It’s not far-fetched to consider corporations as living, breathing entities.
After all, companies of all sizes are made of countless moving parts working together to achieve a goal. But they’re not just machines — like the humans that comprise them, they make mistakes, react to stimuli and rise or fall according to natural selection.
In an age of sustainability, though, it’s more important for ever for corporations to know their “organizational metabolism” — that is, all the materials and energy that go in and come out, just like a cell.
Why? Because efficiency equals cost savings. I spoke with Amit Chatterjee, CEO of Silicon Valley-based (and Kleiner Perkins-funded) environmental and energy management software startup Hara, to learn more.
According to Chatterjee, it’s not just people that need to step on the scale — it’s Fortune 500 companies, too.
SmartPlanet: Tell me a bit about Hara’s approach to carbon accounting.
AC: We’re the first company to actually come out and identify an end-to-end business process.
Hara came out and said, look, there’s an actual focus on the notion of “report to reduce.” It’s very similar to human resources: “hire to retire.”
We look at financials, HR, customer record, product record, supply chain record and energy and environment record. No surprise, each of these bore out seven to 25 million market opportunities.
SmartPlanet: Hara’s not the only company in this space. SAP recently made a big splash in this sector; so has Recurve, ENXSuite and even Microsoft. How do you differentiate?
AC: SAP has been a great follower — not a great innovator — since the 1970s. I see them as great cooperators. (Editor’s note: Prior to founding Hara, Chatterjee led SAP’s Governance, Risk and Compliance unit.)
On average, our product takes anywhere from four to six weeks. When we look at our market, somewhere from 60 to 80 percent also have SAP products and have all-you-can-eat licenses with them, but they’re choosing us.
When I wrote the book, The Post-Carbon Economy, I was very flattered to find out that the city of Rome identified themselves as the “first post-carbon city in the world.”
This is the third major transformation. The mega-trend that’s occurring is similar to what’s happening in the Internet, when we saw massive business change. It’s [also] similar to when we saw massive outsourcing.
We believe the next period of American innovation is mastering the post-carbon economy.
It is the natural resource management era. The companies that [benefit] understand the inputs and outputs of their organization, and how that gets metabolized.
We focus on profitability. The important story is, in the U.S. we currently use 3 trillion kilowatt hours of energy in the United States. There are 300 billion hours in commercial [energy] usage in the United States. That means right now, we could probably address and probably take out 20 to 50 billion kilowatt hours. We haven’t seen that reduction yet, we haven’t seen that opportunity. The focus should be first on the four walls of the organization.
Over time, the supply chain exercise becomes the next effort. After facilities, you’ll need to support basic transportation and get inside your distribution channel.
The next era is going to be the natural resource era, and you’re going to have to find a way to keep pace and innovate. That’s a longer-term trend that we need to solve over the next 10 years.
SmartPlanet: I understand you attended the UN Climate Summit in Copenhagen. What are your impressions of the negotiations?
AC: I had two different world views on this.
The first was the [Copenhagen Climate] Council. Executives of Fortune 500 companies were in the audience. And they were focused on, “Where’s the profitability in what I’m doing?” Or more importantly, “Where’s the strategic advantage in what I’m doing?”
We’re talking about a trillion dollar opportunity. Some businesses will go out of business because they’re not prepared for the post-carbon economy.
When you look at the Global 5000 [list of top world companies], they have to figure out where they fit in. What are the big rocks they can move for government to ensure that they don’t create the first climate change refugees in the world? We’re borderline there with portions of Africa and Bangladesh.
The natural starting point is energy efficiency. It takes $3 billion to create a new utility plant, versus spending a billion using Hara on energy efficiency.
Some of our clients include Safeway, News Corporation, Coca-Cola, Intuit, Aerojet, the City of San Jose, the City of Palo Alto, Akamai.
CSR reporting is just what it is: an initiative inside an organization with a chief sustainability officer.
That was what 2009 was all about. I label 2010 as the “flight to finance” year. The shift from sustainable officers to sustainable operators.
We close about a deal a week here at Hara. We’re starting to see a shift away from organizations who came to us for reporting who are now asking about cost savings, in terms of capex [capital expenditure] investment.
Are they prioritizing those efforts the best? We act as a general contractor to ensure that you don’t put your drywall in and then have your plumber and electrician show up [afterward].
Companies now have an “organizational metabolism index.” It’s the same thing as a BMI [body mass index].
SmartPlanet: I also hear you consulted with President Obama at the White House last year about energy innovation and the green jobs economy.
AC: I told him that if you look at energy efficiency, one of the biggest things we see is focusing on energy efficiency and spending highly efficient capital. Being able to flat-line the U.S.’s greenhouse gas initiatives.
I said that the opportunity, from an effort standpoint, is that we need to stimulate the renewables market. But on the energy efficiency side, there’s an equally strong case that there should be an effort, too.
There are many people that see the quick wins petering out after Copenhagen.
SmartPlanet: Sounds like Hara’s moving quickly. So what keeps you up at night?
AC: Scale. We’re moving into several geographies. That scale means that there are a lot of things that we need to do that big boys need to do. We have to build up scale and 24/7 support that we didn’t have previously.
Also, regional expectations. What we’re doing that helps companies is that we track global rebates, so they can improve their business case in one state versus another.
My number one competitor at the end of the day is [Microsoft] Excel. We’ve replaced SAP at Intuit and others but the reality of the market is that 90 percent of my competition of true deals on closing is that I’m replacing Excel and competing with SAP for that contract. Getting organizations to realize that it’s not only about reporting but reductions is where my challenge is.
At the end of the day, careers are built on profit-making, not on presentation.
