From Mike Hyde’s Chemical Insight, No. 92, late December 1975

From Mike Hyde’s Chemical Insight, No. 92, late December 1975

The second refreshing approach I have encountered is the direct challenge to the forecasts on which current investment decisions are made which is being mounted by Miss J M Pick, a former director of Interplan and now a market researcher in her own right. She tells me of her view that market analysts, whether consultants or in-house forecasters, have no real alternative but to extrapolate from conventional assumptions of economic growth. Like Mr. Levitt* she maintains that the companies naturally look for larger markets. She is also rightly points out that no company can, on its own, plan and invest to criteria which are fundamentally different from everyone else’s, although I do not believe that this necessarily entails extrapolation from previous trends (Insight 89).

However, profits are more important than turnover and returns are plagued by uncertainties which make investments hardly worth the risk. It is difficult to quarrel with Miss Pick’s view that the key uncertainty is the price and availability of energy. Certainly, if nuclear energy is eliminated from the count on technical, economic and environmental grounds, the pressure on fossil fuels is increased and it becomes all the more important that they be used wisely.

To prove her view that a fundamental change in economic direction could and should take place, given of course the willingness of people to change their views, Miss Pick supposed the Earth to be operated as a business venture, with a Board responsible for managing its energy income and limited material resources. She commissioned herself to advise its Board on the corporate planning and undertook a thorough-going analysis of the energy accounts. The first part of her “interim report on a structure for the energy economy”, published in draft edition in April 1973, presents the case for conserving fossil fuel reserves in order to buy time so that industry, transport, construction and agriculture can adjust to the ceiling on their operations imposed by the fact that, long-term, solar energy will be the only source available to them if they are to continue in business.

This is not such a startling conclusion for it can not [be gainsaid] that the sun’s expected life is measured in thousands of millions of years. The residual life of the fossil fuel reserves, on the other hand, is measured at least in decades or at the most in centuries- in other words, in dangerously low multiples of the life of the capital plant which relies on them as feedstock. But forecasts of economic growth throughout the world are still being made on the assumptions that oil, coal and gas will fuel the growth, and that nuclear energy will eventually take over when the reserves run dry. I agree with Miss Pick that neither assumption makes sense and there is an urgent need for forecasters to think again.

Copies of Miss Pick’s interim report are available from her at [removed], for a nominal charge of £5 to cover photocopying and postage***. I hope she succeeds in finding a sponsor for publication of her full report, for it seems to be an eminently worthwhile project and one which would provide the confrontation with the new economic realities referred to by Mr. Shapiro **. However I sense that sponsorship for such a global study is more likely to come from bodies such as the United Nations, the EEC or the Club of Rome than an individual company.

jmp 5 February 2016

* Harvard Business Review, Sept/Oct 1975

** Chairman of Du Pont

*** This charge is no longer adequate, Loan copy usually available for photocopying

Note To the Reader

NOTE TO THE READER Interplan House

London Road, Croydon

January 1973

About a year ago a concept call Conservation was launched on the global market. I wasn’t quite sure what it involved, or what it cost, and there seemed to be many different bodies trying to sell it. But I bought some from the most of them, to add to a growing conviction the Conservation was a good idea - or, an anti-idea? - to sell the world.

It happened to be a good idea to sell to me, as an individual consumer, because I could easily find use for it. And I started to practice the principles of Conservation, and traveled by bike, ate the right things, and thought twice about self indulgences which were obviously anti-Conservation.

And it didn’t do me any harm. In fact, it did me a power of good, and for time, I could not see why more people did not buy this sensible and practical concept.

Now there are many reasons why good and apparently necessary ideas fail. Perhaps there were too many people trying to sell Conservation? Perhaps the competition, raw apathy and anti-conservation, was too strong?

But perhaps consumers were not being told the true nature of the concept, in terms they could understand? Sometimes Conservation was sold as a set of graphs ending in avoidable doom. Sometimes it was a non-non-returnable bottle, or a catalyst on a car-exhaust. Sometimes it offered the hardy loaner a self-sufficient igloo, or a new Agrarian Revolution.

None of these brands appealed particularly to me, as an individual consumer. The conservation package I had bought was simply Conservation of Earth’s limited physical resources. As a physicist by training, I had a fair understanding of what the resources are, how they are limited, and how I personally, could consume in a manner which ensured I did not take more than my fair share.

But other physicists disputed parts of the case for Conservation, and therefore felt themselves able to question the package as a whole. So I decided to question my own understanding and acceptance, and to do so from a first principles treating Earth as a business enterprise, with a Board responsible for managing its energy income and limited material resources. That was the start of the project that evolved into Earth Enterprise.

Earth Enterprise began as a figment of my imagination, but the more I analysed its finer structure, the more real it became. It is the intercontinental, omni national, integrated business which manages the Earth, and which has the Earth as its monopoly market. We are all shareholders and trustees, workers, consumers and members of the Board.

In 1972, Earth Enterprise launches a campaign to sell Conservation. The response is not as good as expected. Thus the Board commissioned a consultant, myself, to advise them. Is Conservation necessary? What is it? If it is necessary, and if it is possible to define precisely although what it is, how should it be modified and repackaged before it is launched onto the market again?

JMP/jmp

26 Oct 2016

Correspondence - SM Nauser

Fris SRI - Europe                                                                  Carolyn House

Dingwal Rd, Croydon

24 June 1974

Dear Miss Pick,

Due to an extended travel schedule I have been behind in attending to some correspondence. In acknowledging your letter of 25th April, I feel your needs for the Earth Enterprise report may have changed and so I am returning it directly to you.

You have created a magnificent concept, well written, and imaginative. I hope there will be some way for you to realise your goals. Incidentally, I am leaving the UK for the US this week and so will not be around to see how you fare.

Yours very truly

SM Nauser

Senior Industrial Economist

jmp/15 October 2016

Correspondence : Hugh Parker

From McKinsey & Company, Inc                                                      74 St. James’s St. SW1

December 9 1975

Dear Miss Pick,

Thank you for your further letter of 8th December reminding me that I have still not returned to you the “interim report on a structure for the energy economy” which you had sent me nearly two months ago. The reason for the delay, as I am sure you will appreciate, is that I have not really had time to read your “interim report”.

However, on a flight to the United States from which I have just returned, I did have time on the flight to look through your report - although I will not pretend that I read every word of it. In your letter to me of 30th October, you say that my comments “will be appreciated”.

My main comment is that you have produced an intriguing, intelligent and certainly provocative statement of the human situation on this planet. Your conception of our plant as a business enterprise, if one can use that analogy, is certainly an original one. It is hard to argue with the basic validity of most of your comparisons, or with some of the conclusions which seem to be implicit in your report.

The only question which it does not answer - and I hesitate to raise this let it bring on a further outburst from you is - what are we going to do about it? In your late letter you suggest that I should send my copy on to Lord Ryder, with my comments if I should wish to do so. You refer to a letter from Lord Ryder, but since no copy of that is enclosed with yours it is hard for me to judge what Lord Ryder’s interests are. At any rate, since I do not him myself, I think it is best if I return your report to you, for you to send on to him with any comments you think appropriate. Thank you again for letting me see this interesting document.

Yours Sincerely,

Hugh Parker

Ps. Since your “Interim Report” seems to conclude that the hard of the matter is the energy component of the equation, you may be interested to see the enclosed brochure describing the recently-established energy laboratory at the Massachusetts Institute of Technology. I happen to be visiting MIT last week where I picked up this brochure. Please feel free to retain it.

jmp/15 October 2016

Correspondence : John Hoskyns to Paul Watts

From John Hoskyns to theBIM Hoskyns Group Ltd

Farringdon Road, EC1

Paul Watts, Esq

British Institute of Management

London EC2 17th July 1975

Dear Paul,

    I enclose, with many apologies for the delay, your copy of the Earth Enterprise Report. I had communication with Mss Pick earlier this year and said that I would write to her again. Perhaps you could pass this letter on to her with the report?

I am sorry I am not able to hold it and do something with it because I suspect it is a rather important document. The very fact that so many people she has sent it to do not seem to have responded, could well bear this out: I suppose that, in essence, it is a well-developed paradigm which integrates a great deal of information and as a result offers some insights without which it is very difficult to think sensibly about the Earth  as an energy system. She seems to have predicted the energy crisis successfully.

In total, reading the book perhaps gives one a new language in which to think and cross communicate about the global problems. To use Stafford Beer’s words, it is the metalanguage in which one can handle the “undecidable propositions” which cannot be handled in the day-to-day language of the system.

Sometimes I would like to get Miss Pick to meet Paddy Doyle, who does research work for us in general systems theory. But both her and I are totally locked on other activities which have their own competing deadlines and I am afraid Miss Pick will find this response only too familiar and frustrating. But she deserves something better, I suspect.  

Apologies again for the delay and hope to see you sometime. Yours sincerely,

John A Hoskyns
------------

From Paul Watts of the BIM

Management House

Miss Joan Pick Parker St. WC2

Peter Ward Associates (Interplan) Ltd 7th August 1975

9-15 London Road, Croydon

Dear Miss Pick,

Attached is a copy of a letter which I have received from John Hoskyns, who some months ago borrowed your Pilot Study of Earth Enterprise. I hope that you will find his letter encouraging and I should like to hold on to my copy of the report, as I get requests from people for it from time to time. But you can always have it back if you really need it.

Yours sincerely,

P A Watts

Head of Special Projects

--------

From Peter Ward (on compliment slip)

9-15 London Rd. Croydon

11 August 1975

Could not help but see these letters, Joan. Hoskyns could scarcely be more encouraging. I hope your success in steadily securing recognition continues and enter aliases soon in genuine and substantial reward.

Best Wishes

Peter

jmp /15 October 2016

Final Draft (Preface?)

FrontSpiece?

   To the Board of Earth Enterprise

THE EARTH ENTERPRISE PROJECT

Final Draft

Faced with the task of advising the Board on the nature, necessity and marketability of Conservation, the consultant followed the normal procedures of a business planning assignment, tracing the history of the business from its incorporation to the present day, in order to identify the roots of the problem (Party One), discussing her conclusions and recommendation with the board (Part Two), researching consumers’ attitudes to check [tha her b and of Conservation] is likely to create a worthwhile market (Part Three), and in response to the Board’s criticisms and suggestions, appending sections on the numbers involved (Chapter 7), the role of the media (Chapter 14), and the role of Sex in the conservation sales campaign (Part 4).

The Board and Marketing Meeting minutes in the Parts Two and Three took place in hypothesis, at a moment’s notice, so that nil Board Members would have an equal chance of attending. Since those minutes were written, in early 1975, real discussions with a fully and fairly representative sample of the Board have take place in correspondence, which the consultant trusts will be published shortly and which the reader is invited to continue.

JMP/jmp

26 October 2016

Correspondence : C J POLLITT @ Fuel & Nationalized Industries Policy Division, DTI

From the Fuel & Nationalized Industries Policy Division, DTI, 21 June 1973

Dear Miss Pick,

EARTH ENTERPRISE : PILOT STUDY

Thank you for sending me a copy of your pilot study following our telephone conversation some weeks ago. I am afraid it has taken me until now to go right through the document.

As I understood it and as you say in your opening summary, you are at the stage of presenting the first part of a much larger project so that “its implications can be tested on a wider audience”. The following comments - very much my own opinion - are therefore offered in a spirit of constructive criticism, and I hope you will not feel that I am in any way underestimating the effort you have invested in what is already an unusually comprehensive analysis.

First, I readily agree with your comment during our conversation that you thought you had hit upon an original approach. As you may imagine, I read a wide range of publications on energy matters in the course of my work, and I can recall none which use the business model in the way your pilot study. This is not to deny, of course, that others may have reached the same conclusions as yourself by different routes. There are also a number of individual passages where I believe you have expressed important but difficult concepts with great clarity - for example, the paragraphs on the price factor on page 19, and some of the section on resource costings on page 33.

It seems to me however, that while your business analogy is very helpful in many places, its complexity sometimes causes difficulty. Perhaps I am mistaken, and a businessman will find it easy to “read across” between your detailed analogues and the “real world” to which they refer. Even if this is so, however, the lay reader could well lose track here and there. In a sense this is a question of how wide an audience you are really aiming for.

My second point is one I feel sure you have already recognised. Your exclusion of any attempt to quantify energy stocks and flows sets a considerable constraint on the sort of conclusions you can draw. From the point of view of public policies, for example, the difficult decisions are often those of a “how much?” or “how far?” nature rather than simple “What to do”. I appreciate, however, that a heavily quantified study would both be more difficult to write probably of narrower appeal.

Finally a few more specific points: Page 1, paragraph 3 The statement “Man has not the resources to judge the monetary value of profit in the future” is perhaps a little bald. Do not discounting techniques enable one to find a value for any income stream over time, depending on what view one takes of the appropriate time preference rate? Page 2, paragraph 3 The preferred definition of the “corporate objective” is not an operational one until “good” is also defined. You tackle this problem on pages (3/6?) and 35, but without coming to a very firm or precise conclusion. Page 16 The penultimate word in the fifth complete paragraph would appear to have been misspelled - should not be “sppernoval”? Page 41 IN the first line of the second paragraph should “cloudes”  be “clouds”?

I hope these comments are of help to your continuing work on energy

Yours Sincerely,

C J POLLITT

jmp/26 October 2016