Systems’ thinking implies taking a holistic view of a situation or circumstance that impacts on all stakeholders involved including all their interactions. Such a view becomes more imperative when management of the situation or circumstance is considered; as an obstructed view will lead at best to a partial approach to management or at worst to a wrong or misleading one. Above all, management goal must be kept in focus so that management action does not become isolated and ineffective, which could lead to business loss.
Business mega-trends force fundamental and persistent paradigm shifts in how companies compete. Some Businesses come out of them stronger as winners while others as losers. In the May, 2010 edition of the Harvard Business Report, the authors of the Big Idea feature, David Lubin and Daniel Esty, argue that sustainability is the next transformational business mega-trend comparable to past mega-trends like mass production, manufacturing quality movement, Information Technology revolution, and globalization. As one may recall, during the manufacturing quality mega-trend, General Motors’ failure to react led to its decline whereas Kodak’s dominant position in photography quickly eroded in the IT revolution mega-trend, as it ignored the signals that digital technologies would displace film.
Arguably, the sustainability mega-trend will again shuffle businesses into winners and losers, depending on how they react or who loses his eyes on the ball. Therefore, Businesses must keep their eyes on the ball, in this case on sustainability if they would survive with this next fundamental shift, though at an early stage. For Businesses not to miss out the trend, the following has been suggested:
a. Getting the vision right, which simply put means knowing what to do. many will agree that Vision is an imperative step in any policy process, more so that if we don’t know where we want to go, it makes little or no difference that we make great progress. However, I would like to emphasize that the point here is getting the vision right because vision can be very dangerous like the ones that brought wars and famine to mankind. Another example in my opinion is the vision some environmentalists project about a sustainable world, which has led many to associate environmental activism with restriction, prohibition, regulation, and sacrifice. This has resulted in an obstructed view of a sustainable world as one which is of a tight and probably centralized control with low material standard of living.
Having said that, Businesses in knowing what to do can start by focusing on risk and cost reduction and over time develop strategies for increasing value creation, ultimately including intangibles such as brand and culture. As reported by carbon49, a Canadian climate change blog, some pioneering companies are already seeing payoff. In focusing on outperforming competitors on regulatory compliance, 3M’s Pollution Prevention Pays reduced its pollutants by more than 2.6 billion pounds and saved the company more than $1 billion, while DuPont’s ‘zero waste’ commitment led to its decision to shed businesses with big Eco-footprints, such as carpets and nylon, as the environmental risks were deemed to outweigh their potential contribution to future earnings.
b. Getting execution right means knowing how to do it. Corporations tend to understand this better than some Governments and Government related businesses, as probably 90% of all Public discourse involves several arguments about execution or implementation. Most policy debates start and end at this stage.
Businesses could focus in five critical areas: leadership, methods, strategy, management, and reporting.
i. Leadership: The IT revolution mega-trend created the leadership position Chief Information Officer. Many companies now have Chief Sustainability Officer (CSO) to lead the company through the sustainability stages. Notable companies with CSO include AT&T (U.S.), SAP (Germany), and LoyaltyOne (Canada);
ii. Methods: Sustainability is bringing new business methods and tools such as business-case analysis, trend spotting, scenario planning, risk modelling to encompass the specialized requirements of environmental sustainability;
iii. Strategy: With a solid base of analytical data, businesses will be positioned to develop distinctive sustainability strategies. Many aspects of strategy development will remain internal, but businesses will increasingly adopt open-source approaches that engage outsiders;
iv. Management should consider incorporating sustainability objectives into compensation models, reviews, and other management processes; and
v. Reporting: Some Businesses have invested in technology to record and report environmental events such as spills and waste disposal. For instance, IBM uses their environmental management system as the foundation for policy deployment, practice management, goal setting, decision making, and data capture.
Getting the vision right and getting execution right can help businesses keep their eyes on the ball, compete through the sustainability mega-trend and come out as winners. Failure which or simply ignoring sustainability would impact on corporation’s ability to compete, as evident in the GM and Kodak cases through past mega-trends. Although at a relatively early stage of the sustainability mega-trend, the time for businesses to think and act is now, as this mega-trend appears to be unstoppable.