Efficiency Matters

Whether you're a diehard environmentalist or a conservative capitalist, efficiency matters. Efficiency is what makes the world better, communication easier, and corporations more profitable. And yet, on the energy side, at least, it's something most businesses spend very little time considering.

If you ran a business and had a single employee who goofed off 70% of the time, you'd fire him. Right? What if you had ten employees goofing around, or a hundred, or a thousand? Unfortunately, that's your electricity bill. Take a light bulb for instance. That light bulb is lit by electricity that you, as a company, pay for. So in business terms that light bulb is your employee. Yet to get that light bulb lit you have pay for a massive inefficiency, namely the grid that electric power comes in on. Before it even reaches your light bulb 70% of your paid-for electricity is lost to the grid. 70%! Of money you've paid! To make matters worse, if you're still hanging around with incandescent light bulbs, you're getting 10% of the delivered power given off as actual light, the rest is simply converted into heat. So when you want your employees to give 110% at work, but you're letting your light bulbs off the hook with a less than 10% productivity level, what kind of message are you sending? Even if you have made the switch to fluorescent lighting, you're still dropping 70% of your money to inefficiency. I mean it kills me how many studies businesses do in regards to "employee productivity" or mapping out the best distribution channel, but how very little attention businesses give to efficiency in their office utilities like light bulbs, computers, and their heating and cooling systems.

It all comes down to money. If we want to stay profitable we can't spend our money on things customers can't see or experience, and besides light bulbs and turning the heat on aren't really major costs. So what would be the point in replacing that old rooftop unit, as long as it cools my space, who cares whether it's inefficient or not? In fact, who cares about even servicing the thing? It does not matter to my customers, so why should it matter to me? But it does matter to your customers. And I'm not talking about the "greenies" who knit their own clothes and reuse their bath water. I'm talking about any and all of your customers. Why? Because the money you're spending on all the little inefficiencies throughout the workplace is one less dime that you're not spending on your customers. It's one less customer service rep you could be hiring, or a website you could be making better, or a new product line you could be taking on. All of it adds up to one less way in which you aren't servicing your customers. Instead, you're servicing your utility company.

Your utility bill is not a tax. It is not something you have to live with. I feel like most of the time we don't do anything about our utility bill because we treat it as a tax, we treat it as though we have no choice in paying it every month. It's kind of like hiring your cousin Billy. We know he's a great guy, and we have to hire him because we want to make Thanksgiving an easy affair, but we know he's not really getting the job done. We recognize Cousin Billy's inefficiency, and simply look the other way.

Even really environmental companies, don't do a whole lot about their utility bill. I go to environmentally conscientious grocery stores and restaurants all the time. They spend a whole menu telling me about where the beef was raised, how it was raised, what it was fed, but I take one look around the restaurant and can immediately spot hundreds of dollars going out the door to keep the lights on and gas firing up. These companies compromise on their environmental promise because they convince themselves that doing a little bit to help is better than doing nothing. But the fact of the matter is, they're acting like the big corporations they pretend to compete with. If you're going to be environmental, then go all the way. Fix the entire system. Fix the entire way you approach your business. Demanding better standards for feed lots and not demanding a better physical store is a compromise, not progress.

So what's the solution? I know we all can't simply go out and turn our 60 year old building into a modern LEED certified structure. And certainly staying where we're at is more efficient and environmentally friendly than building an entire new building (green or not). So where's the balance? Knowledge. I can't tell you how many business owners know every little detail about their customer demographic, product line performance, and employee progress, and yet can't tell me anything about their rooftop unit (except that they know they need to change the filters regularly). They make zero plan, and budget zero dollars, to adequately take care of their most important building components. They've done zero research and have no plan to replace the system before it fails. They simply hire their cousin Billy (who works for cheap) to handle all the non-customer centric elements. And in the end, they pay more to replace their system in an emergency, and then keep paying that same high utility bill, which in turn makes them less competitive.

Think I'm stretching the facts here? I can assure I'm not. And I'll tell you the story of a little airline named Southwest, that just did this. Before the fuel crunch of 2006, 2007, and 2008, Southwest hedged its fuel cost at $35/barrel of gas. At the time, $35 was $10 more than other airlines were paying for a barrel of fuel. But then gas prices skyrocketed from $25 to $50 to $75 and finally leveled off at around $125 a barrel in the next few years. So while other airlines we're paying $100 a barrel more in gas and either filing for bankruptcy, going out of business, or charging bag fees, Southwest was gaining market share and keeping their fares low. They did not have to file bankruptcy, lay any employees off, or cut customer service. In fact, they increased customer service by adding more routes, flying more planes, and they were able to expand their advertising. I don't know about you, but I see more Southwest commercials than all the other airlines combined.

So what does Southwest have to do with how efficient my light bulbs are? After all, fuel is obviously a huge part of the transportation industry. But is it the same in every industry? Sure it is. Just think of your store or office like a plane. It too uses fuel. The only difference is, it doesn't land and turn the engines off every few hours, it "flies" 9-5 every day of the week (maybe more). However, in the example I just gave, if another airline had been able to fly planes with more efficient engines, they too would have offset the gas price spikes. Except, they would retain the competitive advantage even when gas prices came back down because their fuel costs would always be lower. The same goes for your company and your competition. The less you have to spend on overhead, on energy costs, on keeping the doors open, the more services you can provide to your customers. The more profitable you will become. If your 9-5 office flies for cheaper, you have a competitive advantage.

So my advice to you: Fire your utility company! Fire your current service company, unless they are helping you with a long-term efficiency plan! And fire all those inefficient employees, starting with your light bulbs. Don't let yourself become complacent in thinking that you have no control in your utility expense. Discover what's out there and make a plan. Make a plan that puts efficiency paramount in all facets of your business. The Energy Store is great place to start. (www.theNRGstore.com)

Although you may find yourself all alone in your industry with this kind of thinking, that's exactly the type of mentality that takes once-inefficient businesses to the top. Efficiency matters, no matter what side of the political aisle you're on. You just have to make it matter to you.