Stefan Heck
Matt Rogers
We believe the businesses that capitalize most successfully on the resource revolution will employ five distinct approaches, either individually or in some combination. We explore all five of them in our new book, Resource Revolution, but focus here on three: substitution (the replacing of costly, clunky, or scarce materials with less scarce, cheaper, and higher-performing ones); optimization (embedding software in resource-intensive industries to improve, dramatically, how companies produce and use scarce resources); and virtualization (moving processes out of the physical world). The remaining two are circularity (finding value in products after their initial use) and waste elimination (greater efficiency, achieved by means including the redesign of products and services). For more on the waste-elimination approach, click here to check out “Bringing lean thinking to energy.”
Businesses that have harnessed these five models include Tesla Motors, Uber, and Zipcar (now owned by Avis) in transportation; C3 Energy, Opower, and SolarCity in power; Hampton Creek Foods and Kaiima in agriculture; and Cree, DIRTT, and Nest Labs in buildings. As we show in our book, these companies have the potential to upend traditional competitors and create previously unimagined business models. For examples of what this might look like at scale, download “Twelve companies of tomorrow” (PDF–522KB).
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Stefan Heck is a consulting professor at Stanford University’s Precourt Institute for Energy and an alumnus of McKinsey’s Stamford office. Matt Rogers is a director in the San Francisco office.
This article is based in part on the authors’ book, Resource Revolution: How to Capture the Biggest Business Opportunity in a Century (New Harvest, April 2014).