Creating Value: Something from Nothing

Physics Pop Quiz.

Can something be in two places at the same time?
The answer from advanced physics is a clear (if counter-intuitive) Yes.

Can you create something from nothing?
We all know that you can’t — except scientists explain that you can, by taking a vacuum (nothing) and blasting it into its dense, complementary matter - anti-matter components (lots of something).

Can these esoteric observations help us address societal problems - problems operating on the scale of billions of people, not the sub-atomic level of quantum physics?
As metaphors and guiding questions, yes.

Let’s start with money. As a physical medium, if I’ve got a $5 bill in my wallet, it can’t be in yours at the same time. But, as a representation of financial value, my five dollars can be many places at once. If I deposit it in a bank, it’s mine, even if the bank considers it theirs and then uses it to make five $1 loans (meaning “my” five dollars is now in seven places at once).

A loan is the most basic financial derivative, a building block that, in effect, creates money and puts it into the hands of those who need it and can use it to create value. (This is not to overlook derivative’s frightening power and potential destructiveness. Derivatives too numerous and too complicated to describe account for more than twenty times the amount of money in the world’s annual economy, and those tied to housing values brought financial chaos to the world when they imploded.)

But let’s not forget the fundamental lesson: loans let us store the same medium of value in several places at the same time. And these loans need not be money. For instance, Impact Everyday is creating a credit card that lets you loan it the “points” your card earns, whose cash value is then used to fund renewable energy projects. Where do your points “live?” With you, with the card company, or with the solar farm you’re supporting?   It’s not a stretch to say they live each of those places at once.

Or consider your time.  We know that we can’t get it back, but we can come awfully close when we bank it. Time banks create non-monetary markets, often in income-strapped communities, where a unit of effort I perform (say, an hour’s worth of computer programming) is banked until I redeem it (maybe for an hour’s worth of repairs on my car). In obvious ways, this non-cash economy creates a powerful means for putting idle time to productive use and bootstrapping economic activity.

Lent time, as with lent money (credit card points, or other items of tangible value), unlocks value.  In different ways, each transforms potential into value that can help people and communities right now. Dare we say, being in two places at once creates something from nothing?

I consider these examples of Big Picture Design. A principle of Big Picture Design is never to let a good idea go to waste. Good ideas are everywhere, often requiring nothing more than imagination to be applied in a new context. If you can lend money, why not credit card points, time, airline miles, equipment, … ?

Big Picture Design also teaches us to consider everything in developing a solution to a societal problem. By considering everything, not just features that first come to mind, solutions are more comprehensive—and better.

Wal-Mart, poster child for much that needs changing (especially in the area of labor rights), has also jumped to the forefront of the environmental movement by (finally) considering everything involved in its products’ manufacture and delivery. A company that values low costs over everything else discovered it had ignored waste. Once it recognized this oversight, it eliminated the water in its gallon-sized laundry detergent, producing a much smaller container that eliminated three-fourths of the packaging, weight, shipping costs, and shelf space associated with the product. Customers got a less expensive, more convenient product that cleaned clothes equally well. Wal-Mart made more money.

From 2005 to 2008, Wal-Mart shifted its entire detergent inventory to small-size containers, pulling the industry’s production (one billion units) along with it. During this period, Wal-Mart’s actions alone caused 95 million fewer pounds of resin from petroleum to be used, 400 million fewer gallons of water, and more than 60,000 fewer tons of cardboard. The reduction in weight resulted in less fuel being consumed by its fleet of trucks, saving the company money and keeping 11 million pounds of CO2 out of the atmosphere

Wal-Mart also learned that, while it had believed it had nothing in common with soft-headed environmentalists, they both wanted the same outcome. Whether driven by lower costs (Wal-Mart) or a sustainable planet (environmentalists), finding common cause was the best way forward.

To both, waste was the enemy. While it may have appeared that nothing could be gained from Wal-Mart and environmentalists joining forces, this nothing became something. A big, profitable, sustainable something.

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This page contains a single entry by Michael Gordon published on July 2, 2011 6:43 AM.

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