Sustainable strategy and innovation: Whose job is it in your organisation?

Due to be published next month by Springer, “Rethinking Strategy” (ed. Thomas Wunder) contains a chapter by my colleagues at Sustainserv and myself on what companies need to do align external sustainability objectives and communication with internal objective-setting and organisational development. Our research shows that integrating sustainability themes with mainstream business strategies is the key to ensure that implementation can happen. Can happen, you ask? Strategists agree that strategy is not simply a top-down, planned process, but has to also delegate responsibility and authority to those closest to customers and Stakeholders to encourage new strategic perspectives to challenge the old. We argue that this can be done by clearly defining the areas of responsibility of each level and function of the organisation and providing clear guidelines concerning expectations and rules, for example concerning trade-Offs between financial and sustainability topics. But instead of sending out detailed targets without consultation, we´ve found that using the Integrated Reporting six capitals approach can provide a framework for setting out business strategy, without ignoring stakeholders or negative impact of business processes. Using a Sustainable Strategy Map, based on the work of Kaplan & Norton´s original Balanced Scorecard, value creation that goes beyond pure financials can be described and the story of the strategy told. So instead of target-setting alone, Senior Management can provide a common way of creating and aligning strategy – at all Levels -, while encouraging engagement and initiative-taking. And the approach used here also works for the process of seeking out future products and services based on understanding how well we use all six capitals, and using the challenges which emerge, to drive ideation sessions. We recently ran an innovation project for a real estate and services client that asked the question: what would the business model and service portfolio look like if we had to meet the future challenge of climate change today. I can´t share details but the ideas developed both addressed the negative aspects of company activities but came up with almost 100 possible ways that adaptations could contribute to creating value for investors and stakeholders. And the most surprising thing? The participants who were so engaged and innovative weren´t formally responsible for strategy, innovation or even members of management running the business units. But they had a clear perspective on what future customers would need. If we´re going to meet the challenge that future sustainability needs will pose, then part of the solution is making strategy and innovation everybody´s everyday job.  

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  • pragmagreen says:

    Thanks for this blog entry and I am looking forward to reading the book and your chapter as soon as they get published! Congratulations with this progress on your personal leadership challenge, it is remarkable that you can actually measure the output (chapters published) and the outcomes (impact metric, e.g. number of downloads and citations of your work) of your leadership opportunity (very much in line with the Six Capitals model 🙂 ).

    In this blog entry, you provide extremely interesting insights on the formulation of the strategy of the future and, especially, how various stakeholders can play part in this more “sustainable” process. I agree with you that using the six capitals model is particularly helpful, since it speaks to the core of various businesses’ divisions and is also a helpful visual tool. What I would like to learn more about is whether the same process can be applied to companies that do not use Integrated reporting? For instance, one may suggest that in such companies there is a very low level of understanding the Six Capitals model. Is there a shortcut in explaining the model to people who have never used it?

    I also wonder what tools or solutions would you suggest in order to help enable creation of such diverse strategy-forming committees? Or what are the best and most efficient ways to conduct strategy-focused consultations?
    The reason why I am asking this is, because it seems that while many employees may have good ideas, you still need to identify a focus group that has the most knowledge, customer interaction and ability to visualise the future. I wonder how would you identify them? Would you suggest conducting some sort of pre-screening, or do you just organise design-thinking sessions with all those who sign up?

    Thanks in advance!

  • mountfieldadvisory says:

    A quick reply. We introduced the Six Capitals approach by first explaining the latest climate change research – but mapped onto the city where they worked. We then asked whether they thought that financial returns alone, were sufficient Information for managers and Investors, or whether a range of data would be required to steer the business. The answer of course was yes. After developing visual pictures of their business models illustrating the challenges which the six capitals implied and presenting these (some very creative work done here) they move on to developing ideas to create value from these new challenges – and presented after a process of filtering – their best idea in a pitch format that made the Impact on multiple capitals clear – and part of the business case. How did we get people to take part – well, we turned it into a process where you had to apply for a place – and had the board member in charge of New Business and Innovation spend the entire day with these 40 people. The winning ideas were presented to the full board – but all ideas were taken in the “pool” for further study.

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