Factor ‘e’.
The biggest movement right now is not green, clean, political or tabloidential (candidates tabloid drooling news). The biggest movement is much larger: efficiency. What I call the Efficiency Factor, or Factor E.
Factor E drives businesses with profits. Look at any dozen publicly-traded companies’ balance sheets. The efficiently-run companies will be full of Factor E; the ones with huge losses will be Factor E deficient.
The energy industry is a prime example. Adjusted for inflation, oil at $100 per barrel is effectively the same as it was 25 years ago.
Wind, solar, ocean, hydro energy all are attractive only when the Factor E becomes an attractive alternative in terms of cost.
Being efficient for the sake of being efficient is not yet the way of life of 6 billion people.
Green energy only looks attractive in relation to how wasteful the current methods are. But that doesn’t make so-called green energy the “most-efficient” energy. Companies trying to sell “green” do so by describing how much better their solution is versus the status quo. They don’t compare it to a better scale of how efficient overall.
Let me explain a little. Wind farms. Yes, some winds farms may be better than oil or coal energy but that doesn’t mean wind is the most efficient energy method.
You see this relative thinking also in business. XXX Company reported earnings that were XX% better/worse than the same period last year. Earnings are a proxy for efficiency (sometimes), but tell nothing about how well the company could have been managed, or how efficient on an objective scale the company could have performed.
On a simpler example take the newspaper industry. It is not efficient at all these days to cut trees, make, bleach, press, dry, sell, distribute, print paper pulp…and finally print, market, sell, truck, rack, deliver a newspaper.
Think of the gas wasted. Water wasted. And it gets tossed out the next day, perhaps recycled. Most likely, not.
The newspaper industry is oblivious to Factor E, in denial, because it wants to continue to profit from inefficiency.
The movie industry is another example. Every week new films are ‘released’ and movie goers drive to the theater, spend $15 on popcorn, sit and watch the movie. Or try to. There’s always someone opening their cell phone and texting or talking during the movie. Always. ADD at the movies.
If the movie industry was efficient it could triple its revenues from new movies in one simple step: go pay per view on demand.
I’m willing to bet that at least half of movie lovers would pay to watch the new releases at home for a price that equalled theater rates. Let’s say $25 to $40 a film, with some coupons for popcorn and soda at the local store the next time they grocery shop.
The home theater industry would boom. 50-inch and larger TVs would be the norm (Sony and LG would like that).
Instead of having a few hundred thousand people at best slog off to the theater in their cars, several million would likely pay on demand.
We can literally dissect every industry into how efficient it really is versus what it actually does now. The biggest opportunities are in the Efficiency Factor. Greener than green and cleaner than clean.
Factor e. How does your business stack up?
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