Tag Archives: Michael Porter

I knew it was cold, but…

Over recent weeks I’ve written a number of posts suggesting that sustainability  (as I’ve long defined it in terms of “longevity”) is finally coming of age – not least Sir Stuart Rose’s assertion that businesses with unsustainable business models will die within 20 years.

This perspective takes sustainability way beyond “green” and reputation management and positions it in the context of fundamental long-term business viability – a key driver of institutional innovation if businesses are to remain credible, relevant and differentiated, particularly in this post-GFC world.

More precisely, I have written of sustainability as “a perspective on brand and business strategy that inextricably links long-term success with serving a higher social purpose.”

More than a little weird, then, to read about these very similar words taken from a new HBR article…

[Shared value] involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress… [This] is not on the margin of what companies do but at the centre.

It gets even weirder when you realise who wrote them (cue fanfare)…

Michael Bloody Porter!

[Incidentally, very few people know that that’s actually his full name :-)]

If you’d asked me to name the strategy uberguru least likely to have written these words, Porter – he of the Five Forces and the high priest of an outside-in, adversarial stance on corporate strategy – would almost certainly have come top of the list. And yet here it is in black and white.

I knew it was cold outside, but I didn’t think it was THAT cold. Hell, it seems, has actually frozen over!

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The Big Lie of climate politics, talent management and the Next Industrial Revolution

There’s a nice interview piece up on CSR Wire right now, the first in a three-part series with Eric Pooley – deputy editor of Bloomberg Businessweek, former managing editor of Fortune, and author of The Climate War.

It happens to have pricked my interest today as, in the course of editing an upcoming new title on talent management in the 55-minute guide series, I’ve just been re-reading a report by Tomorrow’s Company – Tomorrow’s Global Talent: A new talent agenda for the UK.

(Don’t get the link? Don’t worry, all shall hopefully become clear…)

The central tenet of the Tomorrow’s Company report is that understanding what they refer to as the “triple context” (the interdependence of economic, social and environmental sub-systems) is not just essential to success at the level of individual businesses, but also at the level of national economies. The success of UK plc, they maintain, lies in talent-intensive, high value-added sectors, focused on innovation that steers the global economy towards a more sustainable future.

Interesting, then, to read Pooley’s views on the machinations of the “deny and delay” crowd in the US, and their moves to scupper the US Climate Bill by peddling the great myth that sustainability and economic prosperity are somehow mutually exclusive.

It’s a familiar, if completely facile, argument that insists that if we take action on sustainability, we’ll break the bank (erm… didn’t we do that already?!); that doing something good for the environment is necessarily bad for the economy; that all it does is make us less competitive against the likes of India and China.

Aside from highlighting the inconvenient truth that numerous examples (such as Interface) already exist to demonstrate that this isn’t so, it’s even more important to point out that what this kind of argument appears to ignore is the even greater myth that countries like the US or the UK can even begin to compete with India and China on an international scale on the basis of the continuation of business as usual.

Surely – as alluded to by the Tomorrow’s Company report – the basic rules of corporate strategy apply here, as much to nations as to individual enterprises?

Let’s not forget Michael Porter’s definition of strategy – a process of understanding, positioning and adapting a business for the purpose of creating sustainable competitive advantage. (I mean c’mon, people, he even uses the word “sustainable” for chrissakes! How much more of a clue do you need?!)

Countries, just like companies, can be viewed as bundles of productive resources (e.g. fixed assets, people, skills, brands etc.). Each has a unique resource profile that can be leveraged into core competencies, and that can sustain competitive advantage as long as those resources remain valuable and distinctive.

The point is that much of what was once valuable and distinctive about our system of business is no more. The environment has changed. Our competitors can easily imitate or substitute those resources. The ways of the industrial age just don’t cut it any more because, in that realm of Six Sigma and operational efficiency, our competitors have a much better value proposition.

Isn’t it time for us all to accept this reality and embrace sustainability, not just as a moral imperative, but as a brand, business and economic imperative too?

As many people have written, what we’re talking about here is nothing short of the next industrial revolution – a fundamental game change. (As the military analogies so prevalent in thinking on strategy would have it: if you can’t beat them on their terms, then change the rules of engagement.)

Sure, the transition won’t be painless, just as I’m sure it wasn’t at the time of the last industrial revolution. It will create winners and losers. And the vested interests aren’t going to go down without a bloody good fight. But, to elide two of Umair Haque’s more zen-like tweets, here’s the thing:

The real utopia isn’t betterness. It’s the economists’ world of perfect markets, greed, and consumption driving unstoppable prosperity. Being the best in tomorrow’s terms often means being the worst in yesterday’s. Make the tradeoff. It’s how disruption happens.

‘Nuff said.

CR, culture and corporate strategy – joining the dots

A recent discussion thread on LinkedIn has really helped to crystallise a few thoughts on the links between approaches to corporate strategy and a business’ predisposition to manage CR and sustainability in a certain way. 

All the pieces have been there but, until now, I hadn’t really brought them all together in one place or been able to properly articulate the apparent connections. Here goes…

A company’s attitude and approach to CR ultimately depends on their approach to corporate strategy and their perceived basis of competitive advantage.

If you derive competitive advantage through cost leadership/operational efficiency, a measurement mindset is likely to dominate your thinking on CR. At the lower end of the spectrum (since your customers are motivated by the lowest cost solution) your approach is about cost avoidance – doing the minimum to respond to social pressures, e.g. through voluntary codes and compliance with regulations. At the higher end, companies may actively pursue greater energy efficiency as a means to realise significant cost savings. Either way, you’re living in the world of CR 1.0, somewhere between Levels 1 and 3 on the CR Continuum.

It is only likely to be companies that derive advantage through the value disciplines of product leadership or customer intimacy (the ‘differentiation’ half of Porter’s generic strategies) that are naturally open to adopting a CR 2.0 view – i.e. a more ‘systemic’ approach, where CR and sustainability is used as a fundamental design value to challenge the business model and identify opportunities for product and process innovations.

What matters to product leaders is design, innovation and brand marketing, supported by a flexible culture. For customer intimate companies, it’s about personal service, consistently exceeding expectations and developing lifetime value, supported by a culture that devolves decision authority to those closest to the customer. Either way, it’s a mindset focused on how to create new value for customers through maximising the value of the business’ human and intellectual capital.

As with all theories, I’m sure there’ll be exceptions. But as a general rule, I reckon there’s definitely something in this. What do you think?