Knowledge Networks: Reducing the Cost of Green Business

11/08/2010 12:32 pm ET | Updated May 25, 2011

The leading question about climate change is a question of costs. No one disputes that climate change will be expensive.

Where advocates argue we need to pay now, climate delayers argue we should wait and pay later. As a consequence, where sides diverge on timing, they share a common concern to bring these costs down to levels that are both manageable and predictable.

Smart grid technology is part of an effort to bring down costs for the consumer. By knowing how much energy the customer is using, the argument goes, the consumer will use less energy. It is about driving change through information.

However, the barriers for smart grid technology remain high. It is entering a crowded, mature market place, and is deeply integrated into a rapidly changing if not uncertain scientific, technical and political landscape. The costs are high and the rewards remain uncertain.

There is one potential method to reducing these costs that is both unconventional and still largely unexplored: tailored knowledge networks. I'm not talking about Tweeting our way out of a climate and energy conundrum. I'm talking about the power of information to enable technical solutions at scale when shared freely -- or to impede growth when unduly constrained.

Consider first the process of innovation. It is, by nature, either incremental or radical; either you improve something slightly or invent something entirely new. (Plastics, Benjamin. Plastics.) What an investment will yield -- and whether it will yield anything -- is always uncertain because failure is always an option. In the absence of a clairvoyant, R&D can be unattractive because it can be nothing but costly and uncertain.

In areas requiring innovation, knowledge is then not academic. As the stabilizing and enabling element, knowledge is both cost and cause. It is the product, and a costly product at that. Thankfully, some businesses are beginning to prove that networks reduce those costs.

Consider the example of 2 Degrees, an online network based in Oxford, UK, for professionals working in sustainable business. Their mission is to harness the collective knowledge of their network to expedite the process of innovation through webinars, subject-specific working groups and other information sharing services. Membership is free (though a business membership comes at a cost) and the pace of activity is impressive. Their early success, which I have witnessed as a member for two years now, is impressive and founded on well-established principles of business and group behavior.

First, its members. Drawn from business, government and academia, each member shares a common concern: to understand and help resolve the issue of climate change. The price one pays for general content is nothing other than the knowledge one cares to share, while the benefit is collective; no one has to pay anything, and everyone can learn from anyone.

Whereas traditional forms of information sharing, like peer review articles, conferences or think tanks, are of unquestionable value, they are also slow, burdensome, and monologue-driven. Networks can facilitate the kind of knowledge exchange people often seek: those answered by open-ended questions posed to a well-informed community.

There is an additional benefit to businesses. Whereas businesses often think about the marketplace in terms of capturing market share, networks can be an effective way of increasing the size of the original market. There is a growing body of literature, having grown out of the intersection of behavioral economics and energy, that demonstrates that information provision is a driving force in the adoption of new behavior. In other words, the best way to get people to do something is for them to know other people are doing it. Networks like 2 Degrees are, in this sense, reinforcing; they both strengthen commitments and engender new commitments, creating an expanding space of sustaining behavior.

In the age of growing technical and entrepreneurial challenges in confronting environmental challenges, innovation is essential. In the age of austerity, it is essential that the cost of this innovation is kept low. It's my conviction that knowledge specific networks are can help enable both -- innovation at a lower cost. It's not the answer, but part of the answer.