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Posts Tagged ‘triple bottom line sustainability’

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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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 …

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.