Clever Geek Handbook
9 December 2025

The Lexus and the Olive Tree

Recommendation

In the wake of the horrific terrorist attacks against the World Trade Center in New York and the Pentagon in Washington there is a nearly universal response: "How could such a thing happen?" While it will take weeks, months or even years before that question is fully answered, journalist Thomas Friedman has taken a close look at the mindset of what he calls the "Super-Empowered Angry Men" who use terrorism as a weapon against the U.S. In describing the worldview that permits and encourages the use of violence against American civilians, Friedman identifies a scorching resentment of U.S. power, affluence and culture. This resentment has increased exponentially with globalization, which, ironically, has provided the angry men with the very tools and technology that allow them to personally strike at the U.S. After this week, there is no doubt that these men - and the violent rage that drives them - are now America’s greatest foe.

Take-Aways

  • Through the end of the Cold War, the greatest threat to United States security came from enemy states and competing superpowers.
  • In the 21st century, the greatest danger comes from angry men empowered by globalization.
  • Globalization has given individuals the motivation and means to attack the U.S.
  • Many people see globalization as Americanization - a direct threat to their cultures.
  • The angry men use the very fruits of globalization to attack the global system.
  • They adopt technology while rejecting what they see as corrupt American values.
  • Ramzi Yousef hoped to kill 250,000 people in his 1993 bombing of the World Trade Center.
  • Osama bin Laden’s terrorist group tracks news on CNN, communicates by e-mail and broadcasts to followers over their cell phones.
  • Bin Laden’s group even has a media information officer.
  • Terrorists feel they can’t change the world, so they want to destroy as much as they can.

Summary

All Roads Lead to Rome

At the height of the Roman Empire, it was said that all roads lead to Rome. But as the Romans expanded their roads into new territories, they discovered a funny thing about roads: They go both ways. The same roads that brought the Roman Legions abroad later carried the Vandals and Visigoths who sacked Rome. So it could be with globalization.

Through the end of the Cold War, the greatest threat to United States security came from enemy states and competing superpowers. Individuals or private groups did not have the resources or reach to seriously threaten the country with harm. But globalization has changed all that.

In the 21st century, the greatest danger the U.S. faces is the Super-Empowered Angry Man. Globalization is seen by many as the expansion of American imperialism, dominance and hegemony. This makes many people angry. At the same time, globalization is decreasing the importance of distance through efficient travel and communications and spreading powerful technology to all corners of the world. In short, globalization is super-empowering these angry men.

Violent Angry Men

Super-Empowered Angry Men range from the very violent to the not-so violent. The latter type was responsible for a hacker attack on the New York Times Web site on Sept. 13, 1998 that ultimately brought the site down. The attackers’ only demand was the release of a notorious computer hacker who was then being held in prison. But their real purpose seemed to be to show that they were smarter than the elites that ran the Times and to demonstrate that they could level the prestigious organization at their whim. They had attitude as opposed to ideology, seeking to topple the current power structure and show that the system did not control them.

“How can you shout, ’Death to America!’ when you’re wearing blue jeans?” [Anonymous Iranian student]

Moving up the violence scale you find the Tamil separatists who attacked the Sri Lankan embassy in Washington in 1998 by flooding the embassy’s e-mail addresses with bomb threats and spam, which they called "E-mail to FTP anti-server missiles." This "suicide e-mail bombing" strategy was listed in a State Department report on global terrorism tactics.

Finally there are the violent Super-Empowered Men who do not waste time with e-mail. These men see a global power structure that will never admit them and must be destroyed. Included in this monolithic power structure are almost every capitalist institution, be it the New York Times, IBM or the U.S. government.

Rogues’ Gallery

These violent Super-Empowered Men include the Aum Shinrikyo (Supreme Truth) sect in Japan, the Osama bin Laden gang in Afghanistan, the Unabomber and the Ramzi Yousef group in New York.

“Ramzi Yousef was truly the Super-Empowered Angry Man - a detonator in one hand and a hard-drive in the other.”

The Supreme Truth sect killed 12 people in Japan by unleashing sarin gas into the Tokyo subway, but it had also amassed roughly one billion dollars in assets and purchased a helicopter to spread their gas. Osama bin Laden, the Saudi millionaire, in August 1998 bankrolled the bombings of American embassies in Kenya and Tanzania, which killed more than 200 people. His group tracks news on CNN, communicates by e-mail and broadcasts to followers over their cell phones. One of bin Laden’s followers even referred to himself as the group’s media information officer.

Ramzi Yousef masterminded the 1993 bombing of the World Trade Center in New York. He vented his rage against the West for what he - and prior generations - saw as violence perpetrated by U.S. against his society. He loved the idea of attacking the West using its own technology. Men like Ramsey take pleasure in the idea that they can take the best technological know-how and still maintain a fundamentalist lifestyle. While their methods are more destructive than the hackers, their motives are the same: To spit in the face of American globalization using the system itself.

“This globalization that you speak about is just another American conspiracy to keep the Arab world down, just like Zionism and imperialism.” [A former Algerian prime minister]

Yousef is the quintessential Super-Empowered Angry Man. He wasn’t trying to establish an Islamic republic in New Jersey, he just wanted to blow up American buildings. His goal was to knock down both towers of the World Trade Center, hoping to kill as many as 250,000 people. Super-Empowered Angry Men do not want to change the world - they just want to destroy as much of it as they can.

Detonators and Hard-Drives

Nothing better captures the ability of the Super-Empowered Angry Man to integrate himself into the global system than the actions of one of Yousef’s followers after the 1993 World Trade Center attack. He went back to the truck rental agency where the group had gotten the truck that held their bomb and tried to get back the $400 deposit he had left. This follower was of course arrested and ultimately led authorities to Yousef, and the computer on which he had stored the details of all his terrorist plots. A big part of the U.S. government’s case against Yousef was built on the flight schedules, projected detonation times and identification documents found on this computer.

What’s interesting about men like Yousef, according to Middle East expert Stephen P. Cohen, is that "they used to believe that they had to overthrow their own governments and get control of their own states before they could take on America. Now they just do it directly on their own as individuals." Globalization gives them the ability, the logic and the motivation to attack the U.S. on their own. The logic is that states are no longer the relevant powers, the U.S. and global markets are. Therefore, if you want to bring down the global power structure you don’t waste your time with Pakistan or Egypt, you go right for the U.S.

“They love the idea that you can just cream off the technological know-how, charge it on your Visa card, and still live a fundamentalist lifestyle with the windows closed and a veil on.”

What grates on these men is not that the U.S. is technologically superior, but that the West claims to be superior in values. To the terrorists, American values are simply mindless consumerism and technology worship. Yousef made this address to the judge at his trial:

"You keep talking about collective punishment and killing innocent people... You were the first one who killed innocent people, and you are the first one who introduced this type of terrorism to the history of mankind when you dropped an atomic bomb which killed tens of thousands of women and children in Japan, and when you killed over 100,000 people, most of them civilians, in Tokyo with firebombings. You killed them by burning them to death. And you killed civilians in Vietnam with chemicals, as with the so-called Orange agent. You killed civilians and innocent people, not soldiers, in every single war you went to. You went to war more than any other country this century, and then you have the nerve to talk about killing innocent people. And now you have invented new ways to kill innocent people. You have the so-called economic embargo, which kills nobody other than children and elderly people..."

An Uninvited Guest

There is a backlash against globalization that is much different from the protests we see on TV. It is a rising resentment of the U.S. triggered by a global system that is heavily influenced by American icons, markets and military might. The U.S. has an economic system that has obliterated all others, leaving wealth, but sometimes ruin, in its wake. The U.S. does not conquer other nations, but globalization does something that people around the world see as equally insidious: It makes them like us.

The Iranian mullahs once called the U.S. the "great Satan" and the bastion of "imperialism and Zionism." But today, they use a different term. They call the U.S. "the capital of global arrogance." This is a subtle but revealing shift. Imperialism is a physical occupation. Global arrogance is when your power is so great that you don’t need a physical presence to occupy other lands and influence other lives.

“You went to war more than any other country in this century and you have the nerve to talk about killing innocent people?” [Ramzi Yousef]

To paraphrase Ronald Steel, the angry men see American globalization as an uninvited guest: You try to shut the door, and it comes through the window. You shut the window, it comes through a cable. You cut the cable, it comes over phone line. Cut the phone line, it comes in from a satellite. It’s there with you, on the billboard outside and on the workplace floor. You eat it, it gets inside of you. It creates gaps between generations and families. And it’s all America’s fault. Osama bin Laden says the U.S. must get out of the Arabian Peninsula, because it is "defiling the Islamic home."

Former Indian Prime Minister I.K. Gujral is no bin Laden, but he once said this about the distress he feels about Americanization-globalization: "I see the same thing happening now in India -the changes in our dress, eating habits. My granddaughter is four. She is always talking about bubble gum, not Indian food, or she says, ’I don’t like Pepsi, I like Coke.’ She even speaks English more often than Hindi, and then she went to her mother and asked, ’Doesn’t Grandfather speak English?’ I keep observing my grandchildren because it is an insight. The other day my granddaughter said that she wanted pizza. So her grandmother said that she would make a pizza for her the next day. My granddaughter said, ’No, I want Pizza hut.’"

The Golden Straightjacket

From the perspective of much of the rest of the world, globalization is an American Golden Straightjacket of capitalism and culture. But other cultures, including those of Western Europe and Japan, have very different ideas about how markets should operate and be controlled. The European and Japanese believe in the state exercising power over the people and markets, while Americans tend to believe in empowering people and letting free markets decide who wins and who loses.

“What bothers so many people about America today is not that we send our troops everywhere, but that we send our culture, values, economics, technologies and lifestyles everywhere.”

European governments blunt the impact of markets by regulating them to employ fewer people at higher wages. The Japanese government encourages the payment of slightly lower wages, but with the guarantee of lifetime employment. To people in many of these areas, the American system seems cruel, but they feel that they are nevertheless being forced to accept it.

Some experts trace the origins of globalization back to U.S. strategy after World War II, when it tried to create an international economy to avoid recession and counterbalance Soviet power and communism. As a result, there was already a foundation in place when the information revolution arrived. But this foundation had a largely American face.

While some people see America as offering attractive technology and personal empowerment, others view it with envy and resentment. Because American companies like Disney, Coke and IBM are among the most prominent global players, people around the world see little distinction between Americanization and globalization. They see little difference between American power, exports and culture.

And the type of power that America posses - a power that draws immigrants from all over the world to flock to its shores - cannot be counterbalanced by any state. What could a combined Russia and China do to break the hold of Hollywood? This power imbalance is getting worse, and the angry men are watching.

About the Author

Thomas L. Friedman is the Foreign Affairs columnist for the New York Times He has won two Pulitzer Prizes for his reporting as Times bureau chief in Beirut and Jerusalem. His first book, From Beirut to Jerusalem won the National Book Award in 1988.

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The Lexus and the Olive Tree

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A Special Abstract on Global Terrorism Based on Selected Chapters

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9 December 2025

China's Management Revolution

Recommendation

To many Westerners, China represents the impenetrable East. From its diverse languages and its ancient philosophies to its modern-day economic boom, China simultaneously tantalizes and perplexes Westerners, particularly in the way it conducts business. The Chinese management model, with its emphasis on harmony and reciprocity, and its lack of long-range strategic planning, often makes little sense to Westerners. That’s all the more reason to send kudos to Shanghai-based business consultant Charles-Edouard Bouée for this outstanding job of explaining the Chinese system to Westerners. His informed analysis, though dry in parts and somewhat repetitive, provides an important context for understanding how the globe’s most populous nation will thrive in the future. China seems poised to set the world’s economic pace, and BooksInShort believes Bouée’s book is a great place to start learning about how China does business.

Take-Aways

  • Chinese leaders and businesspeople have become skeptical of the West’s management style, particularly since the 2008 financial crisis.
  • Many Chinese entrepreneurs combine Western practices with ancient Chinese customs, philosophies and cultural concepts.
  • Chinese management balances on three aspects: “spirit, land and energy.”
  • Spirit refers to the spirituality that infuses much of business thinking in China.
  • Land connotes the Chinese state, and its connection to all of economic life.
  • Energy reflects the dynamism Chinese entrepreneurs bring to their markets.
  • The emerging Chinese management model has nine characteristics: It is “dynamic, adapted, flexible, synthetic, mutual, consensual, spiritual, disciplined and natural.”
  • Chinese managers are strong tacticians by design; strategy and long-term planning are less important in China than in the West.
  • Chinese managers prize agility and swift action; they must adjust to the government’s five-year plans.
  • To succeed as a foreigner in China’s economy, follow the Daoist dictum: Just “go with the flow.”

Summary

Chinese Management for China

In 2008, the global financial crisis rocked China, shaking its faith in the United States and the American capitalist system. As markets and organizations crashed and burned, Chinese leaders, thinkers and businesspeople began to reconsider their long-held belief in the American Dream, reimagined for China. Today, China is increasingly looking to its own strengths as it maps out how to proceed economically. The nation is now “retrofitting” Western management methods to fit its customs, traditions, and spiritual and philosophical concepts, with profound implications for the way companies around the world do business.

“China is like a company, 51% owned by the government.” (a Chinese businessman)

Former leader Deng Xiaoping (1904-1997), who wanted to avoid a downfall similar to that of China’s former economic model, the Soviet Union, began modernizing China’s markets. Beginning in 1978, when it was clear the USSR was foundering, the pragmatic Deng refocused the nation’s sights on the US as its model for future financial progress. But 18 farmers in Xiaogang village, Anhui province, changed everything. In November 1978, they agreed among themselves to break up the village’s communal land into individual plots, a forbidden practice at the time.

“To be rich is glorious.” (Deng Xiaoping, former leader, Chinese Communist Party)

With this radical change in incentives, the farmers produced about 90,000 kilograms of grain the next year, equal to the village’s entire output for the previous 20 years. With the sanction of the Chinese Communist Party (CCP), farming villages all over the country quickly followed the Xiaogang model. Now, Chinese farmers – all budding capitalists – can raise and sell their own crops.

“Although a fervent communist and centralist politically, Deng was a fervent liberal, almost an anarchist, economically.”

Small businesses known as Township and Village Enterprises (TVEs) began to spring up all over the country; from 1978 to 1996, the number of rural citizens employed by TVEs more than quadrupled. In early 1992, when Deng began his famous “southern tour,” China had 100 Special Enterprise Zones (SEZs) – duty-free, low-tax regions designed to attract foreign investors – scattered throughout the country; by the end of that year, the total was 8,700. Privatization in China took off in the 1990s under Prime Minister Zhu Rongji.

“Socialism and capitalism are awkward bedfellows.”

Today, China’s businesses work within four basic formats:

  1. “State-owned enterprises” (SOEs) – A result of the CCP’s “keep the large, release the small” dictate, these big, strategically important companies emerged as smaller businesses spun off in privatizations.
  2. “Small and medium-sized enterprises” (SMEs) – Many of these mostly family-run concerns started as TVEs. In 2009, SMEs contributed to almost two-thirds of China’s economic product.
  3. “Large private enterprises (Western clones)” – The “sea-turtles” (ethnic Chinese repatriating after stints abroad) run their companies along Western lines.
  4. “Large private enterprises (New China)” – Doubtful of US-type management, some sea-turtles, along with native Chinese, are creating their own business style based on combining ancient Chinese concepts with multicultural influences.

“Spirit, Land, Energy”

For millennia, merchants and administrators wielded the greatest power in Chinese society. Today, the CCP represents the administrators, and China’s emerging entrepreneurs are the merchants. In the West, firms operate with minimal constraints, accountable mostly to their shareholders. In China, companies must ultimately answer to the people; the administrators keep the merchants in check for the good of the community. Chinese enterprises work within the three components of Chinese civilization:

  1. Spirit – Though an atheist society, China and its culture are “saturated with transcendence and spirituality.” While Confucianism is regaining a foothold in modern China, influences beyond Confucius have molded the Chinese psyche. For example, the I Ching (The Book of Changes), which harks back to around 2800 BC, provides a system of divination that accounts for the Chinese sense of fatalism and luck. Confucianism stresses continuity coexisting with constant change, while Daoism teaches its followers to “go with the flow.” All are pivotal attributes of the Chinese management model.
  2. Land – This refers to China’s modern nationhood, realized only in the 20th century. The government, using a steady, incremental approach, has created an environment of “fragmented authoritarianism.” Businesses trust the government; it is an omnipresent force, but they know how to adapt to it.
  3. Energy – The merchant class – businesspeople and entrepreneurs – supplies the nation’s energy. With a rich, 4,000-year history in trade, Chinese merchants have always been risk takers, a main characteristic of the new Chinese management system. Unlike Western business leaders, Chinese entrepreneurs incorporate philosophical and spiritual aspects, like the concepts of tai chi, in their work.

How China Does It

Though still in nascent form, the Chinese management style is broadly based on nine defining features:

  1. “Dynamic” – As the CCP dismantles the state-sponsored business sector, companies compete furiously to establish strong positions in industries that, though in the early stages of development, are poised for spectacular growth.
  2. “Adapted” – Chinese managers prize agility and swift action, valuable qualities for businesspeople who must adjust to economic rhythms determined by the government’s five-year plans.
  3. “Flexible” – Chinese entrepreneurs place little stock in definite plans, organizational charts and rigid systems. They are great multitaskers, strong tacticians and keen visionaries, but they rely less on long-range planning than their Western counterparts. Instead, they prefer a trial-and-error approach, paying close attention as circumstances change and adjusting their business activities at a moment’s notice.
  4. “Synthetic” – China’s approach to business still depends to a great extent on Western and Japanese influences, but China synthesizes these imports into fresh practices.
  5. “Mutual” – Businesspeople in China do not believe in the American zero-sum approach that says when someone wins, someone else loses. Instead, Chinese people value mutuality and reciprocal obligation, principles that derive from the country’s ancient traditions.
  6. “Consensual” – Typical CEOs do not operate in an autocratic fashion. Rather, they work hard to achieve consensus around their executive decisions.
  7. “Spiritual” – In China, the material and the spiritual are two sides of the same coin. Chinese managers often include spiritual messages in their interactions with employees and other stakeholders. Business leaders often communicate by using metaphors that concern values, and by telling stories and evoking ancient legends.
  8. “Disciplined” – Management tends toward regimentation. Indeed, most large companies feature a “discipline department,” part of the office of the chairman.
  9. “Natural” – Chinese managers don’t view themselves as privileged but as part of their environment. They aim to achieve harmony with their people and surroundings.
“The CCP seems to believe that China has gone as far as it is healthy to go down the US road; that it is time to pause and reflect on how to proceed.”

China’s executives follow much broader definitions of success than their Western counterparts, who focus almost exclusively on shareholder value. Chinese managers strive for constant tactical advantage, but they concentrate on more than profits: Optimizing loyalty, confidence and positive relationships with all their constituencies is just as important. In China, relationships guide everyday life, especially in business. The Mandate of Heaven, which emerged during the Western Zhou dynasty (1045-771 BC), says leaders can govern because heaven decrees it – but only as long as they behave and rule appropriately. The Chinese people consent to the rule of their leaders – but only if their leaders treat them well. For millennia, the Chinese have looked to a “key leader,” normally an emperor, for direction. In recent years, the CCP has played that role; now corporate CEOs arouse the same devotion and respect.

“Change is the religion in Western management. Continuity is likely to be seen as equally important in the emerging Chinese management model.”

Westerners tend to view the Chinese government as authoritarian, but its governance is rarely oppressive; rather, the state rules with the benign authority of a parent over a child. Similarly, most Westerners do not understand the reverential allegiance Chinese workers feel toward their superiors. In the ancient Confucian system, bosses exist as part of the normal order of things.

“A culture so ancient, and until quite recently so separate from, and untouched by, other cultures, is bound to be reflected in the Chinese management style.”

While Chinese entrepreneurs are not actively trying to create any particular management mode, many like the idea that Chinese management is innovative. They appreciate that their distinctive style has its roots in thousands of years of venerable history. Because so many Chinese firms are small and medium-sized enterprises, their methodologies could become the replicable standard for the world’s businesses in years to come. Indeed, the SME may represent the logical next step in global business evolution.

Doing Business in China

When China joined the World Trade Organization (WTO) in 2001, it provided lavish tax incentives and “reinvestment relief,” or rebates, to attract much-needed foreign investment. International companies willing to set up shop in the country found welcoming officials and eager workers. But by 2008, when China enacted the Enterprise Income Tax Law, that welcome became less warm. Because China no longer depended on foreigners to rev its economic engine, its leaders removed many of the incentives for overseas firms, which now must compete on roughly the same footing as domestic companies. With this change, international companies will find it more difficult to do as well as they did in the past. At the same time, though, China is such a huge market that multinationals ignore it at their peril. Foreign firms with Chinese operations have three options: Go home, remain in China and continue to use traditional Western management methods, or stay in the country but adapt to the Chinese way of doing business.

“Chinese managers usually have a sense of direction, but it is more like the surfer’s than the military strategist’s; more like a wish to reach the beach while still standing, than to arrive at a well-defined point.”

If your company chooses this last option, be prepared to engage fully with the Chinese and their culture. Pay close attention to what the CCP does. Look for opportunities in growth industries, such as leisure and tourism. Plug into Chinese networks. Develop contacts within local firms and with government administrators. Most important, take the Daoist approach: Just go with the flow.

What Does the Future Hold?

The recent global economic collapse has thrown much of what Western business executives value into question: Just how worthwhile are planning and strategic thinking when unanticipated events can practically bring down the whole system? Might the Chinese emphasis on tactics and relationships be more effective? After all, the US way of doing business has had a mere two centuries of practice, while the Chinese system, as it evolves, represents thousands of years of experience. Just as Chinese entrepreneurs have benefited from the influence of Western management, so, too, can Western executives profitably learn from the way the Chinese manage their business affairs. As Chinese firms expand internationally, their management ideas will be among their most vital exports.

“The Chinese still have much to learn about business and management from the West, of course, but it is no longer a one-way street.”

For example, when China suffered its own slowdown due to the economic crisis in 2008, public and private companies did not engage in massive layoffs, as occurred in the West. Instead, Chinese firms instituted salary and work reductions for all employees, preferring to keep workers on for the eventual upswing. Many throughout the world may well prefer China’s equitable and humane approach, instead of the harsh Western system that indiscriminately throws people out of work.

“When China wakes up, it will shake the world.” (Napoleon Bonaparte)

When it comes to management, the Chinese have much to teach the US. Business managers in the West often find it difficult to look beyond the bottom line. They should learn to look up – past their profit-and-loss statements and beyond their shores. By doing so, they will see much value in the way that the Chinese do business.

About the Author

Charles-Edouard Bouée is the president of Roland Berger Strategy Consultants Asia. He advises some of the most well-known organizations in China. In 2010, the Shanghai Municipal Government presented Bouée with its Magnolia Award for his civic contributions and leadership.

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China's Management Revolution

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Spirit, Land, Energy

Palgrave Macmillan,
 


9 December 2025

Green Growth, Green Profit

Recommendation

Roland Berger Strategy Consultants produced this anthology, which likens the advent of green business to the Industrial Revolution. The comparison is apt. Just as transformative 19th-century innovations changed business, so, too, will green technologies alter industries, companies and societies for the environmental good. More important, as this series of essays explains, the green transformation is an opportunity for – not a threat to – businesses, if they can adapt to new imperatives. Despite the complexity of the subject matter – and an occasional editorial error – the book is surprisingly accessible to the lay reader, particularly given its effective charts and graphs. It offers on-the-ground perspectives from the countries and regions that are riding the green wave and from those that are just getting their feet wet. BooksInShort finds this informative collection valuable to investors and executives who are leading the way to going green.

Take-Aways

  • The push toward sustainability in the 21st century will change business as much as the Industrial Revolution did in the 19th century.
  • The worldwide market for green business, totaling approximately €1.6 trillion ($2.1 trillion) at the end of 2010, may double by 2020.
  • “Four megatrends” – “demographics, climate change, urbanization” and “globalization” – drive green business.
  • “E-mobility” via electric vehicles will alter how people use their personal transportation.
  • Renewable energy sources need to reach “grid parity” to equal current energy costs.
  • Perceived ecofriendly traits are beginning to vie with price and quality in consumers’ purchase decisions.
  • Firms should develop green policies for every stage of their business cycle.
  • Germany is one of the world’s top green nations due to its national ecological policy.
  • Spain and Portugal are leaders in solar and wind power development.
  • A number of Middle Eastern nations are planning state-of-the-art “eco-cities.”

Summary

Beyond Sustainability

The push toward sustainability in the 21st century will mean as much to business as the Industrial Revolution did in the 19th century. Green innovations will profoundly change how societies work and live. In this new world, alternative forms of energy and energy distribution, reduced waste, and improved efficiency will transform the way governments, businesses and households operate.

“Environmental technology is the 21st century’s lead industry.”

Going green and expanding a business are not contradictory actions. In the course of developing green supply chains, businesses can become more profitable by producing energy-efficient products and cutting waste. Inefficient companies will go out of business or will suffer from missed opportunities. But companies that redesign themselves to embrace green practices and technologies will advance. The global market for green business is already huge – totaling approximately €1.6 trillion (around $2.1 trillion) at the end of 2010 – and is on course to double by 2020. This augurs new opportunities for companies to grow, gain market share and generate new revenues. “Four megatrends” are shaping this transformation:

  1. “Demographics” – With a growth rate of 2% per year in some of the world’s areas, the global population is rather likely to top nine billion people by the year 2050, thus stressing not only water, but also sanitation and energy infrastructures. More desalination plants could alleviate imminent water shortages in places like India, and green business can change how societies process and use scarce resources. Electric vehicles (EVs) and energy-efficient products will go a long way toward meeting increased consumer demand.
  2. “Climate change” – Global warming affects weather patterns and will, over time, lead to less water being available for human use. For example, thawing Himalayan glaciers will provide China with enough water in the short term, but once the ice melts, agricultural growth will stagnate, and food scarcities will prevail. Green technologies that reduce carbon dioxide emissions and incorporate renewable sources can tackle these problems.
  3. “Urbanization” – In 2009, United Nations data confirmed that more than half the world’s population lives in urban centers. “Megacities” such as Mumbai, Rio de Janeiro, Jakarta, Seoul and Manila continue to expand. Dense urban populations create the need for green transportation and construction methods.
  4. “Globalization” – International competition forces green firms to take global markets into account along with local demands. Using 2010 statistics, the largest green markets are in: energy efficiency at approximately €630 billion ($822 billion), water management at €425 billion ($555 billion), transportation at €220 billion ($287 billion) and power generation at €210 billion ($274 billion).
“Business is the true engine of growth and job creation, but it cannot solve the world’s problems by itself.”

Green business ventures unfold three ways: “substituting existing technologies...for environmentally friendly ones,” “increasing efficiency” of current processes and “recycling.” Favorable legislation, government grants and public investment should support green businesses to create new jobs, reduce carbon emissions, and increase exports of new products and technologies. Governments can provide research, development and funding that will help industries revamp to become more environmentally sound.

“E-mobility”

Automobiles spew 7% of the world’s carbon dioxide output; the green solution is to provide electric mobility vehicles. Governments are encouraging e-mobility on the supply and demand sides. The governments of Germany, the US and China are funding the development of electric vehicles, while EV buyers in Denmark receive state incentives to offset their higher costs. E-mobility will trigger a “paradigm shift” in how people think about their personal transportation, so state support is crucial to ensuring that more people drive EVs. For example, developing new battery technologies requires an ongoing collaboration among governments, car makers and utility providers. Government must also guide the expansion of battery charging centers and ensure that the electric power grids are adequate for fueling electric cars.

Renewable Energy

Alternatives to fossil fuels – including “wind, biomass, photovoltaic, solar thermal, geothermal, oceans and hydroelectric power” – can create new jobs and revitalize economies. Aggressive, government-imposed standards are spurring such development. The European Union (EU) has set a “20-20-20” goal that calls for reaching a “20% reduction in carbon dioxide emissions and obtaining 20% of its energy from renewable sources by 2020.” By that same year, China will have built massive “wind power bases.” In the US, the American Recovery and Reinvestment Act calls for boosting the use of renewable energy.

“Government can accelerate the transition to the green world, by supporting business with incentives and favorable conditions.”

The widespread adoption of renewable energy sources will hinge on achieving “grid parity,” at which the cost of renewable sources equals that of standard energy grids. Sunny locations like California have already reached grid parity for solar power, and wind energy costs should fall by 23% by 2050 due to technological advances. Energy output from the wind and sun can vary, so “smart grids” will even out the production and distribution of renewable energy to ensure reliability.

The “Green Product Lifecycle”

Consumers are increasingly aware of the green qualities of the products they buy. Perceived eco-friendly traits are beginning to vie with price and quality when customers make purchase decisions. Thus, companies should develop green policies for every stage of their business cycle and should monitor sustainability in terms of energy, water and resource efficiency.

“Business is proving to be a shining light, with innovations and discoveries that help us steer away from destroying the planet and improve the living conditions of millions of people.”

Johnson Controls followed this approach when it selected coconut fiber and latex instead of petroleum-based polyurethane to make auto seat cushions. It also developed an automated process to manufacture the seats more cheaply than their foam-based equivalents. More efficiently designed shampoo bottles allowed Procter & Gamble to transport more shampoo per shipping pallet, thus reducing energy and logistics costs. And P&G’s research showed that consumers wasted significant amounts of energy heating their laundry water, so the company introduced detergents that clean at lower temperatures. If marketers use positioning properly, they can associate an individual product or brand with sustainability.

The World’s Greenest Countries

“Germany is arguably the number one green technology country in the world” due to a concerted government push toward sound ecological policies, a policy of exporting production worldwide, and a strong base in science and research. Germany’s green industries, which now boast an average annual growth rate of 8%, account for 8% of the country’s GDP and will contribute 14% by 2020.

“China has made green technology a national priority...Its green stimulus package is one of the largest in the world.”

France is the world leader in the use of nuclear power, which generates as much as 78% of its electricity. But that dependence has meant that renewable energy resources receive relatively less attention. While France’s green industries lack strong government incentives, the French lead the way in the fields of waste management, energy efficiency and water management.

Eco-cities “form a perfect testing ground for scientists, engineers and other researchers to put their ideas in practice on a previously unthinkable scale.”

The sunny, breezy Iberian Peninsula excels in solar and wind energy development, but its companies suffer from changing regulations and burdensome bureaucracies that hamper development. Still, Spain has more than 700 wind energy companies, and Portugal’s growth rate in the wind power industry is one of the world’s highest, thanks to strong state incentives. Together, Spain and Portugal are home to three of the four largest wind companies in the world.

“We stand at the dawn of a new economic day: A green revolution is emerging...Are you ready to take the next step?”

Central and eastern European countries’ progress toward green practices varies, given their diverse levels of development. EU members are focusing on renewable energy sources to meet the Union’s directives. The west Balkan states are more concerned with water and waste management infrastructure projects. The region is ripe for growth in environmental technology.

Improving US Energy Efficiency

The US uses 20% of the world’s total energy, more than any other country. To curb this usage, the federal government has allocated more than $80 billion for green technology, mostly to improve energy efficiency and reduce emissions. Work is underway to improve the efficiency of residences and commercial buildings, which use 40% of the nation’s total energy. Investment in and support of green technology tends to occur at the state and local level, often resulting in a “disjointed approach.” But green-business executives looking for opportunities in the US should:

  • “Anticipate public policy” – State and regional programs have often acted as test cases for federal energy practices in areas such as “air pollution control acts, vehicle emission regulation and renewable energy generation standards.” While Congress debated cap-and-trade, some states implemented their own systems.
  • “Follow the money” – The US spent almost $20 billion on green business initiatives in 2009, second only to China. Additionally, American venture capitalists provide important funding to green technology, investing about $5 billion in 2009.
  • “Capitalize on capabilities” – While the US may not be the ideal location for low-cost manufacturing of environmental goods, its skilled labor force, strong R&D abilities and innovation culture ensure a vibrant green-energy market.

Environmental Leaders

Other nations also offer useful lessons on the future of green energy:

  • Brazil – The country is a trailblazer in renewable energy production; renewable resources provide 43% of its energy. Government support led to a rigorous legal and funding framework for its hydropower and biomass industries. Brazil is one of the world’s three largest producers of hydropower, which provides 75% of its electricity. Brazil also leads the world in biofuels for cars, especially sugar-cane-based ethanol.
  • China – With significant air and water pollution, limited drinking water and poor hazardous waste controls, China is making huge expenditures on sustainable energy development. China’s energy firms benefit from strong government support and funding. China is the largest global supplier of solar panels, exporting 95% of its production. The country also has been an innovator in “green services,” or “energy performance contracting” (EPC), in which a provider sells energy-cost-reducing equipment and services to a client; the client then pays the firm a percentage of its energy savings. Now China is home to more than 500 EPC firms.
  • Japan – Japan, the world’s fifth-biggest greenhouse gas emitter, has committed to cutting its emissions by 25% by 2020. Japan depends on nuclear energy now, but it is emphasizing solar power for the future. To stimulate domestic demand for solar, the government offers subsidies and mandates the purchase of photovoltaic-generated electricity. As an incentive, it permits homeowners to sell their excess electricity. Japan also pursues a goal of zero-emissions buildings, relying on heat pumps, LED lighting and special insulation to create greater energy efficiency.
  • India – Because it “cannot afford not to go green,” India plans to spend $250 billion on green business and sustainable energy programs by 2017. As the world’s “fifth-lowest energy-intensity economy,” India still relies on coal for 60% of its electricity. Indian companies are leaders in photovoltaic cell manufacturing, and India’s Reva Electric Car Company “has more all-electric vehicles on the road than any other company.”
  • The Middle East and North Africa – Though rich in fossil fuels, this area is investing in alternative energy. The region’s desert location, sunny climate and oil profits provide the impetus and ingredients for solar energy and desalination projects. The most innovative ideas include “eco-cities,” such as the carbon-neutral Masdar City in Abu Dhabi, that will run on solar energy and be almost “waste-free.”

About the Author

Roland Berger Strategy Consultants operates in 25 countries and serves businesses, financial institutions and governments.

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