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Ukraine: A Net Zero Forcing Function
A Lean Management Lesson
As we all know, on February 24, 2022 Russia invaded Ukraine. This event was and continues to be profoundly important for many reasons - not least the loss of life and the suffering of so many people.
There has been much discussion about the geo-political lessons of this event. Topics such as the future of NATO or the effectiveness of high-tech weapons have become part of the news cycle. But there has been comparatively little discussion as to how the invasion could impact Net Zero programs. A few people have lamented the fact that war generates a lot of CO2, and we are seeing a dispiriting loss of interest in international climate change conferences. But these discussions miss a more important point.
When the Russians launched their invasion most people assumed that the invaders would swiftly occupy key cities, overthrow the legitimate government and install a puppet regime within a couple of weeks. This did not happen. Instead, by the middle of March, it had become apparent that the conflict would be long and drawn-out. The conflict developed two major axes. The first axis was the extent to which the provision of sophisticated weapons to Ukraine could slow down the invasion. The second axis was the Russian decision to limit, or even stop, gas supplies to western Europe.
Therefore, in early April we wrote the post A Forcing Function. We compared the Russian threat regarding gas supplies to one of the principles of lean management.
A principle of lean management is to reduce intermediate inventories of goods and spare equipment. Companies do this, not because inventory is a bad thing in and of itself. They do it because the lack of intermediate inventory forces managers on both sides of the fence to make their operations more efficient. In other words, these companies do not increase efficiency to reduce inventory, they reduce inventory to improve efficiency.
Applied to the Russian gas situation, we suggested that a sharp curtailment in the flow of gas would be a “forcing function”. Nations in the west would have to come up with alternative energy strategies very quickly or face a serious economic downturn.
We are now six months into the conflict. It is too early to say whether this Russian forcing function will lead to innovation or to recession. The advent of winter will probably be the acid test. But the fact that the nations of western Europe have done as well as they have to this point is encouraging. If they can weather this storm then that will be good news for Net Zero programs world wide. It will show that, when forced, we are able to adapt to declining energy supplies and global warming on a global scale.
We will see. Watch this space.
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