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All opinions are my own.

Thursday, January 1, 2009

“Bail out or Hand out” is not the answer but Innovation and Conservation is.

Recent turmoil in the financial markets is taking its global toll. However, this event, once in lifetime event, is also giving us a message and presenting us with an opportunity. The message is “It is time to have innovative technologies that also conserve our resources”.

US Automobile industry lost its focus when it quit innovation in sixties and were not farsighted to raise the fuel efficiency. They fought tooth and nail against raising gas mileage standards. Japanese came with better quality, pizzazz and hybrids. But Detroit thought it was not a good idea to have a “better idea”.
Lately we have read about plants of many chemical companies being shuttered for lack of demand. We will probably hear more such closures before things come back. Bankruptcies would be there also.

I wonder if the closures are a reflection of not having the best technologies to manufacture the products. Had the technologies been such that the feed rates could be lowered or increased to meet the prevailing demand, plant shutdowns could have been avoided. Lack of the best methods suggest that there is an opportunity to have better manufacturing technologies. Better equals high conservation i.e. produce more from less.

Pharmaceuticals, which are disease-curing chemicals, cannot think conservation when they are able to make their profit margins on “human desire” to extend their life. Poor yields, high in-process inventory and producing quality only by checking every milligram are acceptable suggest significant opportunities. Consumer pays for every in-efficiency e.g. inventories, poor quality and costs related with inefficient use of their raw materials. In 2007-2008 we saw loss of employment and knowledge base accelerate. When a pharmaceutical company can close more than 50 plants, it suggests that companies have technologies that need total overhaul. They need to develop and implement technologies for their survival.

Their blockbuster model is dying on the vine and their new product pipeline is heading from gusher to a trickle in the next few years. Pharma needs to create a new business model. Due to toxicity of their chemicals Pharma needs to improve their manufacturing technologies to levels better than “non-disease-curing” chemicals. Higher yields mean higher profitability and less effluent or/and emissions in our eco system.

In my recent trip to China, I saw electrically charged bikes to move around town. Similarly in Europe and China they have low cost and simple solar water heaters on their rooftops to provide them with the hot water for their daily use. Roof top heaters do not look esthetically bad but tell us the inherent character of inhabitant’s and their nature to conserve and use nature’s gift of sun’s heat. A missing rooftop heater suggests a “missing link”. Communities in US have prevented such installations with the thinking that they look ugly and will lower real estate value. Esthetics is more important than conservation.

Chinese company BYD is introducing an electrical car and an Indian company TATA is introducing about $2500.00 car. This suggests innovation is possible if we step up to the challenge.

We need to move from a “consumption zealots” to “conservation zealots”. Conservation and preservation will not result in any hardship but will lead to innovation that will improve profitability. Present slow down is the best time to innovate and we need to spend effort so that we can reap benefits in future.

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