As I talk with prospective members of Abound about their businesses, the business of sustainability and the challenges of being a leader in sustainable business, one of the recurring themes we encounter is that of value.
This theme of value was echoed at the Triple Bottom Line Investment (TBLI) conference I attended in Tokyo. A number of speakers admitted and were confounded by the fact that, from a conventional assessment paradigm, sustainable businesses were often not the best choice for ROI.
A recent conversation with Stephen Aiguier from Green Hammer, a sustainable building company in Oregon, led us to the under-developed notion of relational capital. As it is currently understood relational capital is a subset of the valuation of “intangibles”. This begs the question of what is “tangible?”
Well, assets are tangible but what is their value? The value of assets depends on their valuation-a process of assigning an amount to them. This amount is a shared understanding, an agreement.
Traditionally, a business has been valued by it’s bottom line and top line performance. Cash flow is also a popular indicator. For a publicly traded business this becomes a much more complex process as all sorts of arcane formulae are applied to a business to describe its value to various stakeholders. The business has different values depending on the interests of the stakeholders. Again, we are looking at shared understanding, agreement.
We need to expand our shared understanding and agreement around this concept of value. Legally businesses are people. Actually businesses are complex open systems subtracting and adding value in the markets, communities and environments in which they operate. Both spiders and web, they weave and are nodes in a Value Web. The more resilient the web, the more value it provides. The more skillful the spider, the more resilient the web, the stronger the nodes.
The real value of business is its capacity to sustain that which sustains the business-the Value Web. This is relational. In these relationships is the real value of sustainable businesses. Skillful engagement with the Value Web is the pathway to abundance. Abundance is a healthy, highly resilient Value Web.
Imagine you’re looking at a gauge. The left half of the gauge has black hash marks with numbers that go from “-10″ to “0″ at the top. The background color on this half is red. The right half of the gauge has numbers that start from “0″ at the top of the gauge and go to “+10″ on the lower right. Let’s say the background color for the right half is green.
The goal is simple. As much as possible, keep the needle in the green. Keep things positive.
In Cradle to Cradle Will McDonough writes that eco-efficiency (aiming for “-2 instead of, say, “-8″) really isn’t an option. It’s like being the frog in the pot of boiling water. The water warms slowly. The frog sits comfortably. By the time the water is too hot, it’s too late to jump out. We’re already half cooked. We’ve boiled ourselves to death slowly.
“Life creates the conditions conducive to life” - Janine Benyus. This is true except for when we’re in the red, the negative half of the gauge. When we’re in the red, we’re burning through resources, devouring capital, depleting our savings. When we’re in the red we’re actually creating conditions that make life hard. We’re degrading the systems that support life, that support us. We’re creating our own Hell, cycles of suffering and destruction. From a mindset of scarcity (use what I can, when I can, to maximize my short-term benefit) we create scarcity.
The other half of the gauge is abundance. When the needle is in the green we, ourselves, businesses, communities, cities, nations and the economies that support us are creating conditions conducive to life. We’re strengthening the systems that support life. Well-being emerges from well-being. We’re creating and sustaining life-generating, life-giving cycles. From a mindset of abundance (use what I can to create long-term prosperity for myself by sustaining and enhancing that which supports and sustains me) we create abundance.
The goal is simple. Keep things positive. Making the changes in the ways we think, see, and act in our lives, communities and our work are difficult, daunting. Sustainability is something we do together. Abundance is something we create together.
To quote Eric Clapton: “It’s in the way that you use it.”
The Wal-Mart sustainability index is measuring whether suppliers are measuring their impact on energy usage, greenhouse gas emissions, waste, resource depletion and the communities in which they operate. Essentially it’s binary with annotation. Are you or aren’t you? If you are, please describe what you are doing.
Wal-Mart is gathering data. The key question is “What for?” Wal-Mart has sustainability targets and standards. They can be found here. They are doing good work. Of particular note are their Sustainability Value Networks. In these networks they’re bringing together “leaders from our company, supplier companies, academia, government, and non-governmental organizations (NGOs)” to work in categories that are core to Wal-Mart’s business. It is a matter of course that they will compare what they are learning from their suppliers with their own progress, most likely incorporating best practices along the way.
So, how will they use it with the suppliers? In the answer to this question lies the answer to the question in the title of this post. And, to really uncover the meaning in that answer requires us to look at the quality of relationships Wal-Mart forms with the suppliers and the quality of relationships the suppliers form with their network.
What do I mean? First, sustainability is something we do together. Fundamentally local and place based, sustainability depends on the quality of our relationships with the world around us. Reducing impact is good, however, relationship-wise this creates a less bad quality of connection. Imagine a spouse telling you that to strengthen your relationship he/she was still going to be bad but, from now on, less bad than before. A start? Yes. A strong foundation for a long-term relationship? No.
Second, sustainability is long term. What are we trying to sustain? Us. How do we do that? By sustaining what sustains us. One way to conceptualize this is a Value Web. Incremental reduction, though currently necessary is not sufficient. We become the slowly-boiled frog. The quality of relationships in our value web slowly erode, the web disintegrates and less bad leads to very, very bad. Simply, we need more good.
So, back to Wal-Mart and their suppliers. Moving forward, the better they are able to build networks ofCollaboration that strengthen and enhance the Value Web the more sustainable the Wal-Mart sustainability index becomes. This is where those Sustainability Value Networks could really become value-abling. And, the more coherent their approach, the more effective the networks become at being sustainable. Again, it’s in the way that they use it.
So, now, think about this: For a retail giant like Wal-Mart this is a big hairy audacious undertaking that will touch pretty much all of us for generations to come. This matters. So do we.
So much depends on how we are, what we see and what we do now. As we do as we do we get what we get, becoming what we become. So will Wal-Mart. These are interesting times…
"Sustainability" is not always sustainable. Simply, doing and describing what you do as sustainable does not make it so. For organizations (and us, personally!) to be sustainable in what we do, we have to be sustainable in who we are and how we see the world. This gives us our best shot at doing something that is actually going to get or generate sustainable results. IIn the following series of six posts I will introduce the six levels of engaging in sustainability: Compliance, Conformity, Cooperation, Collaboration, Coherence and Constellation. We use these at Interkannections to help our clients clarify their current goals around sustainability and map out their paths for deepening their practice and impact.
Constellation is characterized by reaching across industry, sector and national boundaries to create "constellations" of organizations capable of making systemic level change that benefits a multitude of stakeholders including, of course, the constellation members. These constellations are characterized by high degrees of transparency and innovation in a rich learning, rich opportunity environment. They are driven by a strong sense of purpose to build systemic capacity wherever they may be operating.
Constellation
Sustainability is internally driven and collaboratively realized in multi-stakeholder interventions
Example sustainability activities: Kalundborg, a workable, meaningful approach to changing climate change, expanding Burgerville's quality of supplier relationships throughout Cascadia, the "Integral Cities" movement.
Being at Constellation innovating and organizing from an abundance mindset.
What we see at this level is our capacity to effect systems level benefit and change with an array of other capable stakeholders.
What we are doing is creating long-term value and resilience in the systems in which we do business thus making them and us more sustainable.
What we get from Constellation is a strong, healthy, positive-value, business opportunity generating Value Web.
Operating at Constellation is our best bet at sustaining the systems that sustain us and allow us to economically innovate and ecologically flourish.
We are just beginning to see Constellation level work emerge. The simplest way to imagine it is collaboration at a systems level. The project, instead of being clean tech. development project would entail a focus on a node or multiple nodes of the value web. Again, if the way Burgerville develops and maintains relationships with suppliers was expanded and implemented with a number of restaurants and suppliers across Cascadia we would be looking at a constellation-like scope and impact.
P&G and Microsoft have both recently strongly committed themselves to "sustainability." P&G's Lafley saying:
P&G’s commitment to sustainability is strategic. It is how our company conducts business. [Specifically]
Develop and market at least $50 billion in innovative and sustainable products, up from a goal of $20 billion.
Reduce carbon dioxide emissions, energy consumption, water usage and disposed waste by 20 percent, leading to a 50 percent reduction over the last 10 years.
Increase use of rail transportation from 10 percent now to 30 percent by 2015.
Increase the number of children benefiting from P&G's Safe Drinking Water Program to 300 million, up from the original goal of 250 million.
and Microsoft's saying:
Recently our CEO, Steve Ballmer, sent out an e-mail to all 90,000 Microsoft employees. He made clear that environmental sustainability is a core value for the company that is embedded in all we do," Robert Bernard said in an interview with CNET News. He added that Ballmer talked about the topic as a corporate belief, "as opposed to a green campaign or a marketing campaign or a marketing issue.
P&G's commitment is wide ranging and touches on a number of nodes of the value web, including resources and trade, atmosphere, energy, water, transportation, and family and community. They seem to be systematically working sustainability into their value chain.
Microsoft's statement, though bold, is a little more confused, referring to "environmental sustainability." Not quite sure how Microsoft is sustaining the environment. Rather than "environmental sustainability" I would recommend something like "environmental awareness is a core value".
Sustainability is bigger than you, me, the environment, climate change and renewable energy. It's what links all of these essential nodes together.
I applaud both companies for their concern and commitment. However, I believe both have a way to go before they fully embrace and embed sustainability in their organizations. They need to take the lead by leaping from focussing on discrete parts to developing strategies that link these parts holistically to what they do.
Sustainability is about relationships and connections and not disconnected metrics. The sooner we see this the sooner we can start doing to get sustainable results.
"Sustainability" is not always sustainable. Simply, doing and describing what you do as sustainable does not make it so. For organizations (and us, personally!) to be sustainable in what we do, we have to be sustainable in who we are and how we see the world. This gives us our best shot at doing something that is actually going to get or generate sustainable results. In the following series of six posts I will introduce the six levels of engaging in sustainability: Compliance, Conformity, Cooperation, Collaboration, Coherence and Constellation. We use these at Interkannections to help our clients clarify their current goals around sustainability and map out their paths for deepening their practice and impact.
Coherence is signified by an organization or reorganization around a clear sense of purpose and deeply embedded principles that promote sustainability beyond the scope of simply doing business in the conventional sense. The organization and its people begin to fulfill an intentionally larger role in the communities and ecosystems in which they operate.
Coherence
Sustainability is generated from clearly articulated and realized principles and purpose.
Example sustainability activities: Intentional long-term and multi-win relationships with suppliers that connect with developing and implementing community enhancement programs internally and with community stakeholders while creating and enacting related business practices that create zero waste and actually restore land and stream quality that significantly lowers risk and increases revenue and value for the business, suppliers and local communities.
Being at Coherence is striving to be the change you want to see in the world while being successful.
What we see at this level is a multitude of business opportunities and potential through engagement with the value web.
What we are doing is "walking" our sustainable "talk" by leveraging value web relationships to generate multi-win, interconnected value as the example activities cited above demonstrates.
What we get from Coherence is excellent risk management, long-term stability through a healthier, more robust relationship with the world.
Remaining at Coherence has little in the way of negative consequences unless the culture becomes stagnant, insular or arrogant.. As the company evolves it is highly likely that opportunities to begin doing Constellation level business will appear. To seize these opportunities the role of proactive leadership throughout the organization, high levels of awareness, communication, innovation and resilience are necessary.
When we think of companies at this level, Burgerville, a Portland, Oregon area quick service restaurant chain comes to mind. Their mission is simple: To serve with love. Their inter-relationship with the communities and market in which they operate is complex. In terms of engagement with the value web they are actively generating positive, clearly visible interconnected returns in nearly all of the nodes. They don't so much have suppliers as they have deep, mutually enriching, value generating relationships. More on Burgerville coming soon.
"Sustainability" is not always sustainable. Simply, doing and describing what you do as sustainable does not make it so. For organizations (and us, personally!) to be sustainable in what we do, we have to be sustainable in who we are and how we see the world. This gives us our best shot at doing something that is actually going to get or generate sustainable results. IIn the following series of six posts I will introduce the six levels of engaging in sustainability: Compliance, Conformity, Cooperation, Collaboration, Coherence and Constellation. We use these at Interkannections to help our clients clarify their current goals around sustainability and map out their paths for deepening their practice and impact.
Collaboration
At the Collaboration level a commonly occurring question is "why we are doing what we're doing?" This is often driven by a desire to be more involved and inclusive internally and externally. Like Cooperation, external stakeholder engagement is still largely targeted and arbitrary although the quality of engagement is less transactional due to the collaborative nature of involvement.
Sustainability is internally mandated and guides internal and external partner and project selection and areas of collaboration.
Example sustainability activities: stewarding NPOs on good business practices, co-development of green technologies, cross-functional and multi-level internal initiatives, including NGO's, local communities and other external shareholders in the project and product and service development process.
Being at this level is focused on engaging with others in sustainable work. An organic expansion of Cooperation, we begin to reach out and look for opportunities to work together on targeted and selected projects.
What we see at this level is the power and value in including and embracing multiple perspectives, multiple win relationships and transparency in our business.
What we are doing is reaching out to and opening dialogues with suppliers, external stakeholders and, even, adversaries to include them in the scope of our sustainability practices.
What we get from Collaboration are deeper relationships with external partners that typically involve learning and development on both sides. This tends to generate more impressive PR and better management of risk as multiple-win and longer-term relationships become more common. Internally, potential for organizational learning and greater innovation increases as information flows and is shared across functional and divisional boundaries.
Remaining centered in collaboration is marked by multiple and fruitful initiatives and relationships that, though multi-faceted and value generating are not fully integrated and coordinated into our business, work and lives.
We believe that Collaboration is the first level of sustainability that may actually be sustainable. Companies that rate their sustainability or philanthropy efforts as very effective are those that engage and collaborate with other businesses and stakeholders. At this level we begin working in interconnected and mutually dependable and mutually influencing ways. Communities of interest and practice develop and become self-organizing and self-managing. We discover opportunities for new value streams and create the potential to dissolve adversarial relationships. Our style of work, interaction and value generation begin to leverage the value of systems thinking and self-organizing systems by mirroring the non-linear workings of open systems.
"Sustainability" is not always sustainable. Simply, doing and describing what you do as sustainable does not make it so. For organizations (and us, personally!) to be sustainable in what we do, we have to be sustainable in who we are and how we see the world. This gives us our best shot at doing something that is actually going to get or generate sustainable results. In the following series of six posts I will introduce the six levels of engaging in sustainability: Compliance, Conformity, Cooperation, Collaboration, Coherence and Constellation. We use these at Interkannections to help our clients clarify their current goals around sustainability and map out their paths for deepening their practice and impact.
Cooperation
When we act at the Cooperation level our focus shifts to giving back and helping out. We engage in philanthropy and charitable giving/support of select causes because we've decided or believe it is the "right" thing to do.
Sustainability at this level focuses on a mix of internal and external drivers calling for "giving" and "helping out."
Example sustainability activities: Charitable giving, service days, volunteerism, targeted but disconnected internal and external CSR campaigns, employee-specific giving schemes, standards for suppliers, stated socially responsible principles and purpose.
Being at Cooperation is about philanthropy. We feel a sense of responsibility to help and support causes of personal interest and meaning.
What we see at this level is our capacity to do good, to help out and support social and environmental responsibility.
What we are doing tends toward transactional giving and improvement. We help you. We help ourselves. We tend toward doing for vs. doing with.
What we get from Cooperation is improved operational sustainability in targeted areas and the very real sense we are making a difference in the lives of the people and conservation efforts we choose to help.
Remaining at Cooperation limits the effectiveness of the time, energy, financial and human resources we apply to socially responsible action and sustainable business. Activity gets confused with accomplishment.
From our research it is pretty clear that most organizations are currently operating around the Conformity and Cooperation levels. Further research by a partner in the US found that over 60% of the companies they surveyed were operating betweenCompliance and Cooperation. In terms of sustainability, we believe our greatest challenge and opportunity is moving beyond these levels because it is our thinking and behavior at these levels that has brought us to where we are today. Simply, Compliance, Conformity and Cooperation are showing themselves to be unsustainable.
"Sustainability" is not always sustainable. Simply, doing and describing what you do as sustainable does not make it so. For organizations (and us, personally!) to be sustainable in what we do, we have to besustainable in who we are and how we see the world. This gives us our best shot at doing something that is actually going to get or generate sustainable results. In the following series of six posts I will introduce the six levels of engaging in sustainability: Compliance, Conformity, Cooperation, Collaboration, Coherence and Constellation. We use these at Interkannections to help our clients clarify their current goals around sustainability and map out their paths for deepening their practice and impact.
Each level includes and transcends the one before it, adding additional functionality and value.
Conformity:
At Conformity we realize the importance of our reputation and brand and the need to protect and maintain them.
Sustainability is externally mandated and harvested for public relations
Example sustainability issue: Creating a sustainability report and publicizing recent gains in workplace safety.
Being at Conformity is about appearing sustainable to appeal to shareholders, immediate stakeholders, NGO's and the media.
What see at this level is the power and influence of others over our business.
What we are doing is using sustainability as a means of improving shareholder and key internal and external stakeholder relations
What we get from Conformity is good PR, enhanced brand reputation, and good relationships with key stakeholders in our work.
Failure to go beyond Conformity frequently results in an overwhelming focus on green washing and "spinning" activities to appear sustainable to avoid trouble and enhance image in the eyes of key stakeholders.
Many an organization is currently mired at this level. The best way to move out of a conformity focus is to create and clarify a more compelling need for sustainability other than using it as a tool for public relations. This is hard. It entails increasing leadership and organizational awareness and understanding of the positive (or negative!) impact you are actually having on the world. Once that understanding becomes discussable re-aligning strategy with what you learn is crucial. This post has been excerpted from The Capacity Evolution Blog which I also write.
"Sustainability" is not always sustainable. Simply, doing and describing what you do as sustainable does not make it so. For organizations (and us, personally!) to be sustainable in what we do, we have to be sustainable in who we are and how we see the world. This gives us our best shot at doing something that is actually going to get or generate sustainable results. In the following series of six posts I will introduce the six levels of engaging in sustainability: Compliance, Conformity, Cooperation, Collaboration, Coherence and Constellation. We use these at Interkannections to help our clients clarify their current goals around sustainability and map out their paths for deepening their practice and impact.
Each level includes and transcends the one before it, adding additional functionality and value.
Compliance:
Compliance can be seen as baseline best business practice. Without a strong foundation in compliance we tend to be constantly firefighting and fighting for survival.
Sustainability is externally mandated and internally enforced.
Example sustainability issue: meeting workplace safety regulations
Being at this level is basically about staying out of trouble and reducing risk. We focus on compliance with rules, regulations and requirements in order to avoid penalties and stay in business.
What we tend to see at this level are the need to meet short-term goals and maintain immediate profitability.
What we are doing is trying to establish stability as we establish ourselves, move into new markets or new areas of business.
From Compliance the positive value we get is ongoing permission to operate and stability.
Failure to evolve capacity to include and move beyond Compliance mires us in largely transactional and frequently win-lose relationships with the world around us as we seek to fulfill self-centered short-term needs.
You probably know people and organizations that struggle in this area. The best way to move out of a compliance focus is to develop strong operational standards and protocols that are part of a larger sustainability initiative. That initiative must be closely tied to financial bottom line improvements and positive visible change.
