An increasing number of total loss write-offs in the industry prompted Guild 21 to host a webinar in October to address this growing concern. Guest speaker Mike Shesterkin, the general manager of What’s Next, a company that assists management teams develop strategies and implement action plans that take into account social, environmental and economic factors, proposed a new business model for the future. It is based on sustainability and what he referred to as a “triple bottom line approach.” This would encompass social, environmental and economic considerations while running a business.
The presentation was titled, “You Can Pay Me Now, or You can pay Me Later: Why the Collision and Service Repair Industry Needs a Triple Bottom line Approach.”
Shesterkin, who has been working with AkzoNobel to advance the sustainability movement within the collision industry, has over 30 years of experience in the paint and coatings industry and has held numerous positions in the OEM and vehicle refinish segments. Shesterkin shared insights with listeners about the emergent issue of total loss write-offs and the importance of creating the “building blocks of a radical new future.”
“It is the consumer who is bearing the brunt of the burden of this,” said Shesterkin. “This is especially true when you look at those who exist at the margins of economic stability.” He said total overall transportation costs take up nearly 20 percent of the average American’s household income, which is up two-fold over what it was 50 years ago. For those in the lower income brackets, the cost is far more burdensome.
Shesterkin said when we learn about science or economics, teachers will tell us to consider one variable and assume everything else remains constant; the term in Latin is ‘ceteris paribus.’ “The truth is all of nature and every human interaction occurs within a system of interconnected relationships. Nothing in life is static,” he said.
He said the key to remember is that systems are constantly adapting; therefore, ceteris paribus is meaningless in the real world.
“These faulty sorts of assumptions are particularly troubling when we look back over the history of the 20th century, which has been shaped by the consumerist worldview,” said Shesterkin. “With the rise of consumerism, there has been a common assumption that there are limitless raw materials and an unlimited capacity for the earth to absorb the waste that’s put into it. That assumption is incorrect. This is the reason many of us sense a “disruption” when we’re forced to deal with total economic losses. There is a tremendous amount of waste that ought not to be happening.”
He said there is a new model emerging based on sustainability. “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
He explained the concept of a triple bottom line model, including social, environmental and economic aspects, which is a shift from the old paradigm of measuring the value of a business based solely on its performance.
“There is mounting evidence that those enterprises that put work into developing triple bottom line value, are outperforming those who do not,” said Shesterkin. “Financial institutions are starting to funnel money into these enterprises that are showing the capacity to manage risk around these areas because they represent the longer-term return.”
Areas where risk of exposure can be managed:
- Morality: doing the right thing
- Sustainability: being motivated to preserve the industry and the business in general
- License to operate: society gives a business its license to operate; therefore, meeting the needs of all stakeholders drives this argument
- Reputation: similar to License to Operate but goes more to perception, rather than anything approaching the objective
What’s Next is a business in residence at the Green Garage, a co-working community in Detroit, MI, which includes sustainable businesses that come together with the intention of creating triple bottom line value. Working with a number of community members, Shesterkin devised a list of stakeholders who affect a body shop’s ability to practice its business.
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