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Blog by Paul McNeillis, Director, 17 May 2012
When two worlds collide interesting things tend to happen. In sustainability most of us have been living in one world. The world of the sustainability professional: expert; committed; specialist. If we’re honest it’s been something of an island world occasionally visited by others like policy makers and business managers seeking advice on specific issues. What risks are likely to affect me? How can I make some quick cost savings from energy efficiency and carbon reduction? Which standards should I report to? Underlying all of these has been the implicit question: what does best practice look like?
At last week’s Responsible Business Summit I saw signs that this world is finally starting to collide with the world of business strategy. At least some companies are starting to look at sustainability in a way that a business strategist might recognise: for example a leading UK retailer and a leading global healthcare firm set out impressive sustainability journeys and achievements to an audience rapidly scribbling down their “best practices”. However it was not the plans or the practices they had followed that impressed me but the intelligent caveat that was added at the end of their talks. To paraphrase: this worked for my organisation because it was designed for my firm as a strategy that fitted with its unique features and capabilities - but it might not work at all for yours.
It brought back memories from around a decade ago when I saw Professor Michael Porter speak in Cardiff to an audience of hundreds of fresh MBAs as I was then and an equal number of seasoned business leaders. Of all the wisdom and insights one key message shone out: strategy is not best practice. Strategy is about unique choices, trade-offs and the decision to invest finite resources in building distinctive capabilities that give you an advantage. Best practice is a relative commodity and although it may yield real value it cannot give you a competitive advantage or make you a leader in your field. So I’ve always wondered, why would strategic sustainability be any different? Why would we expect that wholesale adoption of sustainability best practices would add up to a coherent strategy?
Here’s the rub – sustainability is about to change for all industries as we enter an era where most publicly listed firms have been through at least one round of best practice implementation: reporting to the Carbon Disclosure Project; measuring and reducing their carbon footprints; rolling out supply chain code of conduct programmes and taking first steps in sustainable product stewardship. Some of these practices, although laudable, have taken so long to implement that the world has changed around them and they are starting to look very dated or even irrelevant to the rapidly changing context around them. For example, does anyone still believe that mass supplier compliance programmes will ever reach those suppliers upstream where the real issues exist - let alone deliver the kind of value chain innovation required to stay ahead? Does anyone still believe that doing one product life cycle analyses one at a time is agile enough to inform decision making in companies with rapidly evolving product portfolios or pressure on time to market? One has to ask, if an initiative has failed to become integrated into the core business model after several years – will it ever really be strategic?
While some approaches are looking outdated, new entrants in every industry are proving that entrepreneurs have the agility and bravery to try out strategic new business models. The circular economy seems about to jump off the pages of academia into real businesses where waste streams can become energy or new products; where goods can be rented as services instead of owned. New business models can leapfrog over the best of intentions of best practice. This presents an interesting challenge that only the restless, the creative and the innovative can meet. Only those willing to look again through a truly strategic lens at sustainability will survive and thrive. But as ever companies are stretched thin on time and resources so if strategy is really about making choices then we need a spring clean of old initiatives and models, to make time and space for the new.
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