CEOs of America:
What’s Your Zero Carbon Endgame?
On November 9, 2018, I had the privilege of attending the Cornell Entrepreneurship Summit and asking Robert Nardelli the #ZeroCarbonEndgame question.
Most people have not thought out their endgame. Few people have been asked the endgame question. We’re on a mission to change that. We would very much appreciate your help in asking your fellow Americans from all walks of life the endgame question.
Here’s how it went down with Nardelli.
First, his background.
Robert Nardelli is American CEO royalty. He’s the Former Chairman and CEO of Home Depot and Chrysler and former CEO of GE Power Systems.
Widely recognized as one of the best operating executives in the United States, Bob has grown the sales and profits of a number of multi-national corporations in his career, including quadrupling operating profits for General Electric, doubling the size of The Home Depot, and steering Chrysler Corp. through the financial institution meltdown. Bob Nardelli is the Founder of XLR-8 LLC, Investment & Advisory Company. XLR-8 helps companies identify weaknesses and improve performance.
It was auspicious to be able to ask one of the best operating executives in the US the Endgame Question. And to have a handy recording of it for analysis:
Here’s the transcript.
Me: “It’s an honor. I’m really happy to be here. This is great.
My question goes to what you said: “from great to gone” and “the environment” and “responsibility” and “accountability.”
So, the latest IPCC report has come out and said that we need to decarbonize the global economy by 2040 or we’re doomed. I just wondered — you and the CEOs that hang out together — are we on track to decarbonize the economy in 20 years?”
Note to Readers: The zero carbon endgame question can be asked in many ways, and clarified with follow-up questions. For example:
- What’s your zero carbon endgame?
- What’s your plan to decarbonize the economy?
- What are the plays that comprise your zero carbon endgame?
- Do they add up?
- Are you on track to execute that endgame?
The way I put the question to Bob and his fellow CEOs gives them the benefit of the doubt. It assumes they have a zero carbon endgame and jumps ahead to a followup question, asking if they are on track to achieve it.
The question is unexpected, and requires repetition:
Nardelli: “Say it again please that mics not…
Me: The IPCC, the International…(Bob: yeah) OK, so their latest report says that we’re seriously doomed. We won’t meet our targets unless we completely decarbonize the economy — take all the carbon out (Bob: yep) switch, whatever we have to do (Bob: yeah) by 2040 (Bob: yeah). So that’s two decades. It’s a huge thing and I just wondered if we’re on track.
And now, his answer.
As you read it, think about this moment in time. Think about the competing realities swirling around. How most people are here at this summit to network and find out how to be more successful in our economy as if it’s business as usual. How the IPCC is saying we’re basically doomed if we can’t decarbonize the economy in an impossibly short timeframe. How here is one of the best CEOs of the nation, facing this question. How no one else seems to be asking themselves, each other, their CEOs, this question.
How will he answer it? How would you answer it if you were in his place? Have you thought it through?
I’ve highlighted in bold the key points he makes.
Nardelli: Yeah. So that is an ominous goal, given, you know, where we are today; the technology that we’ve become very comfortable with. Let’s take an example:
I was running GE power systems and if you want to decarbonize, we would go with a hundred percent nuclear or we would go a hundred percent renewable wind or we’d go a hundred percent solar, right? And so we know in the US there’s no appetite for the first of the three that I mentioned. We’re building two nuclear plants. The one in Georgia is probably now a twenty billion dollar enterprise as opposed to a ten, and so they’re staying on course but it’s a cost plus contract now given the bankruptcy at Toshiba and what’s happened there. So we’re doing onshore and offshore wind and we’re continuing. The cost for solar is coming down but it’s more solar farms than it is a couple of panels on your roof.
If you think about, in the auto industry we look more and more towards electric vehicles. Now, we did an analysis of that at power systems and if we took the car part 260 million vehicles and those were all electric you could take a guess at how many more power plants we would have to build. So the question is what type of power plants will we build? And when we talk about environmentally produced electrons — I always challenge people to say how do you trace — when you say well I’m willing to pay more for that electron because it’s it’s environmentally friendly — that I challenge you to trace that electron through the grid as to where it was produced.
So I think, you know, regardless of regulations, I know the CEOs that I talk to are just a sensitive to your question to do that. But that has to happen on a global basis, right, to your point. So I think we’re making a lot of progress whether we’ll make it by that timeframe I’m not sure. But there’s even greater challenges on a global scale particularly as you look at Asia in some parts of Europe. If you look at the gazprom pipeline what Merkel’s using you know to to gasify some of the electrons over there it’s not perfect but it’s environmentally more friendly than than coal for example or some of the other alternate.
So I think it’s an admirable challenge. I think we got to work on it. I think we have to be prepared to see significant capital investment and maybe some you know some cost impact as consumers. But it’s, that’s a great question. Yeah.
Moderator: Super. Thank you so much Bob and Lee.
[Applause]
Coaching The CEO Endgame
All right! He covers a lot of ground in this answer. Time to put on our Zero Carbon Coaching Caps and explore the Bob Nardelli Zero Carbon Endgame.
First, consider this his 11/2018 Baseline Endgame. His first pass at the endgame. He’s just spitballing here. As one of the “Best Operating Executives In the US” he’s capable of a much better endgame.
Second, keep in mind that as a CEO, his primary loyalty is to a different game: the “maximize shareholder profit” game. This is going to have an impact on his zero carbon game.
What we notice from his statement is that, right out of the gate, he assumes no change in consumption. The way he puts it, the goal is “ominous” given the “technology that we’ve become very comfortable with”. Rather than questioning the demand side, and the role of corporations in pushing demand, he focuses on the energy supply side plays, ways to generate enough zero carbon energy to maintain the current system.
He lays out the energy supply side challenges. You can see him rapidly cycle through: You’ve got nuclear, wind and solar. Nuclear is unpopular. Wind and solar exist. But we’ll need a lot of it. Not just for what we’re using now, but for what will happen when we electrify everything. Cue the electric car calculation, which he lays out but can’t complete because he doesn’t have numbers for off the top of his head (who does? Oh, but we should. We should have those numbers easily available). And then, he notes, there’s Asia coming on line. So then he falls back to fossil fuels. Compliments the Gazprom pipeline as being more environmentally friendly than coal.
Basically, Bob does not have a working zero carbon endgame.
The good news is that the “CEOs are sensitive” to the question, and motivated to act on it “regardless of regulations.” Also that they “are making progress.” But will they make it in the timeframe required? He can’t be sure.
It certainly doesn’t sound like it.
I expect more of you, Bob! You are capable of great leadership and strategy. You need to apply it to the zero carbon endgame challenge.
Don’t just focus on the energy supply. Look at all the levers you control. What about the business models! Business is a human construct. Built of agreements. So much you can do there.
So much at stake.
Think about the succession of the companies you have built and are building. Companies you took from “good to great.” They (and our civilization) can go from “great to gone.” Or they can go from “great to surprisingly sustainable”.
This is a moment of decision. You and the other CEOs need to have that long dark night of the soul and figure out a viable, inspiring zero carbon endgame.
If you’re feeling conflicted, it might help to check out the Shareholder Value Myth — get the team playing together, instead of as a zero sum game.
On a related note, feel free to jump in and help us put together our Dream Team to turn the Race to Zero Carbon into a national pastime and coach each state to win.
#Endgame Call To Action!
Thank you for reading this far! What do you think of the zero carbon endgame question? What is your endgame? Comment below!
Also, please join the “What’s Your Zero Carbon Endgame” campaign! Get the question out there! Ask follow up questions! It’s up to those of us who care to make sure everyone in America has a zero carbon endgame. Questions have enormous power. They get the mind to solve problems.
#ZeroCarbonEndgame #WhatsYourEndgame
To zero carbon and beyond!
