Pursuing the Triple Bottom Line in the Digital Age
DowDuPont’s Jim Fitterling on Challenges and Opportunities for the Chemical Industry
A month ago, at the European Petrochemical Association’s Annual Meeting held in Berlin, Germany, Jim Fitterling, president & chief operating officer of the Dow Chemical Company, delivered a keynote address on the topic: "Building sustainable and inclusive economic growth: the value creation proposition of the chemical industry". Fitterling shared his views and perspectives on how the sector intends to contribute to shaping a sustainable and inclusive digital age. Following the speech and panel discussion Mike Reubold spoke to Jim Fitterling about chances and risks for the chemical industry in the digital age.
CHEManager: Mr. Fitterling, in your speech you shared a few observations about inclusive growth in terms of what is called the 4th industrial revolution.
J. Fitterling: Yes, and the first observation I made is that despite the hype we hear about the 4th industrial revolution there are actually three great forces – not just one – that are increasingly impacting the concept of inclusive growth and our industry’s ability to create value. Those forces are globalization, sustainability, and digitalization. Digitalization, actually, is the backbone of the 4th industrial revolution and it is accelerating the first two trends exponentially. Digitalization is helping spread a more inclusive economy by shifting technology opportunities and work globally but it also has the potential to dramatically change our industry’s value proposition.
Would you give us an example?
J. Fitterling: Sure! The great promise of the 4th industrial revolution is that it will give us even deeper connections, even deeper insights, and much different perspectives on old problems. And much of that will come from our ability to use big data analytics to target distinct issues and opportunities in reduced time cycles. Who could have foreseen our ability to bring additional value to agriculture, for example, by using better analytic tools? We are understanding – down to the farm level – how weather, soil quality, pests, plant diseases, and even erosion patterns all come together at one point in time to impact yield of a specific crop.
Another example: today, we have inexpensive GPS units in our cars, and by the way also in our phones, cameras, and music players.
If we could track every product through its life cycle with as much ease as that GPS unit tracks our vehicles, how much could we accelerate the move to a circular economy? That is the future promise of digitalization and the 4th industrial revolution.
Inclusive growth – or growth for people, planet and profit –, this idea of the triple bottom line hasn’t changed much in the past 25 years. How will digitalization impact this approach?
J. Fitterling: The broader impact of digitalization – as a catalyst for the 4th industrial revolution – is dramatically changing our approach of the triple bottom line as a guiding principle to build sustainable and inclusive growth. At Dow, we have been pursuing the triple bottom since the 1980s. Our real breakthrough came in the 2000s and later when we finally began to integrate the triple bottom line into our business models. When we began to see that the ability to positively impact some of the world’s greatest challenges intersected with our desire to grow and thrive as individual companies. In other words, we realized we could make a difference AND make a profit through two integrated approaches: Internally, by reducing waste, making our operations efficient and safer, and reducing our greenhouse gas emissions. Externally by seeing the world’s greatest challenges also as business opportunities, in other words, going into the labs to develop marketable solutions that aid mankind. That – at its heart – is the triple win. So while our commitment to the triple bottom line is as strong as it’s ever been – how we’re meeting that commitment is shifting as we move into the 4th industrial revolution. However, while new technologies are accelerating how we are approaching the triple bottom line our success is not tied to JUST the technology.
J. Fitterling: It is not just about the technology. Our success will be determined by how the entire enterprise takes advantage of these revolutionary technologies. As individual companies and as an industry, failing to understand this is perhaps our greatest risk. In fact, it is more evolutionary than revolutionary. Because what we have learned from the theory of evolution is that survival in a new and changing environment does not favor the fastest or the biggest or the most intelligent, or even the one with most of the money. Survival favors the most adaptable. Thus, how well your company adapts – or more precisely how well your employees adapt – to this new environment is what will determine how well we meet our triple bottom line commitments. We cannot ignore the risks of NOT pursuing the triple bottom line even as we pursue this digitized enterprise. The organization needs to understand the triple bottom line imperative is still valid.
“Pursuing the triple bottom line is mission critical.”
Jim Fitterling, Dow
What are those risks for the chemical industry?
J. Fitterling: If we do not pursue the triple bottom line someone else will. And once that other organization makes the connections to help people and the planet they will also collect the profits and leave us marginalized on the side.
You are talking of new market entrants spawned or enabled through digitalization?
J. Fitterling: Yes! Nearly every industry in history has thought - at one time – that it was immune to threats of new technology and new entrants. Think of the impact of Uber on taxi drivers, Airbnb on the hotel industry, Apple on the music industry or autonomous vehicles on the auto industry and on shipping. Each one of those industries has seen value migrate to companies that are using tools of the 4th industrial revolution to their advantage. Why should our industry be any different? Every juncture in our supply chain offers an opportunity for someone like an Alibaba or an Amazon to come in and disrupt our business. We may not see the impact yet but I guarantee there are people inside – and even more outside – our companies who are thinking about ways to do it better, faster, cheaper, safer, and more efficiently. They are looking for ways to disrupt our business and change the value equation.
So pursuing the triple bottom line is not just a nice-to-do – it is mission critical because the big trends of globalization, sustainability and digitalization are not slowing down – they are only accelerating our journey.