Sustainability as Disruptive Innovation

I had a profound moment some years ago when I was doing a site visit to a precious metal plater in southeast Massachusetts, which at that time was the center of silver and gold jewelry and home goods manufacturing in the U.S.  Precious metal plating involves the use of cyanide baths, metals, and a variety of toxic substances, which typically requires treatment to meet wastewater discharge requirements.  The owner of the business was standing in a small room off the main plating area pointing to the floor where a drain had been plugged with concrete.  He then told how they had figured out how to run their plating operations with zero discharge of any regulated wastewater and that he had stood in the very same place and handed the facility’s wastewater discharge permit back to the state regulatory agency saying they wouldn’t need it any more.  Unbelievable!

Before stepping into the zero discharge facility, I had been in a number of plating facilities that had focused on optimizing processes and every one of them was very proud of their 10%, 20% or even greater reductions in metal concentrations in their wastewater discharges.  All impressive, but every single one of them missed seeing what was really possible.  What I saw at the zero discharge facility wasn’t new technology, although there were some pieces of equipment that weren’t typical for a plating operation.  This was a case of new thinking and innovation in conceptualizing the production process from the point of view of what it would take to eliminate discharges rather than comply with increasingly stringent regulatory requirements.  It was a response to what had become an increasingly untenable cost structure where regulatory compliance was a significant drag on profits in an industry that was just beginning to feel the effects of globalization.

Since that moment, I’ve been impressed again and again how some companies pursue innovation in trying to address sustainability challenges. 

I was chatting with Joel Makower when he mentioned that I should read Clayton Christensen’s book, The Innovator’s Dilemma.  This book and subsequent work of Christensen and his colleagues on disruptive innovation have had a profound effect on how I view sustainability, particularly, why the adoption of sustainability into business processes is painfully slow.

Christensen was trying to figure out why market leading companies were getting displaced by small upstarts that somehow managed to innovate in ways that led them to grow their businesses beyond what the market leading companies seemed able to do.  His theory posited that market leading companies are likely to pursue innovations that serve the interests of their best and most profitable customers at the higher end of the cost curve.  The resulting “sustaining innovations” were incremental improvements for a customer base that was looking for narrow technical benefits—bigger, faster, better quality, etc.—and that was willing to pay for them.  This left an opening for upstart companies to serve the lower cost niches of the market with new products that offer benefits that the middle and top end don’t particularly want and that (usually) cost less and (at least initially) are limited in scope of benefits and quality.  If there are sufficient benefits, the new version of the market potentially grows beyond the existing market displacing the former market leaders.  Think cell phones displacing landlines, smartphones and tablets becoming ubiquitous over desktop and even laptop computers, and big-box discount retailers that leap ahead of smaller full-service stores.

What does disruptive innovation have to do with sustainability?  There are at least two ways in which the concept might be useful.  One is the obvious development of new technologies and services that meet a lower tier market need.  Aqueous cleaning systems have replaced solvent-based cleaning in a number of areas; flash water heating systems are replacing traditional hot water tanks; and the end is near for standard incandescent bulb as CFLs and now LEDs become common in households and commercial applications.  The potential for further disruptive innovations applicable to eco-efficiency and eco-effectiveness is limitless.

The second is a little more interesting and, I think, may raise critical issues for sustainability practitioners and observers alike.  For most organizations, sustainability is a “newcomer” to an existing organizational structure.  In many cases, it is an extension of on-going environmental, health, and safety efforts, sometimes with corporate philanthropy thrown into the mix.  It may have a new name and even a new VP title, but peel back the new veneer and it’s the same old structure; worse, sustainability may take on some of the baggage that legacy EHS programs carry (“enviro cop,” “guilt tripping nag,” and “cost center”).

In this sense, the grafting of sustainability onto existing organizational structures is a lot like the sustaining innovations that satisfy the needs of the best and most profitable customers; in this case the innovations are things (e.g., creating a supply chain code of conduct, instituting an audit system, measuring carbon emissions and pursuing reductions) that organizational leaders perceive as needed to remain a preferred supplier with their best and most profitable customers.  In light of Christensen’s theory, it suggests that most organizations that are fiscally successful will pursue sustainability efforts that are “sustaining” rather than disruptive.  Where organizations are “hungry” is where disruptive approaches to sustainability are likely to be found.

Some of the companies that pursue sustainability as a potentially disruptive innovation include:

Patagonia’s had a long list of sustainability-related innovations from introducing recycled polyester in premium outdoor products to converting all of its cotton fabrics to certified organic fiber.  In both cases, Patagonia had to work closely with suppliers across all supply chain levels.  Those relationships led to further innovations including its Common Threads program which began as an effort to collect used polyester products that were then shipped to Teijin for recycling back into polyester manufacturing.  The program has since grown into a multi-dimensional effort that encompasses all Patagonia products and includes repair services that extend product life, reuse of garments in good condition through resale, recycling into new fabric, and remanufacturing into new products.

Nike has long made innovation a core business strategy and organized internally to support innovation in materials, manufacturing, and design.  They recently pioneered Flyknit, a knitting process for shoe uppers that engineers in strength and support while reducing the waste that otherwise would occur from the traditional cut and sew methods that have been the mainstay of shoemaking.  Nike has also entered into a collaboration with NASA, U.S. Agency for International Development (USAID), The U.S. Department of State to promote innovations in materials and manufacturing that address social, environmental, and economic problems through specific challenges around waste, water, and green chemistry.

Interface introduced the concept of selling carpet in tile form rather than broadloom, which allowed for the easy replacement of damaged and stained areas without replacing the entire carpet.  Since the mid1990’s, Interface’s long-term goal of eliminating environmental impacts has transformed the way they think about product and manufacturing and business systems.  A significant outcome has been innovations that have led to the introduction of carpet tiles with half the mass of typical products, while maintaining all performance characteristics, the development of methods to incorporate recycled content into yarns and to recover each component of a carpet tile including the yarns and the backing and recycle them into new components, and the introduction of patterns and colors that avoid the need for precise color or pattern matching and facilitate long-term use of carpet tile products.

Patagonia, Nike, and Interface are not alone and my hope is that they will be joined by a growing number of other companies that see an opportunity in reinventing how sustainability can help their business.

It Ain’t Easy Being Green – Machiavelli and Sustainability Leadership

The lead sustainability role in organizations may be unique among typical jobs.  To do the job well requires knowledge of a wide field of subject matter from energy to waste to chemicals, an understanding of all functions and aspects of the organization, a solid grasp of how to make change happen, and great communication skills.  In short, it’s not easy.

More and more individuals have the knowledge base that is critical to the technical aspects of the role.  Spend enough time getting to know every nook and cranny of an organization and you can learn its functions.  What’s way tougher is to acquire the skills to lead change in the organization.  In most organizations, leadership that cuts across the institution is reserved for the executive team – the CEO, COO, and the heads of finance, HR, etc. – who have had the opportunity to build leadership skills as part of their career development.  Because the lead sustainability role often is not an executive function, those who come to the role have not had a chance to figure out what leaders do and how they can develop those skills.

Compounding the problem is that the roots of sustainability are an outgrowth of EHS (environment, health, and safety) activities, which has meant that there may be an ongoing expectation that the chief motivational strategy is going to be “nagging.”  All too often the EHS legacy in most organizations has been one of gaining and maintaining compliance and a rejection of the potential opportunities to move beyond compliance.  All too much like “just what the doctor ordered.”  And who really wants to take that medicine?

What does sustainability leadership look like?  If you haven’t read Machiavelli’s The Prince or it’s been awhile, take a look.  Just keep in mind that you’re reading it because you’re the counselor not the Prince (Machiavelli wrote the book as a kind of audition for the job he wanted—counselor to Prince Lorenzo de Medici—and return to Florence from exile).  Your organization has a CEO.  On your own, you, as the sustainability lead, don’t have much power; what you have is delegated to you via the executive leadership.  As such you have to recognize and accept that you are essentially a political appointee and your job rests on your ability to realize the executive agenda, provide wise counsel, and make the organization look good by bringing it along the sustainability path.

That doesn’t mean that you actually do the all the work.  It does mean that you have to provide a kind of leadership that gives people a vision for where the organization needs to go.  You may have a substantial role in creating the vision as an expression of the executive agenda and you certainly have the responsibility for communicating the vision and what needs to happen to fulfill it to others in the organization.

Leading the effort to imbue your organization with sustainability thinking is neither an easy task, nor a one-time effort.  As Machiavelli noted, “…[I]t should be borne in mind that the temper of the multitude is fickle, and that while it is easy to persuade them of a thing, it is hard to fix them in that persuasion.”

The critical skills you’ll need and if you don’t have them, you’ll have to develop, are:

·        Constancy – being firmly committed to a vision; don’t flip flop, don’t give up, don’t make changes unless the political circumstances require a change in vision

·        Flexibility – the means of achieving the vision can vary; don’t be stuck in your view on how best to do things if there’s a better way

·        Listening – listen to others and understand their interests and needs; be politic in building support, coalitions, and addressing needs of those who will lose what they currently have

·        Humility – your job is to inspire others to do amazing things; give credit freely

·        Resiliency – there will be setbacks, barriers, and wrong turns; keep sight of your goals, reflect on how you might have done better, and try again

 At some point along the way, your organization is likely to undergo a change that will affect you.  It may be a transition to a new CEO with a different agenda or a shift in responsibilities that puts you in a different setting with a different network.  It’s your responsibility to adapt to these changes in a manner that fits with the new political reality and allows you to pursue a sustainability agenda.  And if there is an organizational change that leaves you with no choice but to leave, recognize that you are a political appointee and be gracious that you had an opportunity to change the organization for the better.  You might also remember that Machiavelli never did receive a job offer from Lorenzo de Medici.

 

NOTE:  Leith Sharp, Director, Executive Education for Sustainability Leadership, Center for Health and the Global Environment, Harvard School of Public Health, has some great insights in organizational change and sustainability leadership.  See http://www.aashe.org/files/documents/resources/systems.leadership-sharp.pdf

Myths that Bind

People shake their heads when a favorite organization does something that seems completely contrary to their culture and beliefs.  I was in a GreenBiz Forum audience when Yvon Chouinard, founder and owner of Patagonia, the outdoor clothing company, talked about the corrosive effects of incessant corporate growth on the environment and then proceeded to extol his company’s sales growth during the recent recession.  Knowing my Patagonia background, several people came up to me later and mentioned the seeming contradiction.

My reaction?  Another example of Yvon strengthening what I call organizational myths–things leaders say (and do!) that reinforce culture and beliefs within the organization.  These myths are stories that help define what is important to a culture.  That organizations and their leaders don’t always live up to the myth isn’t necessarily a bad thing.  People are human, they don’t always do the right thing.  As long as the gap between the story and the practice is not too wide or practice doesn’t deviate from the story too often, the culture will remain essentially intact.  But if the gap is wide or inconsistent practices become the norm, people won’t believe in the power of the myth.  The story will fall apart.  The culture will change.

Myths are necessary to any organization that desires to create and maintain a high performing workforce and a relationship with customers that goes beyond price and value.  They serve their purpose when they are specific and actionable.  An organization can create a myth ­– tell a purposeful story – and then it has to both act and talk about their actions.  Even better is to be self-critical – owning up to contradictions and failures will reinforce the power of the myth if progress, whether steady or intermittent, is being made.

A company with a reputation for quality (the story it tells) will be likely to weather a period of poor quality if it makes a concerted effort to address its quality issues and communicate openly about the issues and the remedies.  If the issues are ignored or allowed to continue because of cost concerns or some other reason, the initial risk is not the potential loss of customers, but the loss of employee commitment to the organization. 

 

Likewise, it’s easy to find organizations that have built myths around sustainability.  Walmart has been the beneficiary of kudos for its sustainability commitments and the target of opprobrium for falling short in any number of ways.  Yet, it still maintains its pursuit of sustainability, which provides an organizing principle and direction for at least some segments of the company.

 

Organizations can, and should, hear from stakeholders be they internal or external when they fall short of the myths that they tell about themselves.  But we should all recognize that organizations cannot achieve much without putting these myths in place.  It’s a critical part of turning “myth” into “reality.”

Mike Brown

Pursuing a Career in Sustainability

Back in the day when I was the Environmental Assessment Director at Patagonia, the outdoor clothing company, people would come up to me and say “You have the coolest job; I want to do what you do.” More recently, I get students, recent grads, mid-career professionals, and highly experienced experts asking “How do I get a job in sustainability?”

My answer isn’t always what they want to hear.

Putting aside the state of the economy – jobs, in general, are just tough to come by – and focusing on sustainability in companies, I do not see a lot of growth in classic sustainability jobs, either at the entry level, manager level, or VP level. Yes, more and more organizations are creating sustainability positions. But all too often these are a way to recognize an existing person within a company who has taken on sustainability responsibilities. The new role typically comes with a limited budget (“sustainability on a shoestring”) and few, if any, additional full-time positions. Even in large multi-billion dollar organizations, you could often count the sustainability and corporate social responsibility staff on one hand and probably not have to use your thumb.

What this says to me is that the growing number of graduates with a bachelor’s or master’s degree who want to get a job in corporate environmental management and sustainability are going to be battling for one of a limited number of entry level positions for quite a long time. The situation for midcareer professionals who want to transition out of one field (engineering, urban planning, marketing) is, in some ways, even more difficult. While they have valuable job experience, they typically do not have much expertise in the current tools and skills of CSR and environmental sustainability such that they are a good fit for a midlevel sustainability role. Moreover, they are competing against very well prepared recent graduates for the entry level jobs. To be successful, they need to upgrade their skills, whether by returning to school for a new graduate degree or via certificate programs, online education, or some other means that fits into their busy lives and their financial expectations.

One potential pathway that sidesteps these challenges is sustainability consulting. In some ways, the future of consulting is bright; lean organizations use consultants to gain expertise for specific purposes and projects without the need to expand head counts. But even here, a career path is tough to develop. Organizations typically do not want to hire consultants that have to learn “on the job.” Mid and large size consultancies have the same challenges as others in offering entry level opportunities and career development paths. Over the past several years, the slow recovery has pushed a number of solo practitioners to close their doors and midsize consultancies to merge with larger firms that have become the mainstays of sustainability consulting for Fortune 100 companies.

So what’s a person who’s interested in making sustainability their job supposed to do? The best answer I can give is to make it part of any job that they do.

You may have what it takes to be the one person out of hundreds of resumes that gets a great sustainability job opportunity.  But if that’s not the case, rather than thinking that doing sustainability requires being the sustainability person helping others, be the great engineer, a terrific accountant, a creative marketer, an extraordinary graphic designer or a leading sales person who incorporates sustainability into everything you do. Know the basics of sustainability and make the effort to be a continuous learner who becomes the de facto sustainability person in your work group. If effect, redefine your everyday job to be a sustainability job. 

 

Setting Sustainability Goals

You’ve just started becoming comfortable in your new position as the sustainability person when your boss asks you to come up with sustainability goals for the company.  You’re a bit taken aback, since you were hoping to get a few projects done that would be “easy” wins and have some time to think about goals based on what you think is possible. But now, you’re wondering if you’re being asked to come up with an organization-defining BHAG (Big Hairy Audacious Goal a la Collins and Porras’ Built to Last) or incremental goals that move the company down the path. And you’re starting to worry if whatever you come up with will be in sync with business goals.

Where to start?

Sustainability goals are useful when they are relevant to the organization’s overarching purpose, specific to the sought after accomplishments, and capable of measuring progress. Goals should be meaningful to the organization and its stakeholders and be structured so that given appropriate action and information, all stakeholders would recognize that the organization has met them.

It’s useful to distinguish goals that are annual (often coinciding with a budget cycle) and those that are 3 to 5 years out. These time frames generally coincide with forecasts and expectations about changes in the business landscape surrounding the organization.  In some cases, longer term goals can be important when an organization is seeking fundamental changes in how it will do business and expects to be in a leadership role for its industry.

Setting appropriate goals requires an understanding of where the organization is currently on the issues that matter. If a company hasn’t already produced some type of corporate social responsibility report, we often suggest undertaking an internal version of a report, going through a process of identifying issues that matter (e.g., a materiality scan), collecting relevant data for the identified issues, assessing what relevant “peer” companies are doing on the issues, identifying stakeholder expectations for performance on the issues, and determining where the organization wants to be—maintaining a minimal level of performance, being a solid performer, or moving into a leadership position. Not a small task, but virtually a requirement for creating goals that help transform the organization. Setting goals then becomes a task for you and the appropriate stakeholders that will be relatively easy.

Work on the 3 to 5 year goals first, then set annual goals that help meet the longer term goals.

So, if your boss asks you to come up with sustainability goals, you may have to say that you’ve got some homework to do first.