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It would be nice to believe the economic crisis had jolted business into better ways of thinking, but there is plenty of evidence that silliness still abounds, says Peter Knight
Are we living in a “reset” world? This idea, cleverly packaged by the speech writers of GE chief executive Jeff Immelt, sounded interesting when it was delivered this time last year.
He argued that upheaval in the economy would redefine business, resetting the system and putting in place more responsible practices. The fact that Immelt’s first outing with his reset soundbite was delivered at the Business for Social Responsibility annual conference, dovetailed rather sweetly with the audience’s wishes.
So much so that BSR named this year’s conference Reset Economy. Reset World.
Nice idea, poor prediction. Two economics professors, Carmen Reinhart and Kenneth Roggoff, have now provided evidence that explodes the reset myth. The basic message of their book – This Time is Different: Eight Centuries of Financial Folly – and backed by convincing data, is that we have been here before many, many times.
I want to offer three non-academic examples.
Before the financial crisis, the US was in a characteristic frenzy of green enthusiasm. Virtually every discussion had a green tinge to it, from interior decorating and investment strategies to the growth of green television channels and the popularity of vegan designer handbags. You would think a reset recession would surely blow away all the sustainability froth. No chance.
Take the current exhibition – Design for a Living World – at the Cooper Hewitt National Design Museum in New York. It is curated by Nature Conservancy, a venerable US conservation organisation. The exhibition displays the excruciating elitism that characterised so much of the sustainability debate before the recession.
The show’s concept is laudable: find markets for natural materials in far-away places, to promote sustainable livelihoods. But instead of working with Wal-Mart or Target to find everyday uses for the wools, woods and tree saps, Nature Conservancy commissioned upmarket designers.
Missing the mark
The exhibition is composed of a series of products made from environmentally sound but overlooked materials. Two stand out as particularly silly.
Looking for uses for beautiful organic wool, Nature Conservancy commissioned a young Dutch designer who produced hand-spun yarn as thick as a mature set of dreadlocks. She then used knitting needles the size of walking sticks to knit a floor rug so lumpy that getting across it would be a climbing expedition.
Another challenge was to find new uses for the vast amount of salmon skin discarded by fisheries. Nature Conservancy asked an upmarket designer to solve the problem. His solution? Connect a lot of dime-sized disks of salmon skin to make what the world really needs: costly cocktail frocks.
Such garments have been slow movers lately as consumers have worried about the parlous state of their pension funds (called 401Ks here). But a former venture capitalist called Woody Tasch – that’s really his name – says he has found a solution to our shrinking retirement savings.
Tasch thinks money moves too fast and we have to slow it down. In the Wall Street Journal he argues that individual investors should take their lead from the slow food movement and use his investment model called Slow Money. He recommends we invest portions of our 401Ks in the businesses that make slow food: the local farmers who scrape together a living selling artisanal cheeses and obscure salads.
Tasch is far from wacky. He is a respected fund manager and venture capitalist. If we were indeed living in a reset world, Slow Money might be the way forward. But I doubt Tasch will find many willing to invest in those worthy but highly idiosyncratic Farmer Johns one meets at green markets.
One of the best signs yet that we have not abandoned our frothy green enthusiasm is displayed in the window of an upmarket stationery store in lower Manhattan. There hangs stylish rainwear made from recycled Tyvek envelopes: those indestructible sleeves of polyester that look just like paper.
It’s a reset idea: you roll up your envelope-cum-raincoat into a small ball and keep it in your bag for a rainy day. What could be greener? I rushed into the store. I especially liked the child’s jacket bearing the distinctive US Post markings. The shop assistant was unabashed when she announced the price: $245 for the child’s coat and $300 for the adult’s.
When you are asked to pay that much for a used envelope you know we must have turned the economic corner, but totally missed the reset.