That is, in the context of sustainability, managers that think of the company as a distinct organization is unhelpful. These steps are only the beginning of a process that can eventually transform a company’s entire business strategy into a sustainable business strategy. But, they offer a starting place for dialogue for a 21st century business model based on sustainability. So whereas the company may be successful in creating a responsible image to broader society through philanthropic contributions, it's identity internally does not at all reflect sustainability. That is, consumers are loyal to the company because they can count on the fact that all products and services, and the operations used to support the design, manufacturing, and distribution of those products and services, reflect sustainability principles. If they pursued philanthropy for projects meant to counter the negative impact of their operations, they would be admitting guilt to a degree. They also constructed new norms in the industry that forced a number of competitors that had no interest in sustainability to jump on board. Consider gun manufacturers, tobacco companies and weapons manufacturers, all of whom have developed strong competencies related to their products whether it be design innovation, the manufacturing process, or logistics. Gain the confidence and skills to: 1. The interesting thing about this strategy is that employees of these companies, when asked about what they do in their job that demonstrates their commitment to sustainability, struggle to answer the question because they don’t see sustainability as distinct from their daily routines and activities. Tim Hortons recently did this. Second, it can cross functions and departments but represent a small isolated component of employee daily routines. About Tima Bansal. Companies in the transformative strategy want to avoid these standoffs and establish a common standard that competitors can use as well. Sustainable Business Strategies is a consultancy founded in 2005 by Andrew W. Savitz, author of The Triple Bottom Line and formerly a lead partner running PricewaterhouseCoopers’ sustainability consulting practice. The important difference from the second strategy is that the company has begun to innovate in ways that have revolutionized a particular product or process resulting in a substantial reduction in social, ecological, or economic system degradation that goes well beyond incremental improvements. More common though would be a particular positioning that very much relied on the erosion of social or ecological systems where denial of responsibility is oftentimes the only option. Conserving resources and reducing pollution are key to operating more sustainably and minimizing your environmental impact as a business. Another example might be a retail company’s efforts to fuel half of the energy required to operate its stores using renewable energy sources such as wind and solar. **Make sure to scroll for links to several organizations helping businesses better their supply chain & business sustainability**. Yet despite the prevalence of sustainability and corporate social responsibility, there is tremendous variation in how companies have responded. That said, some companies might develop competencies in their brand as stakeholders perceive a certain company as a leader in making incremental improvements to their impact. They may have a particular product that is so revolutionary in its benefit for the environment or consumer health that, despite their other operations, represents a highly innovative capability that could be replicated internally in the firm but is hard to replicate by competitors. Dr. Tima Bansal is a Professor of Strategy at the Ivey Business School. A critical source of competitive advantage for companies adopting strategy 5 is their ability to foster relationships with key actors in its external environment. Competitive positioning becomes one of leadership where competitors look to the company for the next wave of technological innovation that they too need to adopt or, at least, be mindful of the market’s response to what the company is doing. The growing demand for "green" and "sustainable" products has created major new markets in which sharp-eyed entrepreneurs are reaping rewards. A firm’s strategy can be determined using three factors:  1) its positioning in the marketplace relative to competitors, 2) its core competencies that differentiate it from those competitors, and 3) its underlying culture that clarifies to employees the underlying purpose and identity of the organization, supported by structures, processes and policies. Background. Ultimately, companies will often say that nothing they are doing is against the law and so they are doing nothing wrong. Growing pressure to respond to issues of climate change, the financial crisis, environmental degradation, and increasing social inequality have precipitated the diffusion of sustainability in internal business text, company websites, CEO speeches, and company reporting[ii].Some have argued that CEO action on sustainability issues has shifted from being a discretionary choice to a corporate priority with 93 percent of executives claiming that sustainability issues will be critical to the. The identity of the organization is largely tied to the connections it has with key participants of the meta-organization as employees feel that they are part of something much bigger than their own organization can accomplish independently. From a competitive positioning standpoint, sustainability represents THE key differentiating factor among competitors. Leading electric car companies could have put forth separate and technologically-specific charging facilities in the hope of being the VHS or Blu-Ray winner. My name is Ally Long. What sort of sustainability strategies for business can we put in place while maintaining the integrity of our bottom line? Why? Limit Over-Production & Reduce Waste. Business Sustainability Strategies: Delivering Value through the Business Model. As Harvard Business School Professor Rebecca Henderson notes in the online course Sustainable Business Strategy, you … On the surface, companies adopting this strategy possess similar capabilities as those companies adopting the third strategy. The Equator Principles is a similar platform through which major global banks, including CIBC and Royal Bank of Canada, agreed to prohibit any loaning of capital to projects in developing countries of the world that carry substantial social or environmental risks to its citizens. One response is to engage in philanthropic activities that are more associated with the impacts of their operations. Established in the late 1970s, the company was so transformative in its business model that it single-handedly convinced over 800 Egyptian farmers to transition their practices to organic cultivation in exchange for guaranteed access to the European market. Think about the old BETA/VHS war (for those who are old enough) or the more recent HD-DVD/blu-ray war where the supply chain had to wait to figure out which standard would become dominant. Economic systems would encompass the global financial system, income equality, the free flow of goods and services while social systems might include things like the proper functioning of civil society, low poverty rates, the education or health systems, social justice, or the food system. Imagine that, organic farming in the middle of the desert. Similarly, leading CEOs, such as Tesla CEO Elon Musk have been quoted as saying that trying to establish a monopoly in their industry is counter to the goals of sustainability because it delays the establishment of a much needed industry standard all competitors can adopt to move forward and leave less sustainable practices behind. First, it can represent an explicit function or department in the organization like a marketing, human resources, or operations department. 1. In fact, their source of distinction represents a key erosion of social, ecological, and economic systems. ["Sunday","Monday","Tuesday","Wednesday","Thursday","Friday","Saturday"]. Third, sustainability might be isolated to a particular set of product lines where it represents a relatively small percentage of revenue. That is, the mainstream market, which consisted of large industry government facilities purchasing industrial carpet, now expected that Interface competitors offer a similar portfolio of sustainable products. In fact, the company itself struggles to figure out how they were able to develop these competencies. The global population is expected to reach 8.1 billion by 2025. That is, their unique products and services might be difficult for competitors to replicate or the processes behind the creation and delivery of these products and services might be inimitable. Another example might be a manufacturing firm’s use of a new technology that cuts emissions by 90% such as Vale Inco’s supposed plans to use a carbon sequestration scheme in Sudbury, Ontario that would replace one of Canada’s largest smokestacks. When done successfully, the strategic benefits become quite lucrative for businesses that adopt this strategy. Before continuing, let’s define some terms. Firms are playing a dominant role in society today. Second, strategy is very much about what the company does really well that is valuable and unique (its core competencies) that competitors find very difficult to imitate or find substitutes for. But over the last few decades amidst the rise in devastating natural disasters, labor scandals, massive oil spills, and trash-islands floating across the ocean, consumers AND businesses started paying attention. SEKEM’s own ‘mother farm’ was so advanced in its agricultural practices environmentally and socially that the Egyptian government established regulatory policies in the agriculture sector based partly on what SEKEM proved was possible. Once you apply sustainability issues to the supply chain, you’ll see how complicated improvements can be considering how many components to a single supply chain can exist — just think about coffee production or material sourcing from a far off country, not only do thousands of miles stand between you, but those miles are chalk full of individuals working the chain. This latter, rather less studied, reason has important implications for competitive positioning because it offers consumers an opportunity to be activists through their purchasing power. If sustainability exists in an isolated department, employees not in this department often consider sustainability to be irrelevant to their daily operations. Patagonia’s business model is predicated on the notion that it is meant to share any of the new innovations they encounter in the development of more environmentally sustainable apparel. If you’re starting out in building a corporate sustainability strategy, here are five key areas to focus on: 1. But any smart student of business would be interested in distinguishing responses that negatively affect these systems. The following two tabs change content below. is a registered trademark of Alterity, Inc., registered in the U.S. Privacy & Disclaimers, Learn more about Acctivate Inventory Management Software by giving us a call at. But at least two leading CEOs have instructed governments in the jurisdiction that they were considering entering that any charging infrastructure must be universal and therefore usable by competing electric car companies. Start a conversation with a specialist today to learn more. Sustainability might be isolated in an organization in a variety of ways. Ecological systems might include water systems, the climate system, biodiversity, or species reproduction. ACCTivate! Ally holds a bachelor’s degree in English from the University of Texas at Arlington. It’s not easy saving the world by yourself, but helping your community can be environmentally, economically, and socially beneficial. This requires the sharing of important intellectual capital. Many academic scholars and practitioners alike have come to the realization that no organization can single-handedly make substantive strides to sustainable practices. In addition to performance appraisal mechanisms of Strategy 4, managers may also be accountable to the networks they create with other participants while decision-making processes within the firm encompass a wide range of external actors. Food manufacturers have either developed their own highly sustainable products or they might purchase healthy brands such as PepsiCo’s purchase of Naked Juice. Unrelated to food health, the association representing fast food restaurants launched an ad in Times Square denying any responsibility for the growing dependence of their own employees on government assistance and arguing against any need on their part to increase employee pay to a living wage because these employees have no skill or experience and are often lazy. Business sustainability or corporate social responsibility can then be defined as the achievement of economic viability (i.e. Get to know and engage with your stakeholders The first step is to get to know every person, group and company that your business impacts (both positively and negatively). It is important to note that companies will exhibit behaviour that spans some of these strategies. But the fourth strategy reveals additional competencies that are higher in levels of complexity. For instance a company might engage in philanthropic activities that are both related (defensive) and unrelated (denial) to their operations or they may both defend against the impact of their operations while still having a department that contradicts the seemingly careless operations of other departments (isolated). Finally, external positioning and internal competencies must be supported by an organization’s culture and identity that transcends the worldviews of employees to the point where they see the relevance of the firm’s strategy to their daily activities, making it feel like employees live this strategy on a daily basis. It’s the job of the analyst to put these initiatives together to pull out a overarching strategy that defines their positioning, core competencies, and internal culture and identity. Overproduction can come from excessive sourcing of raw materials, … Any innovation developed in the transformative strategy is often less valuable than the processes that created the innovation. We can see similar types of initiatives in the social realm as well. Or they might introduce a technology that dramatically reduces the use of water    An oil and gas company might have a full-fledged renewable energy program, staffed within a legitimate department such as BP that is distinct from its core operations of oil and gas exploration and production that can still result in catastrophic environmental damage. When students of business want to know what makes a business tick, they typically turn to its strategy. Culturally then employees view the organization as one piece of a larger puzzle of organizations who collectively work to achieve sustainability goals. A change-management guide for business, government and civil society (Sheffield, UK: Greenleaf Publishing Limited, 2003); D. Dunphy, A. Griffiths and  S. Benn, Organizational change for corporate sustainability (London, UK: Routledge, 2003); M. J. Epstein, Making sustainability work. Payday loan retailers can be classified under this strategy as well because their positioning as a source of capital for those consumers typically unable to get credit naturally positions the firm as an exploiter of vulnerable consumers. Interface Carpets is a US-based carpet company that has pioneered a number of technologies that have revolutionized the once very toxic carpet industry. I would love to say, “It’s simple, really!” but alas, if mastering global sustainability was simple – well, then, there would be no need for writing this article at all. I have passion for small business and the planet, and I’ve built a list of ten business sustainability strategies for you to consider and maybe even put into action. The business case therefore evident in the need for a company to meet the needs of a growing niche market that wants consistency in their offering. cit. If genuine, managers may position the firm as a leader in sustainability innovation but the innovation, while noteworthy if not groundbreaking, represents a small part of the firm rather than, as will be described in Strategy 4, a key part of the firm’s DNA. Even more lucrative is when government, always uneasy about setting harsh social and environmental regulation that might stifle growth and job creation, establishes regulation that is based on what the company has in fact proven to be possible, without the economic costs governments want to avoid. Ashley Madison is an organization whose fundamental premise is based on a service that a majority of society argues erodes social systems. Facebook has denied responsibility for the proliferation of fake news although they’ve more recently shifted to acknowledging their role and thus have moved up this strategy continuum. Simply put, sustainability is a business approach to creating long-term value by taking into consideration how a given organization operates in the ecological, social and economic environment. The rise of industrialization was a game-changing catalyst for technology, for trade, and eventually, for convenience. Bottom line is that while the core competencies associated with sustainability might be isolated from other competencies that conflict with sustainability, this strategy is the first of the five to show strategic relevance of sustainability. Articulate the importance of sustainability in business, and drive social responsibility across your organisation’s value chain. In other words, do these initiatives represent a substantial business endeavor that generates a substantial portion of revenue that positions them relative to competitors (beyond marketing)? This helps them defend their operations because they can lay claim to the fact that they are at least redistributing some of the profit associated with these operations to various causes that work to stem their effects. The era of stand-alone sustainability strategies, with subsequent integration of sustainability into company strategy, needs to end; the creation of resilient business strategies that take sustainability as their foundation needs to begin. One common source of competitive advantage for companies adopting strategy 4 is its culture. The third strategy is one where sustainability begins to make substantial inroads into the firm’s strategy and operations. Rivalry is lower because for any transformation to take place in an industry, it is easier to have competitors on board for the change. This has further led to increase in usage of resources and thereby increase in environmental impact. Internal processes, reward systems, performance evaluation and employee skill and training have virtually nothing to do with sustainability. Companies are therefore positioned as the sustainability leader based on all of the ways that they’ve worked to reduce the impact of their existing operations, products and services on systems. Best practices in managing and measuring corporate social, environmental, and economic impacts (San Francisco, CA: Greenleaf Pub, 2008); Ethical Corporation, “How to embed corporate responsibility across different parts of your company”, 2009; S. Bartels, L. Papania and D. Papania, Network for Business Sustainability (NBS), “Embedding sustainability in organizational culture”, B. Willard, The sustainability champion’s guidebook (Vancouver: New Society Publishers, 2009), [vii] http://www.theguardian.com/environment/2015/apr/16/bp-dropped-green-energy-projects-worth-billions-to-focus-on-fossil-fuels, © 2018 Mike Valente, Ph.D. customer service), stakeholders consider the firm’s primary value proposition to be related to its commitment to sustainability. Clorox, the consumer packaged goods company, launched a highly popular Greenworks line that represents an isolated brand in the minds of consumers. But what is unique and difficult to imitate in these organizations are the very things that contribute to system erosion. Reduced business costs, more innovative strategies, an improved reputation, and more new customers who value sustainability all work to increase the amount of money sustainable businesses earn. Mining companies, for instance, have begun to tout “green mining” to represent incremental improvements in power and fuel use along with reductions in toxicity, emissions, and water use. Did you know that by 2025, 1.8 billion more citizens of Earth will join the global consumer class? Decision-making at the organization, at most, will have sustainability as one of its key decision criteria but more often will not consider sustainability in its decisions because, again, a department or group of employees and managers is doing that for them. Complexity is high when there are a large number of interdependent parts or actors that collectively create an unpredictable pattern of behaviour as they respond dynamically to their respective local environments. In this example, the product category is not associated with Clorox in the minds of the consumer but nevertheless represents an important strategic endeavor by the firm because it responds to a growing demand for green cleaning products. The following business sustainability strategies take organization, data, communication, resources, and technology to put into place — and a little compassion for the planet never hurts. Inside companies, after years of saying, “Oh, the sustainability guys are taking care of that,” CFOs and financial execs in particular are at the table for real. Ultimately, these initiatives are meant to respond to a growing market demand for products in services associated with sustainability (i.e. When Toyota came out with the Prius as the first hybrid vehicle, they demonstrated a highly lucrative core competency that competitors could not duplicate for quite some time. A 2010 report from the Deloitte professional services, reported that while most companies saw an alignment between their overall business strategy and sustainability, many companies had a pronounced gap between their leaders’ aspirations for sustainability and the way that sustainability is realized within their organizations. Most businesses don’t possess a deeper understanding about sustainability. Here the purpose is to build social goodwill to oftentimes combat any negative publicity that might be associated with their core operations. Be Intentional About Sustainability. But a key difference from the fourth strategy is that their focus wasn’t just on embedding sustainability, it was about rewriting the regulations associated with the carpet industry by demonstrating that more sustainable modes of manufacturing carpet were possible. [iii] P. Lacy, T. Cooper, R. Haywood, and L. Neuberger (2010) op. Unlike strategies 1and 2 then, the identity of employees and image to outside actors are aligned. Meta-organizations are effective at recognizing opportunities through previously unimagined or unavailable participant connections. Wal-Mart’s low prices). 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