Tag Archives: sustainability

On purpose, humanity and the future of the corporation

These past couple of weeks, I’ve been reflecting on an interesting paper from the British Academy – Principles for Purposeful Business: How to deliver the framework for the Future of the Corporation.

Essentially, it’s a treatise on closing the ‘say-do’ gap on purpose, setting out principles and pathways for taking us beyond the rhetoric and hardwiring it into organizations everywhere. And there’s a lot to like about it – not least its definition of corporate purpose, the simplicity and clarity of which stands in sharp contrast to the Business Roundtable statement published a few months back:

The purpose of business is to solve the problems of people and planet profitably, and not profit from causing [them].

I don’t know about you, but I absolutely love that – not just for what it says about anchoring corporate purpose in broader societal goals (as represented by the SDGs), but also what it implies about our notions of ‘prosperity’ and the essential role of capitalism in furthering it. It encourages us to shift our perspective on how and why markets work from their allocative efficiency to their effectiveness in promoting creativity, problem-solving and the diffusion of innovation.

When you think about it, this makes perfect sense. After all (as some smart McKinsey bods argued a few years back), life isn’t better today than it was in 1800 because we’re allocating the resources of the 19th-century economy more efficiently; it’s better because of the vast array of innovations (life-saving antibiotics, indoor plumbing, motorized transport to name just a few) that have become available to much (if not yet all) of the world’s population.

In other words, prosperity can’t be properly understood by looking at just monetary measures. Maybe it’s better understood in terms of the accumulation of solutions to human problems – the ultimate measures of societal health and wealth (and business success) being the range of problems solved, and how widely available those solutions are to all.

I do have my reservations, though…

Aside from the undoubtedly excellent definition of corporate purpose – plus a few abstract references to the wellbeing of humanity – the report is strikingly devoid of any kind of human expression. From ownership and governance to measurement and performance, the principles outlined (while useful) are all largely ‘mechanistic’ in nature, steeped in the mindset of the lawyer, the accountant, the economist, the management consultant and the academic.

As highlighted by a purposeful pal of mine, amid some WhatsApp chat-chat about the report, a big part of the problem today is surely that we’re already drowning in these perspectives – and have been since time immemorial. At their worst (embodied by the likes of Frederick Taylor and his scientific management theory), it’s these perspectives that have led us to spend the best part of a century trying to drive humanity and its imperfections out of the system, so perhaps it’s no great surprise that a humanist perspective is missing from the narrative.

But when it’s our essential humanity that’s now seen as the very thing most critical to business and society thriving over the long term, those deeper philosophical underpinnings need to be there, e.g.:

  • Understanding what it means to be human at work in an era of increasing human-machine collaboration, and how to nurture that
  • Recognizing that any business (at least at its founding) is fundamentally a social enterprise – a coming together of people to solve a problem/meet a need that they couldn’t address alone
  • Appreciating our innate desire, as humans, for connection – with nature and with each other
  • Framing the need for change in terms of finding the antithesis of an economic model seemingly designed to pry ourselves from our human natures, dampen our passions and keep ourselves from constructing a ‘whole’ and meaningful story for our lives

To that last point, the WhatsApp chatter generated a series of ‘from… to…’ statements that bear closer inspection and deeper thought. If the mood takes you, I’d invite you to have a think about these, and maybe share other ‘mindset shifts’ you’d add to the list:

  • From engineer to artist
  • From physicist to biologist
  • From economist to spiritualist
  • From specialist to generalist
  • From consumer to citizen
  • From parts to systems
  • From economics to holonomics
  • From mechanism to organism
  • From extractive to regenerative
  • From ‘more!’ to enough
  • From scarcity to abundance
  • From growth to scale
  • From financial returns to impact returns
  • From transactions to relationships
  • From bureaucracy to community
  • From organization to self-organization
  • From control to nurture

Something to ponder over the festive break, anyway.

 

If not now, when?

I received this passionate and utterly brilliant message from Giles Gibbons, Founder & CEO of Good Business, earlier this week. Naturally, I agree with every word, and it’s just too good not to share in full:

Dear friends,

20 years and counting of the ‘sustainability movement’ – of which we count ourselves a part – and what have we achieved? Our honest answer right now is nowhere near enough.

If anything drives it home it’s the summer we’ve just had. We don’t think you can have lived through it without having a ‘stop and think’ moment. 46-degree heat in Paris. The hottest July the continent of Africa has ever seen. Populism breaking politics in Britain, and exploding onto the scene in France, Italy, Ukraine – and the list goes on…

Too many people feel that the world is stacked in favour of elites at the expense of everyone else. And so the two main challenges of our day – climate change and inequality – played out on the global stage in a clear, present and in-your-face way. Even the FT and corporate USA have started to argue that capitalism as currently construed isn’t working. And that’s before millions of people around the globe joined the biggest climate protest ever.

This must be the time not just to sit up and think, but to take action. Businesses have been delivering slow and incremental change in the name of business responsibility and sustainability when what we need is a thunderbolt of transformation.

We can’t keep saying we’ve got twenty years to save the world because the time will run out. From zero-carbon commitments to the SDG deadline, horizons for delivery are drawing ever closer, not so the action they demand. In fact we think that unless business steps up to the challenges we face, time will be called on the sustainability movement. It’s not delivering the capitalism the world both wants and needs.

But it absolutely can. And there’s never been a more compelling case for it to do so. Not least because there is a massive new wave of will for change. For the first time ever consumers and culture are in the lead on all this, demanding action. People want to buy from, work for, talk about and partner with organisations that deliver bold solutions for people and society. And for every established business that doesn’t deliver against this there’s a disrupter that will.

The message is clear. If you want your business to be part of the future you need a step change in thinking and action. Steady progress on sustainability will write you out of history. The winners will be those that embrace transformative change.

And if there’s ever a moment to mark a new beginning it’s upon us – January 2020. A decade to meet the 2030 agenda for sustainable change. The moment to draw a line in the sustainability sand, and springboard into a new era of action.

We know this is anything but easy. But it is essential. And we believe that everything we’ve learnt and done over the past 20+ years of working in this space has set us up for this moment.

If you agree, join with us. If you want us to help, please get in touch. We’re ready.

Transform your business, transform the world.

Giles

Founder & CEO
Good Business

A more beautiful question

For a while now, I’ve been searching for what author and journalist Warren Berger calls ‘a more beautiful question’ – the kind of question that, with elegant simplicity, can encapsulate a wealth of ideas, concepts and possibilities; that can help to shift the way we perceive or think about something; and that has the capacity to spark breakthrough ideas.

While that kind of preamble almost inevitably sets me up to fail, I think I may finally have fashioned one worth sharing, and it goes like this:

What if business were society’s greatest problem solver?

I use the word “fashioned” advisedly, of course. I don’t claim any originality, save perhaps for the particular combination of words. The ideas and concepts that underpin it are many, varied and long-established – the self-same ones that have preoccupied me (and many others) for years now.

While people may choose different labels to describe the conceptual space here – be it sustainability, creating shared value, purpose-led business, inclusive capitalism or whatever – they are fundamentally united by a common set of assumptions:

  1. That, whatever your views on the role of business, and the capitalist system more generally, in creating many of the problems and inequities we see today, it’s also essential to solving them (as evidenced, for example, by the inclusion of business as a key partner in achieving the UN’s 2030 Sustainable Development Goals);
  2. That business, and again capitalism more generally, is perfectly capable of this kind of ‘reboot’ (indeed, as powerfully argued by some smart folks at McKinsey, creating and scaling solutions to human problems may always have been at the heart of how and why capitalism works);
  3. That the fates of business and society are interdependent and it’s in the best interests of both that business steps up to assume this role as a partner of choice in solving social problems (whisper it quietly, but business-based approaches are frequently more effective than government or charitable aid in reducing inequality).

What this all boils down to – what we arguably lost during the cult of maximizing shareholder value, and what we are now slowly rediscovering – is the understanding that the long-term prosperity of business and society go hand-in-hand. Business cannot, and should not, divorce its success from the health and resilience of the social and ecological systems that give it life.

Moreover – in line with Peter Drucker’s famous dictum that the only purpose of business is to create a customer – the idea of seeing business first and foremost as a problem-solving engine, rather than solely a vehicle for maximizing short-term shareholder gain, would seem a much better and broader reflection of what successful companies actually do.

With specific regard to the third point above – and offering an inkling of what reorienting business as society’s greatest problem solver might look like – probably the greatest joy of my current role is the exposure I get to the work of some outstanding social entrepreneurs.

As a firm believer that the sustainability imperative represents the innovation opportunity of a lifetime, understanding and telling their stories (and EY’s role in helping them build the internal capabilities to extend their reach and impact) is something I find endlessly fascinating. After all, in many ways, social entrepreneurs are the purest incarnation of purpose-led business – a mash-up of the social mission of a non-profit with the market-driven approach of business to innovate new products, services or approaches to tackling society’s most pernicious problems.

Take Jibu, for example, a clean water franchise business in East Africa, conceived by father and son, Randy and Galen Welsch, as a better way to tackle the problem of affordable access to safe, clean drinking water. Its ingenious business model equips local franchisees with advanced, solar-powered filtration equipment that can clean locally sourced water and make it available at a fraction of the price of other bottled water – each franchise effectively becoming a water purification plant for the surrounding community.

More than the question of affordability, the structuring of the business as a franchise also neatly addresses the problem of sustainability in the sense of long-term viability (i.e., sustainability = the ability to sustain!). Whereas donor-funded water schemes often suffer from a lack of local ownership – as a consequence of which, around half of them fail within a couple of years – every Jibu franchise is run by a member of the community it serves.

This puts the very people who benefit from the service in charge of running it, combining their need for clean water with their desire to control their own destinies and build a more prosperous future for their families. It’s a virtuous circle that should see the growth of the business not only provide permanent access to safe water for more than a million people by 2020, but also create 8,000 jobs, in turn providing 8,000 families with a decent and reliable income.

What makes stories like Jibu’s more compelling still is the fact that, more often than not, social entrepreneurs are achieving this kind of success against a backdrop of massive resource constraints. These are master hackers, and you have to wonder what might be achievable if big business took the time to observe, draw inspiration and reverse innovate from their approaches.

Of course, encouraging business-at-large to do so is precisely the purpose behind searching for (and hopefully finding) that more beautiful question in the first place.

Screw AppleWatch. Give me LYF!

Lordy, is it really 4 months since I last posted? Shame on me!

Well, it’s only fitting that I should break such a prolonged period of radio silence with news from my favourite discovery of 2014: the brilliant LYF Shoes.

If you haven’t come across this little gem before, clear 15 mins in your calendar to watch LYF founder Aly Khalifa’s talk from the Sustainable Brands conference in London last November. Seriously, do it. The design – not only of the product, but also the entire ecosystem and customer experience it spawns – is genuinely breathtaking in its scale and ingenuity and, as you pause and reflect on it, you’ll wonder why shoes would ever be made any other way in this day and age.

That’s why I couldn’t be happier to be one of the lucky few to be involved as an LYF Pioneer, shortly to receive my ‘LYF Fit Kit’ and begin the journey towards my first ever pair of custom-fit, one-of-a-kind, made-to-be-made-again footwear.

This may be the first time in my life that I’ve ever truly been an Early Adopter. I couldn’t give a stuff about all the hype surrounding the latest gadgets, like the AppleWatch, but LYF is different.

You see, I’m a sucker for anything to do with sustainability-inspired innovation, and the chance to play some small part in the development an enterprise with the potential to disrupt an entire industry is simply too good to miss. I also happen to be 6’7″ with size 14 feet, which means I’ve struggled for pretty much all of my adult life to find clothes – and especially shoes – that fit.

LYF, with me at least, has hit the mother of all sweet spots!

I’ll let others rave about the opportunity to design their own uppers and create a truly individual fashion statement (I am, after all, a 42-year old straight white male, which makes me something of a fashion vacuum).

What really intrigues me is the chance, for the first time ever, to own a pair of shoes that has been individually customised to the length and width of each of my feet (that’s right, folks, different sized feet receive different sized shoes!); more than that, to own a pair of shoes that will actually capture biomechanical data on the way I walk, using a device embedded in the heel, so that the design of the next pair I buy will be refined to fit even better; and all serviced by a closed-loop, circular business model that eliminates harmful substances from assembly, uses 100% recyclable materials, and spurs local economic development by encouraging micro-enterprises to spring up and fulfil all parts of the value cycle from Original Equipment Manufacture to assembly and retail.

Normally it’s my missus who has the exclusive preserve on getting excited about a pair of shoes but, on this occasion, I’ll gladly buck the trend.

Sustainability-inspired disruption: LYF Shoes

Traditional shoe-making is a nasty business, explains a video from LYF Shoes.

Cheap raw materials, exploitation of foreign labour, toxic adhesives and mega-heat ovens used in assembly, wasteful packaging, long-distance shipping and distribution… That’s a very long list of negative effects for the making and use of a product that, in the vast majority of cases, is ultimately destined for landfill.

Of course, all of this makes it an industry ripe for disruptive innovation. There has to be a better way, right?

Well, LYF Shoes (Love Your Fit. Love Your Fashion. Love Your Footprint.) looks like they may have found it – not just a product with a sustainable twist (a la Oat Shoes), mind you, but an entire sustainable system of design, production, distribution and consumption. A new and disruptively innovative business model.

Ready for the whistle-stop tour? Here are some of the headlines, viewed through the lens of the fundamental principles of design for sustainability, as described in my book

Clever!

Material inputs: How might you redesign products and processes to reduce the amount and types of materials used? Are those materials recyclable, so that waste is no longer waste, but the food for another process? Could your raw materials come from someone else’s waste (or your waste become someone else’s raw material)?

LYF shoes are designed from the ground up to use 100% recyclable materials – from the recycled rubber and plastics in the sole and ‘performance plate’, to the cork insoles (the cork coming from recycled wine bottles), to the all-natural uppers. What’s more, those uppers are precision-cut and printed on-demand, using an all-dry digital printing process, so as to minimize ink and material waste.

Very clever!

Modularity and longevity: What is the expected life span of your product? How easily can it be repaired, updated or put to alternative use? How easy is it to dissemble the product into its component parts to aid that repurposing/updating/re-use?

LYF shoes are specifically designed for ease of assembly and disassembly – five component parts that fit together entirely without glue. That makes it a doddle, either to extend the life of the shoe by replacing a single worn component (no need to throw the baby out with the bathwater) or, if the shoe has given up the ghost completely, to return it to source to be recycled and turned into a new shoe. 

Cleverer still!

Closing the loop: How can you make use of reverse logistics to reclaim discarded outputs and turn them into new inputs? How close are the points of production and consumption? Can these distances be shortened to further increase the efficiency of your value cycle?

Here’s where it gets cleverer still. The simplicity of design and assembly – no glue, no ovens, no screen printing – enables a decentralized model of production and distribution. It paves the way for local microenterprises to spring up to fulfil just about every part of the value cycle – whether that’s Original Equipment Manufacture (OEM – i.e. manufacture of the component parts) or the job of assembly and disassembly at retail.

What’s more, this model slashes the costs and impacts of distribution and packaging by synchronising the points of production and consumption. And with customers incentivised to return end-of-life shoes, by virtue of a buy-back scheme (those shoes easily disassembled at the point of return and their components sent back to OEMs for remanufacture), the LYF model creates a ‘closed loop’ at a local level.

Cleverest of the lot!

Imagine you had absolutely no knowledge of all this ‘under the hood’ stuff. Instead, just pause and reflect on the entirely different customer experience it creates:

  1. You get to design your own shoes – before they’re made! Initially choosing from a range of styles and textile patterns, as the business grows you’ll eventually be able to upload your own print for a truly individual fashion statement. And you get to watch those shoes being made – at the point of retail, in front of your very eyes, in a matter of minutes.
  2. The shoes you receive won’t only be more to your taste in fashion, they’ll be functionally superior too – custom fit, more comfortable (and only getting more comfortable with every subsequent purchase, as an embedded digital capture device tracks biomechanics and builds a user profile that can be used to refine the design).
  3. And if, for whatever reason, those shoes just aren’t doing it for you any more – hey, no problem! Simply return to the store and either have them ‘upgraded’, or trade them in for a new pair, safe in the knowledge that every ounce of materials will go towards make another pair of shoes for someone else.

Seriously, what’s not to love? And if this sort of business model innovation floats your boat as much as it does mine, don’t be shy – go forth and shout about it! Here’s a wee video worth sharing as an introduction to/summary of the LYF story:

Yet more evidence that sustainability pays

For anyone who’s ever questioned the business value of sustainability, a new study published by Oxford University and Arabesque Partners (as reported in Forbes on Monday) should make for thought-provoking reading…

How sustainability drives financial outperformance

‘From the Stockholder to the Stakeholder’ (a full copy of which can be downloaded from Arabesque’s website) is a meta-study of more than 190 academic papers, industry reports, newspaper articles and books, and it provides some of the strongest evidence yet of the positive correlation between good sustainability practices and corporate performance. For example:

  • 90% of studies show that sound ESG (Environmental, Social and Governance) standards lower the cost of capital
  • 88% show that they also result in better operational performance
  • 80% indicate that stock price performance is positively influenced by good sustainability practices

Short-termism is the enemy

The numbers above offer empirical proof of what most of us already know in our gut – that doing good is great for business – and their importance can’t be understated, especially in the context of four more very telling statistics quoted in the report:

  • 80% of CEOs view sustainability as a means to gain competitive advantages relative to competitors, and yet…
  • Only 33% of them think that business is making sufficient efforts to address global sustainability challenges; this is at least in part because…
  • 79% of them feel under pressure to deliver financial results in two years or less, and…
  • 86% say this is in contrast to their innate convictions

In other words, the vast majority of CEOs want to make business decisions over a longer time horizon and integrate sustainability more fully into their businesses, but feel hamstrung by markets’ narrow focus on maximizing short-term shareholder returns (an insight, by the way, that casts a very interesting light on Unilever’s abandonment of earnings guidance and quarterly reporting).

Sustainable growth: changing the frame

Therein (as the Bard once wrote) lies the rub and, as a growing number of influential business leaders are arguing with considerable passion and conviction (notably the likes of Richard Branson, Paul Polman and Arianna Huffington, under the auspices of The B Team), it’s precisely this narrow definition of value that needs to change if business is to succeed in building a better working world.

  • From share value to shared value – leaders make it their business to be a force for good in the world, not just through philanthropy, but by delivering core products and services that tangibly contribute to the wellbeing of people and communities. They do so on the understanding that businesses with ideals of improving lives at their core are substantially outperforming the general market (by 120% according to Havas Media’s Meaningful Brand Index).
  • From next quarter to next generation – what it means to be a successful business is judged by the capacity to create and sustain value over the long-term, including innovating new business models that decouple growth from environmental degradation. This is on the understanding that, among other things, there’s an estimated US$1tn in economic value to be unlocked by transition to a circular economy.
  • From financial accounting to true accounting – businesses illustrate their capacity to create value in a way that reflects the commercial, social and environmental context within which they operate, i.e. fully accounting for their impact on (and stewardship of) not only financial but also human, social and natural capital. They do so on the understanding that a business gets the investors it deserves and that, if they want to attract long-term investors, then they need to offer a more systemic view in order to build trust and confidence in their ability to create and sustain value over the long-term.

Purposeful. Enduring. Real. These are the watchwords that, for me, define sustainable growth.

Are people tiring of ‘sustainability’ (and, if so, what should we do about it)?

Some time ago, I received a tentative approach from Kogan Page about turning my 55-minute guide to building sustainable brands into a more substantive tome. A few weeks of enthusiastic discussion was sadly brought to a halt, though, when the verdict came down from up on high that the ‘S word’ doesn’t sell.

Earlier this week, I stumbled across a blog post citing architect, Michael Pawlyn, who apparently gives some fantastic talks on biomimicry (using design principles evident in the natural world as inspiration for innovation). In these talks he points out that, if someone asked you how your marriage was going, and you answered that it was ‘sustainable’, that would tend to suggest something missing from the relationship!

It’s a fair point and it highlights a very real problem…

As a father, the son of designer parents, and a self-styled purpose-driven strategist, my idealistic attachment to an exciting future – one that offers an elegantly, ecologically and economically enjoyed existence for us all – is so part of my being that I have to consciously remind myself that that’s not where most people live.

In their worlds, were you to play a game of word association, ‘sustainability’ would most likely spark the word ‘green’ (narrowly framing sustainability in the context of environmental protection), rather than ‘longevity’ (opening up a much richer and broader narrative around our capacity to survive and thrive over generations).

Whereas the former is essentially pessimistic and suggestive of limits on business as usual, the latter is inherently optimistic, challenging us to re-envision constraints as an opportunity to design something better, more lasting and truly fulfilling – in balance with (not opposition to) the needs of wider society and the world’s natural systems.

For my money, it’s the absence of optimism and innovation from most people’s mental model of sustainability that saddles the word with its (undeserved) reputation for dullness and moral rectitude.

So what should we do about it? Well, three options spring to mind…

  1. Make a conscious effort to reframe sustainability in our own minds. One of the great weaknesses of the term (its context specificity and openness to interpretation) is simultaneously its biggest asset. As Humpty said in Through the Looking Glass, “A word means just what I choose it to mean – neither more nor less,” and we can choose how to define it – less about soft moral principles and more about hard business logic; less about peripheral philanthropy and more about core strategy and culture; less about risk and reputation management and more about innovation and value creation.
  2. Talk less about sustainability in the abstract and instead focus on being clear about specific outcomes and practical results. For example, everyone wants lower their energy bills and an architect can talk to clients about how adopting Passivhaus planning tools can help them to accurately predict (and reduce) their energy consumption.
  3. Abandon ‘sustainability’ altogether and call it something else. Here, unfortunately, I run out of ideas. Much like the word ‘brand’, if ‘sustainability’ were stripped from my lexicon, I’d be at a total loss as to what to replace it with.

If anyone out there has any suggestions, I’d be genuinely interested to hear them!