Th Lenses of Business Sustainability

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The Value-Focused Business Sustainability Lenses Sustainability Strategy & Design: Unavoidable Opportunity & Innovation Alderspruce Sustainabili ty Consulting Group

Transcript of Th Lenses of Business Sustainability

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The Value-Focused Business Sustainability Lenses

Sustainability Strategy & Design:Unavoidable Opportunity & Innovation

A l d e r s p r u c e S u s t a i n a b i l it y C o n s u l t i n g G r o u p

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Alderspruce.com

Alderspruce Sustainability Consulting Group

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IntroductionThe main driver for sustainability in business has been the profit margin or expense reduction

motive, traditionally highlighting the expense side of the spreadsheet. Recently, the opportunities that sustainability can present for the revenue side of an organization’s accounting are becoming strong motivators for change.

“Companies leading the way in such innovations, like Levi's and its new water-efficient manufacturing process used in its Waterless Jeans line, Clorox Company and the reformulated cleaning products that make up its Green Works brand, and Coca-Cola's PlantBottle -- the first ever recyclable PET plastic beverage bottle made partially from plants -- have all reaped the benefits of improved sales and improved reputation through these efforts” (Viera, 2011).

This presentation explains the opportunities of sustainability in the language of business, through the many ways a business reduces costs, mitigates the risk of future costs, increases revenue, and grows the overall value of the company.

The message is this: The business, as a legal entity, only cares about two things; profit and growth of the finances. Legally, nothing else matters. Some researchers are attempting to make changes to the economic and legal system to broaden what the business entity cares about, such as B Corporation licensing (bcorporation.net). The people in a business care about many more things, but are required to make decisions as part of the business system to increase growth and profit. Sustainability in business must focus on the economic benefits; the profit and growth motives.

Most business leaders place their attention on the cost or expense benefits of sustainability, things like securing the supply chain, reducing operational expenses, etc. That is only half the story of sustainability for business. And it is actually less than half when measured economically. Much less. Expense control and risk management are where we get the short-term financial results from sustainability. It is low-hanging fruit. It prepares the way for reaping the real benefits of increasing revenue and adding value.

This presentation looks through the lenses of Sustainability to see innovations that will increase revenue for the business. It shows how Sustainability adds value to the business. It focuses on the innovative opportunities that are waiting for business leaders. 

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Benefits - Value

By going through this presentation as a half-day workshop, and completing the exercises, you will:

Find new growth opportunities for your business that you can act on to build value for your organization

Uncover hidden costs that you can decrease or avoid in the near future

Improve the culture of your organization to increase effectiveness

Increase the value of your products and services

Build stronger collaborative relationships with your stakeholders

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ContextFrameworks of sustainable development provide reasons for changing objective phenomena in the world such as

materials, water, energy, toxicity and pollution, global temperatures, etc. That is a one sided perspective. There are two things that need to change; the technical processes and things used in those processes and the human consciousness that drives decisions and behavior that determines those technical processes. Leadership that drives human understanding, commitment and engagement toward developing sustainable systems will have the greatest impact to change the global systems of production, commerce and consumption (Meadows, 2008; Doppelt, 2003).

On the human side of change, dissonance and challenge can trigger changes. Leaders want to head off problems, mitigate risks, decrease costs, and adjust quickly to new regulations or influence how regulation is developed. The competitive foundation of business fosters a metaphor of war in the mindsets of people and culture (Klimek, 2011) that is ultimately destructive as a process - emotionally as well as physically.

The other side of change is appreciative and creative. It taps into the positive flow of energy and draws people into the future. This is the opportunity and innovation side of sustainability change. This presentation is primarily about the new opportunities that can be seen through the lenses of sustainability. This side of change builds reputation, improves collaboration to build shared value (Porter & Kramer, 2011; Accenture/CECP, 2011), discovers new product and service markets, and reinvents the systems of production and commerce. This perspective builds confidence in the the fact that there are more benefits than drawbacks to business sustainability – you just have to look at it through the right lenses to see the opportunities.

When contemplating how to lead change toward sustainability, we consider cultural and personal Values that drive decisions and behavior (Hall, 2002; Trompenaars & Hampden-Turner, 1998). People will view sustainability differently based on their cultural background and personal experiences. Change toward sustainability of systems as a goal requires leaders to adapt their communication to the values and worldviews of their stakeholders (Brown, 2006). A person’s view of the world is developed as that person makes meaning of their circumstances, through their own life experience (Hall, 1987). How a person perceives existence then affects how they take action. Meaning making in individuals, as an interactive act between the inner world of the person and the outer world, therefore controls how those individuals shape the world around them. By reframing how a person understands how life functions in a healthy, sustainable way, that person will have influence through their decisions and actions to create healthy, sustainable systems of production and exchange.

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ContextLeading businesses toward sustainable yet flexible states requires the translation of sustainability from

science and social spheres to the worldview, values and language of business. The language of business is economic, organized by spreadsheets into expenses, revenues and the valuation of assets, with measures of health of profit and growth that are often treated as goals. Willard (2007) is among many who call this translation “the business case” for sustainability. The business case does not encompass all of sustainability as system of thinking. It is the unique lens that sustainability shines through into the eyes of business leaders. Once the business case is proven, the other elements of sustainability can be discovered, such as the good feeling of enabling positive social action or the creation of healthy life environments for living beings on the planet.

Clarifying the business case for sustainable development is important in order to build motivation in stakeholders to continue the sustainability journey. Anderson (1998) calls this journey the climb up “Mt. Sustainability,” because the higher a person or organization climbs, the bigger and farther the view becomes of how the world works. In mountaineering, each step becomes more difficult with the thinning air of higher altitudes. This is analogous to the receding financial benefits of actions that develop sustainability in a business and the difficulty in proving the value addition of leading indicators (Pojasek, 2009) such as reputation, employee engagement, healthy ecosystems, improving quality of life for communities of impact of a business, and others.

Leading change toward sustainability means tapping into the innovative possibilities that will improve the health of a business while improving the health of the social and physical environments. A focus on creativity and opportunity leads people in positive directions, building energy and momentum to accomplish something new. If these efforts are focused through lenses of sustainability that highlight healthy, sustainable processes and relationships, people can develop institutions and rules that mirror their clearer vision.

The following powerpoint presentation is an attempt to clarify that healthy sustainable vision of processes and relationships within the context of organizations. It emerged directly from the course of study and the dialogues during the Organizational Leaders, Management and Sustainability course with Fielding Graduate University, taught by Barclay Hudson, Leni Wildflower and Jeff Leinaweaver.

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The Value-Focused Business Sustainability Lenses

Sustainability Strategy & Design:Unavoidable Opportunity & Innovation

A l d e r s p r u c e S u s t a i n a b i l it y C o n s u l t i n g G r o u p

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…but not like this

Technology will solve our problems…

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Technology will solve our problems…

…like this

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America’s dominance?

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Business Sustainability Lenses

Strategy

Design

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See things in a whole new light…

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See business value in a new light…

EXPENSEThe Four Walls

BOTH REVENUEBeyond the

Walls

Decrease Costs ReputationProductivity of People (Willard, 2002, 2005) and Resources (Porter & van der Linde, 1995)

Avoid Future Costs Competitive AdvantagesNew Revenue Streams/Creating Shared Value (Porter & Kramer, 2011)

Secure Supply/Value Chain (Haanaes, et alia, 2011)

Healthier and more effective products and

services

Increase Employee Engagement (Haanaes, et alia, 2011)

Risk Mitigation (Willard, 2002, 2005)

More effective exchange mechanisms

(complementary currency)

Collaborate across borders

Decrease Turnover; Reduced Attrition Costs, Reduced Recruiting Costs (Willard, 2002, 2005)

Easier Financing (Willard, 2002, 2005)

Improved Market Share (Willard, 2002, 2005) through improved differentiation (Laszlo, 2008)

Compliance with Regulation (Porter & van der Linde, 1995)

Enhance value of products and services

Eco-efficiency (Willard, 2002)Greater value of intangibles - New valuations through new accounting (Accenture & CECP, 2011)

Lower insurance and borrowing costs (Willard, 2002, 2005)

Increase sales

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Example - Social Entrepreneur

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Sustainability Strategy

(Source unknown, webinar, 2011)

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Barriers – Competing Commitments(Kegan & Lahey, 2001)1. Commitment(Improvement Goal)

2. Doing/Not Doing(Instead of #1)

3. Hidden Competing Commitment(generating Col. 2 behaviors)

4. Big Assumption(s)

Conduct an accredited Sustainability Assessment of the organization to clearly define value options

Informal attention given to “green” ideas

Debating the value of anything “green” for the business

Keep control of the organization

I am the person in control – that I have control

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Business Sustainability Lenses

Business Sustainability Strategy

& Design

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Sustainability = Resilience

Backcasting

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from Constraints

Backcasting

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from Constraints is…

Risk Management & Asset Management of:

Environmental – resources becoming limited everyday from overuse and degradation

Social – Regulation and social networking, reputation, political instability and changing lifestyle demands

Backcasting

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How business has always been imagined….

Backcasting

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The way it really works….

Environment

Socio-Political

Economy/Business

Backcasting

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Supply/Value Chain:Materials, Energy, Water

Backcasting

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Supply/Value Chain: People

Creating Shared Value (Porter & Kramer, 2011) or Sustainable Value Creation (Accenture/CECP, 2011):Fair Trade Pepsico & Coca-ColaNestleIncluding all Stakeholders in the

business

Backcasting

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SummaryBackcasting

Sustainability = ResilienceStarting from ConstraintsBusiness operates within Environmental

and Social SystemsSupply/Value Chain Creating Shared Value

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RelationshipsHow can you improve relationships between…

Customers Shareholde

rs

Employees

Business PartnersSuppliers

Industry

Accreditors

Government

Communities of

Impact

Media

Environment

Future Generatio

nsStakeholder Waves

Insurers

Social Media

Organization

Stakeholder

Collaboration

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Visibility = TransparencyStakeholde

r Collaborati

on

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Zero Waste fromStakeholde

r Collaborati

on

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Wates ConstructionThe benefits of implementing these changes included:• Large financial savings throughout the business through waste

reduction.• Recognized as an ‘Industry leader’ for waste reduction.• Increased morale, engagement and productivity of employees.• Better working relationships and reduced cost of contracts with sub-

contractors in line with Wates’ waste measures.

Moving forwardHaving worked hard to recover more of their waste, Wates is now focusingon reducing the amount of waste created. By looking at designing out waste onprojects and changing the procurement rules, Wates aim to realize cost savings which can be passed on to their clients.

PepsiCoSeven plants in UK have Zero waste – today! More on the way.

Zero Waste fromStakeholde

r Collaborati

on

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Summary

Stakeholder

Collaboration

Making the Connections - Improving Relationships

Visibility = Transparency

Zero Waste

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Return on Resources

6% Productive Output

94%Non-Product Output

(Adapted from Ayres,1989 in Friend, 2009)

“Throughput Pie” Product to Non-

Product Ratio for U.S. economy,

1989

Valuation

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Investment in the Value Path

Investment is being screened through a sustainability lens

DJSI – SAM (USA)

FTSE4Good & Ethibel Sustainability Index (Europe)

Walmart’s Sustainability Consortium’s Sustainability Index (Low & Menter, 2011)

Life Cycle Analysis (Low & Menter, 2011)

Intangibles & Goodwill

Footprints – Carbon, Water, Health & Development (UNDP, 2011)

Ecoservices Valuation (Low & Menter, 2011)

Valuation

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Performance

Valuation

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Leading Indicators (Pojasek, 2009)Quality Programs

Baldridge ISO15001Best Practices

ADRI – Australian Business Excellence FrameworkApproachDeploymentResults Improvement

Leading Metrics

Valuation

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Asset Management

Extending the familiar – investment mindsetSustainability is Excellent Asset Management (Willard,

2007)

Valuation

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Asset Management

Valuation

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Value PropositionValuation

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Creating Shared Value

Build Social Capital – design the brand to improve social and environmental health. (Porter & Kramer, 2011)

Valuation

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Social License To Operate

Investing in educational systems to develop your future employees. (Versen, 2011)

Implicit consent

(Common Ground Consultants, Inc., 2008)

Valuation

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Sustainability Index: Version 1.0 and Business Value

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Summary

Return on Resources

Investment in the Value Path

Performance

Leading Metrics

Value Proposition

Creating Shared Value

Social License to Operate

Valuation

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Traditional Business: Waste = Inefficiency

• Total Quality Management• Lean Six Sigma• ISO X0001

Linear Value Chain

Deloitte Touche Tohmatsu & World Economic Forum, 2010)

Circular Systems

Materials Sourcing

Manufacturing

Distribution logistics

Sales & Retail

Consumption & Use

Disposal Product Waste

Consumption / use waste

Packaging waste

Logistics waste

Manufacturing waste

Lim

ited

Rec

yclin

g

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New Economy: Waste = Food

Closed Loop Value Chain

Closed Loop Value Chain

Logistics waste and auxiliary

products reuse

Distribution Logistics

Delo

itte

Touch

e T

ohm

ats

u &

Worl

d E

conom

ic F

oru

m,

20

10

)

Waste from consumption

Product and by- product reuse

Manufacturing

MaterialsSourcing

Product Recycling and Materials Recovery Consumption

and Use

Sales and Retail

Raw Materials

Circular Systems

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“No Garbage” Scenario

Imagine that you no longer have garbage pickup at your house or business, only recycling and composting.

What would it take to make that happen?

Can you see any business opportunities in that scenario?

Circular Systems

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Zero Waste = Business Innovation

Circular System

s

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Zero Waste = Business Innovation

Circular System

s

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Summary

Waste = Inefficiency

Waste = Food

Zero Waste

Circular Systems

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Taking responsibility for the lifecycle of a product (or service) opens new opportunities for business.

Lifecycle Insight for Innovation

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“We envisage a world in which our packaging is no longer seen as a waste but as a valuable resource for our future” (Backus, 2011).

Lifecycle Insight for Innovation

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Shift from selling a product to selling the services of the product

Lifecycle Product–Service Shift

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Durability & Repairability

Improving the connection with the customer

Improving quality – increases costs?

Lifecycle

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Traceability

Reducing Costs, building reputation

Lifecycle

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Insight in to Products and Services

Product-Service Shift

Durability & Repairability

Traceability

SummaryLifecycle

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(Max-Neef, et al., 1991)

SatisfiersHuma

n Needs

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Bottom of the Pyramid

Human

Needs

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(blog.finoweb.co.in, n.d.)

Bottom of the Pyramid

Human

Needs

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Internal Culture

A culture of Meaning

Collaborative

SCARF – Status, Certainty, Autonomy, Relatedness, Fairness (Rock, 2009a, 2009b)

PERMA – Positive emotions, engagement, positive relationships, meaning, accomplishments (Seligman, 2011)

Human

Needs

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Satisfiers

Bottom of the Pyramid

Internal Culture

SummaryHuma

n Needs

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http://www.youtube.com/watch?v=n77BfxnVlyc&t=2m52s 2.53 to 6.36

Biomimicry

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Biomimicry Carpet Design

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Biomimicry

Summary Exercise

Where might you go for inspiration about your products, services or business processes?

What scientists in the natural sciences would you invite to help you?

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Think Global, Act Local

Centralized & Distributed systems

Incremental and Transformational Value-added

Short-term, with the Long-term in MindThrough systems-based design

Paradox Creative Tension

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Strategic Mindsets

Paradox

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Think Global…Act Local

WorldSelf, within

Community

Technology

Paradox

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Adding Systemic Value

Centralized & Distributed

Paradox

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Adding Value

Incremental & TransformationalExtending & enhancing current

product/serviceReimagining the product /service

Paradox

Homeowner purchase –

Carpet choices

Construction install – wall to wall

Wall to Wall carpet –Carpet choices

Carpet Squares – lifetime rental

Financial Services – Customer type,

bundling

Sustainable Investments –

DJSI, microlending

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Short-term & Long-term

InvestmentParadox

Environment

Social

Business/

Economic

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Think Global, Act Local

Centralized & Distributed – Energy systems

Incremental & Transformational Value-added

Short-term, with the Long-term in MindThrough systems-based design

SummaryParadox

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Business Sustainability Lenses

Business Sustainability Strategy

& Design

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Alderspruce.com

Alderspruce Sustainability Consulting Group

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