1.31.2013

Gem of the day

BrandLogic's 2012 "SustainabilityIQ Matrix", sold as a new way of looking at sustainability leadership in business, suffers from a few fatal flaws:
  • Comparing apples to oranges - Different sectors have wildly different sustainability impacts, so benchmarking BP, Allianz and Walmart all within the same framework doesn't tell a very useful story.
  • Defining sustainability as "ESG" - Environmental, social and governance factors made for a useful reporting foundation when companies were just starting to get their heads around these issues about a decade ago. For real leaders like Danone, where the company's entire business model (except for Waters) has shifted to a strategic focus on health, ESG is totally marginal.
Case in point are the results, which place the oil majors - BP, Shell, Chevron, ExxonMobil - and even regulatory disaster Bank of America, firmly in the "Challengers" category. To give a better sense of just how wrong that is, here's BrandLogic's definition of "Challengers" and what that means for companies in that category:

"Companies whose real ESG performance is above average and substantially ahead of their perceived performance may have opportunities to secure unrealized ROI from investments in communications and brand positioning."

More brand positioning linked to "best in class" performance in underperforming energy and banking sectors - oh yes, that's what sustainability needs.

1.28.2013

Something that's actually good

Peter Uvin of Tufts University distils a set of 8 principles for companies operating in emerging markets, based on learnings from the work of development organisations; his colleague (and a former McKinsey partner), Dr. Bhaskar Chakravorti, responds to them from a business perspective (via Tufts MIB).

It's a great conversation that touches upon the operational, strategic and even psychological challenges of emerging markets.

Two key points from the first principle, 'All Action is Political':
  • "Managers on the ground have short time horizons: they know they are on the job for a short stint before they prove their ability to thrive under adversity and then move 'up' to more prestigious markets...rather than thinking holistically and longer-term about the broader impact of their commercial initiatives."
  • "If the local socio-political system is characterized by a lack of transparency, profound structural inequalities, deeply engrained types of social discrimination, widespread arbitrariness, omnipresent corruption or pervasive structural violence, then your actions will normally reinforce those features, even if unintentionally."

1.25.2013

Another non-environmental wonder

The words "Davos" and "groupthink" are rarely found far apart from one another. But given the state of economies around the world, this gem takes it to the next level (via BusinessWeek):

"There’s a crystallization of thought that the financial crisis is over,” says Scott Minerd, managing partner and chief investment officer of Guggenheim Partners, a Santa Monica (Calif.) firm with about $160 billion under management."

1.22.2013

Something that's actually good

Sam Palmisano, former President and CEO of IBM, summarises the critical challenge he faced taking the company in a new direction [product to service shift and adoption of Smarter Planet] at a time of strong financial performance (via Wharton School of Business):

"I really believed in the beginning that I had to keep the business going, [and] at the same time start the transformation of the business model. I didn't think the business model as it was at that point in time was going to sustain itself over the next 10 or 15 years...There were people, phenomenally successful in the PC era, who were wedded to a business model...[They thought] 'I'm making so much money in this business, do I really want to take the risk of transformation?'"

More proof that the short-termism of financial markets stunts innovation.

And speaking in a personal capacity, but one entirely relevant to that challenge, he nails the #1 reason most companies never get there:

"To get prepared for the future, you need to really put yourself in an uncomfortable space."

1.18.2013

Gem of the day

Paper industry group Two Sides, authors of key message "print and paper have a great environmental story to tell", have something to say about Google's new "go paperless" campaign:

"This new initiative is clearly another example of a self-interested organization using an environmentally focused marketing campaign to promote its services while ignoring its own impact upon the environment."

No comment.

1.16.2013

Gem of the day

Economist writer Schumpeter has a new column summarising two new reports on risk, and what their contents could mean for business in 2013. He couldn't be further from the point:

"The more you read, the more risks you see; eventually, you succumb to nervous exhaustion...[nevertheless] these reports not only provide warnings about dangers that can be avoided by better planning or clearer thinking. They also suggest opportunities."

The landscape of trends presented in these reports might not be news; rising inequality, unstable financial markets, climate change, resource scarcity, health crisis. But so far few companies have seriously changed the way they do business in response to any of those trends (Danone is a contender; Unilever, Kingfisher, GE, IBM and others aspire to). The past few years indicate the complexity and threat of these trends is only increasing; in the words of Frost & Sullivan, "bringing new competencies into play at half the life-cycle speed of the past decade." This all adds up to serious implications for business.

Companies face a world where the rules of the game are beginning to require more than delivering against short-term financial targets and producing a CR report. That means "better planning" and "considering opportunities" are not going to help any company find a strong, sustainable and long term direction for their business model in an operating environment that is fundamentally changing. 

Linda Sanford of IBM calls it "the golden age for transformation". It's also the start of a great disruption, and that won't be pleasant for any company silly enough to listen to Schumpeter.

1.14.2013

Something that's actually good

Even companies we might consider today's sustainability leaders - Unilever, GE, Kingfisher, IBM - still face a huge challenge to doing more: a market environment that demands short-term results.

That's why Unilever CEO Paul Polman's quest to push back on the limits of "quarterly capitalism" is so important.

But what about companies that are coming at the issue from a more mainstream point of view? Here's Amazon CEO Jeff Bezos on the benefits of a long term perspective (via HBR):

"If you're long term oriented, customer interests and shareholder interests are aligned. In the short term, that's not always correct.. if we needed to see meaningful financial results in two to three years, some of the most meaningful things we've done we would never have even started."

Now all Amazon needs to do is reconcile its status as the world's biggest online retailer with a sustainable business model. A long term mindset is the perfect place to start.

1.10.2013

Gem of the day

McKinsey, steadfast supporters of the status quo, offer three tips for "becoming more strategic" in a company. Tip #2 is "Become expert at identifying potential disruptors", which they describe as "the sorts of changes that make or break companies".

Ironically one hypothetical they give is for an oil company with UK assets to keep an eye on competitors and their investments - not, say, the price of carbon, the rise of non-traditional activist movements, growth of renewable energy markets, energy return on investment or, heaven forbid, decisionmakers' awareness of peak oil. Because in the world of business as usual, monitoring "less conventional" fluctuations in the average is what counts as mastering strategic threats.

Here's one tip they could have offered instead of all three:

"Become expert at translating global megatrends into threats or opportunities for your business - and then find the real thinkers who will help the company design a long-term strategic response to them."

1.07.2013

Gem of the day

Machiavelli: the world's original sustainability thought leader? Surely that's what he meant when he wrote the excerpt below in 1513. Whether it's the cliched battle over pollution, the fight to transition away from fossil fuels, or the food industry's double standards over health, the symptoms of incumbent opposition to change are all too familiar:

"There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new."

Another non-environmental wonder

UK nonprofit Fairer Gambling released a report this week revealing that betting shops are making billions more in profit from the country's poorest areas with the highest unemployment. And who better to make a comment on the divide than a Tory MP (John Redwood, Conservative MP for Wokingham in Berkshire, via The Guardian):

"I put it down to the fact that poor people believe there's one shot to get rich. They put getting rich down to luck and think they can take a gamble...They also have time on their hands. My voters are too busy working hard to make a reasonable income."

Stunning.