Old fashion management

In Sweden we teach our kids their first management tool when they are around 10 years old, brainstorming, a way of turning chaos into order, at least that’s the intention. However, thank to some modern organization theorists we can now arrange the brainstorming more structured. In her book named “Organization Theory”, Mary Jo Hatch introduces the PEST method. PEST is an abbreviation for Political/Legal, Economic, Social/Cultural and Technology.

Let’s use those sectors in order to find parameters that will have influence on business due to global warming. For example political decisions will lead to smaller amount of carbon dioxide emissions in a certain region, making the prize to rise, affecting the marginal costs for companies. So we therefore put the PEST on the y-axel (see picture above) and try to weight the parameters against each other with some kind of failure mode and effect analysis on the x-axel, the shortening for the failure mode and effect analysis is FMEA. But let’s also try to find opportunities instead of just the failure mode. In the picture above we named the columns opportunities, threats (the failure) and also adding a column for the sum of how detectable, sever and the accuracy of the threat or opportunity. How the columns are to be ranked we leave for further research and instead focus on why to do this.

As explained in the previous post, “WRIs green success recipe”, a company can’t just focus on their own operations it must also consider other risks in its surroundings. Let’s use the forest product company Weyerhaeuser again to explain that environmental related risks exists also outside the mills. For example climate change might have physical effect on its main raw material, trees, such as greater damage by wood beetles because of milder winters. So in the model introduced below “increasing damage on wood due to beetles” could be put in as a threat and then the severity, possibility and rate of determination ranked afterwards.

We have also added a column of geography so that the risk or opportunity could be spread on the affected regions. We will get back to this later and also arguing pros and cons with the model. We are also aware of other existing models that are very alike the one above and will introduce those as soon as our research allows. But until then, enjoy some old fashion management in order to assess carbon related risks and opportunities.