SAP Details Sustainable Business Strategy

SAP Details Sustainable Business Strategy.

Sustainable Innovation Strategies: the cases of Danone & Interface

 

Earlier Today, I attented the presentation of the book  “Sustainable Innovation Strategies – Exploring the cases of Danone and Interface” by Marc Vilanova, a Lecturer and Researcher at the Institute for Social Innovation at ESADE Business School, that organized the event, and Pax Dettoni, an independent consultant for social and human development projects.

The event was broadcasted live on the Social Innovation Institute website and on Twitter.

Here’s a summary of the key points of this interesting event, supported by some of  the tweets that were shared on the Internet and my personal comments.

• The introduction speech was delivered by Antonio Fuertes, the Corporate Responsibility & Reputation Director at Gas Natural Fenosa, sponsor of the project and event.  One of the reasons companies like Danone and Interface are successful, he said, is that sustainability and innovation are part of their DNA, that’s been achieved through teamwork, by “touching the heart of their people”, by accepting that sometimes you have  to loose in the short term,  in order to find solutions to complex problems.  

 Antonio Fuertes made also  a very interesting point about innovation: what matters is not “what” to do but “how” to do it.

 

• Miriam Turner, Innovations Director for InterfaceFLOR EMEA, explained how sustainability is part of the company’s core business, present in any innovation, in order to achieve its “Mission Zero” by 2020. This ambitious plan, in an industry that was among the main negative contributors to the environment few decades ago, is based on product innovation, a culture of “successful failure”, biomimicry, and a strategy of “Open Innovation”. 

 This is particularly remarkable, because if the outcome of innovation is often at the center of companies’ communication efforts & marketing strategy, the process that leads to innovation is usually a company’s best kept secret. By “sharing the innovations so they can reach their potential”, InterfaceFLOR is creating a successful ecosystem based on mutual trust with its partners.

Employees are at the heart of the strategy, as their employer is actively helping the internal entrepreneurs “to get out of the closet” and become Ambassadors, a program that supports the 2020 mission goals.

• Franck Aimé, VP HR at Danone, shared the success story of a company that is a pioneer in Corporate Social Responsibility since its funder Antoine Riboud said at the beginning of the 1970´s that the responsibility of a company didn’t stop at the gate of the factory. Since then, the #1 world leader in dairy product has developed a 5 pillars strategy to support Health, People – its employees, Local Communities -particularly those who can’t afford the products, Nature & Life – the children.

A project that the company can be particularly proud of is their collaboration with Muhammad Yunus, the “father of microfinance”, in Bangladesh, creating a network of small production units, providing employment to women and ensuring that children can access to dairy products. This project was challenging for the company as it had to think “out of the box” to address challenges such as the size of the factory (typically a Danone factory produces 500 000 tons a day, there it was only 500), the milk (difficulties to get fresh milk) or the distribution model. In any case Franck Aimé insisted that this was not charity and that there was a business goal, even if the profitability was limited.

It’s interesting to note that the current economic downturn has not diminished the sustainability efforts of both companies, as they are convinced that sustainable innovation is an essential part of their business model.

 

• Marc Vilanova closed the event with the presentation of the key findings of the book, that you’ll be able to access soon in a pdf version on the Institute website. Enjoy!

A successful sustainable innovative strategy requires:

Inspiring leaders that know how to engage employees and senior executive, and develop an organization that is both competitive and sustainable.

Leaders who are non-conformists, such as Ray Anderson, the founder of InterfaceFLor, and who are able to create a sustainable culture within their company, with sustainability being part of the business strategy, not just a nice accessory.

Sustainable products and services, with a long term product strategy.

An “innovative innovation” process.

An organization that allows “successful failures”.

More importantly: a genuine organization. Honesty and Transparency.

 

A sustainable innovation strategy is no longer a “nice to have”, it’s a must have.

Words: why you should use “sustainability” instead of “CSR”

Alberto Andreu, Chief Reputation Officer & Sustainability Manager with Telefonica, a global Telco MNC, expressed his views about the current Sustainability vs CSR debate in an article for VaultCSR. I know that many people believe that arguing over words is unnecessary and a waste of time, which I can agree with to a certain extent. But, still, using the right terminology is important as we are facing a problem of public perception. I believe that most of the CSR/sustainability leaders and practitioners actually share common values and the issue is not really to agree or disagree on values, strategy or practices but to make sure that a larger audience get the right message about the role that businesses play in building a sustainable future, for themselves, their employees and owners, and for society in general.

Even if it’s mainly a problem of perception, I agree with Alberto Andreu the concept of sustainability describes better the strategy of a company, and its initiatives, that support sustainable development (defined as development that meets the needs of present generations without compromising the ability of future generations to meet their own needs).

In most companies “CSR initiatives” do include actions that cover the 3 dimensions of sustainable development: economic, environmental and social, but the general public tends to see the third aspect only.

As I said, it’s probably a problem of perception, but for many stakeholders:

Sustainability = future/ CSR = present (or even past) actions.

Sustainability = strategy/ CSR = policy

Sustainability = risk & opportunity management / CSR = compliance

As said in a previous comment, some could argue that sustainability = green but, in my opinion, this perception is less problematic than the other (the one that relates CSR to charity) as companies have demonstrated that there’s a clear business case for sustainability initiatives related to the environment (energy consumption reduction, carbon footprint, water…).

Words matter because they can be an excuse for some companies to do nothing when we all know that they should act now.

MBA in CSR…I mean MBA.

Catherine Chong,  an MBA candidate specialising in corporate social responsibilities (CSR) in one of the top school with sustainability or ESG (environment, social and governance) curriculum in the UK, shared on her blog a “cri du coeur”.

In her post, Why are you laughing at my MBA?, she explains how a member of the academic staff gave her the advice, in private, to take the general MBA title rather than the MBA in CSR, and how she can observe a general cynicism regarding her career option.

Don’t we ever learn? Aren’t B-Schools able to see their responsibility in the trouble we got in the last years? And take the necessary steps to correct their past mistakes, going back to the original premises of their curriculum?

MBAs were originally designed at the end of the 19th century as a “professionalization” instrument to prepare managers of large corporations to lead those for the public’s good, not for short-term gains. Unfortunately, the dominance of economics by the neoclassical school in the 1980’s imposed the idea that managers are free agents who should continually seek their highest incomes with no loyalty to their employers and no social responsibility.

Ignoring or laughing at the teaching of ethics and values-based leadership is the type of thinking that got us into so much trouble today. Will we ever learn?

CSR, Warriors and Peacekeepers

 

“Every soldier should be a warrior first”…

“The Social Responsibility of Business is to Increase its Profits”…

Norwegian Peacekeeper during the Siege of Sarajevo, 1992 - 1993, photo by Mikhail Evstafiev.

Before the first peacekeeping mission was launched in 1948, a soldier was often regarded as nothing more than a warrior. With 98,582 uniformed peacekeepers deployed in the world at the end 2010 (United Nations), the military role has shifted from warrior to peacekeeper, and soldiers have been given new tasks involving assisting local populations, training police, restoring governments, supporting rescue efforts or reconstruction.

The “Warrior Ethos” still has supporters though. General Peter Schoomaker, the US army chief of staff, expressed alarm in 2003 that soldiers in Iraq “considered themselves to be support troops — cooks, mechanics and supply staff — rather than fighters”. He’s wrong.

As for the second quote – do I really need to mention the author? – although it’s the title of an article that was initially published in The New York Times Magazine on September 13, 1970, this theory still has some strong supporters too. They’re wrong. The same way the military role has evolved to meet the needs of  the last century, the role of business has changed too.

In the aftermath of the terrible earthquake and tsunami in Japan, Akhila Vijayaraghavan, a Justmeans staff writer for CSR and ethical consumption wrote an amazing article: “Beyond Business, CSR: Help Pouring in for Japan From Companies.”

UPS, Bayer, Abbott Laboratory, Walt Disney, Microsoft, VISA… the big names, the multinational corporations, the very ones that should be applying without mercy “The Social Responsibility of Business is to Increase its Profits” mantra, “are opening out their hearts and their wallets” wrote Akhila.

“Even small businesses are pitching in” she added, writing that “The Extreme Pita restaurant in Riverside (sister city to Sendai) is donating a portion of sales. The Takami Sushi Restaurant in downtown LA is donating 100% of all restaurant profits. In Phoenix, Stingray Sushi has created a Recovery Sushi Roll for $12, all of which will be donated to the American Red Cross.”

Akhila Vijayaraghavan´s article reminds me how wrong my 2 opening quotes are.

 Support the Red Cross.

 

Sustainability information & purchasing decisions.

Here’s an interesting conversation about brands, sustainability and consumers behaviours in this 14 min video provided by Environment Leader.

As their concerns about the environment are growing, consumers require more information about the products they purchase. Relying on buying habits is not a strategy. Companies that proactively provide information about their products, through advertising, detailed labels, sustainability goals and reporting etc. will do better in the long run that others. Transparency is the right way to go.

Brand itself is an essential piece of information. If customers don’t get the information they need to make responsible buying decisions, about, for example, the carbon footprint of products all along the supply chain, they will use the company’s reputation as a purchasing criteria. Companies that perform well in sustainability will have a competitive advantage.

Most of SMBs however can’t rely on the power of their brand or reputation, but still, they should aim to create success by ensuring long-term sustainability and communicate about it. That’s one of the reasons why I believe that SMBs should be encouraged to produce sustainability reports and learn how to strategically engage their stakeholders and particularly their customers. They need support for that.

Instead of dedicating more resources to control and validate the larger corporations sustainability reports, as established in the recent law for a sustainable economy, the Government in Spain – and the EU for that matter – should rather support financially small and medium businesses sustainability planning and sustainability reporting initiatives.

CSR: does size matter?

The BBC reported on Thursday a massive misleading sales in the UK. Nearly 15,000 people who registered with Groupola , a group buying website, to purchase an iPhone 4, “were not told that only eight phones were on sale at the discount price of £99”.

Most people were left disappointed, but the business consequently had thousands more people’s details available to it when sending out daily e-mail alerts. The good news is that the company, run by Marcko Media, has been censured by the UK Office of Fair Trading (OFT), and consequently had to apologise and said those responsible no longer worked there. The same investigation also revealed that an employee of the group, pretending to be a consumer, had posted on social media positive feedback and comments about the “bargain”.

Markco Media, created in 2006, is a startup company, that apparently doesn’t have the skills, the experience, the idea or more likely the strategic objective to develop responsible business practices. I’ve met many similar companies, especially startup companies. To be fair with them, the problem was not necessarily that they didn’t want to engage in responsible business practices but they simply didn’t know “how to” or failed to see the importance or ROI to do so. Most of them didn’t consider Corporate Social Responsibility a strategic priority, seeing it as a domain reserved to large companies only, that seem to be more under public scrutiny anyway. The recent CSR law in Spain, that makes CSR reporting “mandatory” for companies with more than 1000 employees, sends unfortunately the wrong message. In my opinion, CSR is not just for large corporations. Developing responsible business practices and taking in consideration stakeholder concerns and interests in the overall strategy is essential to any business.

So, what do you think? When it comes about CSR, does size matter?

Little Things: Big Impact

I had a great week. As the sun is back in Barcelona today, and the week-end is so close, there are plenty of explanations behind my good mood. One of those explanations is definitely my lunch with Guy Bigwood, MCI Sustainability Director on Tuesday. Although my favourite soccer team has had a tough time on Wednesday, I had a fantastic evening with my friends on Thursday. Then, this morning, I read two very interesting articles that I’d like to share with you:

Can Green Building Save the Planet?

“That’s the question experts sought to answer at The Economist’s Intelligent Infrastructure conference held at Pace University, where principals of major architecture firms gathered to define green building and how it relates to their own urban designs.”

In the article, some of the architects share their vision of how we can build a more sustainable planet through green architecture. Among many great contributions, I particularly liked Llewelyn Davies Yeang chairman Ken Yeang’s idea that true green building is “a seamless integration of four eco-infrastructures”:

“Gray” — engineering infrastructure. Energy, smart grid, IT, recycling, waste, transport.

“Blue” — water infrastructure: “We need to close the loop as much as possible.”

“Red” — human infrastructure. “We have to change as people. Our lifestyle has to change.”

“Green” — green infrastructure. “We cannot see this because it’s invisible.” Nature’s utilities, habitats, biodiversity, ecological corridors.

I like this approach. It also reminds me how important it is to choose, not only the colours, but more importantly, the words carefully. Specially when talking about sustainability.

This aspect  is particularly clear in the other article that I wanted to share:

How to get your Board engaged in sustainability?

Written by Sally Uren, a “Deputy person @forum4thefuture. On a mission to create a sustainable future” as mentioned on her Twitter account, this brilliant article gives very smart pieces of advice to sustainability practitioners. Among them, Sally mentions the importance of “Using the right language.” She writes:

“Tailor your language to make the case as compelling as possible – use the language of business. So it’s ecosystem asset, not rainforest; it’s supply chain security, not running low on resources, for example.”

I couldn’t agree more. Using the language of business and, even more importantly, adapting your vocabulary and style to the personality of your interlocutor is fundamental, specially when presenting sustainability to political and rational decision-makers, as described by Sally in her post. Those two types of personality styles are more likely to be found in a Board room than the emotional one. The ideal situation would be to have a good balance of those three styles in a Board room, individually or as a team. That’s why diversity is so important as discussed in a previous post.

Well, in case you have to present some day a sustainability project in a Board room full of “emotional decision-makers” I can recommend the following video sent by my friend Gaelle, a brilliant manager at SAP. She has the right balance between emotional, rational and political decision-making styles, and she’s passionate about sustainability.

Enjoy and have a wonderful (green or multicoloured) week-end!

CSR conversations: Guy Bigwood, Sustainability Director

On my quest to the definition of Corporate Social Responsibility and Sustainability, I had lunch yesterday in Barcelona with Guy Bigwood, a Global CSR Professional dedicated to increasing the sustainability of the Meetings and Events Industry, Corporate Sustainability Director with MCI and current President of GMIC, the Green Meeting Industry Council. Guy was busy writing MCI’s 2010 CSR report and preparing GMIC next week conference where he will deliver a series of keynotes, so I really appreciate the time he spent with me discussing their 2009 Corporate Social Responsibility report, sustainability in the meeting industry and CSR in general.

MCI’s journey to sustainability started few years ago, with the company becoming in 2007 the first in its industry to join the United Nations Global Compact. MCI is a globally integrated association, communication and events management company with offices in 20 countries and about 900 employees worldwide. Its 2009 Corporate Social Report  describe the initiatives led by Guy Bigwood and his team through 5 majors area: leadership in the industry, employee development and well-being, environmental impact reduction, customer focused initiatives and impact on local communities. What is clear in the report is the involvement of the company’s leadership in the sustainability strategy, something particularly interesting as this topic was quite new to the top management team, but also the leading position of MCI in its industry.Finally,  the initiatives related to the  environment are definitely a major aspect of MCI sustainability strategy. Something I found really great in the report was that it also mentions the key learning points and improvement areas. Guy confirmed for example that there’s a need for key metrics in future reports. Although the 2010 report, due to be released in April, will still be published as a separate report, integrated reporting remaining the ultimate goal, it will contain more KPIs and measurements of the impact of the company’s sustainability initiatives. The specific GRI guidelines for the event industry, which draft was published yesterday, will help.  HR is  also an area where specific indicators, such as employee satisfaction, talent retention, or employee turnover, could be useful too. Guy confirmed that the HR department is definitely supporting the group’s CSR initiatives, something essential as discussed in a previous blog post, with proven results in many of their regions. The MCI Dublin Office, for example, won in 2009 the Irish Independent Great Places to work award. My guess is that the great job done there has something to do with the local employees perception of their work environment. Measuring this through specific indicators, as well as sharing best practices, could help working on employee engagement in the other regions. Guy and I also share the idea that middle-management is a key element of a successful sustainability strategy as discussed in a previous post.

MCI defines CSR as “a business strategy which strives for financial viability, in harmony with the planet and its people“.

 Guy and I discussed the current debate around the terminology and the efforts that CSR practitioners are undertaking to come up with a more consistent definition of those concepts. Regarding the debate, I share Alberto Andreu’s idea that the concept of CSR “is broken and that it’s urgent to fix it“. Alberto Andreu, who is Managing Director of Corporate Reputation and CSR at Telefónica and Professor of Organizational Behaviour at IE Business School, also considers that there’s a cultural bias that makes it difficult to get to a consistent definition of CSR on both sides of the Atlantic. I couldn’t agree more. In the US the legal perspective prevails and CSR initiatives are often reduced to the minimum compliance requirements, anything beyond that being “illegal or insincere”, or are only acceptable when they are synonym for philanthropy or charity, while Europe, which seems to be moving towards mandatory CSR reporting, has a broader perspective that involves the development of responsible business practices and a strong focus on the companies impact on their “ecosystem”.

 Alberto Andreu writes that “the line of progress, is in the definition made by the Dow Jones Sustainability Index (DJSI): “Corporate Sustainability – it states – is a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments”.

This definition is close to another one that I mentioned in a previous post: SAP’s definition for sustainability: “holistically manage economic, environmental and social risks and opportunities“. As you can see, it seems quite complicated to avoid  “buzzwords” and this is exactly what anti-CSR advocates argue: CSR and sustainability are nothing but buzzwords. Note that their speech is usually not exempt of jargon.

Buzzword or not, what matters is execution. There’s a business case for sustainability, an urgent need for sustainable development, in a world with limited resources, and that requires more than words: strategic, powerful, comprehensive and measurable CSR initiatives.

CSR in one word: Opportunity

It seems quite challenging to describe what CSR is in 140 words or less. But it’s a great exercise. Leon Kaye, GreenGoPost.com‘s Founder, Features Editor & Lead Writer at Triple Pundit , Business Consultant and Balkans Advocate recently asked the CSR crowd on Twitter to give it a try :  #CSR and #Corpgov in Tweet-Speak: Express Yourself in 140 Characters (or Less!)

I decided not to use one of the many definitions written by others that I’ve read about the topic in last few years. Instead I tried to define it with my own words and came up with the following definition:

CSR= an opportunity for companies to ensure a sustainable growth while meeting the needs & concerns of their stakeholders

I wanted to avoid buzzwords but, in my opinion, the objective of Social Responsibility, including Corporate SR, is to contribute to sustainable development, so I couldn’t leave this word apart. Stakeholders? Well, employees, shareholders, customers, partners, providers, as Todays’ business world is far more interconnected than it was when Milton Friedman expressed its now infamous idea that the only responsibility a business has is towards its shareholders, nobody can deny that the value demanded by customers, employees, job seekers has created a profound market shift that companies can’t ignore. As SAP’s Chief Sustainability Officer, Peter Graf, put it recently, “sustainability is a trend as important as Internet or the globalization itself” and, “it’s here to say”, creating a world of “new winners and losers”.

That’s the reason why I’m using the word “opportunity“. Compliance is not a strategy, going beyond business is,  and it’s also a fantastic opportunity for companies to manage successfully the new market shifts around value creation: value demanded by stakeholders as previously said, value delivered by the company through its products and its supply chain and the value graded by financial markets, governments and NGOs. Companies that fail to see CSR as an opportunity simply won’t survive.