Making Data Visible So You Can Act On It

John Schulz, a director of Sustainability Operations at AT&T

There’s a scene early in the 1996 movie “Jerry Maguire” where a sports agent, played by Tom Cruise, decides that his company needs to pursue a more noble path. He writes a manifesto about how the sports management business ought to operate and presents it in a grand overture to the entire staff, peers and executives. He expects to get a big pat on the back. Instead, he gets canned.

John Schulz says he had his own “Jerry Maguire moment” with his company, AT&T, about five years ago.

“My memo essentially said, ‘Look, we really need to take a leadership position around sustainability because we do have such a large portfolio, which means we have a large opportunity,’” Schulz says. “Our technology can be an enabler as well, and that’s somewhat unique — not only can we take care of our operations and our own house, but we also have the ability to look at how our technology can be developed for our customers to be more efficient and to reduce their impacts.”

Schulz didn’t get fired for his memo. Instead, he got a different job. AT&T, unbeknownst to him, was already having this kind of conversation at the executive level, getting ready to hire its first Chief Sustainability Officer. He moved from doing a data-centric systems job to working with the company’s energy team to assemble AT&T’s first greenhouse gas emissions inventory.

Today, Schulz is part of AT&T’s corporate sustainability group and is a director of sustainability operations, working closely with several business units on integrating sustainability into their operations.

In a conversation with MIT Sloan Management Review’s Nina Kruschwitz, Schulz talks about AT&T’s work to identify and manage its energy and water use and how it goes about framing sustainability work in a business case.

You were a big part of AT&T’s energy team for several years. Can you give us an overview of the company’s energy program?

We spend millions of dollars on energy efficiency programs and initiatives. The reason is that many of them have very competitive returns on investment. And the great thing is that there’s so much opportunity there, because of our scale and because of the growth of our business. I find this to be a stunning statistic: From 2007 to 2011, our wireless data network traffic grew 20,000 percent. That’s a lot of zeros.

Think about what happened between 2007 and today. It’s this explosion of data-intensive devices that are all hooked up. And it’s not just data, it’s video and all these forms of multimedia being transmitted through the spectrum — through the air essentially. So maybe it’s not so surprising, but it’s still an amazing number. This is a business that is expanding tremendously, and at a tremendous pace. That is always the backdrop against which we show these opportunities to drive efficiency.

So part of what you’re focusing on is making AT&T’s own operations more efficient, and part is making large customers’ data usage more efficient and useful?

Yes. Let’s start with the first part, our own operations. We manage thousands of facilities across the nation. They’re made up of tall administrative buildings in downtown areas like Dallas and Chicago — there are a great number of those.

The facilities that really make the network run are the central office buildings that house what used to just be phone networking equipment, but which is migrating to Internet Protocol data central offices, where that data-intensive IP traffic is going.

Those facilities make up a little less than 50 percent of AT&T’s energy usage. So we did your classic Pareto analysis to figure out which 20 percent of our facilities were representing 80 percent of the usage. We needed to get more visibility to data that was useful for those 1,000 facilities — so we developed a scorecard that included questions such as what types of projects do you have funded for that facility? What have you completed? Have you done Energy Star training? Do you have renewable energy at these facilities?

We ended up getting these very direct, I would say pretty efficient in terms of the information that they use, scorecards that grade these facilities, A through F.

The visibility of that data is what really drives behavior, because it’s shared with their peers, who the facility managers want to do well among, and with upper management. We found the scorecard model to be very useful, both for choosing the right points of data and then for making them visible. That was a real turning point for us.

I love the connection between making something visible and then being able to do something about it. Until it’s visible, what were they supposed to do? They could go off on their own and try X, Y and Z, but they wouldn’t necessarily be the most high-leverage actions, or what senior management would want.

Exactly. We looked at water, too. People might say, “Why is AT&T talking about water?” but while we recognize that we are not water-intensive like the food and beverage industry or heavy manufacturing or processing or agricultural, we do use a fair amount of water. But we only knew the top line. We only knew that generally, we were using about 3.4 billion gallons of water. Well, is that a lot, is that not a lot? We didn’t know. We really didn’t know.

We also didn’t know how that broke down — where or in what kind of buildings we were using water or for what purposes. So we did a similar evaluation as we did with energy and what we found was that about 125 of our buildings represented half of our water use.

That’s a nice targeted collection of buildings, and so we dove into those buildings to find out what was going on in each facility, what kind of awareness there was for the water use, what kind of water use efficiency efforts were in place. What we found was, and I think you’ve probably guessed it, was that these buildings had cooling towers that use water to cool the environment, and they were either heavily populated with people, and so a lot of people were coming in and out, doors opening and closing, lots of cooling required; or they were a technical space, like central offices or data centers that needed that constant cool temperature for the equipment.

So we focused on water efficiency in that cooling process. Earlier this year, we announced that we’re working with the Environmental Defense Fund (EDF) on some pilot projects at a collection of these sites to get even more detail at that level and really build the business case. The business case for water efficiency is very challenging, because water is cheap in the United States.

Right now it is, yes.

It’s undervalued right now. The cost of it is so low, it’s difficult to justify an investment in water efficiency. And that was the challenge that we and EDF decided to take a look at.

What we found was that you needed to marry this together with the entire cooling process. You’ll notice I didn’t say water efficiency, or water process, or cooling tower process even; it’s the whole thing. And then you can integrate energy savings related to the chiller, you can integrate potential chemicals reductions and chemical savings, because you use chemicals to treat the water. We spend quite a bit of money on keeping the water chemistry correct, so that you don’t get green stuff growing in the tank, or corrosion and buildup of phlegm on the edges. If you can reduce your chemical use, you’re not blowing those chemicals down the drain to the sewer, and also there’s savings.

So if you look at the whole process holistically, suddenly it becomes more compelling from a business case perspective. And that’s the nut we’re trying to crack with EDF.

You talk about the framing of these issues as a business case, and not just a sustainability effort.

You think of AT&T and you think of the amount of investment that AT&T makes into our network and our infrastructure. It was $20 billion last year, an incredible amount of investment — I think it was the largest in the country, actually. We also recently announced $66 billion in network infrastructure over the next three years, which just shows how critical these network investments to our future.

The challenge is that every business case runs up against the network, and the critical path of having that network run as efficiently as possible. So you have to be very, very competitive in your business case.

Let’s talk about the other piece of your job, which is thinking about the ways that AT&T’s products and services can be useful, in sustainable ways, to customers.

They’re an enabling factor, for sure. Intuitively, people understand that if they can use their phone or their data lines to work from home or avoid getting in the car or on a plane to go to a meeting, and still be productive and able to spend their evenings to go to the kids’ soccer game or whatever, then they’ve increased the quality of their lives, they’ve been very efficient and oh, they’ve also reduced their environmental impact.

But it’s difficult to put pen to paper and quantify that so, we engaged with credible third parties, working very closely with the Carbon Disclosure Project and Verdantix to do some whitepaper research. The first one was a case for telepresence, which enables very high-definition virtual meetings. The paper talks about how an investment in a given number of telepresence locations has an economic and environmental impact. It made the business case and also attempted to quantify some of the reductions in greenhouse gas emissions that result as well.

We also researched cloud computing as well as the big picture about the telecommuting and telecommunications economy. This was our first foray into trying to quantify what was intuitive. And I think it was pretty good. We were one of the first companies to come up with some defendable models on the savings.

But there are a lot of whitepapers out there, and what we’re finding is that we need to engage more directly with real customers. We’re working with the Carbon War Room on M2M, attempting to take it one step further, which is to evaluate opportunities for machine-to-machine technology with real customers in real situations to drive real benefits.

Let me jump in and ask you to explain machine-to-machine technology and how AT&T is involved with it.

The classic example would be the smart grid, right? Collecting data from disparate points, bringing that data together through communications and technology, making sense of the data and then making a good decision with the data. That’s the smart utility idea, using distributed data collection for intelligent decision-making.

You could do that for fleet, for efficient routing, efficient inventory management — all that stuff, which is again collecting distributed data and bringing it to a central place to be able to make good decisions with it.

We’re trying to take all of this beyond whitepaper to actual value chain engagement, if you will, and looking at where the connections are made in, say, a large fleet or trucking operation, and how that marries with inventory control, and how do you have fewer trucks on the road and less empty trucks and less empty runs. How do you put all this together, and what are the pieces of the puzzle that need to be brought to the table to optimize those kinds of processes? Our work with the Carbon War Room is to not only do the research to figure out what those look like, but then also to get the discussions going across the value chain.

Would this be a new offering that AT&T would have for its customers?

It’s not so much a new offering. A lot of these technologies are in place, actually. It’s really understanding the decision-making process for the customer, and the right way to present the value to them.

I think most of it is going to be looking at the right way to communicate and bring the right people to the discussion, so that a customer can recognize the value. Again, it starts with the business case. We keep coming back to the business case; these are all a business-driven decisions.

Pulling back to the big picture to close: Do you think AT&T’s sustainability agenda gives the company a competitive advantage? Do you think some of your competitors might want to do what you’re doing in certain areas?

That’s an interesting question. I think that our two largest domestic competitors also realize that this is an expectation of our customers, and it’s now becoming an expectation of our board and our stakeholders, beyond just the customers. There are lots of ratings and rankings that will give you perspective on that. I would say that the path that we’ve taken, we’ve shown progress, and from the point in time when I wrote my memo to where we are today is a fairly dramatic evolution. It really is.

It’s only been about five years, right?

Yeah. But an interesting evolution that I wasn’t expecting, that was not in my memo, is the broader perspective that we’ve taken on what sustainability means. I went in with a very environmental focus. That was just where I was coming from personally, and where I think there was the most immediate traction.

But we’ve broadened it to really embrace the social piece of it. Several years ago, the Chairman said, “In our engagement with our communities, we’re all over the board. Our philanthropic efforts are all over the board; our messaging about our emphasis is all over the board; we need to focus.” And the company saw that one of the most important social issues impacting the true sustainability of our company was education – ensuring a strong workforce for tomorrow. Our philanthropic efforts and our social efforts are really very focused on education, and most particularly the high school dropout crisis.

We have a program called Aspire, which began as a $100 million commitment focused on addressing the high school dropout crisis. This year, we expanded our Aspire program by investing another $250 million planned over five years, with a specific focus on supporting innovative ways to keep all students on track to graduate from high school ready for college and careers.

At first, I didn’t appreciate or didn’t realize the broad nature of sustainability, meaning the overlapping of what AT&T does and what’s important for our communities. It has expanded from what I’m most comfortable with, the environment, to include things like diversity and the aging of the population and how you enable the evolution of our customer base to take advantage of our products and services.

At first it was kind of an odd marriage, because it was people who were writing grants to charities that were working in the education space, and people like me who were crunching numbers to create a greenhouse gas inventory. And it wasn’t clear where the synergy was. But over the last year and a half particularly, what we’ve found is that the broader and more comprehensive strategy is the community piece — how we can create shared value for the company and the community. It’s brought different ways of thinking about things to the table that we wouldn’t have otherwise.