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Successful Triple Bottom Line Sustainability Depends On Board of Directors’ Leadership

May 23, 2011 Leave a comment

The notion of organizational leadership has traditionally been viewed in a top/down reductionist thinking fashion. At the pinnacle of the organization is the CEO, followed by the other C-Suite incumbents, then senior executives, then middle management and so on and so on. The idea that an organization’s board of directors has the ultimate leadership responsibility is either not typically considered, or the role of a CEO has become so dominant that no Chairman wants to fight that leadership battle anymore.

This is no trivial mater in regard to who should lead sustainability initiatives, and triple bottom line sustainability (tbls) in particular. It’s one thing to report good intentions through a Corporate Social Responsibility report, but another entirely to envision and lead the complex long-term business changes entailed in a tbls strategy, since this is one of the most systemic and challenging change-related journeys on which any organization may embark. The complexity of triple bottom line sustainability has been emphasized in previous blogs, and is further inferred from the following tbls definition adopted by The Leadership Alliance Inc: “Triple bottom line sustainability is the result of the activities of an organization, voluntary or governed by law, that demonstrate the ability of the organization to maintain viable its business operations (including financial viability as appropriate) whilst not negatively impacting any social or ecological systems.”

The board of directors in principle is ideally placed to envisage and lead this demanding journey, given that it has responsibility for the interests of all the stakeholders, not just shareholders, as its mandate. Without the board of directors’ interest, broad experience, vision, knowledge, and leadership, regarding a chosen sustainability variant, it is not likely that anyone else in the organization will pay much attention, other than for “window dressing”, and this has been born out through our research [1].

Furthermore, even a top management that is committed to sustainability does not last forever, and the responsibility for maintaining a change initiative falls back on the governance structure. If the board of directors does not understand the essence of an organizational change, the risk is that top management will be replaced with new managers who have new ideas of their own – organizations are replete with change-credibility “black holes” created when change sponsors have moved-on from much hyped initiatives without accomplishing their objectives.

As I look around at sustainability initiatives in progress, I see more and more evidence of the application of the traditional reductionist approach, whereby responsibility for sustainability is parceled out to individual organizational entities without regard for the need for a new and innovative organizational strategy plus an overarching planning process capable of addressing systemically the unpredictability and dynamic complexity in which today’s organizations operate. All too often innovation, the key to sustainability, is targeted to saving electricity, reducing waste, or preventing usage of non-biodegradable materials; of course such initiatives are important, but typically they are cherry picking, and no consideration is given to applying innovation to business planning that could lead to restructuring of the organization, and the optimal redesign of its strategy to eventuate in an organization truly designed for the tbl sustainability journey.

This kind of bold new thinking must come from the board of directors which has the power and the mandate to exercise leadership in setting organizational direction for the CEO and the C-suite … when will you directors heed the call? If someone in leadership is reading this blog and would like to know how we at The Leadership Alliance Inc. can assist an organization to set-off optimally on the tbl sustainability journey, please contact us, and as always your comments are of great interest to us.

 Reference:

[1] Smith, P.A.C., Sharicz, C., “The Shift Needed For Sustainability”, The Learning Organization, Vol. 18, No. 1, 2011

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Hiring Strategy for Developing TBL Sustainability and Supply Chain Viability

April 10, 2011 Leave a comment

In recent blogs I have underlined the radical changes in organizational thinking, design, and culture that are associated with developing Triple Bottom Line Sustainability. These changes are fundamental to the success of any plan for progressing toward TBL Sustainability. It is also evident from the extended discussion I have provided in a co-authored series of six bogs detailing the organizational conditions for addressing TBL Sustainability, that leadership and management characteristics are critically important for success. I have also explored the views on leadership of various generational cohorts in regard to emerging knowledge sharing (KS) organizations. It is clear from these data that for organizations embarking on, or already pursuing, TBL Sustainability and/or KS, the roles, thinking, and behaviors of leaders and managers will need to be re-tailored drastically to satisfy the demands of these increasingly popular strategies.

Whether existing leadership and management cadres have mindsets consistent with undergoing development to cultivate these appropriate new capabilities is a big question. Furthermore, conventional wisdom may work against the hiring of new individuals with appropriate skill sets since organizations typically seek to hire individuals who display capabilities consistent with those displayed by incumbents who have been successful in the past. This is a sourcing process that has worked well historically, but one that is a recipe for disaster when there is a change of era such as seems to be the case now.

There are a number of reasons to believe that we are indeed either transiting such a change of era, or are already immersed in the early phases of the new one. Just as water power facilitated the emergence of the industrial era, so the ubiquitous penetration of digitization into all aspects of business and social life is facilitating emergence of a new social-networked era.  The focus of the industrial era was profit; the emerging focus of this new era is stewardship and TBL Sustainability. Resourcing for any management level of an organization must take into account not only in-depth familiarity with all of the digital platforms and their properties, but in addition the impact of their usage on organizational design and social interaction. This is a difficult problem when filling senior levels of an organization, since this typically entails hiring cohorts of individuals over 30 years of age, and such cohorts exhibit less and less familiarity and understanding of the current digital and social know-how with advancing age.

A further question relates to inter-organizational collaboration and regard. For instance, in a previous blog I explored the need for promotion of socialization both within and between the members of supply-chains. How will such relationships be affected by the leadership and workforce capabilities explored in previous paragraphs? Will a sophisticated organization following a TBL Sustainability and/or KS strategy be willing to include in its supply chain an organization backward in any of the respects discussed above? And if it did, what would its stakeholders have to say about it, and would its governance be influenced?

We are in a business era that moves at breakneck speed, and it is not too soon for forward-looking organizations to think about the notions touched on here. Indeed, if these notions indicate a fundamental change in hiring and development to provide longer-term tenure for young people to mature their leadership and management capabilities to match their already significant digital and social acumen, then the sooner an organization starts to address this issue, the better off it will be.

The Why, What & How of Organizational Sustainable Advantage™

February 1, 2011 1 comment

This blog is condensed from a six part blog that was published beginning October 2010 co-authored with Tia Carr-Williams.

In 2011, business as usual is not an option – organizations need new ways of thinking and organizing if they are to do more with less, and ensure ongoing business growth and renewal. How successful your organization becomes at acquiring and retaining a leading position in your niche marketplace depends critically on how you position your business relative to other businesses. In the past this involved gaining Sustainable Competitive Advantage (SCA) over “competitors”; we recommend replacing this outmoded concept with Organizational Sustainable Advantage™ (OSA™).

OSA™ differs significantly from the familiar SCA. Both OSA™  and SCA involve introducing the right products and/or services at the right time in the right contexts with the right supply chains, and then continually updating, optimizing, and retiring them as necessary; however. SCA pits both employees and organizations against one another in a never ending competitive “survival of the fittest” which is out of date in this era of open innovation and collaborative stakeholders. OSA™ strategy and implementation are based on the win-win collaboration of all parties, and on plans that are ethical, and without negative impact on relevant ecological, sociological or environmental systems. In other words, SCA tries to push change into being – yeah, just like pushing on a rope – whereas OSA™ pulls change into being and at the same time adds the desirable Triple Bottom Line (TBL) elements as a significant component of sense making and decision making.

Implementation of OSA™ mandates an engaged workforce as a necessary component of its culture. This employee-centric culture then becomes as much the organization’s foundational differentiation as the products or services it provides. Having significant differentiation continuously proposed from an engaged workforce provides a formidable distinctive resource for promoting and maintaining marketplace uniqueness.

Genuine OSA™ demands a decentralized organization with a polyarchic approach, providing both independency and interdependency of all major components of organizational processes. People at all levels must be epi-central to the co-evolution and co-maintenance of strategy, structure, processes, and rewards. This human-centric style organization will include employees in most of the organization’s responsibilities and decision-making, ensuring incremental investment by each member in the rigors and rewards of a profitable company.

So how is OSA™ introduced into an organization?  To ensure and encourage the necessary organizational climate of innovation and TBL focus, monitoring, and reporting, when an organization begins to navigate the transition from SCA to triple bottom line OSA™, The Leadership Alliance Inc. [TLAINC] has led the way in creating an easily understood seamless performance-based process. This process is one that an organization may readily morph into. It reduces the organizational complexity typically involved in such a large scale change; promotes formation of a fractal organization; fosters common OSA™ understanding and values across all organizational levels; nurtures a culture with innovation at its heart; encourages collegial, participative, open business systems; promotes and leverages networks and social interaction; and provides systems to measure and report progress continuously.

In order to easily understand and rapidly adopt TLAINC’s seamless performance-based process to navigate the transition from SCA to triple bottom line OSA™, organizations need to cultivate a culture having sustainable business principles, learning and innovation at their heart. There must be a motivational visionary strategy allied with a deep human context structure; workforce integration systems of high efficiency, capability and efficacy; a synergistic co-operative culture that fosters thinking on how everything can be improved and costs reduced; and there must be task agility for optimal productivity.

This is a tall order, but to achieve these ends, TLAINC supports its clients in undertaking two processes concurrently. One process involves creation of an organizational “attractor” – a central core of strategic business concepts, business processes, and social norms to be refined and used by employee networks at all levels to mutually shape the organization in a dynamic manner; the second process is cultural, and involves creation of a socialized environment based on trust, true dialogue, and the lessening of the power struggles that exist in organizations.

These interventions may be optimally achieved based on TLAINC’s transformative approach. This involves forging a unique ‘solidarity network’ that is inclusive of all the important organizational networks. In this approach representatives of all the various key organizational and governance networks, including the Board and CXO’s, hold dialogs together for the good of all the stakeholders. TLAINC has the proven capabilities to identify the representatives of the key organizational networks, and the real-life organizational experience to assist formation of the solidarity networks.

These solidarity networks re-design and re-develop the systemic organizational structure, business processes, roles, and tools, to specifically develop an environment where learning and adaption will be essential to successfully carrying out the work of every employee. In this pursuit, new structures and ways of working to adjust to, and to continue adjusting for, a changing set of conditions are created by the continuous dynamic process of co-evolution with a changing environment that is underpinned by learning. This approach leverages a distinctive characteristic of complex systems which is their ability to create new order; that is, a different way of working, thinking and relating —  OSA™ is this continuous process of co-evolution. It is neither a one-off change which remains static, nor a reversion or adherence to the status quo. This means understanding and working with (not constraining) the characteristics of organizations as complex social systems.

The measurement, monitoring, and reporting of the above pivotal features are critical to success. TLAINC will collaborate with a client to provide a customized version of TLAINC’s Sustainability Scorecard™ to truly reveal the advances that indicate improvements are being realized, and to highlight next steps. If you are serious about having your organization navigate the transition from SCA to triple bottom line OSA™, TLAINC is the consultancy to help you make it a reality – why not give us a call?

Corporate Sustainability – Board, Management, Market, and Stakeholders

January 17, 2011 5 comments

I am carrying out research on the adoption of Triple Bottom Line Sustainability (TBLS) in business companies, and I am pondering the question “Is it all about financial return?” In this regard I am interested in tapping into the wisdom of readers of this Blog.

I define TBLS as the outcome of the activities of an organization, voluntary or governed by law, that demonstrate the ability of the organization to ethically maintain its business operations (including financial viability) whilst not negatively impacting any social or ecological systems.

As I understand it, the Board of Directors of a company is responsible to the shareholders for optimizing shareholder value, making sure profit compares favorably with businesses in comparable industries, being competitive relative to challengers, and guiding the company’s strategic management by controlling and monitoring the activities of the company’s management. The CEO and management team in theory only design and run the company to satisfy the Board. This looks to me like a directive tailored for ‘Financial’ not ‘TBL’ Sustainability.

The Board and/or the CEO and the management team may be wise enough to envisage enhanced profits and market position by taking advantage of the uniqueness of products and services tailored to TBLS; however, this approach is still financially, rather than ethically, motivated.

It would be encouraging to see large numbers of companies embracing TBLS for ethical reasons, but that may not be realistic given the Board mandate highlighted above. It seems to me that the ethically driven leverage for introduction of TBLS comes from the marketplace, the shareholders and the stakeholders – we the people!! In other words, if enough consumers, shareholders and stakeholders are sensitive to ethical concerns and place pressure on companies to operate in a TBLS manner or else risk earning lower company profits and reducing shareholder value, then the relevant Boards have a responsibility to make appropriate changes to introduce and sustain TBLS, and must ensure the changes take place (or risk the corporate consequences). Indeed under these circumstances the CEOs and management strategists ought also to be pressing for change based on strategic imperatives. However, even if corporate action is based on the ethical concerns of “we the people”, the outcome is still based on a Board’s financial obligations.

The only other option for introduction of TBLS that I see is by Government intervention through a change in Corporation law – not likely to happen I think.

Your thoughts and comments on the general thrust of this Bog would be most welcome and thanks in advance for taking time to consider the thoughts expressed here …

Survey Results: Which Leader Would You Follow? Which Leader Gets Results?

December 14, 2010 1 comment

This blog summarizes some of the results from an informal online survey that I conducted recently with respondents participating from 22 countries around the world. The survey was intended to help clarify attitudes toward leadership across different generations and geographic cultures. In regard to culture, respondents were asked to indicate in which country they were born, educated, and work. In addition, respondents were asked to identify their gender, and to indicate the business or other sector in which they work. They were also asked to identify the occupational title that most accurately defined their own organizational role.

It is noteworthy perhaps that far more males than females responded to the survey, and that this was the most noticeable in the youngest and the oldest cohorts. In particular, in the youngest cohort, only 15% of respondents were female.

With regard to business or other sector in which respondents worked, most sectors were represented; however, the educational sector had the largest representation at 42%, with the business/professional services sector next largest at 17%.

Respondents in the older cohort all occupied senior roles in their organizations (supervisor on up to CEO).

The following notes  and the table below set out the principal results:

No significant correlations with respect to country of birth, education, or work were identified.

No significant correlations with respect to the type of business or sector in which respondents worked were found, except that respondents working in the Not For Profit sector indicated on questions #1 and #2 a preference for a leader who had gained influence through a designated management position – as is shown in the table, this is contrary to the preferences shown by the majority of respondents.

From the responses to questions #1 and #2 we can see that all cohorts will more readily follow a leader who has gained influence through social interaction rather than from a designated management position. In addition there seems to be a trend corresponding with increasing age to more readily follow a leader who has gained influence through social interaction, and also to believe that such leaders are likely to be most effective in achieving results. This is consistent with research that has shown that most senior leaders spend a lot of time “schmoozing”, and rely on social interaction to influence results and get things done through others. The belief that leaders who gain influence through social interaction are likely to be most effective in achieving results seems less pronounced in the oldest cohort, perhaps because members of this cohort all claimed to hold senior positions themselves and have come to believe in having “power over” (see Blog “Power Over vs Power To ..” at https://tlainc1.wordpress.com/2009/08/27/power-over-vs-power-to/)

The responses from question #3 indicate that no generational cohort would choose to follow a leader from their own generation over a leader who shares their values or who displays leadership behaviors important to them. Members of the youngest cohort do slightly favor following a leader who shares their values rather than one demonstrating leadership behaviors important to them, and this is opposite to the preference shown by the two older cohorts.

Social Commerce and Successful Supply Chain Development

May 17, 2010 1 comment

A supply chain (SC) in which the members are strategically, operationally, and technologically integrated is fundamental to commercial success in many businesses, and SCs continue to be adopted by organizations as a strategic vehicle for creating and sustaining market advantage. Claims for the success of supply chain management (SCM) have traditionally been largely based on efficiency improvements (e.g. time compression, cost cutting and quality improvement) and innovative supply chain factors which enhance consumer value have been underplayed.  This Blog is to heighten awareness of the huge influence that social commerce may have in ensuring successful supply chain development, where social commerce is defined as all manner of intra- and inter-organizational social discourse particularly related to market concerns e.g. F2F meetings, communities of practice, social networks, social media, Enterprise 2.0 etc..

First of all, there needs to be a realization that indeed there is an unbalanced focus on technical and rational perspectives in SC practice that has resulted in the ignorance of potential innovations that could result from understanding the complex social and political issues that are an integral part of any supply chain. In defense of this bias it should be noted that ‘people issues’ such as culture, trust, aversion to change, opportunism, willingness to relinquish control, and willingness to collaborate, are intractable issues that organizations avoid addressing at all costs. This is especially true in cultures where emotion-laden subjects are un-discussable i.e. most organizations! Difficulties in acknowledging and addressing these cultural issues imply that for effective implementation, SCM must be aligned with an appropriately developed organizational culture e.g. see the EVO approach (http://www.tlainc.com/TLO%20V3%20N4%2096.pdf).

Collaboration is highly important if SCs are intended to lead to innovation, since the innovation potential of a SC is based on the skills and expertise of each supply chain member. In order to generate SC innovations, member organizations must understand the dynamics of the supply chains that they are involved in. For example, successful SCM involves horizontal cross functional integration, based on inter-organizational relationships which increase trust and collaboration, not only across but also within firms. The need for common or translatable value systems, language, symbolic artifacts and protocols or etiquette have been shown to be important for developing shared understanding and thus enhancing the chance of trust and commitment, not only across the whole SC, but also in each particular organization. This ensures that each trading partner increases trust in the other members of the SC to keep them committed.

The conventional approach to SCM views the supply chain as a linear process involving discrete organizational entities that are tightly linked from the source of supply to the supply of a final product or service to consumers or end users. Such SCM emphasizes major functions such as outsourcing, supply management, chain management, relationship management and power management. The current alternative view, which focuses on the social commerce among members, does not imply that the management of these major functions is not crucial, but rather that principles of organic and facilitative management through stimulation of learning, networking and expectation alignment should be incorporated in the management of these functions. Many SC practitioners have difficulty moving from the conventional view to one which focuses on social collaborative arrangements among members, and thus remain uninformed about the learning-related processes they could employ to build relationships and better integrate.

People who commit the firm to SC promises must be empowered and resourced to execute them, and must have the appropriate knowledge and skills provided by training, learning-by-doing, and Knowledge Management (KM) processes. A key competency therefore is the ability to learn or acquire the needed knowledge and the capacity to identify key information, understand the competitive importance of the knowledge and apply it. Learning in supply chains requires a high level of trust that allows partners to openly share sensitive information in order to gain full benefits of collaboration. If an organizational partner has excellent learning capacity, inter-organizational trust intensifies, and as the whole supply chain learns to work collaboratively and trustingly, the KM principles adopted will unleash immense creativity and innovation providing significant advantage to supply chain partners. In order to gain the necessary trust and commitment for this to happen, the organizational values and culture need to support the creation of social capital (SC).

The concept of social capital is useful for representing the collaborative status of relationships across an organization. Although there is no uniformly accepted definition of social capital, its meaning in an organizational setting has been defined as “The set of resources, tangible or virtual, that accrue to a corporate player through the player’s social relationships, facilitating the attainment of goals.” [1] A growing body of opinion sees social capital as an important source of commercial advantage. The importance of social capital is often under-valued in SCM but its value in my opinion must not be underestimated. Social capital might be viewed as the relational glue that underlies the effectiveness of supply chains, and it comes into its own particularly in supply chain situations that are complex and ambiguous.

Successful innovations are generated when key processes such the formation of wide and interconnected intra- and inter-organizational networks, and extensive experimentation, and broad learning are emphasized. SC practitioners may be considered members of a community of practice rather than members of disconnected functions along a chain. This requires that SC members actively and deliberately explore together their relationships. This collaborative learning builds competence, commitment, and accountability to their community of practice. In this way they adopt a people-centric social learning approach towards better understanding customers’ and/or SC participants’ perspectives and needs, promoting further supply chain integration. It is clearly important to underpin such inter- and intra-organizational social networks with a multitude of social commerce related communication channels within which SC actors may share learning and insight, and to introduce Enterprise 2.0 and social media  where possible.

[1] Gabbay, S.M., and Leenders, R.T.A.J. (1999),  “The structure of advantage and disadvantage”,  in R.T.A.J. Leenders and S.M. Gabbay (Eds.), Corporate social capital and liability, Kluwer Academic Publishers, Boston.

Developing Sustainable Organizations Using the Sustainability Score Card™

September 9, 2009 Leave a comment

Blog by Peter A.C. Smith and Dr. Carol Zulauf-Sharicz (Suffolk University, Boston)

Definitions of sustainability range over many different domains such as profit, viability, energy, ecologies, natural resources, organization, and society to name just a few. Most of these definitions are different and none of them totally satisfy requirements to cover all aspects of the subject.  We feel that since a complete definition is not feasible at this time a pragmatic approach based on relevant current research and practical concerns is valid. Therefore we focus here only on the sustainability of commercial organizations, especially organizations functioning in complex environments such as those that face firms locally and globally today and for the foreseeable future. This is not to say that some or all of the following may not be more generally relevant. Further, we define sustainability as the capability of an organization to be viable over extended periods of time in a commercial sense whilst being an exemplar in avoiding potential or real negative ecological and social impacts related to its activities.

What makes an organization sustainable?  First, achieving “Right for Market™” (R4M™).  R4M™means introducing the right products and/or services at the right time in the right contexts at the right price with the right supply chains, and then continually updating, optimising, and retiring them as necessary; and secondly, making sure that achieving R4M™ does not negatively impact relevant ecological or social systems. These two points demand extensive internal and external knowledge and awareness. This may only be satisfied if the organization is founded in complexity and learning based on systemic approaches.  In particular sustainability demands innovative approaches and fresh thinking for the necessary transformative changes to take place and organizational self-actualization in terms of sustainability to be achieved.

With respect to individuals and their self actualization, Abraham Maslow developed a well-known hierarchy of needs.  Maslow postulated that human beings have an innate drive to satisfy these needs, and that they form a hierarchy – Maslow drew the hierarchy as a pyramid. At the lowest level he placed a person’s physiological needs e.g. food, water. Once the physiological needs are met humans look to satisfy what Maslow called the safety needs e.g. law, stability.  When the two lowest needs are largely gratified, there emerges the need for belongingness e.g. love, community.  According to Maslow, only when the three lower needs are satisfied will the individual seek esteem.  Maslow divided this class of needs into two sub-classes.  The first involves the need for self-evaluation e.g. self-esteem, confidence; the second involves the views of others e.g. reputation, prestige.  There is a further less-well formulated stage that often, if not always, develops even if the lower needs are satisfied whereby individuals feel a new discontent and restlessness unless the individual is doing what they are fitted for – this is epitomized in the expression “What a person can be, they must be” and relates to self-actualization.

Maslow made the point that some needs are under the control of others (in the others’ domain), for example safety, recognition, enumeration. Other needs can be satisfied by the individual him or herself (one’s own domain), for example self-esteem and self-actualization. In this regard, Maslow had the further notion of “threshold limits” making the point that individuals should set a target for satisfying their own needs “in others’ domain” at the boundary between “justifiable appetite” and “greedy desire”.  Maslow further postulated that the energy used in seeking to satisfy “greed” saps the individual’s capability to satisfy needs “in one’s own domain”.

So what does this have to do with sustainability? Turns out by analogy “quite a lot”! We can view the needs and development of organizations in a similar way to those ascribed to individuals by Maslow. Further, by equating this development as a journey toward self-actualization in sustainability terms, we can identify organizational behaviors and stages of sustainability development. For example, the initial stage is related to making a profit sufficient to stay in business; short term viability is the key concern and other sustainability aspects are not of concern. The second stage is related to having standards and laws that protect the organization and sustainability other than viability is seen as burdensome. The third stage involves lip service to the communities and the ecological and social standards in which it operates; the organization no more than complies with regulations that govern organizational conduct. It is not until the organization has satisfied these needs that the organization will address Maslow’s “esteem” level when what employees think becomes important, and the organization is confident of its viability and its place in the world of business. After this what others in the broader community think becomes very important, and since this organization now yearns for high reputation and prestige it will take the initiative in preventing negative ecological and social impacts. Finally, an organization will truly become sustainable when it applies the idea that “what an organization can be, it must be” and it then operates as an exemplar of all that is included in our sustainability definition. Further, as Maslow suggested, such an organization will operate at a commendable boundary in “others’ domain” and will be thus able to channel its energies internally to appropriately satisfy the needs of “its own domain.”

For organizations to meaningfully contribute to their own sustainability their activities need to be reported and measured against identified goals. To this end the profit/ economic survival balance sheet must be amended to include bottom lines for environmental and social accountability. This has become known as the triple bottom line and there may yet be other measurements that will be added.  This new way of assessing an organization’s performance is one of the biggest challenges facing organizations today; however, the application of the Maslow hierarchy to an organization allows stages and behaviors on the journey toward sustainability to be described, and a “Sustainability Score Card™” developed, that allows the organization readily to track progress and report measurements.

Please clic the link to if you would like information concerning the related Seminar. To get to  know more about building & leading sustainable organizations and how the Sustainability Score Card™ enhances your potential to achieve this goal, please give us a call through The Leadership Alliance Inc. …. our best to you, Carol and Peter