The Duality between GDP and Ecology – The Case of IKEA

The Duality between GDP and Ecology – The Case of IKEA
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When world-renowned psychologist Daniel Kahneman coined the concept “What You See Is All There Is” (WYSIATI), he did so in order to describe the common tendency to simplify the complexity of the everyday phenomena that surround us. In his own words, WYSIATI means that we use the information we have as if it is the only information. Instead of contemplating and planning based on things that we don’t know, we make do with what we do know. This concept is central to the functioning of our mind.

In our daily life we tend to give answers based only on the information we have available without acknowledging the importance of the data that is not available to us at the moment. Furthermore, we don’t necessarily consider how this could substantially alter the results of the analysis.

However, there is one duality where WYSIATI apparently has no effect, and which is perhaps the most important one for the preservation of life on the planet. It is the duality between the GDP and ecology. Although the GDP is invisible and environmental contamination is visible, the reality is that it is difficult for many political and business leaders to acknowledge ecology as the World’s priority and many still live in a state of denial regarding it.

The fact remains that climate change is real and that if we don’t do the best we can to change our behaviour, life on Earth as we know it will disappear.

So, could it be that WYSIATI does not apply to the ecology? I don’t think so. ‘What there is’, is more an issue of arrogance than ignorance. At the core of this issue is the modern tendency to pay more attention to the products rather than to the processes. Therefore, society deems it more important to inform its citizens about industrial products rather than the state of the ecological processes.

‘What there is’, is that the invisible GDP turns visible at the end of the life-cycle of the products. There are mountains of trash extended over fertile lands, islands of garbage float in our oceans and still many companies turn their heads to look the other way to search for “opportunities”. Many still hold on to Milton Friedman’s point of view where the business’s main responsibility is to increase company’s value. But Life ignores these rules. It only complies with nature’s rules, and if anything, history has taught us that in any clash between human and nature, it is much wiser to stand on nature’s side.

However, there are companies that took nature’s side and did it many years ago. They were walking this path even before social responsibility became the buzzword. These businesses had a clear vision of reality applying common sense and business strategy for the times to come. Now that this time has come, they lead not only in the “green reputation” rankings but also in the sales rankings.

One of these companies started its existence with this mentality strongly integrated into its culture. In the early days of founding his company, a young Swedish entrepreneur used to visit wood factories looking for “off cuts” (the timber to be thrown away as waste). He was asking himself what furniture could be produced out of it. This young entrepreneur was Ingvar Kamprad and the company was IKEA. Adam Morgan, who wrote the book about IKEA’s early days called this “outlooking”, or the ability to think differently. In those days of “plenty” when the natural resources seemed endless, “outlooking” was an expression of ecological consciousness.

Outlooking was an important element to the company’s culture that was constantly searching for the shared meanings that stand behind IKEA’s brand identity. Ever since 1993, IKEA adopted the environmental policy it has pursued to cope with many different ecological and social challenges. That same year was their 50th anniversary and the booklet released on that occasion clearly stated the path: “The future of IKEA will be closely linked to ecology and the environment”. Since then the company has been closely examining the life-cycle of their products. The environmental policy has become an integrated part of their business model and this in turn, feeds into their sustainability as a brand.

The future they were talking about is already the past. Now, a new element that binds economy and environment has emerged, fusing GDP with ecology. It converts sustainability into a business strategy and not just another buzzword.

IKEA’s vision of this future is embodied in the wisdom of the founder who said: “The question is whether, as an entrepreneur, I can combine a profit making business with a lasting human social vision. I like to think that it must be possible. I don’t mean to say that capitalism can avoid fiascos. I myself have been the cause of several. To fail is part of the evolution. But every day, IKEA strives to develop and achieve a better future for the people, our customers. A company goal of that kind of influences those working toward it. Studies show that people who work for IKEA believe that they really are working for a better society and that they therefore like working for IKEA. They believe that in their daily lives they are contributing to a better world.”

Ingvar Kamprad has retired from all the responsibilities in IKEA but not before he made sure that the values and culture he consolidated stay strong for the generations to come. Steve Howard IKEA’s Chief Sustainability Officer represents these values and tradition: “Sustainability will be a decisive factor in terms of which business will be here in 30 years’ time. It’s also the future of business.”

Like other family businesses, IKEA has a long-term business philosophy. They own most of their stores, factories, and the land they are built on. This makes them more aware and responsible for the actions they take and the ways this could impact on the environment. The next step for them is to produce clean energy for their stores.

This vision is not based on some altruistic utopia: “We have 3 billion people over the poverty line, coming in less than 20 years, who will have middle-class living standards”, Howard explains. “We’ve got emissions that have to peak by 2020, and then we need a rapid decline in order to stabilise the climate.”

“Knowing little makes it easier to fit everything you know into a coherent pattern”, Daniel Kahneman states. Pretending to know little about the climate change is hard to fit into any pattern. Therefore, instead of wasting time trying it, go for the clean revolution and sustainability! Because family businesses traditionally have stronger roots in society, it should take these opportunities to become the business leaders in 30 years’ time.