One of the hottest concepts in strategy and management today is the idea of "open innovation." Gone are the highly secluded R&D departments funded by a single company, carefully guarding secrets from the outside and even from other divisions. In its place, in theory, are hubs of collaboration capturing ideas from customers, academia, or some guys in a garage somewhere.

Given the simultaneous growth of the sustainability movement, it's no surprise that companies are starting to combine the concepts and try to create open green innovation.

The general idea of this new collaborative approach to innovation has been kicking around since the 2003 publication of Open Innovation by professor Henry Chesbrough at UC Berkeley (see a recent article he wrote with some key examples here). But it's been gaining real currency in recent years as (a) large companies such as Procter & Gamble and IBM have embraced the concept, (b) the platforms for accessing many brains through social media have evolved, and (c) companies have looked for low-cost innovation pathways during tight times.

The green shade of open innovation has appeared more recently. Earlier this year, Nike, Best Buy, Yahoo!, and a few others launched the GreenXChange, an organization dedicated to sharing patents and ideas that can help companies reduce their environmental impacts. The core non-corporate partner is Creative Commons, the godfather of modern idea sharing and an organization "dedicated to making it easier for people to share and build upon the work of others."

I met some of the key players in the GreenXChange consortium — and saw Professor Chesbrough speak — at the recent Sustainable Brands Conference. Nike managers described how this fascinating agreement to share patents works in practice. Earlier in the 2000s, Nike had developed a "green rubber" that lowered production costs and slashed toxic emissions by 96 percent. The company offered up this technology and the Canadian outdoor equipment company, Mountain Equipment Co-op, licensed it (for what I sense is a nominal fee) to apply to its products.

Members of the GreenXChange contribute patents for new methods of production that reduce energy, water, toxicity, and so on. Each company can learn from and build on what has come before. As the Nike managers put it, companies have latent ideas and technologies sitting on shelves, not being used. Why not let others in?

Is open innovation a great thing for sustainability? A couple of major points in its favor: First, it certainly represents heretical innovation of the innovation process itself, and I'm big proponent of asking heretical questions. Second, the energy, toxicity, waste, and water challenges the world faces are so great and pressing, we don't have time to wait for every organization to discover cleaner ways of operating on its own —- we need to share information and speed up adoption of new methods and technologies. We need cooperation across traditional boundaries and open innovation to solve the biggest problems, and that means companies sharing much more than they're used to.

But I'll admit to having one major reservation about this innovation strategy. One of the core arguments for going green is that it creates competitive advantage, a logic that makes sustainability palatable to many corporate leaders. A skeptical executive would be completely right to ask, "Won't sharing our ideas level the playing field and give away the keys to the candy store?" Imagine getting your patent attorney on board. Well, Nike execs brought theirs to the conference and he talked about his personal journey to seeing the value — to society and to Nike — in exchanging patents.

I asked the manager leading the GreenXChange project my core question about giving up competitive advantage. Her logic was interesting. When the company discovers something like green rubber, "people" (meaning, I think, their employees and other key stakeholders) expect the company to do the right thing and spread the word — and so Nike does just that.

But there are certain kinds of innovations the company wouldn't share. The ideal shoe, this manager imagines, would likely be made from one material (which would greatly reduce its material use and lifecycle footprint and make recycling very easy). If Nike could accomplish this feat, the new geometry and design would be all Nike's, and thus a source of real advantage.

In the end, I come down firmly on the side of supporting open green innovation, especially given the scale and nature of the challenges we face. But for each company, the supporting logic for open green innovation will need to be balanced by a good understanding of where and when to share ideas, and which ideas are unique to the company's core competencies — such as design and branding, in Nike's case. Those latter ideas will drive profit and advantage.

For now, it seems that Nike has this delicate balancing act down.

[This post first appeared at Harvard Business Review Online]

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Note: This post is co-authored by Will Sarni (see bio below)

Last week we asked, "Is Water the Next Carbon?". Although our short answer was "no," we believe that managing water will become a critical business skill for the 21st century. Need drives innovation, so this week we want to highlight some of what is happening in the new markets in water.

First, even large companies are carving out new niches to help businesses and communities manage water scarcity.

For example, GE's investment in water technologies is well known, and its leadership stems from its ecomagination portfolio of products. GE not only recognizes the critical role technology plays in addressing water scarcity, it also understands the challenging interconnection between energy and water: increasingly, the world will be needing low-energy water treatment technologies.

Another major industrial company moving to address water risk is ITT, the world's largest supplier of pumps and systems to transport, treat, and control fluids. ITT has a stake in seeing cities and companies invest in water management, but the company is discovering a relatively low level of awareness of the need.

ITT conducted a survey titled "The Value of Water" highlighting both how much water we waste and exploring the critical gap between the current price and the real value of water. We spoke with Colin Sabol, a Vice President at ITT, about the survey and ITT's goals.

In the US, ITT tells us, about 650 water mains break each day at a cost of $2.6 billion per year. Our crumbling infrastructure on the whole loses 1.7 trillion gallons of water per year, equal to the water use of 68 million homes. On the positive side, approximately 95 percent of individual consumers said water was the most important service they received in their home. And consumers said they'd pay more for improved water infrastructure.

The business community was another story, however. Three-quarters of corporate respondents told ITT that they take clean water for granted. As Sabol says simply, "The infrastructure is literally out of sight, underground." That's why ITT has a big challenge in conveying to its customers the importance of investing in its services. But if this shift in thinking happens, the business opportunities are likely to be vast.

Secondly, it is often innovators who must lead customers down new paths, showing them new ways of managing a resource and saving money that they didn't know were possible. So in addition to large multinationals such as GE and ITT, there are a number of startups in the process of bringing new technologies to the water industry. Several of these innovators participated in recent competitions such as the annual ImagineH2O and the CleanTech Open. Both of these groups may play a crucial role in creating an ecosystem for water innovation.

This year's ImagineH20 finalists illustrate the diversity and imagination of the entrepreneurs paying attention to the opportunities in the water industry (here is a sample of these innovators — you'll see a couple themes, including capturing wasted energy in the water system).

• Agua Via developed a nanotech membrane that enables desalination at a 66 percent energy reduction and 50 percent cost reduction, providing energy efficient purification and wastewater remediation.
• BlackGold Biofuels recovers energy from wastewater streams, creating lucrative renewable energy assets from pollution liabilities.
• FogBusters treats petroleum, biofuel and food processing wastewater "better, faster, cheaper, cleaner and greener" while capturing the FOG (fat, oil and grease) to make into biodiesel.
• NLine Energy, Inc. converts wasted energy found in water transmission and distribution systems into renewable energy.
• Puralytics, winner of this year's CleanTech Open, uses photochemical processes work to break down or remove contaminants from water.
• Water Resources Management Co. helps water utilities realize the full benefits of their investments in advanced meter reading, system control and asset management.

To get a sense of what companies are doing about water, check out these and other ImagineH2O finalists as well as the work of ITT and GE — they all highlight the exciting business opportunities and challenges in the water industry. It's a space worth watching as these challenges are expected to become more pressing in the coming years.

Guest co-blogger Will Sarni is a director with Deloitte Consulting LLP and leads Enterprise Water Strategy for Deloitte's Sustainability Services. He is an internationally recognized thought leader on sustainability and is the author of the upcoming book Corporate Water Strategies (Earthscan).

(This post first appeared at Harvard Business Online.)

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My monthly (or so) e-letter is out. If you don't receive it, here's a quick summary and link to the latest...

How the Auto Giants are Managing a Paradigm Shift
The auto industry is arguably going through the most significant change in its history. The race to a future filled with clean cars that use a variety of new technologies is on. At the big Detroit auto show this month, companies are falling over themselves announcing green initiatives and products.

So how are the big guys approaching this new world? The competition seems to be centered in large part on the range of the vehicle; that is, how far can you go on the battery? Here’s a quick look at the spectrum of tactics being employed...

See the full story here...

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I recently attended an Executive Sustainability Summit hosted by Xerox, Waste Management (WM), and Arizona State University. The short conference brought together public and private sector managers working on environmental and social issues. Xerox asked me to attend and give my thoughts on what I heard and saw*.

What really struck me is that both Xerox and Waste Management are doing something mostly unheard of: they're working with customers to help them use less of their traditional product or service. The plenary panel during the Summit included execs from both companies proudly talking about these fast-growing, service-oriented parts of their businesses. And what's really important is that these are not just niche product lines, but fundamental shifts in what these companies do.

In some sense, this shift is not optional, as both companies are in the throes of fundamental transformations of their industries. Xerox has been navigating the shift to digital documents for years, and WM is facing an existential threat. As CEO Dave Steiner put it, "When your company is called Waste Management, and your customers all talk about 'zero waste,' you better change your business model."

So both corporate giants are handling the industry transitions by embracing sustainability to the core. Xerox's president, North America , Russell Peacock, speaking for the company at the event last week said, "Sustainability...is what is driving the transformation of Xerox to a services-led business."

Xerox advises companies on how to save money on document handling, and holds a sizable 48 percent market share in the broadly defined, and surprisingly large, $7.78 billion "managed print services" (MPS) industry (according to research firm IDC). Part of this new strategy is an outsourcing play — they'll take over all your print needs for you — to grab share. This is clearly not a niche business-this is a firm that existed on selling devices, paper, and machine servicing, so the more it's used the better.

But at the core, what Xerox is offering is less total printing. That's a big shift in business as usual.

Xerox has worked with multinationals such as Dow (case study here) to drastically reduce the number of printers sitting in individual offices by thousands, shifting instead to many fewer centrally-located multifunction devices. But at the Summit, Xerox execs gave an example from their corporate backyard. The company helped the city of Rochester, NY slash the number of printing devices from 459 to just 168, saving a very budget-constrained local government millions of dollars over the next five years.

These printing retrofits save clients up to 30 percent of their document-related costs. And the sustainability story is significant. In addition to using less energy to run machines, slashing paper use also saves large amounts of energy and water upstream in the paper production process.

For Waste Management's part, the story their execs told was similar but goes beyond cost savings and has a measurable financial upside. When WM helps customers reduce waste to landfills — which is how WM has made all its money until recently — it diverts those waste streams to recycling facilities which segregate materials to resell or to waste-to-energy (WTE) plants.

Recycling streams can generate income for customers. So instead of paying to dump garbage, customers may get paid for valuable material, which adds up (GM, for example, has made $2.5 billion on recycling over the last five years). Meanwhile, the other stream of waste will create a potentially significant source of clean energy (adding to the sustainability win). In its WTE plants, WM now produces enough energy to power 1 million homes, more than all the solar power in the United States. From waste hauler to energy company — that's a transition for sure.

These two companies are not the only ones out there going down the "use less" path. It's increasingly common in the B2B space. Another client of mine, Kimberly Clark Corporation, has similar conversations with its customers for its K-C Professional division, which supplies paper and cleaning products to public and private sector organizations. The customers appreciate supply partners that help them save money.

Let's be clear: Xerox, Waste Management, Kimberly Clark, and others are purposely cannibalizing their own businesses. The wisdom of such a strategy has been discussed in business circles for years, most notably in the work of Harvard's Clayton Christensen (The Innovator's Dilemma). My tweak to Christensen's famous term "disruptive innovation" is to describe sustainability-driven creativity as even more heretical; it's about questioning the entire consumption model — it's heretical innovation.

It can be painful for companies to threaten their own cash cows, but what's the other option? I interviewed Xerox's CEO Ursula Burns for my last book, Green Recovery, and asked her about this strategy. Talking about Xerox's service business strategy and its "solid ink" technology, both of which displace existing printers, she said, "Will these new products cannibalize our machines? Maybe, but someone else doing it is much worse."

So the choice is not between asking your customers to use less of your product and ignoring the trend...it's between you doing it or your competitor. That's the risk reduction logic. But a related logic relies on improved customer service and deeper customer relationships. As Waste Management's Steiner said last week, "We're cannibalizing our own business to give back more to our customers."

Xerox's VP of Environment Patty Calkins probably put it best during the Sustainability Summit: "Who would think that Xerox would help you reduce printing or that Waste Management would move toward zero waste?"

Who indeed.

(*Both Waste Management and Xerox have been clients of Winston Eco-Strategies, LLC. I attended this meeting at Xerox's request. This post first appeared at Harvard Business Online.)

The forces driving the business world toward sustainability are vast, powerful, systematic…and growing. In recent months, we’ve witnessed massive climate disruptions everywhere from Russia and Pakistan to Brazil and Nashville. Resource constraints are a reality, with serious discussions about peak oil, peak coal, peak coffee, and, well, peak everything. Technology-driven transparency is creating a mad rush to capture product and company sustainability data, and companies continue to push new demands aggressively up their supply chains.

And the mega-force to beat all – the relentless rise of population and living standards in the developing world – continues unabated. So how will we provide a good quality of life to what will be 9 billion people on a resource-constrained planet?

In short, we need some very large changes to “business as usual,” requiring radically new ways of thinking.

Over the past couple of years, I’ve written frequently (in my last book Green Recovery in particular) about the need for “heretical” innovation – that is, asking very hard questions that challenge the very nature of a business or product. I wrote recently about two companies, Waste Management and Xerox, in the middle of deep transitions. From hauling waste and getting paid by the ton, to managing recycling streams and helping customers achieve zero waste goals. Or from selling as many printers as possible to helping customers reduce the number of devices and do less printing over all. Asking customers to use less of their core products – that’s heretical.

Some will point out that this is similar to the concept of “servicizing”, and of course it is. But I believe there’s a deeper heresy at work than just turning a product into a service. After all, Xerox could offer outsourced printing services and try to print as many pages as possible. It’s the combination of service and talking openly to customers about using less in total that makes it novel.

So I have a paradoxical task in mind: figuring out how to systematically and logically ask illogical, wacky, heretical, leapfrog questions. I’m looking for ideas from the assembled knowledge and experience of the sustainability leaders reading this.

My three main questions are:
1) How do we cultivate a culture of heretical innovation (how do we make it ok to ask wacky questions)?
2) How do we identify and support the true innovators, intrapreneurs, and heretics in even the largest organizations?
3) Is sustainability-driven innovation fundamentally different than ‘regular’ disruptive innovation, and how?

On the first question at least, I have a few broad ideas. Here’s a starting list for budding corporate heretics:

• Start with value-chain data to identify big risks and opportunities. With solid data, managers can focus limited resources on tackling the real footprint and drive toward new ideas and questions. For example, Pepsi’s Tropicana brand is experimenting with low-carbon fertilizer after discovering that growing oranges was the biggest part of its GHG footprint. And more famously, P&G launched Tide Coldwater to address the largest (by far) portion of detergent lifecyle emissions, washing clothes in hot water.

• Use open innovation. The hottest concept in innovation today is inviting people in to solve your problems. P&G has opened up its innovation pipeline to anyone with a good product idea. A few companies are sharing some of their best ideas (and patents) with the world – as Nike and others do with GreenXChange – and then hoping for reciprocal karma.

• Try “co-creation” (the second hottest concept in innovation and a subset of open innovation perhaps). IBM has had great success in recent years with “Innovation Jams” that allow all employees and customers to throw ideas into the mix. Cross-fertilizing people from radically different disciplines, and from outside the organization as well, can lead to some novel questions.

• Show personal leadership (walk the talk). Have senior execs take part in jams and brainstorms. Let them publicly generate wacky ideas and support pilot projects to explore them.

• Systematize innovation. 3M and Google famously set aside a portion of everyone’s time for whatever strikes their fancy. More companies should emulate this practice, but also make a point of focusing specifically on sustainability pressures.

• Award the wackiest ideas, even the ones that don’t pan out. Some public pats on the back and recognition for employees who show bravery and try new things can go a long way.

• Create competition. Sharing data on sustainability performance internally can drive real competition and learning across divisions or products. Or utilize public prizes, like the famous X Prize or the $1 million Netflix Prize.

All of these paths can help us regularly ask the toughest, most interesting questions. Only then can we match the scale of innovation to the scale of the sustainability challenge.

These are just a few ideas (after all, this is a blog, not a book). There are many more. So please send me your thoughts on how to drive breakthrough innovation and how to find the heretics in the organization. Finally, any examples of heretical questions within your organizations are very welcome. (andrew@eco-strategies.com).

(This post first appeared on Corporate Eco-Forum's site.)

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Tucked into this year's Fortune 500 issue is a short article on the annual Rice University Business Plan Super Bowl. With $1.3 million in cash, equity, and advice in play, this contest is one of the world's most prestigious and richest competitions for budding entrepreneurs. It also provides some insight into what MBAs and VCs are excited about today.

If these entrepreneurs are our future business titans, then I'm feeling pretty good about where we're headed. In short, next-gen leaders want to build businesses that solve sustainability problems. Here are a few of the 6 winners profiled in Fortune.

• 3rd Place: PK Clean from MIT designed a factory that converts carbon-containing waste like plastic into fuel.
• 4th Place: cycleWoodPlastics from University of Arkansas developed a biodegradable plastic bag to replace grocery bags, which are increasingly being banned around the world.
• 5th Place: SmarterShade from Notre Dame created an elegant technology that adjusts the tint on windows, saving on building cooling costs by preventing heat gain.
• 1st Place. TNG Pharmaceuticals from University of Louisville developed a vaccine for a parasite that strikes cattle, costing the dairy and beef industry over1 billion a year. The winning team pointed out that, compared with the current industry "solution" of ear tags to mark the sick cattle, their method is cheaper and "greener" (it reduces pesticide use and increases milk production, thus making the industry more efficient and saving lots of energy).

The other winners, FYI, were a better human authentication tool for websites and a material science innovation, a heat-resistant filter made from titanium dioxide.

So out of the six winners, call it three (and part of the TNG pitch) were green-focused. I'd say that three and a half out of six is a darn good ratio in a competition that was not intended as a sustainability contest. And these entrepreneurs are working on some of our biggest problems — buildings represent about 40% of all energy use and emissions, waste is the new frontier in fuel sourcing, and the cattle industry is one of the largest sources of greenhouse gas emissions.

Given the outcome of this year's contest, perhaps what the judges and competitors are telling us is that every competition needs to be about sustainability now. We're facing a tough future for our species if we don't turn the power of all of our institutions — business, government, academia, NGOs, and communities — toward solving our biggest challenges. Luckily for all of us, these bright young minds, our future business leaders, are excited to tackle these problems (and make gobs of money doing it).

But let me leave you with two main questions if you're a current business leader:

1. Are you ready to innovate and find solutions for our toughest sustainability challenges?
2. Will you be able to attract the best and brightest talent to your organization if you're not?

(This post first appeared at Harvard Business Online.)

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Last week I wrote about how eating less meat was the best way to reduce your food's carbon footprint. But what do you do if you want to be a responsible corporate citizen and you sell fast food? Well, I think your company would look a lot like Max Burgers, based in Sweden.

I recently spoke to Richard Bergfors, the CEO (and son of the founders) of this unusual 44-year-old "fast" food chain. With 3000 employees and about $200 million in revenue, Max Burgers is a great example of how a midsize company can carve out a profitable niche through a focus on sustainability — even in an unexpected sector.

In 2000, the company set a new strategy focused on the word "fresh." The leaders looked closely at every ingredient and reduced fat, salt, and sugar, and eliminated genetically modified organisms (GMOs) and trans fats. The menu got healthier, with multiple side options besides fries, 10 drinks with no added sugar, and a selection of darker, healthier breads. The company now sources 100% of its beef and chicken — and 90% of all its product — locally.

To explore its broader climate impact, the firm started working with Swedish thought leaders Natural Step, which, not surprisingly, identified beef as the biggest problem for the company (80 to 85 percent of the footprint). Bergfors acknowledges that industry-wide climate-friendly beef is still a long way off, so Max Burgers plants trees in Africa to offset its carbon footprint. New stores also use solar panels for 15 to 20 percent of electric needs.

But perhaps the most surprising thing this company does is try to influence its customers to buy less meat. Quick reminder: the chain is called Max Burgers. This counterintuitive strategy is the kind of heresy I love — asking customers to use less of your core product. Max Burgers accomplishes this by adding more non-meat items to the menu, prominently displaying climate footprint data in store (there's transparency for you), and suggesting customers buy chicken, fish, or veggie sandwiches periodically (a là Meatless Mondays).

In 2004, a golden marketing opportunity came along with the launch of the documentary Supersize Me, which followed director Morgan Spurlock as he ate only McDonald's food for 30 days. Max Burgers decided to launch a tongue-in-cheek "Minimize Me" campaign. A customer, much like Subway's famous Jared, ate only Max Burgers for 90 days and lost 77 pounds. Two years later, the company re-ran the promotion with multiple people competing on the Max-only diet.

The result of all these efforts is a more sustainable burger chain that's telling everyone to eat less meat, and doing so profitably. The mix of non-beef products is 30% higher than it used to be. But the profit margins are very high.

Bergfors reports that his stores are averaging 11 to 15 percent profit margins versus 2 to 5 percent at the big name competitors. He says Max Burgers is the most profitable, fastest growing chain in Sweden, expanding at 20% per year (and 5% same store sales growth) in a flat market. Granted, higher-end niche brands generally do have higher margins, but this is not an overly small company, and it doesn't seem to be sacrificing anything with its "minimize me" strategy — quite the contrary.

Of course a family run company always has more leeway to act on values (see Patagonia, the prime example). As Bergfors told me, "we've always done things a bit differently — the goal is greater than to just maximize profit." But it's still a business, and in the next breath he said, "we're profit driven and like to make a profit like everyone else...but we don't put profit first...we don't have to maximize profit and we can care for people and the planet we're living on."

But given Max Burgers' profit levels, it seems that maximizing all value, not just profits, can be darn good business.

(This post first appeared at Harvard Business Online.)

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fyi to my readers...

I recently contributed to an interesting website/online discussion, built by CNBC and Harvard Business Review (and sponsored by Shell). The topic is Sustainable Mobility and it's part of a larger series called "Energy Opportunities."

CNBC taped three people providing a perspective on mobility and posing some 'challenges' to us all. First up was Bill Ford discussing gridlock and challenges of moving people around in a crowded world.

Second is me, with a question that frequent readers of mine will recognize -- "How do we encourage heretical thinking?". My 2-minute video is totally animated, which is cool.

The third perspective comes from one of my heroes, Jaime Lerner, the former mayor of Curitiba, Brazil. He's one of the most creative thinkers on sustainable cities, and he built the first real bus rapid transit system in the world, and it's now a mass transit system in 120 cities. Lerner asks people to reimagine cities as places to mix peoples of all incomes and backgrounds.

Please swing by the site to check out the three short perspectives and comment if you like...

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In the midst of the debt ceiling debacle, the House recently found the time to vote on (and fail to pass) a bill that would've repealed the so-called "light bulb law" that raised energy efficiency standards for lighting. The mandate was considered by authors of the repeal attempt — and apparently by 233 House representatives — as a "government intrusion."

Hear, hear! I'm tired of all these higher government standards. I want to retain the "freedom" to buy a refrigerator that uses as much energy as possible (and runs on coal you can shovel into the front), buy clothes and furniture as flammable as possible, purchase food without any safety standards and take my own darn risk of e.coli. Oh, and I want drive my car without that annoying life-saving seatbelt.

Kidding aside, this vote was absurd. If the bill hadn't been brought to the floor under some arcane two-thirds majority rule, it would've passed. The House has continued its attack by trying to defund enforcement of the bill. This is a really bad idea.

It may seem heretical in today's anti-government mindset, but I'll say it: many regulations and standards are very good for business. Here are a few reasons that the continued attack on the light bulb bill makes no sense, and in fact, why we should be passing a lot more laws like it:

1. Government standards, and particularly energy efficiency standards, are, well, standard.

Quick history: President Bush, who I think was a Republican, signed an energy bill in 2008 which raises efficiency standards for all new light bulbs starting in 2012. And the anti-freedom Congressman who put those standards into the bill: Rep. Fred Upton, also a Republican (he has now, as the Times put it, "reversed his position on the standards he authored").

In short, before recent hyper-political times, this country passed bipartisan safety and energy standards for decades on everything from boilers to cars and trucks to heating and cooling systems.

Critics claimed this particular law was the end of the incandescent bulb. But the bill does not pick technologies; it says how much energy the bulbs can use. It's the classic and most effective use of government mandates: set the standards and let the market decide how to meet them.

2. Efficiency standards drive innovation and save lots of money.

To be fair to critics, the standard did effectively rule out most incandescent bulbs at the time it passed. But then something totally expected happened: companies got creative. As the New York Times reported on July 5, "Incandescent Bulbs Return to the Cutting Edge." Apparently, some people didn't get the message that regular bulbs were dead. Instead, companies like Philips — while innovating around the new CFL and LED technologies — took the 100+ year-old bulb and made it 30% more efficient and last three times longer.

This pattern in common in industries affected by efficiency standards. Look no further than the dramatic innovation in refrigerators. Art Rosenfeld, the godfather of California's energy efficiency movement, likes to show the powerful chart shown here (from NRDC's David Goldstein). Due in large part to aggressive efficiency standards, the energy use and price of new refrigerators has plummeted — all while the size more than doubled. The innovation has saved consumers many billions of dollars.

(Note: Rosenfeld's work has been at the core of California's amazing record of holding per capita energy use flat for 40 years while the rest of us increased energy use 50%).

3. The companies most affected by these standards aren't complaining that much anymore. (Hint: higher product quality and efficiency makes companies more competitive)

One of the biggest battles over efficiency is often waged around automobile miles per gallon targets. The creativity of the auto industry over the last decade or two has been driven (sorry) by higher oil prices at times. But high standards on vehicle miles per gallon around the world have been even more effective (see page 18 of this UN report for chart comparing EU, Japan, China, and the trailing US on mpg standards).

The U.S. is in this game also — the Obama administration is proposing a new rule that would force automakers to raise their fleet average to 56.2 mpg by 2025. The Washington Post reports that this rule could save us 4.7 billion barrels of oil and $705 billion over the next 20 years. Even with these benefits, we'd normally see the auto companies fight hard, and there's always haggling. But this time it's a bit different. GM has broken from the pack and indicated that it would figure out a way to meet the standard. As GM's North America President, Mark Reuss put it recently:

It's our job to [figure out] what it takes to do it. The auto industry does not get easier. It always gets tougher. That's the challenge and that's what our jobs are. If even-stricter guidelines require billions more in investment, so be it. It's not an either/or thing. It's how we get there with cars and trucks that consumers really want to buy at a [price] that doesn't put unreasonable cost on them.

GM, after lagging for many years on product efficiency — a strategy that basically killed the company in 2008 when oil prices spiked — seems to get it now. As Reuss indicates, high standards push companies toward what consumers will demand. And in a world of expensive energy and tight resource supplies, they'll want cars that sip fuel.

In short, those who complain that higher expectations on energy efficiency will "kill jobs" or be destructive to industry aren't giving our business leaders much credit. Companies can and will innovate. It's in their best interest for many reasons, including the fact that the rest of the world continues to raise the bar. Multinational companies need to keep up to stay competitive.

And it's in our vital national interest to continue getting more efficient as quickly as possible. While energy efficiency standards may not be a complete solution, they have represented a rare bright spot in the nearly defunct national energy and climate policy realm. So let's stop the silly votes, move forward, save everyone some money, and help drive innovation.

(This post first appeared at Harvard Business Online.)

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I believe in science and facing facts or, to borrow words from an important awareness-building event today, I believe in “climate reality.” I'm donating my Twitter feed and this blog space to point people to the Climate Reality Project , Vice President Gore's latest attempt to light a fire under everyone about our climate.

In my work, I try to convey the benefits of going green to executives around the world. I generally avoid talking about climate change, at least in the U.S. where it's such a political hot potato. So instead I demonstrate how profitable it is to reduce your footprint (including carbon), regardless of the science on climate change.

My basic logic is this: decoupling our companies and economy from fossil fuels, and oil in particular, is just good business. By reducing energy use and carbon pollution, companies save money, reduce the risk that comes from relying on volatilely-priced fuels, and reap the benefits of taking part in the clean economy, which will drive innovation and generate vast wealth. But it's also a matter of national security (which is why the U.S. Navy is greening itself faster than any company I know). So, no, it doesn't matter if you "believe" in climate change.

But every now and then, I have to state clearly what I believe. Saying "it doesn't matter" is true, but it's not leveling with everyone about the depth of the challenge.

So here's my belief: The scientific evidence that the earth is warming and humans are the primary cause is vast, overwhelming, and very convincing. We are destabilizing our one home, and it's endangering our economies, communities, and even our species. The fundamental change in how the planet works – which has begun already with record droughts, floods, heat waves, and storms – is larger than we realize..

I think a lot about what a "real" approach on climate would mean for business, which will play a pivotal role in finding and spreading solutions to our energy and climate challenges. While many companies have begun the hard work, they need to step up their game.

On the day-to-day level, that means setting much more aggressive carbon reduction goals (80 to 100% reduction by mid-century or sooner). A few leaders, such as Wal-Mart, P&G, and Sony have set 100% renewables (and/or "zero impact") as goals. The rest of the business world needs to follow, and truly lay out a path to get there.

On the larger level, companies need to pursue what I call "heretical" innovation that rethinks business models and provides goods and services with dramatically reduced environmental footprint (see my blogs on this, here and here).

I see a deep parallel in all of this with one of strategy guru Jim Collins' major principles in Good to Great: "Confront the brutal facts." Collins makes a compelling case that businesses won’t succeed if they don’t tell themselves the truth.

The same logic applies to each of us as individuals, and to all of us collectively as a country and planet. It's time to confront our brutal facts -- our climate reality -- and get moving.

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The passing of Steve Jobs was in no way surprising – we knew it had to be serious for him to leave the company he loved. But it’s still a shock that we’re robbed of his brain and all the amazing things that he would have invented.

I had always hoped that this once-in-a-generation genius would turn his prodigious mental powers to solving the world’s largest challenges. Imagine a Jobs-designed, must-have iCar that people would want as badly as an iPad…Or an iHome that uses drastically less energy with its iFridge and iWasher…Or how about an iCity or iTrain to tackle urban design and transportation challenges?

We’ll never get those products from Jobs, so other innovators will have to fill the void. But there is one incredibly important lesson that sustainability-minded leaders can learn from Jobs’ legacy: you should lead your customers and show them a better way.

Steve Jobs did not ask people if they could use a tablet computer. In fact, in a long list of amazing quotes from the man, one of the most powerful is this: "It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them."

Before the iPad came out, plenty of pundits asked why anyone would really need a tablet. After all, laptops were fairly small already and we had connectivity and games on our phones. Why add this midsize device to our lives? Steve Jobs made us want to.

In my experience, most large companies today are “fast followers” – a strategy that has seemingly lower risk for a public company. But just look at the playing field littered with tablet computer also-rans to see how expensive second-place can be. And yet it still seems like the preferred (or default) approach for most companies.

This fiscal and strategic conservatism breeds a culture where execs prefer to wait and talk to customers before doing anything drastic. Of course customer (and other stakeholder) perspectives are critical. But as with tablet computers, when it comes to sustainability, often the customers don’t really know what they need.

Companies often gather data on what their business customers think a sustainable product should be, and the survey might show that including recycled material is important, even if that’s a tiny part of the real footprint story. Nobody knows the value chain of your product and service as well as you do (or if someone else does, get them in the room pronto). So figure out where the impacts really lie and what you can do to reduce your customer’s footprint in ways they hadn’t considered. This might require asking heretical questions about whether the product should even exist in its current form or should be converted into more of a service.

Do most people think they need a hybrid car, or would they even imagine that they’d share a car using a service like ZipCar? Probably not, but if the experience can be made fun and profitable enough, perhaps they will. The Toyota Prius has sold well, in part, because it did some exciting new things (ran quiet on no gas at times) in a familiar midsize car framework, much like the iPad looked like a big iPhone but could do so much more.

I wish I could come up with more examples of companies truly leading with sustainable products. It’s a sparse field for now, but that will change. The next generation’s Steve Jobs will most likely focus on sustainability since that’s where the largest challenges and business opportunities lie. Consider the case of William Kamkwamba, a boy from rural Malawi, one of the poorest countries in the world. At 14, this self-taught “Boy Who Harnessed the Wind” built a working wind turbine from scraps. He’s now at Dartmouth College.

The world contains some true innovators. Will our big companies find these leaders and harness them…or be brought down by them? I know which one I’d pick if I were normally a “fast follower.”

Here’s hoping we find the next Steve Jobs quickly, someone who can bring us green things we never knew we wanted so badly. Rest in peace, Steve.