Getting funky with sustainability
Use sustainability management to overcome short-termism
Most businesses have accepted sustainability as a mainstream concern and try to integrate it into strategy and execution. According to Professor Kjell Nordström, author of Funky Business Forever, sustainability should guide innovation. Business leaders should overcome short-termism and take the driver’s seat in sustainability developments.
Nordström, a professor at the Stockholm School of Economics, is ranked high among management thinkers in the world, according to www.thinkers50.com, and No. 1 in Europe (with co-author Jonas Ridderstråle). He inspires business leaders all over the world with his sharp views on successful business models in an information- and knowledge-laden world. In his vision, competing in today’s market economy requires a temporary monopoly and acute awareness of social change and responsibilities. Business leaders also have to learn how to practice what Nordström calls "infinite innovation": continuous pursuit of value for all stakeholders. Sustainability management clearly plays a part in this.
A much-used definition of sustainability is the explanation by the World Commission on Environment and Development. This describes sustainability as “forms of progress that meet the needs of the present without compromising the ability of future generations to meet their needs.” Sustainability at the management level means taking responsibility for the entire business impact of your actions up and down the value chain.
Nordström sees climate change as a big issue on the world’s agenda. “We have changed the climate in our society beyond comprehension. And we have something similar going on in our economic and social systems: the amount of information we distribute. This information overload can be as noxious to personal lives as CO2 emission to the climate.”
“More” nowadays often means “more of the same.” Namely, a surplus of similar companies, producing similar things according to similar best practices. Companies need to be different. Not only is a green corporate spirit a good way to get noticed by potential customers, it will also help attract talent and capital to your organization. According to Nordström, it’s even sexy. Business leaders clearly feel the same, but often let emphasis on short-term economics paralyze actual initiatives. “In the end, laws and standards set by consumers will hold companies to more and more responsibilities. Truly funky businesses need to take the driver’s seat themselves, and drive the development and even the law,” says Nordström.
The constrained energy and labor markets are pushing sustainability upward on the corporate agenda. In Nordström’s vision, technology, institutions and values are important drivers of green initiatives. But the key factor will be innovation. “To make real changes, we have to rethink our basic assumptions and break free from the logic of the past. A good example of innovation along sustainability lines are restaurants serving house-made sparkling and still water in reusable bottles. Thus, they have found a way to make money while reducing the environmental costs of both manufacturing and transporting bottles of water and waste management.”
In his latest book, Funky Business Forever, Nordström offers seven principles for organizing businesses. “The firm of the future is small. Sixty percent of all employment will be offered by companies with no more than 150 members. It’s also flatter and temporary in the sense that people work in projects and small, creative teams. It works horizontal and circular, which is about organizational democracy. It’s increasingly networked in order to cooperate productively with customers, suppliers and even competitors. It has identified in what areas it’s really world-class and buys the rest from world-class partners. Thus, the network becomes the relevant unit of analysis and action. Control will become more indirect. Information systems will be used to increase control by measuring more things, at multiple levels and at a greater frequency.”
Explore the unknown
“Both innovation and sustainability require appropriate goals to challenge people to perform beyond what they thought to be possible. Business intelligence solutions enable organizations to identify strategies that address environmental, human and economic issues. They can also help them to identify the right metrics and find the right data to describe and measure green-related metrics. All this makes it easier to move relevant knowledge from individual levels to group and organizational levels.”
Nordström states that the only way to break out of short-termism is by measuring in other terms than financial results. “Define success and what to measure on. Separate the main issues from the smaller ones. For this purpose, SAS offers extremely sophisticated sustainability management tools. In fact, the possibilities they offer go beyond our imagination,” says Nordström.
“The fact that we can’t get our head around the technology has become the limiting factor,” he continues. “Most people are genuinely bad in mathematics. That makes it extra hard to fantasize about unknown things like measuring environmental impact and return on decency. While Da Vinci could only dream of flying, today there’s so much that we can do!”
Hetty Boerakker is a manager of marketing for SAS Netherlands.