Harvard professor: How companies drive the green transition right now

Some of the most significant steps towards green manufacturing are currently being led by large companies, according to Harvard Professor Willy Shih. He gives his insights on the environment they work in and what technologies will make the biggest green impact.

MADE celebrates its 10th anniversary with the publication of a series of articles on recent manufacturing history and the role of MADE. You will learn about how Denmark has gone from outsourcing manufacturing jobs to establishing supply chains that are closer to home, as well as about the enormous technological advances made in recent years.

Harvard Business School Professor Willy Shih has an impressive academic record on top of a resume of 28 years in the manufacturing industry working for IBM, Eastman Kodak, and more. He has visited manufacturing companies all over the world to learn about different approaches to new technology and sustainability. He is in no doubt when asked how we can reach a more circular and energy- and resource-efficient future:

“I think, the companies will have to drive the transition.”

The manufacturing environment today

And this must be done amid large changes.

”The environment has really changed quite dramatically,” Shih says and adds:

“I think 80 plus percent of World Trade has come under threat. That threat comes partly from geopolitics, but also from climate change. The first big change has been geopolitical instability, with the war in Ukraine and the Suez Crisis. But the second one is the one that is really growing and it requires us to do something about climate change.”

When asked if this ‘something’ could be as simple as producing less, Shih answers:

Overall, the world needs to think more efficiently

Willy Shih, Harvard Business School

“Overall, the world needs to think more efficiently.”

If we produce less, products need to last longer but longer-lasting products usually cost more. We will also have to reuse materials and repair products, and this too is expensive. Customers are generally not ready to pay more, and in many cases, they are not in a position to pay more, Shih explains.

“We have to be mentally ready to have a market of long-lasting products and replace a ‘more is better’ with a ‘longer-lasting is better’- or ‘less is more’ – culture. This is an educational process. Some European countries have done a much better job than the U.S. in minimizing waste, emphasizing reuse, and recovering materials and energy from trash. We are not there at all in the US,” Shih says.

Looking towards governments, Shih underlines, that even though they are starting to encourage a green transition through laws and regulations, these measures have not created the greatest impacts so far:

“Governments will contribute and are now creating acts to drive change but currently, it is the companies that are changing the industry,” he says and continues:

“An example is Mærsk. They have been thought leaders, and even working with its competitors through the International Maritime Organization (IMO) to set emission reduction targets, they are changing a whole industry. Their investments in green methanol are pioneering, even though the business case is challenging, it is a step towards changing things. Organizations like MADE who support such industrial innovation and generate the necessary learnings on sustainable methods are important to enabling change.”

Key technology and processes

Not only organizations can help the industry make a green transition – certain technologies may offer just what we need.

“Right now, applying machine learning to improve production efficiency and yield and creating new process technologies are very exciting.”

The Harvard Professor emphasizes that it is not a super-intelligent AI, which will step up and save the planet. No, luckily, it is simpler than that. 

“There will be many areas that will benefit from the simplest part of AI, which is pattern recognition – going through lots of data, mining the patterns, and improving them,” Willy Shih says.

Pattern recognition can help improve small things that can make a big difference. An example could be how sensors and machine learning can improve chemical production.

For example, in new continuous flow reactors (which enable you to adjust the chemical mix continuously), “You can improve mixing, temperature control, and reaction conditions and monitor them in real-time and correct problems very quickly,” Shih explains.

Shih sees great potential in focusing on process technology for example the application of fermentation where bacteria and chemical processes can replace more polluting production methods. As an example, he mentions, startups like Remilk are using precision fermentation to produce animal-free dairy products in Kalundborg.

Geopolitical insecurity pushes innovation

The aforementioned geopolitical insecurity is not only causing problems. It has also pushed innovation.

“Whenever you have a pressure for change, there’s opportunity, if you look at it the right way,” Willy Shih says and dives into an example that has caught his investigative eye.

“The West used to get most of its’ aerospace titanium from Russia. When they invaded Ukraine all of a sudden, we didn’t want to buy titanium from Russia. Then you ask: ‘Well, why was all this aerospace titanium made in Russia?’ It is because the energy was cheap because they subsidized it. It’s a very dirty process, so it creates a lot of pollution, so we let the Russians do it. But some companies are still importing titanium from Russia because they don’t have alternative sources,” he explains and continues:

“But I’ve been looking at, for example, a new production process that uses hydrogen, and it’s called hydrogen-assisted metallothermic reduction which avoids the Kroll process (a highly polluting and energy-intensive chemical process used to produce metallic titanium from titanium tetrachloride). So anytime I see these kinds of new production processes I am excited.”

The hydrogen process uses much less energy and is a lot less polluting. Nonetheless, green transition and innovation are not always profitable as earlier mentioned and Willy Shih points toward big Danish companies such as Maersk, Novo Nordisk, and LEGO as possible main drivers of innovation because he sees the right mindset in Danish manufacturing giants. The story is different when looking outside of Denmark – especially outside of Europe, according to Willy Shih who underlines there is a reason why Denmark is one of his favorite spots for studytrips.

“We bring students to Denmark because I want to give them a view of what things will look like in ten years in the US.”

Read the interview in Danish – Læs interviewet på dansk.

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