest,

where the soil is thin, minerals are scarce,

and resources are always in short supply,

life is extraordinarily rich,

more abundant and diverse than anywhere else on earth.

There is a simmering dynamism in the forest,

as organisms constantly chase the increments of sunlight, water, and minerals

that are always at a premium.

Yet through all their interplay with one another,

the plants and animals of the rainforest find their unique niches,

places where they fit better than any other,

where their specialized forms make them masters of skill and efficiency,

using just what they need of the scarce resources that are delivered to them,

just in time,

as those resources cascade through multiple stages of recycling.

Limits are a constant reality in the rainforest,

yet, paradoxically, scarcity is its own remedy.

It triggers constant feedback, learning, and adaptations that shape the organisms

and the relationships between organisms

so that an extraordinary richness of life is created.

On a constant flow of energy from the sun,

resources recycled continuously from the earth,

and nothing else but a complex and ever-changing design,

life flourishes in the rainforest in more concentrated abundance

than anywhere else on the planet.

Sometimes life departs from the rainforest for a time,

only to return there later,

for lessons that can be learned only at home.

We return there now.

Acknowledgments

We have many people to thank for shaping our thinking. In Bill Coors, the chairman of Adolph Coors Company, Doug Daft, Coca-Cola’s chairman, and Dee Hock, the founding CEO of VISA, we found executives who had taken the theories of living systems and turned them into practice in the most extraordinary ways. Coors grew a series of product lines and companies; Daft applied the ideas to increase Coke’s brand diversity, profits, and sustainability; and Hock created both the concept and the reality of a chaordic business organization, one that harmoniously blends chaos and order to serve the interests of all its members, as well as its customers and stakeholders.

William Ford championed the ideas of corporate sustainability and responsibility at one of the definitive companies of the industrial era, Ford Motor Company, to help it excel in the emerging economy. Paul Hawken also put theory to practice, first at Erehwon, then again at Smith & Hawken, and helped inspire us with his insights about The Next Economy in the 1980s and more recently with his focus on Natural Capitalism. Ray Anderson, founding head of Interface, pioneered those ideas at the world’s largest carpet tile maker. Bill Green did the same in the chemical industry and proved its profit potential.

We would also like to acknowledge business and systems thinkers who have profoundly shaped our ideas: Tom Peters, Peter Drucker, Arie de Geus, Murray Gell-Mann, John Holland, Brian Arthur, Amory Lovins, Brian Tracy, Ichak Adizes, and Kevin Kelly.

Randy Hayes of Rainforest Action Network (RAN) and Michael Marx of ForestEthics provided the motivation and inspiration that got us to the tropical rainforest in the first place. Linda Coady of Weyerhaeuser and Chris Hatch of RAN introduced us to the temperate forests of British Columbia. Professor Ryoichi Yamamoto, the director of the Center for Collaborative Research at the University of Tokyo, and Peter David Pedersen, the president of E-Square Inc. in Tokyo, helped us to understand some of the principles at work in nature and in business. Joel Makower and Fritjof Capra turned systems theory into practical business ideas, each in his own way, at our Industrial Ecology conferences. Janet McElligott, a Republican environmentalist and exotic species in her own right, deepened our understanding of how to help developing economies leapfrog over the industrial stage to economic models that protect the environment and preserve local cultures. Together with Lynn Scarlett of the Reason Foundation and now Assistant Secretary of the U.S. Department of the Interior, one of the sharpest systems thinkers we know, they helped us integrate the ideas of systems thinkers from the often-antagonistic free market and deep ecology communities, a necessary synthesis whose potential is only beginning to be appreciated. And Drexel Sprecher of American Renaissance, an information age political philosopher, applied his innovative models and analytical tools to sharpen our discussions of the generic dynamics of change, information technology, and values.

For helping to shape this book, and believing in it, we thank Jeffrey Kulick, James Turner, Janet Coleman, Adam Davis, Mandy Blake, Karri Winn, Monica Bernardo, Cate Gable, Charlie Banks-Altekruse, Nikole Wilson, Steve Cassel, Aileen Ichikawa, Augustine Koh, John Van Gigch, Lou Capozzi, Joe Gleason, Jill Farwell, Christine Rosen, Bettina Murphy, Jay Harbison, Marti Kaplan, Sharon Maves, Molly Kicklighter, Alis Valencia, Sara Shireman, Eldee Stephens, Darcy Riddell, Don Yacktman, Morley Winograd, and Paul Wright. Julia Tindall planned some of our rainforest expeditions and helped make them adventurous, powerful, and fun. Peter Barnes, cofounder of Working Assets, provided a place for us to think and write at his Mesa Refuge writers’ retreat; Ward Mailliard and Brajesh Friedberg of Mount Madonna Center were equally generous with their site. Detta Penna and Richard Wilson gave the book its distinctive design. And Steven Piersanti and Jeevan Sivasubramaniam at Berrett-Koehler supported the project with enthusiasm and became our publisher of choice.

We greatly appreciate the contributions and support of all these people. Any errors or misconceptions in the work are solely our own.

Most of all, we thank our families and friends for supporting us during the five years—well, six years—it took us to complete this one-year project. From Bill to Aileen and Samantha, and from Tachi to Kyoko, who give us what we need more than anything, go our love and appreciation.

INTRODUCTION

How Can Business Profit from Nature?

To profit in the forest, harvest the ideas.

Falling toward the limits of Earth, we learn how nature rises above them.

In midair, we stepped out the open door of the plane, or, more accurately, were pushed out by our guides—three, two, one, go—and began the long, quick descent to the ground more than two miles below. We were traveling at 120 miles per hour, but oddly it didn’t feel that way. We were so far above the ground at this point that we seemed almost to be lying motionless in the air, face down to the ground, the wind rushing up from below us, pillowing us in mid-air. Of course, we were free falling, through relatively calm air; the wind effect was generated by our descent through it, as gravity hurried us effortlessly toward the solid ground below.

As we looked around from our unusual vantage point, to the east we could see the mountains of Corcovado and to the west the vast expanse of the Pacific Ocean. Corcovado is an old-growth rainforest on the Osa Peninsula in Costa Rica, the one we would explore later that day. Far beyond our view, on the opposite (Caribbean) side of the country was another, younger forest that we would visit a few days later: Tortuguero.

Jumping out of the airplane marked the beginning of our expedition into the rainforests of Costa Rica, of our most recent exploration of the future of business