In his sustainability classic, The Living Company, former Shell Oil chief executive Arie De Geus coined the term “living companies” to describe organisations whose own forms of best management practice had resulted in an ability to remain viable over several generations. Citing one which could trace its roots back over 700 years, by comparison, he suggested, the short lifespan of average corporations was simply wasted potential, given that individuals, communities and economies can be devastated by untimely corporate demise.
The fight is now on for all businesses to operate on sustainable business models.
By “sustainability”, the man in the street might interpret that a business minds its own patch and manages its environmental footprint. Yet, the fight for true organisational sustainability, as De Geus ventured, takes the words “sustainable” and “sustainability” at their original face value. They describe the efforts and outcomes of fighting to stay in business and generate profit year in, year out. Sustainability connotes no loss in profitability; it is as air, no company can survive without it. However, companies must become ever more innovative and inventive in its pursuit if they are to achieve it.
It is this that makes sustainability much more interesting than simple waste or environmental management, because if it is to be effective, managing for sustainability must also become a pervasive philosophy underpinning the entire operation of a business. It must be collaborative and engaging.
It is true that that managing for organisational sustainability is not easy, as it requires on the part of its practitioners an ability to challenge repeatedly almost everything that has gone before. It can only emerge through the constant questioning of what is done and why.
But, by challenging the given, managing for organisational sustainability also provides the most powerful spur to perpetual innovation, product and process involvement, as its reward will be the sharp edge of demonstrable, repeated customer preference, and all the benefits that go with accomplishing that.
It is no secret that customer preferences will increasingly be defined by the ability of any business to demonstrate sustainability in its practices. Customers recognise also that in the face, not least, of climate change, if the potential for environmental degradation is built in upstream into everything they consume, then downstream, the only hope they have of effecting positive change in their own backyards is through the vote of spending power.
As such, companies dedicated to managing for sustainability work with a single-minded focus on building advantage through reputation. And, far away from the worlds of spin, as we will see increasingly over coming years, it is earned, sustained legitimacy in the eyes of a concerned and sceptical public that will create the sharpest marketing edge of all.
All enterprises are now open to closer scrutiny. At one level, customer curiosity and concern will continue to drive the need for companies to become more responsive to demands for information; at another, it will force greater voluntary transparency upon them.
In the face of the potential for leakage of sensitive information via the web, it is secrecy and the propensity to conceal that can cause most damage to reputation. And reputation, as we all know, travels faster than ever in the emerging media. A business, healthy at the opening of its doors in the morning, can be sunk by lunchtime.
Those operating with sustainability forefront in mind, however, have little to worry about. Their management of effective relationships with those beyond their walls renders them a small target. They need no fortress mentality, and they are not managed by fear.
Moreover, such companies’ advanced people-management practices work to build the commitment and confidence of those within, such that they are able to achieve an optimum balance of confidentiality, security and openness. Advanced competencies are fostered by mining for the deeper seam of creativity and capability that lies within their teams. And the acceptance that the best ideas within the enterprise do not reside only in the minds of senior management is also genuinely held. Such companies work to build the engagement of their people, and they engage them more creatively and effectively in the pursuit of profit.
This is the benchmark against which we should evaluate the companies whose reporting activities or lack thereof we address in these pages. This is where they will build or lose value.
That managing for organisational sustainability requires a whole different set of tricks, techniques and management thinking can not be denied. But sustainable businesses build their future into the present. For in better managing their role in the world and the communities in which they are part, such organisations define the very shape of the world and the workplaces we will wish to inhabit.
Those businesses managed for the long run with a single-minded focus on building their reputation and legitimacy can not help but to enhance their contribution to society. And by becoming better-favoured, more welcome business citizens, the financial performance of such companies will steadily improve and their productive lives be extended.
As such, our society can not begin its transformation to a sustainable future without the thinking that creates organisational sustainability becoming pervasive within its businesses.
More importantly, over time, the trickle-down effect of their actions – as businesses that are managed for sustainability only buy from suppliers that are, too – will have a greater influence over the sustainable practices of economies the world over than any other single intervention.
(Note: This post first appeared at Accelerated Sustainability.)
