February 25, 2009

Is the Recession Good for the Environment?

In light of the recession, companies are more concerned with finding the cheapest mode of travel than the mode with the smallest carbon footprint. As companies cut their travel budgets, though, will they increasingly turn toward far-greener technological substitutes like webinars and video conferences? Will this be just the push required to get consumers to change their behaviors, allowing these technologies to disrupt the business travel industry?

Last night, I read
this article, entitled "Recession May Harm Green Business Travel, Survey Says". The article reports that, according to a recent poll (details in the article), CSR in general will continue to grow, despite the recession, but some specific initiative, including green business travel, are likely to be cut to save money. In particular, "the survey found that 79 percent of companies rate cost-cutting as a high business travel priority this year, versus 17 percent for whom environmentally sustainable travel is a high priority."

Green travel, while not explicitly defined by the article, seems (as one might expect) to include travel decisions made with consideration for carbon emissions, such as choosing high-speed rail over flights. According to the article, it has "has not yet taken hold among a majority of companies". The article quotes Yves Weisselberger, CEO of KDS, an expense management company in Europe, as follows: "At this stage, green travel choices remain scarce and are usually more expensive." He goes on to say, "Longer term, though, the picture is brighter—companies clearly want to do the right thing through CSR, so once the financial premium is erased, or the economy permits, we should expect to see green business travel become far more popular."

I have to say, I was surprised when I saw this article and its gloomy view of the present situation. In the past month or so, I've noticed that the recession has caused a number of companies to institute travel bans. (
Here's an article about a decrease in business travel in the UK; if anyone can back up my anecdotal observations about a decrease in business travel in the US, would you please post a comment?) I'm clearly not an expert in carbon footprints, but I feel comfortable concluding that a reduction in travel is better for the environment than a shift toward green travel.

This got me thinking about what companies will use as a substitute for travel. If they had been willing to shell out cash for place tickets in the past, they must have had a job they needed to do - what are they now using to do that job? I bet their solutions will include an increase in the usage of videoconferencing, webinar tools, and similar technological solutions. (In fact, the above article about travel in the UK mentions a rise in video conferences.)

I recently had the opportunity to participate in an online conference/presentation (appropriately, as part of a Proctor & Gamble case competition focusing on sustainability). I have to admit, I was dreading it. The format of the event required each of the five participating teams to present a PowerPoint and video which we'd submitted in advance, and then to go into four or five virtual "breakout rooms" to discuss each presentation in small groups. Between the competing students, the people running the competition, and the P&G executives that were judging us, there must have been at least 25 participants, in literally as many different locations around the country. It just sounded like a recipe for chaos. Instead, I was very pleasantly surprised. The presentations all went smoothly, and in my breakout room, we had a really productive conversation, aided by a "whiteboard" where the moderator could take notes that all of us could see and a polling function. The only equipment we needed to participate was a computer, an internet hookup, and a phone line.

I'm taking a course this semester that's taught by
Clayton Christensen, the mind behind the theory of disruptive innovation. As I was thinking through this post, it occurred to me that this is a classic illustration of that theory. I can't do the whole theory justice in this post (I HIGHLY recommend the book The Innovator's Solution, which is the backbone of our class), but here's a short and rough analysis:

Travel is great. It is the best way to do the job that companies need done when they put their employees on planes, trains, and automobiles. That said, it's fairly expensive, so not everyone can travel, and companies won't use travel in every situation - because, in those situations, physical travel over-serves their needs. Tools like webinars and videoconferencing are not great. They simply are not as high quality as truly being in the same room as the people on the other end of the phone line or computer screen. I've certainly observed this myself in my previous role as a consultant - absolutely nothing builds relationships like face-to-face communication. Furthermore, these tools have historically been frustrating, with frozen screens, dropped calls, and other bugs. However, in situations in which travel is too expensive relative to the benefit it offers - that is, when the customer is being over-served by traditional travel, these tools are a great alternative.

The issue is, though, that the current context isn't static - instead, both travel and these travel substitutes are getting better over time. That means that I can fly where I want to go faster, more easily, and generally better. (Well, that's the theory at least - I guess the idea that all companies improve their products on an ongoing basis might not quite take into account increasing security regulations - but think back to travel several decades ago, and this is more or less true.) At the same time, webinars and videoconferencing tools are getting better, too, so that they more and more and more meet my needs. Of course, my own expectations are increasing over time, but not as quickly as the quality of both my travel options and my travel-substitute options.

Someday, the travel-substitutes will meet and then exceed my needs. Real travel will still be better, but since the webinars and videoconferencing will be more than adequate, while at the same time cheaper, why would I bother to get on a plane? Webinars and videoconferencing will have successfully disrupted physical travel.

In reality, of course, it might not be quite so simple. There will always be reasons that I might want to be someplace in person. In general, though, I buy into this theory enough to believe that technological substitutes for physical travel will certainly steal market share from real travel in the long run. With the same disclaimer that I couldn't tell you the carbon footprint of a webinar, I can only imagine that this would be a strongly positive change for the environment.

So what does any of this have to do with the recession and the article about green travel? My number one takeaway from my introductory marketing class last year was this: It's really, really, really hard to get consumers to change their behavior. You might have a product that would seriously benefit them, but if it doesn't fit into the way they currently live their lives, you have a major uphill battle to get them to adopt it.

To illustrate this concept, I'll go back to my experience in the case competition. I didn't want to use the online tool. I wanted to just stand up in front of the room, make my presentation, and meet in a real breakout room with people who were really there with me, just like I've done in the past. When I was forced to adopt this new technology, though, I found that it met my needs, and I would absolutely use it again.

If the recession is forcing companies to cut their travel budgets, it may be the push they need to adopt technologies that substitute for travel - the push they need to change entrenched behaviors. In fact, in researching this post, I came across
this article from 2003, when we were emerging from the last recession. The article reports that airlines were likely to benefit from the economic recovery, but that "it may not deliver the rebound in business-travel spending they wish for", because companies were likely to continue to use cost-cutting measures they had adopted in the face of the recession, including video and web conferences.

If this theory pans out, the recession may be just the jumpstart needed not for green travel, but for green travel substitutes.

1 comment:

  1. I hope you're right! As someone who has spent time working internationally, I imagine that green travel substitutes could be especially helpful where relationships have already been established by traditional travel. I can't imagine really forging trusted inter-cultural relationships without the face to face.