The Strategist
The Strategist - January 2010
Consider the Tuna...
The late American writer, David Foster Wallace, in his characteristically probing style, once asked, in an essay titled “Consider the Lobster”, if it was “all right to boil a sentient creature alive just for gustatory pleasure”. His intent was to pose an admittedly unsettling challenge to the way many of us live. I was reminded of this while reading the January 6 edition of The Globe and Mail. Specifically, an article titled “Fears of extinction don’t curb blue fin tuna prices”. Let me explain.
The world is growing smaller by the day due to human encroachment on nature. Ecological markers suggest that in the early 1960s, humans were using about 70 per cent of nature’s yearly output; by the early 1980s, we’d reached 100 per cent; and in 1999, we were at 125 per cent. Such numbers may be imprecise, but their trend is clear – they mark the road to ecological (and other) bankruptcy. It is therefore well past time to meet Wallace’s challenge, unsettling though it is, head-on. His essay is nearly a decade old, and the reflection he desperately hoped we might engage in hasn’t happened. And so alongside the unfortunate lobster scrabbling for a way out of the pot – which may ultimately be an ironic metaphor for the human plight if we aren’t careful – I want you to consider the tuna…
On January 5 a single blue fin was sold for $176,000 (USD) in the first auction of the New Year at Tokyo’s Tsukiji Fish Market, the world’s biggest wholesale fish market. And it wasn’t alone; 2,280 tuna were sold on the 5th to feed a Japanese market that is the world’s biggest consumer of blue fin tuna.
It wasn’t always this way. Historically, the samurai considered maguro, as blue fin tuna is known in Japan, an unclean fish and wouldn’t eat it. As recently as the 1970’s, the fish was even sold for cat food or thrown away. Now of course, its fatty belly meat – toro on your sushi menu – is prized for its taste and texture.
The Montreal-based writer, Taras Grescoe, reminded us in his recent book, Bottomfeeder, that by the turn of the millennium 90 per cent of the world’s predator fish – tuna, sharks and swordfish – had been removed from the world’s oceans – no surprise given the prices these fish command at auction. The result of this unsustainable harvesting, coupled with pollution and climate change, will be the total collapse of the world’s fisheries by mid-century. Remove the top predators like blue fin tuna and algae blooms expand dramatically. When the algae decays and sinks to the bottom, it releases hydrogen sulfide, a toxic gas. The resulting “dead zones” support jellyfish, but little else. As Grescoe reports, these sterile swaths of ocean “regularly crop up from the South China Sea to the Oregon coast. Some of them are now as large as Ireland."
And yet the tuna harvest continues. Like the cod off European and Eastern Canadian coasts, the blue fin tuna needs a break if it is going to survive. The International Commission for the Conservation of Atlantic Tunas (ICCAT) has developed just such a plan, but it allows fishing to continue during the period 2008–2010. Pardon my skepticism, but haven’t we seen this movie before – in fisheries, forestry and any number of other natural resource industries? It is as if we were the residents of Easter Island, so brilliantly and poignantly chronicled by Ronald Wright in A Brief History of Progress:
The people who felled the last tree could see it was the last, could know with complete certainty that there would never be another. And they felled it anyway…The people had been seduced by a kind of progress that becomes a mania, an “ideological pathology”.
Is our pursuit of the tuna (and other oceanic top predators) emblematic of our broader attitude toward nature? Is it an ideological pathology? I suggest that it is. I suggest that we are running headlong toward a future we believe will either (a) be much like the past, or (b) be something that we can manipulate to our advantage. Such hubris, especially in the face of a historical record that suggests quite the opposite has been true. We have not been stewards of the planet’s bounty. We must shift our thinking – and quickly – to avoid catastrophe. As Canada’s Thomas Homer-Dixon put it in his masterful book, The Ingenuity Gap:
We have subordinated a large portion of the planet’s resources and ecology to our interests…We will need a far better understanding of our planet’s complex systems if we are to achieve a relationship with our surrounding natural environment that is economically and socially sustainable.
Returning to the imperiled blue fin tuna, Brian MacKenzie of the National Institute for Aquatic Resources at the Technical University of Denmark, has studied the ICCAT plan and predicts that the adult blue fin population in 2011 will likely be 75% lower relative to 2005 and that quotas in some years will allow the fishery to capture all of the adult fish. Writing in Conservation Letters, he suggests that the population is at risk of collapse (a 90% decline in adult biomass within three generations – the criterion used by the International Union for the Conservation of Nature for defining populations as Critically Endangered), even under the currently agreed recovery plan.
So, how to turn things around? I believe we need to begin striking at the root of established thought. If we have learned anything from the collapse of Canada’s east coast cod fishery, once the envy of the world, it is that we do not understand natural variations in fish population ecology well. We may have approached fisheries planning with good intentions, but we have not imbued our plans with what I can only describe as the requisite humility – and therefore with the protective room of being able to make corrective adjustments in light of feedback from key ecosystem markers. We need to tap the power of place and evoke the heart and soul of a particular geography in our approach to being stewards of the planet. Our plans should reflect a devotion to place, community identity and nature. This calls for a radical re-think with respect to our relationship with the planet. In the case of the blue fin tuna, we should stop digging the hole that will soon consume us. Yes, that means a stop to the auctions in Tokyo and elsewhere; an absolute moratorium on fishing a species that is so much more than a commodity – it is a keystone indicator of planetary health. We must stretch beyond what conventional or received wisdom says is possible and accept that the status quo just isn’t going to cut it. Let’s face it; does anyone really think that the ICCAT plan is going to work?
I might add that in thinking of how we upgrade, we should feel energized by Elinor Ostrom's recent Nobel Prize in Economics. Her work on human interactions with ecosystems, and in particular, the novel institutional arrangements for managing natural resources and avoiding ecosystem collapse is both a beacon in the realm of ecological economics, and an exemplar of the kind of thinking we need more of to forge truly resilient societies – societies that treat creatures like the blue fin tuna as something more than a commodity.
I am under no illusions; to forge the kind of change we need will not be easy, but achieving something important, on a planetary level, never is. The work that lies ahead will require a deep commitment to what Gary Hamel has called “strategizing”, the creation of new, rich and “complex webs of conversations that cut across previously isolated knowledge sets and creates new and unexpected combinations of insights.” In case anyone is still wondering, this means a good deal more than, as the high bidder at the January 5 Tokyo fish auction put it, making “an impact on the Japanese and Hong Kong economies by buying the highest-priced tuna.”
- - -
The Strategist - Spring 2006
Confronting Ridiculous "Truths"
The March 4th edition of The Globe
and Mail contained at least 3 articles that
made me want to channel Howard Beale, the hero of Sidney
Lumet's visionary film, Network,
who screamed "I'm mad as hell and I'm not
going to take it anymore!" Let me explain.
In "Your own one-tonne challenge", Tim Flannery,
one of Australia's leading environmental thinkers and writers,
argued that in a matter of decades one of every five living things
will become extinct unless we wean ourselves off fossil fuels.Yes,
it's another story about climate change, but the article,
an excerpt from Flannery's new book, The Weather
Makers, does everything except make your
eyes glaze; it's a riveting piece. All the more
so because it is clear that we are at a hinge point in history: "we
are the generation fated to live in the most interesting of times,
for we are now the weather makers, and the future of biodiversity
and civilization hangs on our actions...if humans pursue
a business-as-usual course for the first half of this century...the
collapse of civilization due to climate change becomes inevitable."I
can only hope that Flannery's prose makes a sufficiently
large number of people ditch their second (or third) car and
start boning up on ways and means to reduce their fossil fuel
footprint.
In "Cancer, and the battle after", CBC journalist
Wendy Mesley talked about her battle with cancer and her investigation
into why it is one of Canada's fastest-growing medical
crises. The Canadian Cancer Society (CCS) reports that
2,865 Canadians are diagnosed with cancer each week - and
1,337 die. The incidence of cancer in Canada has climbed
from 1 in 10 in the 1950s to 1 in 5 in the 1970s to 1 in 2 today. What's
going on? Why are we not talking about this more? Why
do we seem willing to accept a five-fold increase in the rate
of cancer? Well it is probably fair to say that we are
more adept at diagnosing cancer today, I can't help but
think that we are also living in an increasingly toxic
environment that is challenging us, and changing us on a molecular
level. And there's some evidence I may be right. A
recent editorial in The Calgary Herald noted
that the CCS is undertaking research into a link between environmental
chemical exposure and acute lymphoblastic leukemia, a common
childhood cancer. Elizabeth Guilette, a researcher at
the University of Florida, has already discovered a disturbing
relationship between pesticide exposure and childhood health. In
Mexico, children exposed to pesticides had more mental and neuromuscular
defects, reduced stamina, and increased respiratory infections. In
a country where gardening is a national pastime, we should all
think about this the next time we head to the store to pick up
supplies to keep our flowers and lawns looking sharp.
In "China keeps bad company", reporter Geoffrey
York noted that China's financial support is propping up
some of the world's most reprehensible regimes. "With
its newfound economic muscle and its amoral zeal to do business
with anyone, China is propping up a host of tyrants and dictators
who might not otherwise be around." And so it is
that China adopts a "business is business" posture
and deals with Sudan, Uzbekistan, Iran, North Korea, Myanmar,
Angola and Zimbabwe, to name a few.
So there you have it; one newspaper, one day, and 3 articles
that got under my skin. They did so because it seems to
me that we've become so inured to bad news that we accept
it as inevitable or dare I say it, the truth of how things are. Well,
I don't accept it. And I certainly don't accept
that trend is destiny. I choose to believe that we can
do something about climate change. I choose to believe
that we can do a better job of cancer prevention rather than
treatment after the fact. I choose to believe that we can
confront China; call it on behaviour that is, frankly, reprehensible
and not in the interest of the global commons. Most of
all, I choose not to accept that a certain amount of "bad" is
inevitable in society. Like John Ralston Saul, I'm amazed,
and saddened, by the extent to which our society accepts serious
levels of poverty, exclusion and homelessness. There is
no reason to accept these things as "truths" of how
things are, or must be. There is no need, and certainly
no good, in intellectually reconfiguring them as conditions of
society.
It's
time to challenge what I will charitably call "ridiculous truths" and
get on with the work of dreaming big and making those dreams a reality. It's
time to remember heroes like the brave women who stood in the rain outside
the White House in the early 1960s and brought an end to aboveground nuclear
testing and with it, the radioactive fallout was showing up in mother's
milk and baby teeth. The Women's Strike for Peace, and the spirit,
the hope that informed it is one of the lights that should guide us out of
our current darkness. It's time to remember that we can change
the way things are. We can change them to the way things ought to be.
- - -
The Strategist - Winter 2006
Oil Profits, Global Warming and the Nature
of Business
On Tuesday, January 31, the Calgary Herald ran
two stories that demonstrated yet again just how ephemeral human
civilization might be.
In the first story, we were told that Exxon Mobil, the
world's largest publicly traded oil company, posted profits exceeding
$10 billion in the last quarter of 2005 - a record for
any U.S. company, and a key driver of the largest annual reported
net income in U.S. history. Further, we were told that Exxon's
results lifted the combined 2005 profits for the US's three largest
oil companies to more than $63 billion. Let me be clear here;
I'm talking about profits, the residual when all expenses
have been paid.
In the second story, the head of the British Antarctic Survey,
Chris Rapley, warned that the huge west Antarctic ice sheet may
be disintegrating - a bellwether of climate change and
an event that could raise sea levels by five meters.
If we connect these two stories a disturbing and disturbingly
familiar pattern emerges. Exxon and its oil industry peers are
making money from an energy source (refined hydrocarbons) that
is directly responsible for an unsustainable build-up of greenhouse
gases in the atmosphere leading to climate change.
At the G8 Summit last June, the leaders of the world's industrialized
nations agreed that climate change is happening, that human activity
is contributing to it, and that greenhouse gas emissions must
decline, moving society toward a low-carbon economy.
And so we return to the unprecedented profits being made by
the oil companies. Make no mistake; I have nothing against profits - they
are a deserving reward for a successful entrepreneur. But I believe
they are also more than that. As Charles Handy put it in a provocative
2002 article for Harvard Business Review, "the
purpose of a business is not to make a profit, full stop. It
is to make a profit so that the business can do something more
or better". This something more becomes the real purpose
of the business.
Most businesses are managed through the narrow lens of financial
performance, a lens that may not adequately identify risks and
opportunities. With oil supplies peaking and powerful new economies
in China and India accelerating, resource depletion and the corresponding
price point escalation will become commonplace. While previously
a necessary part of any robust environmental or climate change
strategy, a strategic energy management and raw materials plan
with an emphasis on decarbonizing supply and value chains now
looms as a fundamental business imperative that transcends environmental
stewardship.
Easy access to abundant sources of hydrocarbon fuels has created
substantial inertia within the industrialized world. Every second,
the world consumes 37,000 gallons of oil, 480 tons of coal, and
3 million cubic feet of natural gas. Oil, coal, and natural gas
now supply 85% of world energy needs. But what happens in a world
market in which hydrocarbons are less abundant and the effects
of climate change are felt in more acute ways? The choices that
companies like Exxon make in the face of this question will go
a long way toward defining the kind of world we live in. Look
at it this way, our current addiction to hydrocarbons is unsustainable
on two counts: (1) supplies are dwindling; and (2) continued
use of these energy sources is damaging the environment beyond
the point of repair.
So, how to move forward? To every oil company out there, I say "what
percentage of your profits are you reinvesting in an innovation
agenda that dramatically accelerates the viability of alternatives
to hydrocarbon fuels?" Seventy years ago Joseph Schumpeter
defined profit as "the premium put upon successful innovation
in capitalist society and [it] is temporary by nature: it will
vanish in the subsequent process of competition and adaptation".
In an era characterized by dwindling reserves of traditional
fuels, increasing evidence of climate change, and hypercompetition,
it seems clear that a portion of any oil company's profits needs
to be reinvested in activities that deliberately push the envelope
of the firm's business model - or indeed the conventional
wisdom of the industry itself.
Henry Hubble, Exxon's VP of Investor Relations, attributes his
firm's success to its ability to create "world-class projects".
While the context needs to change, and change quickly, the spirit
of those words has never been truer. Time to step up to the plate,
Mr. Hubble, and use some of those profits to do "something
more", to create world-class projects that facilitate a
global shift to alternative energy.
- - -
The Strategist - Winter 2005
Remembering Peter Drucker 1909 – 2005
In the month since his death, the requisite accolades have been
pouring in for Peter Drucker, the seminal management thinker
of the past century. On the face of it then, there would appear
to be little to be gained from another tribute – a lone
voice that might be lost against an impressively large chorus
of admirers and supporters. That said, I am compelled to write
because no one has yet pointed out that Drucker made prescient
observations about the responsibility of business to society
long before the term “sustainability” came into vogue.
With his death, the world lost a legitimate “elder”,
and I was reminded, again, that those of us with an interest
in a more just, humane and caring world would do well to read
his good words. As early as 1942, for example, he argued that
businesses should define
“an organizational purpose that goes beyond next-quarter
financial results and beyond maximization of shareholder wealth...a
purpose that employees can believe in and challenges them to
contribute their best work”.
I revere Drucker because he was a keen observer not of the ball,
but the game – he knew in a way that few do that what really
matters is the flow of a society through time. Insofar as business
is concerned, he knew that the creation of a customer was the
only valid definition of business purpose, but the way(s) in
which that customer was “created” and continually
satisfied mattered a great deal:
“This new concept of social responsibility no longer
asks what the limitations on business are, or what business
should be doing for those under its immediate authority. It
demands that business take responsibility for social problems,
social issues, social and political goals and that it become
the keeper of society's conscience and the solver of society's
problems.”
In this regard, Drucker anticipated much of what is popularly
called corporate social responsibility. He also correctly anticipated
the rise of intangible assets as the ultimate sources of wealth
creation, writ large, in society. Drucker believed that highly
skilled people are an organization's most valuable resource and
that a manager's job is to prepare and free people to perform
– to recognize the skills in his or her team and create
the conditions where those skills are most effectively deployed.
One of the most striking features of what I will call the sustainability
“debate” is the failure to draw on the mainstream
management and strategy literature in helping to frame both the
challenge and opportunity of sustainability. Several recent books
have tried to do this, but for the most part, they have not tapped
into this influential body of knowledge. More to the point, it
is a pity that so few sustainability advocates are unfamiliar
with Drucker. We live in an era when business, or as Drucker
would prefer, the corporation, is the most influential organization
on the planet. It follows that if society is to shift to a more
sustainable trajectory, the corporation must play a lead role.
To get there, more of us need to know something about how the
corporation really works. There are few better places to begin
than Concept of the Corporation. First
published in 1946, this book was the first attempt to show how
an organization really worked. It's success established management
as a legitimate discipline and field of study. More recently, Management:
Tasks, Responsibilities, Practices, published in
1973, has long been on my short-list of essential
“sustainability” reads. The chapters on management
as innovation, and the responsibility of business to society,
are clear-eyed accounts of what we need to do to create better
corporations, why we need to do it, and most crucially, how we
can get on with the job.
Peter Drucker shaped much of my thinking on the nature of the
corporation. I owe him an enormous intellectual debt. –
a debt that I will enjoy repaying by sharing his insights with
others, and using his guidance to help build a more just, humane
and caring world.
- - -
The Strategist - Summer Supplement 2005
Ode to a Visionary: Charles David Keeling
(1928-2005)
Two weeks ago, I wrote the Summer edition of The
Strategist in the wake of oil cresting $58
a barrel. I argued that perhaps the silver lining to rising
crude prices was the spur it should provide for investments
in alternatives that don't shred the Earth's life support
services. Four days later, the world lost a genuine visionary,
and the man most responsible for drawing our attention to
the buildup of greenhouse gases in the atmosphere, with the
death of Charles Keeling.
Beginning forty years ago, when the industrial world was basking
in the glow of a post-World War II building boom and cars were
celebrated signs of progress, Keeling lugged a CO2 monitor to
the top of Mauna Loa in Hawaii and began taking the full measure
of our “progress”. His findings, made famous in the
“Keeling Curve” reproduced below, demonstrated that
CO2 concentrations in the atmosphere were steadily rising –
by about 3% a year.
When Keeling began his work, most scientists didn't think that
emissions from cars and factories could have a measurable (or
material) effect on the earth's climate, assuming that the CO2
would be absorbed by plants or the oceans. Today, the Keeling
Curve is considered the foundation document of global warming
research. Charles Kennel, director of the Scripps Institution
of Oceanography in San Diego where Keeling worked, has called
the data that underpin the Curve “the single most important
environmental data set taken in the 20th century”. Today,
the majority of climatologists globally agree that increasing
levels of CO2 in the atmosphere contribute to ozone depletion,
glacial meltdown, and desertification of farmland, among other
environmental crimes. Eleven science academies, including the
National Academy of Science in the U.S., cited Keeling's work
earlier this month when they called on world leaders to acknowledge
that the threat of climate change is real and increasing and
needs to be addressed.
W.H. Auden once said that a culture is no better than its woods.
What he meant was that woodland can be exploited wisely –
there is no need for complete preservation, but the
unfortunate tendency is for humans to harvest all trees within
reach and expand farms onto fragile hillsides, causing drought,
flooding and erosion. In a similar way, the burning of small
amounts of fossil fuels is one thing, but the creation of an
entire economy, indeed an entire world culture, that is hydrocarbon
based is quite another. It's been quite a ride, but at what cost?
Put another way, is our reliance on fossil fuels what Ronald
Wright would call a progress trap? Seems like a good thing in
the beginning, but by the time we recognize there may be a problem
it's too late to reverse the damage?
Earlier this week, the Senate in the U.S. approved an energy
bill that pays lip service to conservation and the legacy of
Charles Keeling. The bill calls for utilities to produce 10%
of their electricity from renewable sources of energy, and provides
tax incentives for people to purchase hybrid cars and energy
efficient homes and appliances. These are good things to do,
but they fall well short of the catalytic change that is needed
to get us off our fossil fuel addiction. And of course, the bill,
which must navigate the rough political waters of the House,
is silent on drilling for oil in the Alaska Wildlife Refuge,
and the need for automakers to get serious about making fuel
efficient cars.
We can honour Keeling in at least two ways. First, by grounding
our discussions of climate change and the greenhouse effect in
good data. Second, by taking real action in the face of incontrovertible
evidence – forty years' worth – that our fossil-fuel
driven progress just may be a progress trap.
- - -
The Strategist - Summer 2005
$58 a Barrel Oil: Save Your Balance Sheet…and
the Planet
On Saturday, June 18, I was struck by two articles that highlight
an opportunity to dramatically improve the financial performance
of most of the world's businesses, and save the planet in the
bargain. The first was a report in The Globe and
Mail noting that the price of crude oil had surpassed
$58 a barrel. The second was a comment in Patagonia's spring
catalogue about innovation and sustainability. To the casual
reader these may appear to be unrelated items, but they're not.
Let me explain. At $58 a barrel, the cost of manufacturing, transporting
and servicing virtually any product becomes perilously uneconomic
for any business still wedded to fossil fuels. Balance sheets
that were already bleeding will now start to hemorrhage. And
of course, as many experts have long been telling us, reliance
on an energy source that is shredding our planet's life support
systems through climate change is the antithesis of prudent risk
management. This brings me to Patagonia. Long a pioneer in the
outdoor clothing and equipment field, the company also has a
distinguished history of genuinely educating customers and other
stakeholders on sustainability. Nowhere is this more evident
than in the company's newest catalogue. An essay on innovation
points out that the challenge for business is no longer simply
about finding new ways to solve old problems; it's also about
asking whether the innovation is healthy for the environment.
For too long it has been too easy for business not to
truly innovate on energy. The price of oil was low, or within
an acceptable risk profile and the costs of decarbonization were
seen as being unacceptably high. In the face of those hard financial
numbers, any additional pleas to altruism or social responsibility
fell on deaf ears. Those days are gone. And perhaps that's the
silver lining to $58 a barrel oil. Perhaps now we can see innovation
harnessed to alternative energy. Herewith then, a five-point
call to action:
(i) businesses should quickly develop and incorporate alternative
energy rules into all capital expenditures – a condition
for any new expenditure is that the energy source be non-carbon;
(ii) energy efficiency must be dramatically promoted in every
sector of society – it should become a badge of honour
for a business to tout the money it has saved through these
efforts;
(iii) governments across the northern hemisphere should set
a target of 50% of all energy being non-carbon;
(iv) all vehicle fleets should be transitioned to hybrid and
alternative fuel status; and
(v) the big three auto makers in North America need to step
up their level of activity on the creation of hybrid and other
technologies – these are the energy sources that will
fuel the future, but only if the boys in Detroit start to think
of them as something other than novelties or curiosities.
Jared Diamond's bestselling new book, Collapse,
which chronicles the failure of previous civilizations to negotiate
a relationship with the Earth that is sustainable, provides a
useful point of context as we think about energy and our world.
Too many of us live at a remove from nature, a remove that blunts
our understanding of nature and our dependence on nature. Too
many of us go through our days in a quest for ease, comfort and
convenience. And of course, too many of us, especially in North
America, are consumers – whose sense of self is defined
through the acquisition of stuff – cars, sport utility
vehicles, boats, sea-doos and ski-doos – that perpetuate
a dependence on fossil fuels. This dependence is largely responsible
for the removal of half the world's original forest cover, the
collapse of most of the world's marine fisheries, and the conversion
of natural habitats to human-made habitats, notably cities. Recent
evidence from the Millennium Ecosystem Assessment research indicates
that 60% of the ecosystem services that support life on Earth
are being degraded or used unsustainably – 60%!
If these ecological signals didn't convince us previously, maybe
oil at $58 a barrel will. Our backs are against the wall and
it's time to act – decisively, confidently, without fear.
Can we learn from our mistakes – both historical and recent?
Can we begin to chart a course that is deliberately different
from the civilizations of the past? John Ralston Saul's new book, The
Collapse of Globalism, argues that we live in a
storm between two weather fronts in which nationalism is reasserting
domestic interests in both positive and negative ways. This is
sustainability on a vast canvas; the argument writ large. And
make no mistake; oil figures prominently in our global dilemma.
We now stand at a crossroads on our evolutionary path. In one
direction lies almost inevitable collapse. In another, lies an
exciting future of cleaner air, healthier people, and new types
of economic opportunity. I know which path I'll be choosing.
- - -
The Strategist - Spring 2005
Sustainability: A Cause in Search of a Story
Robert Altman's wonderfully cynical film about the movie business, The
Player, contains an essential truth about stories
that advocates of sustainability would do well to remember.
In the film, the central character is asked why a particular
screenplay wasn't filmed. He says it lacked certain qualities
necessary to make a commercially successful movie. There
is a pause. He expands on his answer. He says up, as opposed
to down; happy as opposed to sad; hopeful as opposed to desperate;
and a happy ending…especially a happy ending. His point
is that while all people like stories; most people
like stories that offer hope – and a happy ending.
Stories in which good triumphs over evil. Stories propelled
by an engaging and entertaining narrative – the route
to the happy ending matters.
Now consider the way in which the sustainability “story”
has been told. Is it any wonder the majority of people have tuned
out? So many of the efforts to get more people “living
like they plan on staying” read and sound like a mother
trying to coax her kids to eat vegetables – this may
not taste good, but it's good for you! We can do better. We
need to do better.
Lest readers wonder if I've forgotten about those relatively
well-known individuals, cities and organizations that are brokering
novel collaborations and incubating new sustainable business
models and technologies, I'm not talking here about
the relatively thin edge of leaders (that's another newsletter).
Instead, I'm talking about “the other 80%”, the large
clot of individuals, cities and organizations whose behaviour
must change if society is ever to approach a relationship with
the Earth that can be called sustainable.
To be sure, the complex patterns of interaction that characterize
biological and human systems cry out for new ideas, technologies
and collaborations, but what is most needed is a new story. And
that story is not about making people aware of the true
costs of energy, to take a topical example, or pointing out that
non-carbon alternatives to gasoline are available that won't
cramp anyone's style. This is subtext. The real story
is about home – the places we live, and our relationships
with others. The real story is about how we give meaning
and value to the idea of home. Ted Chamberlin makes this point
beautifully in his protean book, If This Is Your
Land, Where Are Your Stories?
Except for the idea of a creator, there is no idea quite
as bewildering as the idea of home, nor one that causes as
many conflicts…Can one land ever really be home to
more than one people? To native and newcomer, for instance?
Or to Arab and Jew, Hutu and Tutsi, Albanian and Kosovar,
Turk and Kurd? Can the world ever be home to all of us? I
think so. But not until we have reimagined Them and Us.
Throughout history humans have divided the world and its peoples
into friend and foe, them and us – with catastrophic results.
And we continue to do so today, and not simply at a national
or international scale. Look closely at any city, or indeed at
any organization, and you will see the separation of people into
distinct camps, cliques, or tribes. One of the most important
things we lose through this separation is an awareness and appreciation
for other people's stories and the lessons they might hold:
Other people's stories are as varied as the landscapes
and languages of the world; and the storytelling traditions
to which they belong tell the different truths of religion
and science, of history and the arts. They tell people where
they came from, and why they are here; how to live, and sometimes
how to die. They come in many different forms, from creation
stories to constitutions, from southern epics and northern
sagas to native American tales and African praise songs,
and from nursery rhymes and national anthems to myths and
mathematics.
So, how to move forward? How to write the kind of story the
sustainability cause needs? The answer will not be found in the
usual places. Which is to say that benchmarking studies, stakeholder
engagement exercises, and business case development – all
tools of the trade for most sustainability efforts – must
be viewed as accents and nuance. They enrich the narrative, but
they are not the narrative. Just as special effects never make
up for a lack of plot in a movie. Should we talk to people and
create business cases to support an argument for sustainability?
Yes, but we should recognize the limits of such an approach.
To paraphrase the business strategist, Gary Hamel, customers
are notoriously lacking in foresight
– they often don't know they want something until it is
thrust upon them. We therefore need to forge a story about sustainability
that hasn't been told yet (or told well). We need to shape a
compelling vision of the future, and sell that vision with the
kind of passion, money and marketing savvy that Hollywood sells
movies. We need to convince people through the art of storytelling
that this vision is worth fighting for. And it's okay if the
story seems strange – this is what will first take hold
of us (and others) and make us believe it.
Nothing happens without first a dream. My dream is a world in
which human society lives in a more sustainable relationship
with the Earth, and with each other. To get there, we need to
write a new story – a story about the future and what can
be done now to secure it. We also need to sell this story in
ways that heretofore have been overlooked by the sustainability
community. We have a great cause; what we lack is a story to
grow the constituency of supporters for that cause. Over the
coming months I'll be striving to create such a story. I'll need
help. Let me know if you want to join me in creating the future…
- - -
The Strategist - Summer 2004
Reformation versus Revolution: Late Night
Thoughts on Sustainability and the True Nature of Leadership
One of the more interesting philosophical debates among those
with an interest in sustainability pits what I will call the
reformers against the revolutionaries. Let me explain. The reformers
believe that while there may be a few genuinely bad companies
out there, it is absolutely possible to reform the majority and
weave sustainability into day-to-day business. The revolutionaries,
as the name suggests, are skeptical (or worse) about the corporation
and believe we must forge a bold new future with new types of
social and commercial enterprise.
I thought of this last week as I read Janet McFarland's useful
column in the Globe and Mail, “The corporate call
for integrity seems little more than lip service” (see www.globeandmail.com for
details). You see, I have long placed myself in the reformer's
camp. In fact, I have been quick to defend the majority of corporations
and have suggested that the Achilles heel of the sustainability
movement is its too frequent insistence on seizing the moral
high ground and preaching to the converted. What about the other
80 or 90%? While I'm not yet ready to declare myself a revolutionary,
Ms. McFarland's column gave me pause and reminded me that my
reformation argument rests on an important assumption about corporate
leadership that is too often ignored or overlooked. Put simply,
unless and until corporate boards and the CEOs they hire accept
responsibility for the behaviour of their firms, our ability
to institute reforms that foster sustainability will be gravely
compromised.
In the lingering fallout from the collapse of Enron, Adelphia,
WorldCom and others (will the ripples from this story never cease?);
CEO ignorance is becoming a trendy excuse and defense tactic.
And so it is that Ken Lay, at once both notorious and pathetic
as the fallen chief of Enron, can claim that he knew nothing
about the financial transactions and accounting practices that
ultimately sunk his company. Further, he can protest that his
personal wealth has been “diminished” to some $20
million and that he is therefore also a “victim”.
What is going on here? What do such claims of ignorance say about
how we should think about and measure CEOs? I respectfully submit
that the fundamental measure of a CEO is his or her ability to
lead. But what, ultimately does this mean?
In business, as in so much of life today, we emphasize outcomes in
thinking about leadership – increased sales, reduced costs,
shareholder value, and so on. We also, it must be said, value
power and charisma and associate this with leadership. Our implicit
or explicit evaluation of corporate leaders and our apparent
willingness to worship at the cult of celebrity leaders (think
Donald Trump) only reinforces this view. The methods through
which outcomes are achieved, however, has tended to receive rather
less attention. In particular, the moral principles that underpin
the ideology of leaders are a subject that cries out for discussion
and debate.
If we are interested in creating genuine financial and social
wealth or well being, if we are interested in sustainability
or social responsibility, why wouldn't we see the imperative
of exploring the moral dimension of boards and CEOs? As Ms. McFarland
aptly put it, morality “is not endlessly flexible”.
More broadly, Miles Little, Director and Founder of the Centre
for Values, Ethics and the Law in Medicine at the University
of Sydney, reminds us that merely thinking about leadership in
the instrumental sense of being the means through which followers
achieve a particular interest (shareholder value comes to mind)
is to focus too narrowly on “the kind of leadership
that can have an ideological base without necessarily having
a moral one. Leadership without a moral basis is almost always
potentially disastrous.”
The news is not all bad. Just as Camus generously and wisely
noted that in a time of pestilence there are more things to admire
in men than to despise, I passionately believe that there are
many more good companies than bad. I further believe that more
and more companies and organizations are thinking about the moral
dimension of governance. Viewed in this light, sustainability
or social responsibility can become an emergent property of doing
business or exercising leadership. Canada is especially fortunate
in this regard. The most recent KPMG – Ipsos Reid ranking
of Canadian corporations noted that the two companies which score
highest for corporate governance, RBC Financial Group and BCE
Inc., also top the social responsibility rankings. RBC also happens
to be Canada's most respected corporation overall.
And what might all of this mean for my reformer versus revolutionary
argument? I'm still a reformer at heart (or maybe a quiet revolutionary)
who draws inspiration from RBC, BCE and others like them, but
I have a renewed appreciation for the need to frame the sustainability
challenge properly – it's about leadership, writ large.
It's about catalyzing individuals to work as one team to create
genuine wealth. It's about sharing credit among the team. And
it's about taking responsibility for the results.
- - -
The Strategist - Spring 2004
In Defence of the Corporation
There's a popular documentary film currently making the rounds
called The Corporation. In Canada, it has quickly become the
most lucrative homegrown documentary of all time – which
I find somewhat disturbing. Let me explain. A central thesis
of the film is that the modern corporation (think post-1900)
displays the same pathology as a psychopath. Which is to say
that it shows a callous unconcern for the feelings of others,
incapacity to maintain enduring relationships, and a reckless
disregard for the safety of others, among other sins. I find
such a portrayal dangerously misleading.
I have written previously about the ways short-term corporate
thinking can shortchange society; in particular, I have argued
that the confluence of three trends – corporate autonomy,
a digital economy, and naively impatient investors – has
created a monster in the form of pressure to produce short-term
results. Nowhere is this more evident than in the fallout from
ImCone, Tyco, Adelphia, WorldCom, K-Mart, Enron and others. Still,
the suggestion that all (or most) corporations are “externalizing
machines”, to use one of the film's grim labels, is unfair.
There is a world of difference between a smart company that knows
it doesn't make sense to close every loop and an externalizing
machine. Skeptics might rightly challenge me on this point. Why
shouldn't corporations close every loop? Put simply, it isn't
necessarily in the public interest for them to do so. The
Corporation steps blithely past the benefits that
accrue to society from industrial activity – benefits that
are typically accompanied by some level of pollution (how many
zero emission, zero waste companies do you know?). If a firm
was compelled to eliminate all pollution or waste; to close every
loop, the social costs of doing so could well outweigh the benefits.
The responsibility of business to society has been a persistent
theme in the management literature, and for at least three decades
there has been a robust debate about the role that business should
play in addressing societal problems, particularly environmental
problems. No less an authority than Peter Drucker framed
the challenge this way:
“This new concept of social responsibility no longer
asks what the limitations on business are, or what business
should be doing for those under its immediate authority.
It demands that business take responsibility for social problems,
social issues, social and political goals and that it become
the keeper of society's conscience and the solver of society's
problems.”
The happy news is that more and more corporations have stepped
up to the challenge. The
World Business Council for Sustainable Development is
a notable example. A coalition of 160 international companies
united by a shared commitment to sustainable development through
economic growth, ecological balance and social progress, it has
sparked much-needed thinking about how business can help society
shift to a more sustainable trajectory. Yes, the ecological economist
in me would like to see more emphasis on “development”
than “growth”, but I appreciate the effort WBCSD
is making. Are some of the members just along for the ride, cloaking
themselves in a green veil in the hopes of earning some good
PR? Probably. Does it matter? Probably not. The overwhelming
majority of WBCSD members are backstopping the good words with
tangible actions that are rapidly slaying the myth that one can't
be green and competitive. And to those readers who point out
that the WBCSD is a rather exclusive club for only the largest
of corporations, I would point to the “next generation” of
businesses
– energetic companies like Antioch, Baxter Healthcare,
Fetzer Vineyards, Herman Miller, Organic Valley, Patagonia, and Shorebank
Pacific – that are re-writing the rules for their
respective sectors. I would add that organizations such as the World
Economic Forum have increasingly recognized the
importance of sustainability. Finally, business schools worldwide,
the gene pool from which the next generation of corporate leaders
typically springs, have discovered that more and more students
are interested in exploring sustainability – this augurs
well for future corporate behaviour.
And so, to those who watch The Corporation and
come away thinking that we need to reform (or blow up) the corporate
model, I would say take a deep breath and look at the bigger
picture. As with any socially created institution, there are
examples of human failing leading to disaster. Equally, there
are examples of companies that understand the dynamic interplay
of financial, social and environmental aspirations and work hard
to achieve results for their shareholders as well as their
other stakeholders. These companies endure. They also inspire.
Let them guide us in our efforts to improve on the institution
of the corporation, but let them also sharpen our will to defend
that which is good about corporations. And lest anyone doubt,
or forget, there is much to defend. As Jim Collins put
it for Fortune Magazine recently, “Some of the
most amazing inventions in history are not technology or products,
they're social inventions. The modern corporation is in that
league, not so much because it is a font of technological innovation,
but because it is the bridge between market mechanisms and democracy.”
- - -
The Strategist - Winter 2003
Finding Order amid the Chaos, or Making a
Mid-Course Correction
There's an indelible moment in the film A Beautiful Mind when
Russell Crowe's character, John Nash, looks at a seemingly incoherent
board of numbers and the ones he's searching for magically advance
toward him. Imagine what it must be like to see, or create, such
order where others see only chaos? Now ask yourself whether you
share this gift. Be honest. Are you able to see both the forest
and the individual trees? Are you able to “frame the problem”?
Or are you doing the best you can, which is great, but which
also amounts to frequently being carried along by the current
of daily life with little or no control over events? If it's
the former, read no further; you'd make Pascal (to say nothing
of Nash) proud with the righteous life you're leading. If however,
you're in the latter camp, I'm here to tell you it doesn't have
to be that way – on both an individual and organizational
level.
As someone who advises individuals and organizations on strategy,
I'm all-too-familiar with the lament that our world is too complex
and fast-paced to understand, much less control. Perhaps. But
is that lament too easy, too convenient? Have too many of us
simply wandered into the organizational forest and lost our collective
way? Maybe it's a function of entering my forties, but I'm giving
more and more thought to the gravitational forces that affect
individuals and organizations and I increasingly see a three-point
plan to facilitate a mid-course correction: (i) reflect more;
(ii) define a genuine sense of purpose; and (iii) take more risks.
Reflect More
I don't expect to convert my clients to philosophy (well, maybe
just a little), but I do expect my clients to cultivate a point-of-view
about the future that is uniquely their own, and to frame that
point-of-view in the context of what is going on around them – the
proverbial “big picture”. Virtually every organization
I know claims to do this, but in fact, very few pull it off.
Why? Because it takes time. Not a huge amount of it, particularly
when measured against the costs of not framing the organization's
raison d'etre properly, but more than many organizations think
they can spare. Here's a litmus test, if you've ever wondered
why your organization is doing something, and not doing something
else, you're probably not alone, and your organization would
likely benefit from framing its work (and communicating same)
better. Put another way, what are the opportunity costs associated
with a particular program or service? What do you want your legacy
to be? Are you and your colleagues genuinely excited about your
work? These questions can only be answered after some honest
reflection.
(Re)Define a Purpose
With reflection comes the ability to define (or redefine) who
you are and why you exist. In a business context, Charles Handy
nailed it when he said that the purpose of a business was not
to make profits, full stop. Profits were the means to the greater
end of doing something more – giving back to the community
and having a genuinely positive impact in the world. So think
about your organization and ask yourself “what is our purpose”?
“What are we really doing?” “What should we
be doing?” “What's stopping us from getting on with
the work that we know really matters?”
Take More Risks
In their report, Canadian Competitiveness: Nine Years after
the Crossroads, Roger Martin and Michael Porter argued
that Canada needed to embrace “relentless innovation” and
“bold strategy” if the country was to succeed in
the modern economy. While there are undeniable Canadian success
stories
– in business, government, the arts, and other aspects
of civil society – we all need to resist the temptation
to
“play it safe” and do what others do. From time-to-time,
being a fast follower can work, but in general I don't recommend
it. We need to foster an organizational, if not societal culture
in which risk taking is good, in which new ideas are celebrated,
in which undiscovered voices are heard. Where, after all, will
bold innovation come from? Anybody can have 1 good idea (or get
lucky), but how do you create the conditions in which good ideas
– and the translation of those ideas into tangible products
– is a self-reinforcing virtuous circle? Put another way,
what is your competitive advantage, and what are you doing, today,
to ensure it's sustainable?
Unless we all learn to reflect more, define a clear and compelling
sense of purpose, and take more risks, there's probably room
for improvement in our lives. And if that's true, the organizations
we advise or work for are likely underperforming. So as we end
one year and begin another, take a moment to think about what
you're doing, why you're doing it, and (crucially) how you could
do it differently…and better.
To discuss any of the ideas contained here, contact Rob
Abbott at ideaguy@shaw.ca
- - -
The Strategist - Fall 2003
Trends Shaping the Business “Big Picture”
One of the most poetic lines in political economy is Marx and
Engels' assertion in Manifesto of the Communist Party that “all
that is solid melts into air, all that is holy is profaned, and
man is at last compelled to face with sober senses his real conditions
of life, and his relations with his kind.”
The conditions in which “all that is solid melts into
air”
are nothing less than a dramatic reordering of the world as we
know it. We are living in such a time. The enormous gap between
the world's wealthiest countries and the remainder of the planet
is creating a "resources versus repression" climate
that manifests itself in many different and rather frightening
ways. Unless we begin to address this fundamental global problem
– which includes issues of economic efficiency, fairness,
and the scale of the economy relative to the ecosystem - we should
expect to see more civil unrest, more political dissent and,
dare I say it, more conflict.
To help us begin articulating the analytical framework we need
to more clearly see our way forward, I would suggest that strategists
everywhere think carefully about the following three trends:
(1) genetic and genomic technologies; (2) transparency in business;
and (3) stakeholder value. These are three points on a compass
that we do not yet understand well.
1. Genetic and Genomic Technologies
The implications and opportunities associated with the mapping
of the human genome are staggering, as are the social, economic,
and ethical concerns about the use of genetic information. From
a healthcare standpoint, I see enormous and enormously exciting
things ahead for gene-based medicine. This will change we way
we train doctors and healthcare providers, and change the way
we think about and treat human disease, but it will require fundamental
policy change. To get there, we need to raise the level of debate
such that the opportunities and concerns are discussed intelligently.
From a “sustainability” perspective, genetic and
genomic technologies hold considerable promise in alleviating
poverty and suffering in the developing world - what is needed
is the institutional (and economic) will to deploy them from
the developed world.
2. Transparency in Business
Transparency in business is a trend that has been gathering steam
in the wake of the Wall Street scandals of 2002, but its roots
extend further back. Kevin Kelly has long talked about the "new
economy" being built on chips and trust - yes, the engines
of economic growth are changing, but you still need the trust
of your community to survive, much less prosper. Interbrand has
extended the argument and pointed out that by 2010 intangibles
could account for 45% of a company's market capitalization. This
raises exciting and challenging possibilities for business. How
are you going to create value in a world where physical assets
don't count as much as they used to, where intangibles are gold,
and where trust (or lack thereof) can overturn strategic positions
very quickly?
3. Stakeholder Value
The third big trend I see is the transition from a shareholder
value model of business to what Ed Freeman and others call "stakeholder
capitalism". This is about creating value for all stakeholders,
not simply those who invested in the company. This requires that
we redefine how we think about and measure success. It also requires
that we understand the importance of trust and transparency in
business. From the standpoint of starting and/or running a business,
if you can connect what you do to one of these trends, you have
probably enhanced your chances of success. Of course, you'll
still need a compelling value proposition to distinguish your
company from someone else's, but that's another story...
To discuss any of the ideas contained here, contact Rob
Abbott at ideaguy@shaw.ca
- - -
The Strategist - Summer 2003
Reflection and Renewal on the Road to Valhalla
Northrop Frye, Canada's seminal literary critic and theorist,
once observed that the Canadian environment was feared by early
settlers and this fear spurred domination and exploitation. I
thought of this earlier this summer as Canadians (how many, I
wonder?) celebrated Environment Week.
It is now more than 30 years since British Columbia MP Tom Goode
introduced a Private Members Bill inaugurating Environment Week.
Why do we still need a week-long event to remind us to think
about the environmental consequences of our lifestyle? Is there
a large constituency that still views the environment with fear
and suspicion, as something to be dominated? Fear and suspicion
are probably not the right sentiment. Neglect and lack of awareness
seem closer to the mark. And because of this lack of awareness
we need Environment Week more than ever, albeit with a renewed
focus.
On May 27, the results of a national nature audit by the World
Wildlife Fund (WWF) indicated that Canada's natural resources
and wild ecosystems are under intense pressure from human settlements
and a concerted effort is needed to prevent further erosion of
our natural capital. I use the word capital in this context deliberately
– our capacity as individuals, firms and a society to create
social and economic wealth, or well-being, is inextricably linked
to the natural world. Moreover, nature performs essential life-support
services for which there is no human-made substitute. The regulation
of the composition of the atmosphere or the cycling of nutrients
comes readily to mind. Viewed in this light, the WWF findings
are disturbing. And WWF isn't alone. A study released last year
by the Eco-Research Chair of Environmental Law and Policy at
the University of Victoria placed Canada 28th out of 29 OECD
countries in environmental performance.
As individuals, firms and a society we need to ask some searching
questions about why our ecosystems are still in retreat, why
lifestyle choices continue to run against the environment. Earlier
this year, the Globe and Mail reported that the 3 cars
Environmental Defence Canada rated the “greenest” were
among the poorest-selling. Why is that? Have we failed to get
the price signals right? Maybe, but I suspect there are other,
more complex forces at play. Despite much rhetoric (and to be
fair, some genuinely well-intentioned policy), we have not made
the connections between environmental quality and social or economic
well-being meaningful to a sufficiently large number of Canadians.
It is to this task that Environment Week and events like it should
now turn. How can we catalyze genuine discourse, and with it,
genuine progress?
And it's not just in Canada that we need to question the sincerity
of our commitment to the little (and not so little) changes that
are the cornerstone of a sustainable society. In the June 15
edition of the New York Times Magazine, Elinor Burkett
pointed out that Cape Wind Associates' proposal to build America's
first offshore wind farm, something that is old hat in Europe,
was being vigorously opposed by the good people of Nantucket
Sound. Despite the fact that the wind farm would provide Cape
Cod residents with up to 75% of their electricity, these erstwhile
Greens have put aside their environmental sensitivities and are
demanding that their homes be exempt from such a project. Plus
ca change…
Wendell Berry has said that if we were sincerely looking for
“success” as a society, we would turn to the communities
of which we are a part – humanity, water, earth, air, plants
and animals. Put another way, we would forsake our individual
lives of affluence and remember that what really matters are
the choices we make everyday to help ourselves and each other.
And therein lays the crux of the sustainability challenge for
us all
– how do we deliver the utility people want in a way that
respects the hopes and aspirations of others? How do we make
the connections between our daily lives and the natural world,
which should be obvious, more immediate and immediately important,
to more people? I don't pretend to have all the answers yet,
but I am consumed by these questions.
And now you know what I'll be thinking about this summer.
To discuss any of the ideas contained here, contact Rob
Abbott at ideaguy@shaw.ca
- - -
The Strategist - May 2003
What Measurement Should be all About
Jacques Ancel, the 20th century French scholar, once observed
that “it is not the frame that is important, but what is
framed”. Ancel's interest was political geography, but
his observation seems equally valid in the business world
– and especially so in the realm of performance measurement.
Too many organizations are preoccupied with measures or indicators
(the frame) and have inadvertently lost sight of the bigger picture
that is their strategy (what is being framed).
It has become something of a mantra if not shibboleth that “what
gets measured gets managed”. And so it is that managers
try to translate their strategic intent into measures or indicators
that can be counted, used (one hopes) to improve organizational
decisions and performance, and reported to shareholders and other
stakeholders.
While the need to measure is intuitively clear, I believe there
is a danger in measurement that is often overlooked. The danger
springs from a failure to identify measures that are meaningful
and rely instead on measures that are easy to assemble, consistent
with industry peers, or consistent with past practice. I might
add that many organizations compile a dizzying number of measures
that creates more confusion than clarity. These dangers are especially
evident among advocates of sustainability.
Now, before I step onto the proverbial limb that some readers
might want to cut off, let me be clear: I have a keen professional
and personal interest in shifting society onto a more sustainable
trajectory and I applaud the intellectual and other energy that
has given rise to measurement frameworks such as GRI and GPI,
and metaphors such as the footprint, barometer and dashboard.
My concern is that these efforts, however well-intentioned, have
not bridged the gap between what I will call mainstream strategy
on the one hand, and sustainability on the other.
If we are to establish measures that “make sense”
at a deep strategic level, it seems to me that we should always
begin with an organization's strategy. Tony Manning, in his
handy treatise, Making Sense of Strategy (2002), argued that
it is only what is spoken about that will be measured, much
less managed. Put another way, it is only what is important
to an organization's leaders, what creates and informs the
context or “mental space” in which people work
that matters. And so the challenge for those with an interest
in sustainability is to become more actively involved in strategy
creation, or ensure that they have a solid footing on the strategy
or point of view that their organization is seeking to deploy.
Measurement efforts must take their cue from this strategic
line of sight. And of course, because the real world of strategy
is less about tiresome annual planning efforts and more about
making decisions “on the run”, some searching questions
should underlie any measurement effort: Will this measure contribute
to or advance our strategy? Will this measure be useful and
meaningful at different levels in the organization? Are we,
the architects of performance measurement (and sustainability),
part of an ongoing conversation about what lies ahead for our
organization?
There are signs of progress. My concerns aside, GRI and GPI
are significant advances over early measures of emissions or
outputs. And the importance of considering the entire “web”
of supplier and customer relationships is becoming more accepted.
But if performance measurement and sustainability are to become
part of the strategic firmament, the thinking that underlies
them must catch up with current thinking about strategy.
To discuss any of the ideas contained here, contact Rob
Abbott at ideaguy@shaw.ca
- - -
The Strategist - April 2003
Teaching Old Dogs New Tricks? Thoughts on
the World's Most Admired Companies
Like most people, I find lists seductive because they invariably
spur friendly (and sometimes not so friendly) debate. Q magazine's
recent list of 100 songs that changed the world is a good example.
In a business context, Fortune magazine's
annual ranking of America's most admired companies, and the best
companies to work for, respectively, are eagerly awaited and
sell out within a few days of release. This year, I noted that General
Electric, which had topped the most admired list for
5 years, suffered from its embarrassing golden handshake with
Jack Welch and dropped to #5, and Wal-Mart topped
the most admired list but didn't even make it onto the list of
the 100 best companies to work for. And therein lies something
exciting – the emergence of a new business ethos. Let me
explain.
Much has been written of late, and doubtless more said, about
sustainability, the interplay of economic, social and environmental
aspirations. In fact, it's become de rigueur for business
and government leaders, the NGO community, and their advisors,
to talk about the importance or “value”
of sustainability. I'm culpable here; I've argued for some time
that sustainability should be dragged out of the middle management
trenches and placed squarely on the CEO's agenda. And so it is
that I compared the two Fortune lists
to see if there was any overlap. If I was right that what we
call sustainability should inform the strategy process, then
the companies we most admire should, among other things, be great
places to work.
The results initially surprised, and discouraged me. Just as Wal-Mart topped
one list but didn't make the other, Edward Jones,
the best company to work for, didn't crack the most admired list.
But as I looked a little deeper I began to see more overlap. Microsoft,
#7 on the most admired list, was #20 on the best to work for
scale, and Starbucks, #9 on the most admired
list, came in at #47. In all, 37 of the 100 best companies to
work for also made the most admired list.
What should we read into these results? First, careful readers
of the Fortune rankings will point out that the methodology
used to compile the two lists differs and that any comparative
results should be interpreted with caution. Fair enough. But
I think we're beginning to see a broadening or maturing of business
strategy to include many of the principles of sustainability.
Make no mistake, there's still much to learn and even more to
do, but smart companies realize that attracting bright people
and keeping them motivated and excited is a recipe for success.
Some might call this paying attention to the social bottom line,
but I prefer to see it as an exciting evolution of the competitive
strategy process. Closer to home, the top three points of differentiation
on BC Business' ranking of the province's
most respected companies last year were customer service, treatment
of employees, and environmental performance. Not a bad proxy
for sustainability, and not a bad basis for describing how your
firm will compete.
There are those who might argue that any ranking of companies
from any business magazine is suspect, and that my attempt to
draw a link with sustainability is apocryphal. To them I would
point out that Business Ethics' annual ranking of the 100 best
corporate citizens in America has just been released, and 3 of
the top 5 can also be found on Fortune's list of the 50 most
admired companies in the world. In fact, 5 of the top 10 companies
on the global 50 are on the Business Ethics' list. These companies – Microsoft, Dell, Procter & Gamble, IBM and FedEx might
be thought of as old dogs (they've all been around for at least
2 decades), but it is perhaps more useful to see them as grey-haired
revolutionaries, to use Gary Hamel's term. They aren't afraid
to raise the height of their radar, listen to the winds of change,
and adjust their strategic position. Put another way, they aren't
afraid to learn new tricks. The ability to see the relationship
between shareholder results and broad social and environmental
concerns may be the greatest trick of all. I believe we'll see
more companies follow suit in the years to come.
To discuss any of the ideas contained here, contact Rob
Abbott at ideaguy@shaw.ca |
