The Dark Side of Efficiency

Innovation in Business, Energy, and Environment

By Peter Brooks

In at least three of the cases we have studied so far (Maersk, Groom, Wal-Mart) efficiency was the one thing everyone seemed to agree on.  Investments in greater resource efficiency (energy, water, space) that cost less than future benefits are no-brainers; a company can save money while also preserving precious, finite resources (to say nothing of the safety, regulatory, aesthetic, and morale benefits of finding and fixing inefficiencies) and that is unequivocally a good thing.

Unfortunately there is a dark side to efficiency: it can be more destructive to the environment and speed the withdrawal and consumption of natural resources than if the investment were never made.  In the late 19th century, an English economist, William Jevons, made the startling discovery that technological improvements that increased the efficiency of coal-burning, led to an increased consumption of coal.  To put it another way, greater efficiency was used…

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