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Using Sustainability to Avoid Risk

The SSC Team August 25, 2015 Tags: , , , , , , , , , , , Strategic Sustainability Consulting No comments
Enjoy this blog from the SSC archives: The evidence that sustainability can be good for business is overwhelming. Most of the case studies, examples, and analysis that has been done show positive links between a sustainable approach to environmental and social issues, and corporate profits, Thus far, the research has been primarily focused on direct operational efficiencies (like retrofitting your office lighting to save money and reduce your carbon footprint), innovation (using biomimicry to drive new product development), and productivity (ie. more engaged employees take less sick leave). However, there hasn't been as much talk about the nexus between sustainability and risk management. And for corporations operating in complex supply chains in a globally-connected economy -- well -- effective risk management can be the difference between success and failure. Below, we take a look at three articles that shed light on why companies still struggle to incorporate sustainability into their risk management practices (and vice versa).

Has sustainability become a risky business? 

This GreenBiz article by John Davies reviews a report by Ernst & Young. The key takeaway: While more companies are concerned about increased risk and the proximity of natural resource shortages, corporate risk response appears to be inadequate to address the scope and scale of some of these challenges. The free report looks at six corporate sustainability trends with a strong focus on the internal influencers of corporate performance (CEOs and boards), as well as external forces ranging from governments to shareholders and investors.

Playing It Safe Is Riskier than You Think

This article by Bill Taylor in the Harvard Business Review makes the case that "difficult and uncertain times are often the best times for organizations to separate themselves from the pack, so long as their leaders are prepared not to stand pat." While not directly about sustainability, this article certainly supports the notion that economic turmoil is no reason not to be ambitious about tackling big sustainability challenges.

Research: Why Companies Keep Getting Blind-Sided by Risk

by Mary Driscoll in the Harvard Business Review presents fascinating insight into why companies (and their executives) are not succeeding at identifying and mitigating risk. Survey findings indicate that most organizations’ leaders did indeed express concern about the impact of political turmoil, natural disasters, or extreme weather. But the findings also show that the people at the front lines of the business were hamstrung by a lack of visibility into risk. Nearly half said they lacked the resources needed to adequately assess business continuity programs at supplier sites. Many relied on the suppliers filling out perfunctory, unreliable checklists. There are some big lessons here for sustainability practitioners! Are simple mistakes holding back your sustainability? Find out how to correct those mistakes here!

Grow Your Sustainability Consultancy Business by Speaking Your Client’s Language

The SSC Team July 7, 2015 Tags: , , , , , , , , , , , , , , , , , , , , , Strategic Sustainability Consulting No comments
Enjoy this blog from the SSC archives: So, you know all about your prospective client and you’ve decided on the strongest business case for sustainability for their situation. Now it’s time to win them over and solidify the relationship with a smashing proposal or pitch.

1) Don’t think of a pitch as a sell, think of it as an educational opportunity

Don’t worry so much about whether or not the client is going to hire you at the time you are meeting with them. Instead, treat it like a customized webinar or mini-conference where you are showcasing your knowledge about sustainability, the realities of where the economy is heading, their specific opportunities in relation to sustainability, and what they will need to do to get ahead and effectively adopt sustainability in their corporate strategic framework. You are just showing them the raw ingredients, while keeping a hold of the recipe. 

2) Start at the very beginning, a very good place to start

So, you know all about sustainability. And you know all about your prospective client. Unfortunately, your audience, be it the CEO or a mid-level executive, may not know much more about sustainability than “I think it costs a lot, but everybody seems to be doing it.” Clear that up right away with a brief definition of strategic sustainability – use the definition you use for your own consultancy. Make sure the client know that sustainability is a business framework, not a philanthropic or public relations gesture. Drop a few names, too – Wal-Mart, GE, Nike, Rio Tinto, Toyota. It doesn’t hurt for your client to know that they are joining the ranks of commerce’s elite.

3) Stress the long term and a future of change

“Fundamentally, corporate sustainability is about exploring the next way your company will be successful, because almost all the things you currently rely on -- energy, supply chain, consumers, investors, regulation -- are going to change,” said David Bent from the non-profit sustainability organization Forum for the Future in a blog series for Greenbiz.com. Changing times demand that companies factor in future risks, such as rising energy prices, increased regulation, and pressure from consumers, into their strategic plans. Since many of these future risks and market changes are going to stem from environmental and social concerns, integrating sustainability principles into the corporate framework now, to address these issues now, isn’t just a “cost” to the business, it’s an investment in the future risk management. “You can’t predict ‘the’ future, but you had better be prepared for possible futures with a portfolio of strategies – and a business case – that ‘future-proof the company’ by diversifying your risk going forward,” advises Gil Friend, founder and CEO of Natural Logic. You must stress this fact to prospective clients – they will probably have to become sustainable eventually, but they might as well make some money doing it proactively instead of reactively. Just be sure to avoid scare tactics or pressure. The fact is: the world is changing, and change can be good.

4) Look to frame sustainability as a driver for innovation and opportunity

Find examples of “play-to-win” organizations that have used sustainability to tap into new opportunities (destroying the competition in the process) to help sell the concept. Companies are inherently competitive, but often are mired in a “compliance mentality.” Remind your audience that business is a battlefield; you might be able to tap into that competitive spirit. Use what you know about the company’s competitors or industry to highlight how the sustainability program may get them ahead of the game.

5) Present the client’s customized business case in a language that everyone can understand – shareholder value

It’s meat and potatoes time. You’ve briefly discussed sustainability, the risk of not acting, and the opportunity gained by taking action. Next is what they’ve all been waiting for – the business case. At this point, be fairly specific about what you feel the key “value drivers” of a sustainability program will be for this specific organization. First, present the business case. For example, an engineering firm with a zillion vacancies on its “careers” page and a reputation of an ‘old boys club’ may benefit from a sustainability program stressing competitive advantage – a program that will help its recruitment program, shape its industry, and help it become an early mover on new and emerging areas for growth (like green design, perhaps). Second, present the projected investment (in time and money) and the estimated return on investment (ROI). According to Friend, the business case has to provide a clear ROI in the financial, operational, and strategic dimensions. But be clear that ROI in sustainability isn’t only about short-term dollars and cents. When you are talking about elements like “recruitment” and “industry shaping,” be sure to clarify that these, albeit not short-term financial returns, are “indirect” returns. While direct returns include costs (lighting retrofits or waste-reduction), indirect returns ( impacts on brand reputational value, employee productivity and retention, product quality, community goodwill, etc.) can open companies to new business as much as any marketing plan while helping reduce risk. For an in-depth discussion on costing for sustainability, check out the book Making Sustainability Work by Marc Epstein. Third, use statistics, examples, graphics, and best practices, briefly but effectively, to back up your claims on how your proposed programs can directly affect shareholder value through direct and indirect returns. Finally, give the client a path on how a sustainability program for this value driver might be incorporated into their organizational framework.

6) Don’t frighten them off

Although you may have made an amazing pitch with ROI analysis that just can’t be denied, a client may still balk. “But we don’t have $150,000 for a lighting retrofit, even if we know it will save us $300,000 over the next six years…” Yes, it may be ideal if you could tackle each value driver head on, re-write the strategic plan, and reorganize the company, but, more likely, the financial minds at your prospect’s firm are going to be reluctant to loosen the purse strings. To help ease them into the process (and help you begin to form a long, trusting relationship), break it down into steps. Begin with saying, “Now that I’ve presented the strategic sustainability framework that will eventually deliver the most value to your organization, let’s talk about where we begin. Every journey starts with a series of small steps…” At this point, have one or two programs that will work as small but effective pilot programs for this broader sustainability plan. Try to find the one or two manageable programs with the lowest-hanging, least expensive fruit, and suggest that the client give them a try first. The pilots will help you build credibility with the CFO’s office, as well as awareness throughout the rest of the organization. Hopefully by achieving documented success with the first few pilot programs, the company will continue to draw on your services to expand into the more complex strategic development of their sustainability program (that you were the architect of).

7) Be straightforward about the business relationship

Once you’ve delivered the presentation (no more than an hour of their time) and have some concrete offerings available for them (green audits, waste audits, pilot ‘Green Team’ programs, stakeholder engagement initiatives, or whatever your other pilot programs were) be ready for questions. Know how long each program will take and what it may cost if they suddenly want to go whole hog. Be prepared to answer detailed questions about customer service, your ‘next steps’ in project development, your experience, your resources, costs of your service, as well as costs directly to them (retrofits, training investments, life-cycle-analyses, etc.) and the overall estimated ROI for each suggested program. Instead of spending your time trying to convince the client through testimonials of how great you are, just do what you do best: consult them. Show them what you know and use examples from research or from your past experience to illustrate how they, too, can meet their goals, transform their business, reduce their risk, and increase shareholder value through sustainability. You are simply the person with the tools to help them get the process started. Find out how you can become a better sustainability leader in one of our latest blogs.

Workplace Movement Toward Environmental Sustainability – Pt. 2

The SSC Team May 7, 2015 Tags: , , , , , , , , , , , , , Strategic Sustainability Consulting No comments
By: Alexandra Kueller Two weeks ago, we introduced the Retail Industry Leaders Association’s (RILA) brand new Retail Sustainability Management Maturity Matrix. The Matrix hopes to be a tool that will be used by sustainability executives, individual companies, and industry-wide. We also noted that while the Matrix is designed with the retail industry in mind, we think that is has a wide applicability beyond just the retail sector. Last week, we discussed the first three sectors that are featured in the Matrix. Today we are focusing on the final four of the seven sectors. Hoping to provide a more in-depth look at how RILA hopes to benchmark across the industry in terms of environmental sustainability, we are going to look at what it would take for a company to become a leader in that sector.

Retail Operations

Environmental sustainability extends to all aspects of a company, including their retail operations. Whether it is a store or corporate offices, a company should be putting in effort to make these areas as sustainable as possible, such as having facilities be LEED certified. Other ways to make your retail operations more "green" can include incorporating green standards for all new warehousing and participating in the ENERGY STAR program. The Retail Operations sector has three different dimensions:
  • Store/Corporate Offices
  • Warehouses/DCs
  • Data Center & Applications

Supply Chain

Supply chain sustainability might not be the first aspect of a company's sustainability plan to come to mind, but it is no less important than any other aspect. To be a leader in the retail industry when it comes to supply chain sustainability, a company must demonstrate the reduction of environmental impact through the optimization of transportation, work closely with suppliers to help improve their sustainability metrics, and be more transparent when it comes to audit statistics (e.g., percent of non-compliant factories). The Supply Chain sector has three different dimensions:
  • Transportation/Logistics
  • Supplier Engagement
  • Supply Chain Transparency & Traceability

Products

When someone thinks of a retail organization and sustainability, often times their first thought is "how sustainable is the product?" RILA recognizes that product sustainability is a key component in a company's overall environmental sustainability and offers some suggestions on how to be a leader when it comes to making a company's product more sustainable. Some examples are using renewable energy sources during manufacturing, offering take-back services, and designing products with a "cradle to cradle" outlook. The Products sector has three different dimensions:
  • Product & Packaging Design and Development
  • Owned Manufacturing/Production
  • Product & Packaging End-Of-Life Stewardship

Environmental Issues

And finally, true environmental sustainability cannot happen if a company does not focus on the environmental issues at hand. How a company addresses these issues - energy, waste, recycling, etc. - in the context of the retail sector is telling, and some industry leaders are already paving the way. Some of these companies are implementing leading waste technologies and policies, establishing green chemistry programs that helps reduce toxins, recycling and reusing water, using alternative energies, and more. The Environmental Issues sector has four different dimensions:
  • Energy & GHG Emissions
  • Water & Wastewater
  • Waste & Recycling
  • Chemical & Toxics
Last fall we attended the annual RILA Sustainability Conference. Read about some of our thoughts on the conference here.

Workplace Movement Toward Environmental Sustainability – Pt. 1

The SSC Team April 28, 2015 Tags: , , , , , , , Strategic Sustainability Consulting No comments
By: Alexandra Kueller Last week we introduced the Retail Industry Leaders Association’s (RILA) brand new Retail Sustainability Management Maturity Matrix. The Matrix hopes to be a tool that will be used by sustainability executives, individual companies, and industry-wide. We also noted that while the Matrix is designed with the retail industry in mind, we think that is has a wide applicability beyond just the retail sector. Today we are focusing on three of the seven sectors that are featured in the Matrix. Hoping to provide a more in-depth look at how RILA hopes to benchmark across the industry in terms of environmental sustainability, we are going to look at what it would take for a company to become a leader in that sector.

Strategy and Commitment

Before a company can begin their sustainability journey, they must first have some sort of sustainability strategy, right? And if that strategy is weak, how strong will a company's goals be? How well will the company show executives that sustainability is necessary? What this section hopes to capture is how well a company is addressing environmental sustainability at a governance level. A leading company in this sector will have a sustainability strategy that is aligned across departments and integrated into corporate strategy, has defined comprehensive and aggressive goals, incorporates executives from all relevant parts of the business, and more. The Strategy and Commitment sector has five different dimensions:
  • Strategy
  • Materiality/Risk Identification
  • Goals
  • Governance & Executive Engagement
  • Incentives

People and Tools

Sustainability cannot happen without people. Whether the people are stakeholders or employees, sustainability is a collaborative process that needs to have everyone involved from the beginning. While the people involved in your sustainability process is important, so are the tools you use. If you don't have the right set of tools and the right people, your company might be falling short in terms of their sustainability. According to RILA, in order to be leading this sector, a company must demonstrate that they have a dedicated team to creating and investing in sustainable innovations, incorporate feedback from key stakeholders into sustainability strategy, provide a collaborative forum for employees to engage in, and more. The People and Tools sector has four different dimensions:
  • Stakeholder Engagement
  • Employee Engagement
  • Funding Mechanisms
  • Business Innovation Mechanisms

Visibility

You have your sustainability strategy in place and have assembled a team of employees that have the right set of tools to tackle sustainability, so what's next? Choosing sustainability metrics focused on all material aspects. Using 3rd-party standards in your sustainability reporting. Having sustainability be a focus in marketing campaigns. Partner with other organizations to continue to identify room for improvement. These are just some of the ways RILA says companies can become better sustainability leaders while promoting their sustainability. The Visibility sector has five different dimensions:
  • Metrics & Measurement
  • Reporting & Communicating
  • Point-of-Purchase Consumer Education
  • Marketing Campaigns
  • Collaborative Involvement
Last fall we attended the annual RILA Sustainability Conference. Read about some of our thoughts on the conference here.

Introducing RILA’s 2015 Retail Sustainability Management Maturity Index

The SSC Team April 21, 2015 Tags: , , , , , , Strategic Sustainability Consulting No comments

By: Alexandra Kueller

The Retail Industry Leaders Association (RILA) recently announced their brand new Retail Sustainability Management Maturity Matrix. The Matrix, which is based on Deloitte and RILA’s knowledge of the retail industry and its sustainability programs, hopes to be a tool that will be used by sustainability executives, individual companies, and industry-wide.

(Although this matrix is designed with the retail industry in mind, we think that it has a wide applicability beyond just the retail sector.)

While there are many aspects of sustainability, the Matrix focuses specifically on environmental sustainability. The Matrix has seven sectors that helps break down the different components of environmental sustainability:

  1. Strategy & Commitment
  2. People & Tools
  3. Visibility
  4. Retail Operations
  5. Supply Chain
  6. Products
  7. Environmental Issues

Each sector is then broken down by dimensions, and each dimension is ranked by five categories: starting, standard, excelling, leading, and next practice. RILA acknowledges that only a few companies are in the “leading” category, but hopes that over the next few years more companies can get to that level. The main goal of the Matrix is to identify all of the possible pathways to strong environmental sustainability.

Here are some of the ways the Matrix can be useful:

  • Identifying and assessing the maturity of your sustainability program and opportunities for improvement
  • Helping to facilitate conversations about your sustainability program’s development
  • Finding ways to access for funding for your sustainability program
  • Training employees to have more sustainability responsibility
  • Allowing internal, external evaluation of your program’s perception, gaps it might have

It’s RILA’s goal to use the Matrix to benchmark the industry in 2015, while annually updating the matrix.

Over the course of the next two weeks, we will be further breaking down the Matrix by sector to get a more in-depth look at how the Matrix will work.

Last fall we took an in-depth look at SSC's peer benchmarking system that we used against the athletic wear industry. Catch up here.

8 Questions for Sustainability Innovators

The SSC Team January 15, 2015 Tags: , , Strategic Sustainability Consulting No comments

Here is an article we wrote early last year, and we thought it was worth sharing again! Enjoy:

At Strategic Sustainability Consulting, we love Scott Anthony, the thought leader and managing partner of the innovation and growth consulting firm Innosight. His book, The Little Black Book of Innovation, challenged us, and we recommend it to anyone thinking about how to innovate within a company.

But enough flattery. Anthony's recent Harvard Business Review article, Eight Essential Questions for Every Corporate Innovator, got us thinking about how innovation and sustainability are a natural fit, and we wanted to share it with SSC readers.

Below, we've highlighted the questions that Anthony recommends that corporate innovators ask themselves, and then we added our thoughts below each question, from a sustainability perspective.

Identifying New Growth Opportunities

  • What problem is the customer struggling to solve?
  • Which customers can’t participate in a market because they lack skills, wealth, or convenient access to existing solutions? 

There is a huge opportunity for companies to use sustainability as a lens to enter new markets -- including the developing world. Selling to the "bottom of the pyramid" requires innovative thinking -- and companies like Unilever, Coke, and Nestle are paving the way, by using "shared value creation" to benefit the local communities in which they operate.

Identifying the Threat of Disruption

  • Where are we overshooting the market by providing features that users don’t care about and don’t want to pay for? 
  • If you were going to disrupt your company, how would you do it?

Despite a lot of wishful thinking by companies, consumers generally are not willing to pay extra for "green" features. Instead, savvy companies are using sustainability to enhance safety, quality, durability, efficiency, and value. Don't make the mistake of thinking you can get a green premium for your product -- instead focus on creating a better product or service through innovation. Being "green" is just the icing on the cake.

Designing Compelling Offerings

  • Who has already solved the problem you are trying to address? 
  • What can you do that few other companies in the world can do? 

Sustainability is a global challenge, and no single company can solve it alone. Innovators need to identify and exploit the leverage points in the system--and often those appear at the junction between entities. Public-private partnerships like the UN Global Compact, collaborations like The Sustainability Consortium, and industry groups like the Innovation Center for U.S. Dairy are proving that sometimes the whole is greater than the sum of its parts.

Commercializing Your Idea

  • What assumption are you making that, if false, would blow your strategy up? 
  • How can you learn more affordably and efficiently? 

The world of sustainability is rapidly changing-- methodologies, regulations, best practices, frameworks, legislation, stakeholder expectations--and the work of sustainability innovators is never done. Make sure that your eyes are not so closely fixated on your prize that you miss the changing world around you. You need to continue to regularly engage with your peers, to review your risk assessment methodology, and to indulge colleagues who will play the devil's advocate. Look for partners across your value chain, and make an effort to challenge each other in your various pursuits!

Thanks to 2degrees for publishing a version of this article!  Read the 2degrees article here.

Have additional ideas on ways for sustainability leaders to innovate?  Leave a comment or join the conversation on Twitter!