A couple of days back I was disccusing with a friend of mine about the coal industry in the context of the Australian emissions scheme. What will happen to these guys when they compete with countries like India and China which do not have a emissions scheme.

Will they be a endangered species? I am not sure.

The important thing about the emissions scheme is that it is for the “common good” and not for any particular entity. However, it is a bigger issue than that.

Schumpeter was famous for his explanation of the “creative destruction” process. Drucker explains (Free Reg) it the best.

“We must learn how to make existing companies capable of innovation where innovation means the systematic sloughing off of yesterday.”

In a way, this is the essence of capitalism. I gave another analogy. Hinduism has the trioka of gods at the top of the pyramid. Brahma (the creator), Vishnu (the preserver) and Shiva (the destroyer). The three Gods would participate in the cycle of life.

The same is true for companies and industries. This is the same as the movement from an agrarian society to a manufacturing and then a services society. Past industries changed or died. We are at the same stage in history.

This quote from Voltaire will be helpful.

History never repeats itself, man does.

The point is that the coal industry has an option and that is value addition.

Tom Peters in his ebook rant, “PSF is Everything” talks about the value addition ladder.

Raw materials, Goods, Services, Solutions, Experiences, Dreams and Lovemarks.

Well, lovemarks will be really tough for the coal industry but they can move from Raw materials to Solutions. Can they provide carbon capture technology with the coal they sell? That would be great. Australia already has a high quality coal. The opportunities with a co2 capture mechanism will be immense.

That is one example and I am not expert in this industry. However, there is an opportunity to tap into the value add ladder.