Organisational Change Management Volume 1

Framework 52 Sustainability as a Basis for Change

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Usually when organisations pursue sustainability, it is assumed that they are demonstrating social responsibility. It is expected that these endeavours will add to their costs, deliver no immediate financial benefits and could erode competitiveness. Furthermore, policymakers and activists want stricter regulations plus educated and organized consumers who will force business to adopt more sustainable practices.

Recent research has demonstrated that organisational and technological innovations around sustainability in organisation designs, products/services, processes, business frameworks, etc can improve revenue and profit, giving competitive advantages. In other words, sustainability equals innovation.

Smart organisations adhere to some simple rules to improve their sustainability, ie

Don't start from the present

Extrapolating the present to the future is very risky; rather it is important to fold the future into the present by asking the following questions

- What are the milestones to our desired future?

- What steps can we take today to get there?

- How will we know that we are moving in that direction?

Ensure that learning precedes investment

Need to have an understanding of how to execute projects by starting small, learning fast and scaling rapidly 3 phases, eg experiments and pilots, debriefing and learning, and scale in. (Smart, sustainable firms benchmark and aim to develop new practice, not merely mimic base practice)

Stay wedded to the goal while constantly adjusting tactics

Directional consistency is important while tactical flexibility is critical, ie be prepared to make tactical adjustments, corrections, etc along the way

Build collaborative capacity

Be prepared to form alliances with other organisations to create new mechanisms for developing products/services and distributing them

Use a global present to experiment

Some emerging markets have less entrenched systems or set mindsets to overcome than traditional markets which can become set in their ways

To become sustainable, there are 5 stages, ie

i) viewing compliance as opportunity

Compliance is complicated with regulations and community pressure varying between countries, states, cities, etc. However, there are substantial first-mover advantages in sustainable innovation, including time to experiment and to spot opportunities first. Firms can, in fact, turn antagonistic regulators into allies by leading the way.

ii) making value chains sustainable

Focus on increasing efficiency and reducing the consumption of non-renewable (fossil fuels, etc) and renewable (wood, water, etc) resources ; analyse each link in supply and value chain to develop more sustainable practices by using techniques, such as enterprise carbon management, carbon and energy footprints, life-cycle assessment, etc; turn cost centres into profit centres by reducing and recycling waste, returns, etc.

"...when they create environment-friendly value chains, companies uncover the monetary benefits that energy efficiency and waste reduction can deliver..."

Ram Nidumolu et al, 2009

iii) designing sustainable products and services

As increasing number of customers prefer eco-friendly products/services, such as cold water detergents, firms can get a competitive advantage by satisfying this demand; to design sustainable products, firms have to understand customers? concerns and examine lifecycles for products that lie beyond their traditional expectations, such as biomimicry.

iv) developing new business models

This is more than rethinking the customer value proposition and figuring out how to deliver a new one; it includes new ways of capturing revenues and delivering services in tandem with other firms; it involves asking what business should you be in; new technologies provide new entrants the chance to challenge conventional wisdom, such as bubbling carbon dioxide from industrial wastes through seawater to manufacture cement (like coral does to builds shells and reefs from the calcium and magnesium in seawater); involves exploring alternative and entrepreneurial ways of doing business and questioning existing frameworks.

v) creating next-practice platforms

Challenging and changing existing paradigms, status quo positions and mindsets by questioning the implicit assumptions behind current practices is essential to sustainable business/organisational evolution.

Five Stages


Viewing Compliance as Opportunity

Making Value Chains Sustainable

Designing Sustainable Products and Services

Developing New Business Models

Creating Next- Practice Platforms

CENTRAL CHALLENGE To ensure that compliance with norms becomes an opportunity for innovation. To increase efficiencies throughout the value chain. To develop sustainable offerings or redesign existing ones to become eco-friendly. To find novel ways of delivering and capturing value, which will change the basis of competition To question through the sustainability lens the dominant logic behind business today.

The ability to anticipate and shape regulations.

The skill to work with other companies, including rivals, to implement creative solutions.

Expertise in techniques such as carbon management and life-cycle assessment.

The ability to redesign operations to use less energy and water, produce fewer emissions, and generate less waste.

The capacity to ensure that suppliers and retailers make their operations eco-friendly

The skills to know which products or services are most unfriendly to the environment.

The ability to generate real public support for sustainable offerings and not be considered as merely 'green washing.'

The management know-how to scale both supplies of green materials and the manufacture of products.

The capacity to understand what consumers want and to figure out different ways to meet those demands.

The ability to understand how partners can enhance the value of offerings.

Knowledge of how renewable and non-renewable resources affect business ecosystems and industries.

The expertise to synthesize business models, technologies, and regulations in different industries.

INNOVATION OPPORTUNITY Using compliance to induce the organisation and its partners to experiment with sustainable technologies, materials and processes.

Developing sustainable sources of raw materials and components.

Increasing the use of clean energy sources such as wind and solar power.

Finding innovative uses for returned products.

Applying techniques such as biomimicry in product development.

Developing compact and eco-friendly packaging.

Developing new delivery technologies that change value-chain relationships in significant ways.

Creating monetization models that relate to services rather than products.

Devising business models that combine digital and physical infrastructures.

Building business platforms that will enable customers and suppliers to manage energy in radically different ways.

Developing products that won't need water in categories traditionally associated with it, such as cleaning products.

Designing technologies that will allow industries to use the energy produced as a by-product.

(source: Ram Nidumolu, CK Prahalad & MR Rangawami, 2009)


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