Was anyone else inspired by “Milk”? More than any movie I’ve seen, it celebrates the raw, complicated deeply complicated process of fighting for social equity. It captures the real pain and overwhelming empowerment that are stirring on the flipside of so many of the issues talked about in this program. It’s also the story of people with toxins in their water, of Arundhati Roy, of people already suffering the impacts of climate change. For me it gets at the human side of sustainability, and that means it comes with a business case.
To construct that business case I couldn’t ask for a better template than The Next Sustainability Wave. Willard maps not only a compelling business case for environmental sustainability but a practical guide for overcoming the objections to that case (in a photocopy-friendly format no less!) His core point was this: environmental sustainability isn’t a new objective, it’s a means to accomplish existing business objectives more effectively. Sustainability is about revenue, market share, efficiency, productivity and innovation. The discussion about sustainability isn’t just about how companies eliminate waste, it’s about how they do those things now and how they can be done better.
I took Willard’s crisp business case in my head and tried to hold it up next to that image of Market Street flooded with candles after Harvey Milk was shot. All of those little points of light represented a community, one that had been tirelessly nurtured and encouraged with years of hard work. Without any economic incentives to speak of or any marketing dollars that community continued to expand and grow and have more than a few real economic impacts. Willard makes a compelling case for why businesses should get the environment, and it seems like there is an equally compelling case for businesses to get those kinds of social movements and the issues behind them.
When constructing his case, Willard focused on a set of key constituencies that executives must deal with: employees, customers, suppliers, investors/insurers, government, and civil society. These constituencies provide the drivers for environmental sustainability. Across the board sustainable strategies lead to more productive relationships with these key constituencies, which results in better business. It’s that simple.
Here’s a shot at how social sustainability can do the same thing:
Unsustainable model– Employees are viewed in terms of a single metric (hours worked, ROI created, etc.) All other components of the employee experience are ignored.
Driver– Literature on effective management shows time and again that investing in people pays off. Major companies like Southwest take great pains to construct the ideal environment for their employees to do work in, and gleaning competitive advantage as a result.
Sustainable model– Employees have direct ownership of their work, an environment which allows them to do that work effectively and happily, and the flexibility to innovate improvements. All employees feel that they are part of a small to mid-sized group which supports one another, communicates effectively and makes many key decisions democratically.
Positive Impact– Satisfied, ownership-motivated employees work harder and innovate constantly. A focus on team decisionmaking creates a culture of open dialog, honest communication and innovative collaboration which greatly multiplies the impact of increased productivity.
Unsustainable model– Company sees sales numbers as its primary measure of success and interacts with customers to maximize those numbers in the short term. Products are either designed to minimize price (under the assumption that that is the only information the customer cares about) or designed and marketed not to improve customers’ lives but to manufacture demand where none existed.
Driver– Ultimately, consumerism is bad capitalism. Customers would rather own products that make them happy, and happy people don’t need to buy as much. Companies that seek to genuinely improve the lives of their customers- both directly through products and indirectly through social service- will build a competitive advantage over those that do not.
Sustainable model– The marketing dept transforms from a loudspeaker for one-way communication about selling to a telephone for two-way communication about effectively solving customer’s problems. Open communication with customers allows the company to make genuine improvements in customer’s lives. In appropriate contexts costumers can support and network with one another. They know and are excited by the company’s mission, and this excitement translates to brand loyalty and word of mouth marketing.
Positive Impact– Increased efficiency and employee productivity will drive products down in price while a greatly improved, direct relationship with customers will revolutionize the design process. Businesses can become a little more like Harvey Milk- deeply tapped into the problems that their community of customers is facing and able to design real solutions that make dramatic change in people’s lives. This kind of relationship is the ultimate advantage in market share, it’s impossible to mimic or outprice.
Unsustainable model– Company analyzes community in terms of its potential backlash to externalization of company costs. Community engagement is about maintaining brand integrity, avoiding tort liability and removing barriers to company projects by any means necessary.
Driver– A major court case or PR disaster scares the company into action. Realizing that they are spending significant resources responding to threats, companies decide to be proactive.
Sustainable Model– Company enriches community institutions valued by employees and customers, building brand equity and increasing employee effectiveness. Company adopts a mission of community service based on its core strengths, it looks to civil society for it’s reason to exist.
Positive Impact-A solid company mission galvanizes employees, customers, and other core constituencies, serving as the foundation for the good relationships described above. By remaining sensitive around and connected to issues in the local community company can avoid being blindsided by unforeseen changes in its business environment. Excellent brand equity pays off in top-line sales, hiring, and public relations.
Unsustainable model-Company follows legal regulations only when enforcement cannot be avoided and when the cost of fines exceeds profits from illegal behavior. If this is the case, company partners with others in the industry to lobby for such regulations to be removed.
Drivers– Changes in regulation and enforcement can drive up the cost of noncompliance. Flares of internet-fueled activism is making government bodies increasingly difficult to predict and outmaneuver, and thanks to the recent financial crisis the idea that government should just “get out of the way” of business is hugely unpopular.
Sustainable model– Company respects all legal regulations relevant to its industry and clearly communicates that respect to its staff. Company maintains good government relations underpinned by its good community relations. Company seeks to enhance its competitive advantage by supporting legislation which aggressively pushes for the environmental and social sustainability that it already embodies. Company participates as a sustainable voice in industry lobbying groups.
Positive Impact– Company receives a competitive advantage from good governance. Less corrupt governments with staricter regulations around issues such as worker’s rights weaken the company’s competitors and expand market share.
Unsustainable model– Company engages vendors based solely on price.
Drivers– NGOs target the company because of issues in their supply chain, leading to one or more PR disasters. Company seeks supply chain reform to address the issue.
Sustainable model– Company seeks to replicate the integrated bottom line benefits of sustainability across its supply chain by demanding sustainability from its vendors (when it has the leverage to do so) and offering expertise and resources which allow vendors to mirror its success. Company actively explores supply chain sustainability and takes ownership of major social and environmental supply-chain problems.
Positive Impact– Respect for human rights in the company’s supply chain creates brand equity. In assisting suppliers the company builds relationships which result in better communication and more innovative supplier/company relations. Ultimately more sustainable suppliers are able to increase efficiency and productivity.
Unsustainable model– Company assumes that investors care only about short-term ROE, and make all decisions to maximize this metric.
Drivers– Increasing investor interest in off-balance sheet measures like social sustainability forces companies to expand their communication with investors about social issues. Shareholder activism and SRI make social sustainability questions a standard at shareholder’s meetings, managers had better have answers.
Sustainable model– Company works to create an investor-approved social mission that can drive the company. Governance structure is expanded to include employees, customers and other key stakeholder groups. Sustainability reporting is fully integrated into investor communications.
Positive Impact– As company gains access to socially-aimed funds the cost of capital decreases. Improved governance allows for a fuller set of perspectives to be “at the table”, leading to more diversity of opinion and a more stable long-term strategy for the company.
That’s it for now- a rough sketch of a bunch of ideas I hope to explore further in the coming semesters. Some of these (workplace democracy and anti-consumerist marketing) I’ve spent a good deal of time thinking about already. I’d love to discuss these still-rough and hole filled ideas if anyone is interested, or hear some of yours around this issue!