In the modern management approach, the strategic focus is on the ratio of value and costs, as is depicted in Fig. 3.1b . A big difference between value and costs create a variety of strategic options for setting the right price (more profit by optimization of margin per product versus sales volume).
In the classical management paradigm, higher value (“quality”) leads always to higher costs. In the modern management paradigm that is not the case: there are many management techniques that lead to a better value/costs ratio. Examples are: logistics (better delivery at lower stock levels), complaint management (satisfied customers with less claims), waste and quality management (less materials better quality). All these examples – there are many more in the field of Total Quality Management and Continuous Improvement – lead to more value at less costs. This is called “the double objective” for managers and opens new perspectives to support eco-efficiency (it supports the first part of the eco-efficiency definition of the WBCSD, as given under the tab “general”).
Note that this modern management philosophy is much more than just “adding services” to existing products. It is about carefully improving the quality of products and services (as perceived by the customer!) by eliminating the “non value added” energy, materials and work.
A fact is that these modern management techniques not always lead to better eco-efficiency (e.g. the use of pesticides in agriculture results in a better value/costs ratio but not in a better level of environmental protection). That is why the aforementioned definition of eco-efficiency of the WBCSD adds: “….while progressively reducing ecological impacts …..”.
For this reason, the eco-costs are indispensable for companies which aim at good governance.
Literature: see under tab references 2.0, 2.5 and 2.8.