2 Internalizing Life Cycle Thinking in Business Strategy
Through Amalgamation of Life Cycle Knowledge
with Strategy Development Tools [1]
Human societies today need business models that allow wealth generation along
with regeneration of natural and social capital, which means going beyond the usual
financial performance focus to manage environmental, social, developmental
impacts of doing business. On top of this, Life Cycle approaches call for an
assessment of these impacts not just from production and delivery, but across
product/service life cycles from material extraction to end-of-life disposal. Given
the dominant business paradigm of profit-maximization, why would business
leaders succumb to hard sell by LCA practitioners and make life more complex for
themselves?
To be fair, Life Cycle Thinking is not new to business management. The Value
Chain concept is integral to business strategy. Based on a process view of organizations, the idea of seeing a business as a system, made up of subsystems with
inputs, transformation processes and outputs is already internalized in strategy
literature. How value chain activities are carried out determines costs and impacts
profits. While converting inputs to outputs, business organizations engage in
hundreds of activities which can be categorized as primary or support activities, and
their depiction through the Value Chain diagram is pervasive in business management literature. Thus product development requires businesses to research where
the raw materials might come from, which manufacturing processes may be needed,
who will use the product, what additional costs will be incurred during use, what
maintenance support will be needed, what types of waste will be created before/
during/after use, and where the product remnants will go when discarded. In the
LCA practitioner’s lingo, this translates to ‘designers conduct life cycle studies and
measure the potential impacts of various options, requesting information from
suppliers, calculating full life cycle cost of goods consumers purchase including
point-of-purchase price as well as costs of transporting, storing, installing, cleaning,
operating, repairing, and eventually discarding those goods’.
Despite common ground across strategy development and Life Cycle approaches, there is little uptake of Life Cycle approaches at a truly strategic level. Most
success stories about business value from Life Cycle studies talk about cost
reductions through materials/energy saving, or customer loyalty through sustainability posturing. Cost reductions accompany operational improvements, while
sustainability posturing builds image. Business leaders aren’t fundamentally
rethinking their business to increase aggregated well-being of the planet and human
society. At best, they are trying to do less harm while going about their business.
For Life Cycle approaches to qualify as tools enabling paradigm shift, like
Strategy tools, they must provide a structure to generate and evaluate strategic
options of domain selection (what business to be in) and domain navigation (how to
compete in this business). Business strategy deals with competition, business
440
E. Mieras and A. Wathelet
Through Amalgamation of Life Cycle Knowledge
with Strategy Development Tools [1]
Human societies today need business models that allow wealth generation along
with regeneration of natural and social capital, which means going beyond the usual
financial performance focus to manage environmental, social, developmental
impacts of doing business. On top of this, Life Cycle approaches call for an
assessment of these impacts not just from production and delivery, but across
product/service life cycles from material extraction to end-of-life disposal. Given
the dominant business paradigm of profit-maximization, why would business
leaders succumb to hard sell by LCA practitioners and make life more complex for
themselves?
To be fair, Life Cycle Thinking is not new to business management. The Value
Chain concept is integral to business strategy. Based on a process view of organizations, the idea of seeing a business as a system, made up of subsystems with
inputs, transformation processes and outputs is already internalized in strategy
literature. How value chain activities are carried out determines costs and impacts
profits. While converting inputs to outputs, business organizations engage in
hundreds of activities which can be categorized as primary or support activities, and
their depiction through the Value Chain diagram is pervasive in business management literature. Thus product development requires businesses to research where
the raw materials might come from, which manufacturing processes may be needed,
who will use the product, what additional costs will be incurred during use, what
maintenance support will be needed, what types of waste will be created before/
during/after use, and where the product remnants will go when discarded. In the
LCA practitioner’s lingo, this translates to ‘designers conduct life cycle studies and
measure the potential impacts of various options, requesting information from
suppliers, calculating full life cycle cost of goods consumers purchase including
point-of-purchase price as well as costs of transporting, storing, installing, cleaning,
operating, repairing, and eventually discarding those goods’.
Despite common ground across strategy development and Life Cycle approaches, there is little uptake of Life Cycle approaches at a truly strategic level. Most
success stories about business value from Life Cycle studies talk about cost
reductions through materials/energy saving, or customer loyalty through sustainability posturing. Cost reductions accompany operational improvements, while
sustainability posturing builds image. Business leaders aren’t fundamentally
rethinking their business to increase aggregated well-being of the planet and human
society. At best, they are trying to do less harm while going about their business.
For Life Cycle approaches to qualify as tools enabling paradigm shift, like
Strategy tools, they must provide a structure to generate and evaluate strategic
options of domain selection (what business to be in) and domain navigation (how to
compete in this business). Business strategy deals with competition, business
440
E. Mieras and A. Wathelet