Charting paths to a sustainable future

Citation

Abraham, S. (2009), "Charting paths to a sustainable future", Strategy & Leadership, Vol. 37 No. 5. https://doi.org/10.1108/sl.2009.26137eac.001

Charting paths to a sustainable future

Article Type: ASP 2009 conference report From: Strategy & Leadership, Volume 37, Issue 5

The theme of the Eighth Annual Conference of the Association of Strategic Planning at San Diego, California was “Planning for a Sustainable Future.” The conference covered two days and featured three keynote speakers, one keynote panel, and 21 breakout sessions. In addition, it offered seven in-depth sessions.[1]

What follows are highlights from two of the keynote presentations (the other has already been summarized in this journal)[2] and a selection of the breakout sessions. For more on the keynotes and presentations, visit the ASP website: www.strategyplus.org.

Keynote Presentation: “Strategy, Sustainability, and Social Innovation,” James A. Phills, Jr, Director of Stanford University’s Center for Social Innovation and Associate Professor of Organizational Behavior, Stanford Business School, Palo Alto, CA

Sustainability, defined as meeting the “needs of the present without compromising the ability of future generations to meet their own needs,”[3] has emerged as not only a goal in its own right, but also a major challenge within the field of corporate social responsibility (CSR). Sustainability efforts have typically taken a back seat to a corporation fulfilling its economic responsibilities of growth in profits and shareholder value. But Prof. James A. Phills, Jr agrees with analysts who now believe that “long-term economic growth is not possible unless that growth is socially and environmentally sustainable.”[4] He advocates aligning sustainability with scope and competitive advantage to ensure a fit between the company’s activities/industry, the social problem, the potential solution, and the firm’s capabilities and resources.

Consumers have industry-specific concerns:[5]

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  In apparel, working conditions and fair pay.

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  In mining, air and water pollution.

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  In petrochemicals, price gouging, environmental practices, climate change (developing countries poverty and political stability).

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  In pharmaceuticals, affordability of prescription drugs, direct-to-consumer advertising.

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  In food and beverages, an obesity epidemic.

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  In financial services, transparency, consumer debt, predatory lending, and discrimination.

To illustrate the disparity between espoused goals and actions, consumers in almost every opinion poll say that they are very concerned about climate change, yet a 2007 McKinsey & Company global survey of 7,751 consumers in eight major economies shows that while a full 87 percent of them are concerned about the environmental and social impacts of the products they buy, only 33 percent say they are ready to buy green products or have already done so.[6]

So companies should adopt a proactive rather than defensive stance toward sustainability, choose sustainability initiatives and investments based on their significance and relationship to their industry, not overestimate the value customers place on social performance (yet not treat it as fixed either), and develop an understanding of the “political” dynamics that exist.

A “social innovation” is any novel and useful solution to a social need or problem that is better than existing approaches (i.e. more effective, efficient, sustainable, or just) and for which the value created (benefits) accrues primarily to society as a whole rather than private individuals (examples include microfinance and fair-trade products).

Mechanisms of social innovation include exchanging ideas and values between organizations in the public, private, and nonprofit sectors, shifting roles and relationships between business, government, and nonprofits, and blending market-based principles and mechanisms with public and philanthropic support. In other words, social innovation becomes easier the more that boundaries between these sectors and entities are dissolved, and is essential to fostering sustainability.

Keynote Presentation: “Strategy as Art and Design: Developing Sustainable Organizations,” dt ogilvie, Founding Director, The Center for Urban Entrepreneurship & Economic Development and Associate Professor of Management and Global Business, Rutgers University, Newark, NJ

This presentation advanced the “think-plan-act” process to a learning cycle of “think-act-think-act-think-plan-act.” Acting ideally leads to knowledge, and the feedback can be reinvested in better thinking, better planning, and finally better actions. By shortening the feedback cycles, everything improves. The how-to insights included:

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  Strategy as art. People have to be passionate about what they do. Leaders have to engage the organization around a sustainable strategy. And they have to base decisions on shared values, gaining acceptance before taking action, and use “viral marketing” (through blogging, green movement, activist groups) to disseminate information and gain broad acceptance.

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  Strategy as design. Just as successful new products are developed through rapid prototyping to enable lessons to be quickly learned and applied, so also should new things be tried to tweak or change a strategy. Leaders should pick a desired future and then work backwards to see what needs to be done. But as these tasks begin to be done, there should always be an element of trial and error and learning, so that a strategy continues to evolve.

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  Crafting strategy. Planning teams should create models in groups where they get involved, gain new insights, and learn to collaborate effectively. Such small groups reignite the spark of latent creativity and instill attitudes such as, “we do tolerate failure.”

Breakout sessions

Replacing petrochemicals with safer alternatives: Jane Christie, President, NRG Resources, Inc., Jennifer Beever, CMO for Hire and President, New Incite, and Jim Wilson, Managing Director, Claremont Strategy Center presented a case study that explored how a new management team, in a promising but challenging turnaround situation positioned NRG Resources, Inc. (“NRG”) as a credible supplier of “solutions for sustainability” to industrial customers.[7] The case addressed many of the practical considerations involved in adopting “green” positioning in a business-to-business market.

NRG customers have major problems, for example:

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  Trucking companies have high fuel costs and are major sources of PM, NO_x, and SO_x pollutants.

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  Marine fleets burn the planet’s dirtiest fuel and face port restrictions.

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  Agricultural vehicles commonly leak hydraulic fluid in sensitive areas.

Beginning with safer plant-based components and collaborating with customers, NRG used proprietary materials and techniques to produce high-performing lubricants and chemicals that met customers’ environmental needs immediately and were technically superior to competitive offerings. The firm unequivocally believes that environmental and economic goals are simultaneously achievable.

Embracing the future: Don Heathfield, Founder, Future Map, Cambridge, MA, maintains that only a handful of companies are able to build effective strategies and proactively manage change. What they do that others don’t is to engage in future-oriented strategic conversations, build a culture of embracing the future, and execute flawlessly even in an era of constant change.[8]

What management most needs today is a continuously updated “big picture” of what future the company needs to prepare for. This comprises events anticipated in its market and competitive environment, other trends that might affect the company and their impact on it, as well as its objectives, strategies, and action plans. Such a “big picture” would constantly keep the company in a state of readiness and connect strategy-development with implementation processes. Strategic planners will need state-of-the-art software tools to make such readiness possible.

Sustainability in hard times: Mark Morgan, Chief Executive Advisor, StratEx Advisors, Inc. gave a down-to-earth presentation about what to do in an economic downturn.[9] He advocates looking for advantages. Prune for growth (cut the branches, not the tree), create slack, buy assets more cheaply, buy back debt (at cents on the dollar), use cheaper professional services, and consider taking advantage of the increase in available talent (it’s a buyer’s market). Focus on decision quality (how you arrived at a decision – the frame, alternatives, reliability of information, clear thinking, values – rather than on outcomes) and “portfolio-management mastery:”

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  Work on continuous improvement.

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  Work in product development and operations.

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  Work to transform (rebuild) the business.

Use consultants to help intervene and break the cycle of old habits, and help to create strategic-planning processes.

Restoring the balance: Anika Savage and Michael Sales[10] note that only since about the mid-1800s has man engaged in “take-make-waste” practices. These need to be changed so that everything is recycled except biodegradable wastes, restoring the perfect balance that existed for millennia. Sustainability practices can be carried out over and over again without negative environmental effects or impossibly high costs to anyone involved, but these require staunch leadership. For any critical environmental problem (such as CO₂ emissions), there are four possibilities for taking action:

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  Transformative breakthrough (very short-term) will require technological innovation and radical new forms of belief, behaviors, and organization.

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  Maintaining the status quo (short-term) will require stop-gap measures, but in this interim change is resisted, economic disparity continues, technologies mature, and forms of belief, behavior, and organization remain traditional.

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  Disciplined forward action (gradual, longer-term) requires idealism and sacrifice, an investment in future technology growth, and new forms of belief, behavior, and organization.

Should leadership ultimately fail, the consequence is likely a breakdown that will result in economic depression, technology decline, a survival mentality, anxiety, and cynicism – certainly the scenario to avoid.

Opportunities in health and sustainability markets: Irene Hughes, CEO, Essence Consulting, and Miriam Karell, Founding Sustainability Strategist, Three Point Vision, made the point that companies have to transition from business-as-usual (BAU) to sustainability-as-usual (SAU).[11] Today, LOHAS (Lifestyle of Health and Sustainability) is a $209 billion marketplace. In an era of declining resources and increasing resource demand, sustainability is not possible (see left-hand portion of Exhibit 1). However, if resource demand can be slowed to a level where resources aren’t being depleted, then sustainability is possible (middle portion). In the best case (a restorative economy), resources have the possibility to grow again because demand for them has dropped to a much lower level. This is true sustainability.

Exhibit 1 The funnel

Sustainability leadership is a combination of awareness, innovation, and action. Sustainability leaders, to be effective, must take on a new mindset: operate in networks, not hierarchies; regard life – not money – as having most value; and engage in win-win-win situations instead of tradeoffs.

Hughes and Karell offered a new definition of sustainability: “Sustainability is the role I have in sustaining and fostering the ability for [who?] to be able to [have/do what?] for the next [how long?] as a result of my actions now.”

The people on the bus: William Schiemann, CEO, Metrus Group, Inc., focused his remarks on “people equity”, the key driver of strategic formulation and implementation.[12] Strategic planning and implementation tools deliver only a fraction of their value if they are not adequately aligned with human resources and behaviors, have sufficient capabilities to deliver on the strategy, and have high workforce engagement – three factors that together make up people equity.

Schiemann maintains that sustainability goals and measures have to be part of the company’s core strategy, and not added on or treated as a separate initiative. Senior leaders must be committed to broader sustainable outcomes, in addition to the usual financial results and those regarding customer loyalty and retention.

Strategic planners can and should play vital roles such as:

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  Build more business models that drive sustainability.

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  Guide the integration of functional specialties.

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  Develop more holistic measures that encompass sustainability.

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  Ensure that strategic plans are driven by people equity (alignment, capabilities, and engagement).

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  Test alternative futures using such models.

Notes

1. 1.

   Michael Putz, Director, Business Development and Strategy, Cisco Systems, who led one in-depth session, is submitting his presentation as an article for a forthcoming issue of Strategy & Leadership.

2. 2.

   Jeff Dunn, President and CEO of Bolthouse Farms, gave a presentation entitled, “Transforming pain to performance and purpose” that was reported in Stan Abraham, “ASP conference report: “Think green: rapid growth in the hi-tech baby-carrots business,” Strategy & Leadership, Vol. 37, No. 4 (2009)

3. 3.

   UN General Assembly, 1987. Report of the World Commission on Environment and Development: Our Common Future [Electronic Version]. Retrieved February 21, 2009, from www.undocuments.net/wced-ocf.htm

4. 4.

   Epstein, M.J. (2008). Making Sustainability Work: Best Practices in Managing and Measuring Corporate Social, Environmental and Economic Impacts, (1st edition), Sheffield, UK, 33.

5. 5.

   See Bonini, S. and Oppenheim, J. (2008), “Cultivating the green consumer”, Stanford Social Innovation Review, 6(4), 56-61 and Beardsley, S.C., Bonini, S., Mendonca, L. and Oppenheim, J. (2007), “A new era for business”, Stanford Social Innovation Review, 5(3), 57-63.

6. 6.

   Bonini and Oppenheim (2008), op. cit.

7. 7.

   Jane Christie, President, NRG Resources, Inc., Jennifer Beever, CMO for Hire and President, New Incite, and Jim Wilson, Managing Director, Claremont Strategy Center, “An emerging firm in a ‘triple bottom line’ world.”

8. 8.

   Don Heathfield, Founder, Future Map, Cambridge, MA, “Putting future in the center of strategic planning – building future management systems.”

9. 9.

   Mark Morgan, Chief Executive Advisor, StratEx Advisors, Inc., “Executing sustainable strategy in a downturn.”

10. 10.

    Anika Savage and Michael Sales, Co-Founders, Art of the Future, “Discovering and using the benefits of sustainability practices.”

11. 11.

    Irene Hughes, CEO, Essence Consulting, and Miriam Karell, Founding Sustainability Strategist, Three Point Vision, “Sustainability leadership: strategies and paradigms.”

12. 12.

    William Schiemann, CEO, Metrus Group, Inc., “Connecting the dots: linking sustainability, strategic planning and human capital.”

Stan Abraham (scabraham@csupomona.edu) is a professor of strategy and entrepreneurship at Cal Poly Pomona and a Contributing Editor for Strategy & Leadership. He has reported on every Association of Strategic Planning annual conference since 2001 for S&L.