Capabilities:
The skills and methodologies that sustainability-promoting firms need to master.

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Philip Sutton
Director, Policy and Strategy
Green Innovations Inc.
Tel & fax: +61 3 9486 4799
Philip.Sutton@green-innovations.asn.au
29 October 2000
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by Philip Sutton.

Corporate capabilities and competences for promoting ecological sustainability

Over the last two decades there has been a substantial shift in the corporate world from seeing ‘concern for the environment’ as something that is imposed on firms and as a commercial threat to seeing it as a value that the firms themselves can espouse. However, most firms have been focused inwardly on reducing their own negative impacts and they have engaged in very gradual incremental change. Risk and cost reduction have been the major motivators.

Only a very few companies around the world have adopted comprehensive approaches that could be defined as ‘sustainability-promoting’ - the carpet manufacturer Interface is one of the few. Sustainability-promoting firms are distinguished from other firms not only by their policy differences but also by their basic capabilities that affect:

Sustainability-promoting firms need to develop capabilities that enable them to overcome the following blockages experienced by conventional firms:

The required capabilities will be built up using more specific competences some of which are describe briefly below.

Mindsets and values

The 5-in-1 Customer. Environmental problems are, as often as not, a sign of ethical failure arising from the fact that most people, most of the time, favour immediate concerns over those that affect people further away in space or time or that affect non-human species. One way to avoid this ethical failure is to adopt a more inclusive ethical framework that is built on a compensation principle - like the old sea rescue protocol of "women and children first". That is we should put the currently disempowered first - both human and non-human. If we did this then other species and marginalised people would be given more active consideration.

Consideration of other species for their own sake, and not just because of the essential contribution they make to human welfare, is a defining ethical dimension of the pursuit of ecological sustainability. One way of conceptualising an inclusive ethical framework, using a commercial metaphor, is to think of serving the 5-in-1 customer.

In a world where firms are focussed on ever-narrower niche-markets the customer is a much reduced concept - it can be nothing more than the fragment, the nano-second slice through a person that relates exclusively to the purchase of a product. The idea can be much richer than that however. Imagine the implications for product development and service delivery if the ‘customer’ was thought of as the totality of the direct product user, the local community, people globally, future generations and nature. To serve the customer would mean doing good for the local community, people globally, future generations and nature - at the same time as doing something useful for the traditional customer, the direct user of the product .

Unlimited responsibility. Sustainability-promoting firms need to adopt a principle of "unlimited responsibility" for the achievement of sustainability. It is not enough for firms to just aim to reduce their negative impacts. Achieving sustainability is such a massive and difficult task that it will only be possible if a vast number of organisations work to ensure that the whole task is tackled.

Of course no single firm or individual, by themselves, has the time or capacity to solve all of society’s problems. What the principle of "unlimited responsibility" means then is that everyone needs to do some catalytic work to see that the full scope of the necessary changes occurs.

Sustainability is a goal to be achieved. Sustainability is about maintaining something important over time (either continuously or with timely restorations). So actually achieving the goal is important.

Long-term thinking is important. If sustainability is to be achieved them firms will have to be managed for both short term and long term success.

Prevention is usually better than cure. The principles of thermodynamics explain why, if something is to be maintained, that prevention is usually better than cure.

Thinking skills

One of the most important areas in which new competence is needed is in the handling of complexity. Environmental issues arise as often as not because humans try to change complex natural and human systems. The necessary solutions have to mesh with the same complex reality. However, for effective action to be taken the solutions need to be packaged simply enough to make them understandable to those who need to act. Some important competences related to handling complexity are:

New knowledge

A great deal of new knowledge related to sustainability problems, how they might be solved and how the firm might act, including relevant technologies, will be needed. Some core knowledge needs to be embedded in the firm and additional knowledge needs to accessible via knowledge providers when needed.

Strategic skills

Special strategic skills will be needed to deal with:

Management skills

Handling long time frames. Managers and other employees need to have effective long-term reminder systems triggered by events and conditions as well by dates. For example, although investments in new plant and equipment may only occur infrequently these investments open up the opportunity for major leaps in environmental performance - provided people remember to act on the opportunity.

Dealing with difficult deadlines. Managers and other employees need to have the skills and systems for handling difficult deadlines (that are in the distant future, are immovable or ambiguous or which are more important for society / nature than for the short term interests of the firm.

Inspirational stretch goals. To provide a concrete framework for the 5-in-1 Customer concept to operate in, it is useful to adopt a set of inspirational stretch goals to guide the firm’s product development and innovation programs of all sorts. These stretch goals are not something that one would expect to achieve immediately, easily or even in some cases totally, but like the ‘zero defects’ idea adopted by the Japanese after the Second World War, they point the direction and give a sense of a preferred future state.

Other key management capabilities: Some additional competences are:

Design skills

Whole system design. Over the last couple of decades, the Rocky Mountain Institute has shown that large energy savings can often be achieved more cheaply than small ones in buildings, motors and many other technical systems through the use of whole-system redesign - (von Weizsäcker et al., 1997).

Others have also discovered the magic of whole-system design, that is, the potential for win-win solutions. It underpins, for example, the power of TQM techniques, business process reengineering, Eli Goldratt’s Theory of Constraints, cleaner production, eco-redesign and life-cycle assessment.

When societies, economies and technologies become complex, most people focus on incremental improvements in the parts of the system. This leaves a vast reservoir of economic and environmental efficiency gains to be made by those who can handle complexity.

Whole-system design is not just a very good source of productivity gains, it is also the only way that ecological sustainability can be achieved - because, as stated earlier sustainability is a system characteristic and it cannot be achieved by focussing only on uncoordinated changes in parts of the system. This is why effort to reduce a firm’s negative impacts which emphasise introspective improvements in the firm’s own product and organisational performance, cannot result in society becoming ecologically sustainable.

Design profligacy. Good solutions can only be selected if they exist. The more goals one is trying to achieve at once the greater the number of options will have to be generated to find one or some that perform well against all the main requirements.

Standardised system frameworks. Knowing that whole-system design is the key to achieving ecological sustainability with win-win productivity gains is one thing. Doing something about it is another.

There are two reasons why whole-system design is not undertaken often. One is that most people have not been trained to handle this approach. The other is simply that it is generally harder to develop whole-system designs and implement whole-system changes than it is to deal with incremental changes.

One very important way to reduce the difficulty of handling whole-systems is to use techniques that reduce the uncertainty and complexity of change. Standardised system frameworks can be used to maintain the sustainability of the system over time. A number of standardised system frameworks can be designed which, when combined, are known to be sustainable. Then, as long as each product is designed to fit into one of these frameworks, the sustainability of the system as a whole is likely to be maintained.

Technical skills

Cleaner production / industrial ecology. The original business response to the need to reduce pollution was to add treatment facilities to unmodified factories. It has now been found that the financially most beneficial approach is to design factories so that the production of troublesome pollution is avoided in the first place. Out of this cleaner production approach has grown the concept of industrial ecology where whole industrial systems, involving a great many firms, are redesigned so that waste generated by one factory is used as a raw material in another. (Alenby & Richards, 1994; Pauli, 1998)

Modelling capacity

The speed and scale of change required to achieve ecological sustainability is an order of magnitude greater than people tend to imagine. Change like this cannot be achieved in a timely fashion purely through the aggregation of a myriad incremental changes. Micro changes will need to be accompanied by a great many big leap changes.

To maintain public support for leapfrog changes, it will be necessary to produce win- win outcomes where major environmental improvements come at an affordable cost and without the need to sacrifice the satisfaction of other human needs. The chance of finding a suitable win-win solution can be kept high by significantly improving our knowledge of the world and society and then vastly increasing the number of options that are generated and tested. To be affordable most of this option generation and testing has to be done in the mind or in the computer because it is prohibitively expensive to create huge numbers of real prototypes.

So leapfrog change requires people to be able to imagine society and technology as it has never been, that is, to be able to think 'out of the box'. Whole-system design requires people to have the ability to conceptualise and use complex models depicting how things are now and how they might be. And the creation of win-win solutions requires 'design profligacy' that is only possible when whole system design skills are ubiquitous and computer-aided-design can be applied widely. So for all these reasons sophisticated simulation modelling capacity will have to be widespread throughout society. (Kelly & Allison, 1999)

References

Alenby, B. & Richards, D. (eds.) (1994). The greening of industrial ecosystems. National Academy Press: Washington, D.C.

Blanchard, K. and Waghorn, T. (1997). Mission possible: Becoming a world class organisation while there’s still time. McGraw-Hill: New York.

Claxton, G. (1997). Hare brain, tortoise mind: Why intelligence increases when you think less. Fourth Estate: London.

Crum, T. (1987). The magic of conflict: Turning a life of work into a work of art. Touchstone/Simon & Schuster: New York.

de Geus, A. (1997). The living company: Growth, learning and longevity in business. Nicholas Brealey: London.

Ellyard, P. (1998). Ideas for the new millennium. Melbourne University Press: Carlton South, Melbourne.

Goldratt, E. (1994). It’s not luck. Gower: Aldershot, Hampshire.

Grove, A. (1998). Only the paranoid survive: How to exploit the crisis points that challenge every company and career. HarperCollinBusiness: London.

Holmberg, J. (1999). "Backcasting: A natural step when making sustainable development operational for companies". Greener Management International, 23, UK.

Kelly, S. & Allison, M. (1999). The complexity advantage: How the science of complexity can help your business achieve peak performance. BusinessWeek Books (McGraw-Hill): New York.

McLaren, D., Bullock, D. & Nusrat, Y. (1998). Tomorrow's world: Britain's share in a sustainable future. Earthscan: London.

Moore, J. (1996). The death of competition: Leadership & strategy in the age of business ecosystems. HarperBusiness: New York.

Meadows, D., Meadows, D. & Randers, J. (1992). Beyond the limits: Global collapse or a sustainable future. Earthscan: London.

Pauli, G. (1998). Upsizing: The road to zero emissions: More jobs, more income, no pollution. Greenleaf Publishing: Sheffield, UK.

Pino, R. (1999). Corporate Aikido: Unleash the potential within your company to neutralize competition and seize growth. McGraw-Hill: New York.

Sachs, W., Loske, R. & Linz, M. (1998). Greening the north: A post-industrial blueprint for ecology and equity. Zed Books: London.

Strebel, P. (1992). Breakpoints: How managers exploit radical business change. Harvard Business School Press: Boston, Massachusetts.

Sutton, P. (1999). "The sustainability-promoting firm". Greener Management International, 23, pp. 127-152, UK.

Sutton, P. (1997). "Targeting sustainability: the positive application of ISO 14001" In Sheldon, C. (ed.) ISO 14001 and beyond: environmental management systems in the real world. Greenleaf Publishing: Sheffield, UK.

von Weizsäcker, E. Lovins, A. & Lovins, H. (1997). Factor four. Allen & Unwin: St. Leonards, NSW.


 

Author:  Philip Sutton
First posted:  29 October 2000
Feedback & Enquiries:   Philip.Sutton@green-innovations.asn.au


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