Embedded Sustainability: The next big competitive advantage

By Chris Lazslo and Nadia Zhexembayeva

Greenleaf Publishing 2011

I put together a summary of Lazslo’s and Zhexembayeva’s book as part of my LEAD Europe training in leadership for sustainability. The book is very good and so the summary worth sharing with you here.

The book is organized in two parts: business strategy and change management.

1.    Business strategy – This part explains why embedding sustainability creates business value.

There are three distinct but interconnected trends that are putting increasing pressure on business to be sustainable. Whether business managers like it or not, business has to transform. These trends are as follows:

  • Declining resources (i.e., fish, and other natural capital rapidly diminishing),
  • Radical transparency (i.e., increasing number of activist organizations and NGOs using social media to catalyze change) and
  • Increased expectations (i.e., employees wanting to work for ethical companies; customers not willing to pay a premium for sustainable products, but wanting smarter products with sustainability at their core).

Lazslo and Zhexembayeva argue that the most adequate way for business to transform with sustainability at its core is by Creating Shared Value (CSV) for both stakeholders and shareholders.  Pursuing both stakeholder and shareholder value creation means value is created for both business and society. Responsible business does not have to compromise profits. CSV creates increased competitiveness by getting business to embrace what is sustainable whilst realistic and possible. CSV also ensures that business invests not only in the present but also the future.

Lazslo’s and Zhexembayeva point out that business strategy tends to focus on adding and removing costs, making trade-offs, mitigating risk, reducing energy and waste, differentiating products, entering new markets, protecting and enhancing brand and influencing industry standards. In all these, it does not normally look at resource  and natural capital availability and value chain security. This is despite that resources are declining and value chain security is rapidly diminishing.

It is good practice to look at business strategy as an opportunity:  i.e. pursue change proactively, systemically and aim for zero harm and positive benefits. Sustainability strategy should be no exception. Pursuing sustainability may be about a radical and disruptive move-away from the classical business paradigm. Pursuing sustainability should be inherent to the business, as well as motivating and aligning employees around a common vision for sustainable business. In this, product differentiation and radical innovation (facilitated by methods such as The Embedded Sustainability Cloud) are key.

2.    Change management – The second part of the book outlines the methods, competencies and processes for embedding sustainability.

The authors point out that embedding sustainability means incorporating health, environmental and social values into the business with no trade-offs in product price and quality. Embedding sustainability means a radical transformation in values, mindset, consciousness and behaviors. Here are some of the key messages:

  • Building transformative relationships is at the core of embedding sustainability. Cooperation with competitors is a source of gain.
  • Developing new competencies such as design, inquiry, appreciation (open mind) and wholeness is important. Leadership and design thinking should join forces.
  • There has to be on-going cultivation of an inspiration-ideation-implementation cycle of feeling-thought-behaviour. This cycle, if inspired by values around sustainability, can be deeply transformative. Topsy Turvy (reverse brainstorming) and appreciative inquiry are useful methods to cultivate such a cycle. Same goes for learning the language of systems thinking and practicing lifecycle analysis.
  • In order to get change to stick in, we must harvest the low-hanging fruit, balance short-term with long-term thinking, monitor and evaluate and remain open to change and circumstance.

The messages the authors put across in the book are simple yet sophisticated. To sum them up, the authors quote George Orwell who once said that industrialization has cut the soul of man, but he did not notice it for many years. In a similar way, the paintings of Tamara Lempicka from the industrialization age show lots of beautiful however sad and empty people surrounded by grey and cold buildings. In my mind, embedding sustainability in business and our lives is key to achieving not only a comfortable balance with our environment, but also a new way of living life. We can do it.


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