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Sustainability – As a business opportunity

Planet Earth

Earlier this month I attended a most thought provoking event – “Climate change – the latest evidence and implications for business” organised by The Walker Institute, the Met Office and the Grantham Institute. The latest climate change evidence suggests that temperatures are rising, humans are to blame and carbon reduction targets will need to be met on a sustained basis to mitigate the effects. The central theme of this blog is that dealing effectively with this climate change opens up great business opportunities – the potential is such that it merits focused thinking by business leaders irrespective of their personal environmental views. This is very different from the corporate social responsibility agenda where there appears still to be a belief that companies have a duty to undertake social corporate responsibility initiatives for the greater good. Alice Korngold, author of A Better World, Inc.: How Companies Profit by Solving Global Problems…Where Governments Cannot (Palgrave Macmillan, 2014), is most refreshing in this regard:

“I fully encourage companies to maximize the opportunities to mitigate risks, reduce costs, and profit—in both the short term and the long term—by finding solutions to global challenges such as climate change, poverty, education, healthcare, human rights, and ecosystem degradation.”

The importance of this linkage between growth, competitiveness and sustainability was a key point made by Pierre Nanterme, the Chairman and CEO of Accenture in his opening to their #Sustainability24 event on 4 June 2014. He argued that business, academics and governments are now aligned in the view that actions to improve sustainability are no longer optional!

Actions to turn theory to value

Optimisation along an industry Supply Chain is one avenue that is already providing benefits in some industries. In his article “Engagement – Getting it together”, Tony Webb argues that thinking holistically about inputs such as R&D, sourcing, incentives, logistics design can drive improved outputs along the supply chain – for example safer buildings, less carbon, better conditions, more effective agriculture etc. ; moreover, over time, these can improve the overall effectiveness and efficiency of the system and reduce the overall carbon intensity. Tony proposes the following six principles for successful, B2B sustainability collaboration:

“1. Pace: how quickly can five or 10 companies make a substantive, measured difference?
2. Depth: how deep can they go beyond their own operations into the supply chain?
3. Governance: how well managed are they and how transparent?
4. Communication on failure and success: how far can they push members to report, and aggregate that in a credible way?
5. Accountability: what they do with laggard members. This is one of the hardest areas. Carrot usually wins over stick, but without some of the NGO and media “stick” attention, some of this wouldn’t happen, so the balance is key.
6. Influence: how they use their work to raise the bar elsewhere.”

Engaging the people throughout your enterprise in a sustainability drive – that is clearly sponsored by top management – is another valuable avenue. This has the advantage of opening doors for broader contributions from the talent at all levels in your enterprise – that can in it self generate positive discretionary effort and a rich stream of sustainability improvement ideas. For example, the instructors in a flying school that were challenged to reduce the school’s use of aviation fuel decided to institutionalize a much more extensive re-planning of student flying programmes when bad weather was experienced. This involved the junior instructors in much more planning effort and fewer flying hours in marginal flying conditions that only allowed limited training requirements to be met. This resulted in more programmes end dates being delayed but the full costs were materially reduced (as was the carbon footprint). Thoughful use of the increasing amounts of data and computing capacity opens up ever increasing opportunities to optimize all dimensions of our processes and lower the carbon intensity of our businesses. As the Carbon Trust points out:

“Big Data is the first step to measuring the complex web of interdependencies between the economy and the environment. If you can’t measure effectively it is certainly true that you can’t manage it effectively.”

Another Leadership challenge …..

In his recent book Accelerate, John Kotter argues that:

“The world is now changing at a rate at which the basic systems, structures, and cultures built over the past century cannot keep up with the demands being placed on them. Incremental adjustments to how you manage and strategize, no matter how clever, are not up to the job. You need something very new to stay ahead in an age of tumultuous change and growing uncertainties.”

In his research, Kotter has identified networks in a number of large successful organisations that operate alongside the conventional hierarchy. In these enterprises “networks of willing volunteers” operate alongside conventional hierarchies and accelerate the capacity to change. In these organisations individuals contribute to change initiatives as part of the network as well as fulfilling roles in the line organisation.

Kotter Dual Op System

He argues that such “dual operating systems” enable the data needed to turn threats into opportunities to be processed with the agility that 20th Century hierarchies find difficult if not impossible. I sense that this approach could be a pragmatic way of accelerating sustainability programmes.

Next Steps

If these ideas resonate with you, please contact me to discuss how Efficienarta could help you develop an action plan that improves your sustainability whilst also developing the engagement of your people and the expertise of your leaders.

 

Huw Morris

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