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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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Identifying Stakeholder Representatives For Interactive Planning

April 26, 2011 Leave a comment

One of the problems with attempting to include the input of all organizational stakeholders in planning and decision making relates to the shear size of the population, and the associated difficulty in reaching consensus on any given point or issue.  This challenge is particularly acute when Interactive Planning is undertaken because of its continuous planning ethos and its organization-wide relevance. This Blog demonstrates how legitimate stakeholder representatives may be identified and how, through these “opinion leaders”, stakeholder views may be presented and addressed. In addition, these representatives in turn help their constituents to understand and commit to plans developed through Interactive Planning e.g. for Triple Bottom Line (tbl) Sustainability.

Across an organization’s social fabric, individuals learn to trust each other and form groups capable of sense making and knowledge sharing. It’s not just ‘What you know’ (Human Capital) or even ‘Who you know’ (Relationship Capital) that ensures this inter-connectivity, it’s ‘Who you know well enough to trust for advice, or have confidence in to get things done efficiently and effectively’ (Social Capital).

Although there is no uniformly accepted definition of Social Capital (SC), its meaning in an organizational setting can be defined as “The resources, tangible or virtual, that accrue to a corporate player through the player’s social relationships, facilitating the attainment of goals.” Each individual’s relationships with other individuals in an organization form that individual’s SC for better or worse; close relationships enhance SC, whereas distrust and lack of openness cause low SC (sometimes termed Social Liability).

Some individuals in groups and communities achieve particularly elevated prestige or influence with their peers. They form core groups and their names come up time and again in their peers’ hearts and minds and stories, not so much because they have authority but rather because they have attained legitimacy. Individuals demonstrating such characteristics have accumulated considerable SC and are termed here “Opinion Leaders”. In a sense they assume archetypical characteristics within an organization through emergent stories and myths, or attain their status by matching existing ‘trust norms’. Opinion leaders are highly trusted as advisors by their colleagues for a variety of complex and often systemic reasons, e.g. personal attributes, expertise, knowledge, longevity, local deployment, power etc. They are frequently seen as removing risk from organizational situations by providing a positive evaluation of “local fit”.

Such influential individuals typically gain elevated SC by having well-developed meta-abilities such as excellent cognitive skills, self-knowledge, emotional resilience, and personal drive. The development of meta-abilities results in improved interpersonal influencing skills. This contributes to these individuals being more astute and insightful, able to make better judgments, and identify more alternative actions. This means that they can better navigate the typical complex and dynamic organizational reality and influence effectively within it. Opinion leaders usually have greater exposure to mass media, are more cosmopolitan, have more change agent contacts, have a higher socioeconomic status, participate more in their social system than their followers, and are especially important for interpersonal networks whose members differ in many aspects.

If an organization has identified its opinion leaders, these individuals may legitimately represent their constituent stakeholders regarding the stakeholders’ views, and contribute to Interactive Planning in their behalf. As noted above the opinion leaders have themselves personal characteristics that make them particularly well qualified to participate in planning activities.

Theory and means relevant to the identification of opinion leaders based on using Network Visualization Analysis (NVA) have been presented elsewhere. The identification method is very cost-effective and is highly recommended to represent appropriately the various stakeholders across an organization.

Successfully Developing Triple Bottom Line Sustainability: #3

November 2, 2010 1 comment

This is the third of six contiguous Blogs dealing with TBL Sustainability to be published over the next few weeks. All these Blogs are being co-developed with my colleague and TLA Associate Tia Carr Williams. In this third Blog further cultural implications of Sustainable Advantage (SA) are explored.

“It is not who is influential that counts but who acts as a catalyst for conversation” – Keith O’Brien

Sustainable Advantage (SA) has been discussed in Blogs #1 & 2 of this series dealing with TBL Sustainability. It is clear that change is fundamental to SA, and change is a constant continuum – a flowing circadian dynamic that yearns to be harnessed. The ability to purpose the momentum of change is colored by an organization’s prior experience of change. When starting to contemplate SA as an organizational change opportunity, and how it might be managed, it is useful initially to spend time reviewing and learning from previous change-related experience, and re-assessing the organization’s culture and design.

Change takes root best in a culture of innovation that incorporates an inclusive collaborative mindset, and that embraces change as an organic evolutionary process of co-production. As emphasized in Blog #1 of this series, a decentralized organization has distinct market advantages over a wholly centralized organization. In particular, the sense of incorporation from many perspectives in a decentralized organization creates a balance and an harmonious relationship with change, rarely the case in current or previous models of ‘change management’.

How well or badly churn has been integrated into the daily work flow is also an indicator of sustainability potential. Churn is typically viewed as deleterious from an organizational harmony viewpoint, but for a decentralized organization focusing on SA, churn is integral to its change momentum, and new and existing incumbents can champion innovation from a place of congruence, comprehensively cognizant of choices and challenges.

An organization seeking SA must cultivate a culture enfranchising sustainable principles and innovation at its foundation. There must be a synergistic co-operative culture that fosters thinking on how everything can be improved. Management must seek a balance between financial viability and strategies to gain and maintain market uniqueness through environmentally sustainable practices, including product and process innovation, as well as the development of sustainable supply chain management. There must be a motivational visionary strategy allied with a deep human context structure, and workforce integration systems of high efficiency, capability and efficacy. Costs must be reduced, and there must be task agility for optimal productivity. Leadership is at the heart of a healthy organization, but it must beat with the ring of authenticity – people will follow where their heart is engaged.

This kind of strong organizational culture confers a fundamental and unique advantage. If building and sustaining an innovation culture focused on commitment to the organization’s goals remains central to all activities, the potential for sustainable success is increased immeasurably. To promote creativity the organization’s leaders must pull the culture into being by giving the right incentives to key people, encouraging them to think creatively, and with every achievement, giving them the confidence to think ‘out of the box”. This can only be accomplished where the environment supports such activities. ‘Soft spaces’ within the formality of the corporate environment nurture such engagement to great effect; it is no surprise that the factors that most strongly predict rapid change, adaptation, and innovation introduction, are related to collegial, participative and open organizational systems, and cultures that permit joint problem solving without boundary interference. These are the kinds of decentralized organizations where individuals have the freedom to take risks and develop new ideas, be creative, and challenge existing organizational norms.

In the upcoming fourth Blog of this series, the implications a Triple Bottom Line approach to SA will be explored.

Successfully Developing Triple Bottom Line Sustainability: #2

October 27, 2010 3 comments

This is the second of six contiguous Blogs dealing with TBL Sustainability to be published over the next few weeks. All these Blogs are being co-developed with my colleague and TLA Associate Tia Carr Williams. In this second Blog, differences between Sustainable Advantage (SA) and Sustainable Competitive Advantage (SCA) are explored, and the relevance and promotion of innovation are reviewed.

“It is not the strongest of species that survive, nor the most intelligent, but the ones most adaptable to change.” – The Origin of Species, Charles Darwin

How successful you become at acquiring and retaining a leading position in your niche marketplace depends critically on how you position your business relative to other businesses. Having significant differentiation continuously proposed from an engaged workforce can provide a formidable distinctive resource for promoting and maintaining marketplace uniqueness. Sustainable Advantage (SA) advocates an engaged workforce as a necessary component for continuous improvement, and this employee-centric culture becomes as much your foundational differentiation as the products or services you provide.

Organizational culture is defined as the collective behavior of a group of people aligned to a corporate vision, demonstrating shared values, habits, common working language, systems and ethos. The ecosystem infrastructure is defined as a common support environment, interwoven with processes, and underscored with the necessary technologies, where the behaviors of different individuals bring to the SA workplace uniqueness in knowledge conditioned by social attitudes. A given corporate culture invariably reflects the moral, social, and behavioral norms of the constituents of that organization, based on their values, attitudes and priorities. When efforts have been made to create a commonality of values that all can aspire to and adopt, it is provable that just the day-to-day work climate can en-culturate a population. For example, without regard for diversity, the bond forged corporately mashes the workforce under a common banner – in this case SA.

SA differs significantly from the familiar Sustainable Competitive Advantage (SCA). Both SA and SCA are based on achieving Right to Market™ (R2M™), where R2M™ involves 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” whereas SA strategy and implementation are based on a win-win collaboration of all parties.

Innovation is vital for bringing about improved performance and efficiency, and is widely acknowledged to be a critical determinant of uniqueness, profitability and overall positioning. SA ensures that innovation is being enabled by the knowledge present across an organization’s marketplace networks, and at every level and from every departmental corner of that organization, propelling and accelerating such innovation. SCA is only qualified as a continuum of innovation to build perpetual differentiation among employees and with, and among, competitors. In contrast, SA promotes open innovation through communication and collaboration in an organization’s marketplace networks, whilst also creating conduits of continuous communication to capture contributions by collaborative employees. This co-opts commitment and buy-in from other organizations as well as every member of staff. The result is a formidable benchmark, and a peer culture of personal accountability, that underscores a daily commitment to improving how things get done. The SA ‘sweet-spot’ is quickly identified, since engaged internal and external networks provide a stream of qualified improvements – they are engaged because they invest in the high value of the ‘relationship capital’ that such broad collaboration rewards.

To grow a culture of innovation it is critical that an organization evolve an SA that instills a long-tail objective. Over what time horizon is your organization really forecasting? Beware! If it isn’t at least the next decade, your vision is short term, and your SA will be unsustainable!!

In the upcoming third Blog of this series further cultural implications of Sustainable Advantage (SA) will be explored.

Successfully Developing Triple Bottom Line Sustainability: #1

October 22, 2010 6 comments

This is the first of six Blogs dealing with TBL Sustainability to be published over the next few weeks. All these Blogs are being co-developed with my colleague and TLA Associate Tia Carr Williams.

“We now know that the source of wealth is something specifically human: knowledge. If we apply knowledge to tasks we already know how to do, we call it productivity; if we apply knowledge to tasks that are new and different, we call it innovation. Only knowledge allows us to achieve those two goals. Organizations that are efficient and effective in applying knowledge will succeed better than their competitors” – Peter Drucker

Business as usual is no longer an option – it is obvious that traditional organizational design has not worked in today’s complex business environments. New ways of thinking and organizing are critically important if organizations are to do more with less, and ensure ongoing business growth and renewal.

Most of today’s organizations are set up like spider webs with thinking and command at the centre, and planning and control exerted through the web threads. The problem is that command and control operation is far too inefficient in terms of speed and efficiency, too clumsy in terms of knowledge management, and too lacking in variety for today’s complex dynamic business contexts. Top-down corporations need to adapt their fundamental structure to change from a command and control model to one that promotes facile communication incorporating social trust and widespread knowledge sharing – in other words to survive surging market competition organizations must decentralize.

A decentralized organization has distinct market advantages over a wholly centralized organization, allowing not only for the natural development of the key capabilities needed for the organization to operate creatively and successfully in face of today’s constantly changing circumstances and environmental demands, but equally to address the needs of a churning workforce that increasingly includes a new breed of worker – the Generation Y Millennials, the cohort born between the mid-70s and the early 2000s. Organizations challenged with three generations of employees need novel organizational strategies to accommodate employees’ varied learning requirements and to foster work satisfaction. Decentralized organizations are more responsive to market forces and employee variety, are agile in implementation, and are consistently adaptive to innovative processes that promote and empower continuous improvement at the rock face of employee daily-deliverables.

Decentralization as it is implemented today typically involves creating a starfish configuration, comprised of small hubs capable of operating, growing and multiplying interdependently of each other. The starfish model is used by innumerable organization designers around the globe today. Although it is an advance over the spider web design, and does facilitate significant strategic advantages to emerge from daily operations in ways that play a significant role in continuous improvements informing sustainable advantage, the starfish model still does not go far enough to provide a truly sustainable systemic approach to organizational design.

Genuine Sustainable Advantage (SA) demands a much more polyarchic approach, providing both independency and interdependency of all major components of organizational processes. In the SA model people become epi-central to the co-evolution and co-maintenance of strategy, structure, processes, and rewards. Human-centric organizations 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.

In the second Blog of this series the critical differences between Sustainable Advantage (SA) and Sustainable Competitive Advantage (SCA) will be explored, and the relevance and promotion of innovation reviewed.