Sustainability Context – exploring and managing it in a complex world

“Discovery consists of seeing what everybody has seen and thinking what nobody has thought.“

Albert Szent-Gyorgyi

Navigating sustainability context

Developing resilient, successful organisations relies upon an understanding of operating context and the big picture trends and challenges which can (and will) affect that context. The strategies for delivering that success tend to be derived from the use of a set of well known management tools, including Porter’s 5 Forces, PESTLE and SWOT analysis.

Most such traditional strategy approaches feature an emphasis on the current operational strengths of an organisation. In many cases it makes a lot of sense to focus on these and not the ‘weaknesses’ in capability. But this can be a risky approach in a fast-changing environment, and conventional tools often ignore or underprioritise issues and topics that arise from sustainability context.

Terrafiniti has long argued that sustainability issues are strategic issues for business and markets. However, understanding the strategic implications of environmental and social issues and trends may require a longer-term perspective than is normally taken in conventional business analysis and planning.

We also argue that many conventional business tools can be adapted or hacked to broaden their perspective, allowing them to explore the relevance and importance of sustainability issues for company strategy. For example, see our Sustainable Business Model Canvas, which adapts a conventional strategy tool to integrate sustainability.

Resilience requires looking forward

The effective use of these tools is however dependent upon keeping an eye on purpose and context.

In competitive strategy analysis, it often makes sense to focus on an organisation’s key strengths and capabilities; where they outcompete the market, or provide a compelling value proposition over their peers. But this shouldn’t be done in isolation without looking at possible strategic threats and paying attention to the wider social, ecological and market environment.

Each of these ‘realms’ is subject to change; the market, social and physical context that companies need to operate within are undergoing a number of remarkable transformations.

So, what is changing? Quite a lot, quite fast, here’s a quick summary… (click to expand).

Strategy and planning in complexity

There has always been change, you may say, why is the change we are experiencing today any different?

It is different in two ways:

1. Because the economic and business assumptions of the past may not hold true for the enterprise of the future – changes in resource availability, rising demand and changing ecological conditions may present existential threats to the business models of today.
2. Because demands on companies are changing – investors, NGOs and (to an extent) consumers are increasingly requiring companies to analyse and plan for the impact of issues that have previously been off the agenda or someone else’s problem, such as climate change and water scarcity.

Change is relentless, it doesn’t care whether your organisation is effective in delivering its mission – or if it even continues to exist. History tells us that companies and products that fail to adapt to changing circumstances can lose money, market share, sovereignty or even fail spectacularly. Examples include Kodak, Nokia, and Redland plc amongst others.

I’ve given up predicting the future

Predicting the future is difficult in the detail, but are there big picture trends and implications we can be sure of?

The diagram above can be translated into several trends that we can be pretty certain will impact upon us. Given the inherent uncertainty of future-scanning it makes sense to focus on what is innately and unarguably sustainable. Doing that will reduce risk, promote efficiency and help enhance reputation in the long term.

Sustainability can be described as either doing the same things very differently or doing very different things. Here are some key points:

Embrace change – it’s inevitable and always in motion. Develop knowledge and corporate approaches to uncertainty and risk.

Foster dialogue with key stakeholders – your first point of contact with the outside world. Deepened dialogue with staff, customers, investors, suppliers, regulators, peers and government strengthens strategic awareness, influence and reputation.

Develop a broad understanding of dependency – all organisations depend upon external resources and organisations to deliver their mission. Understanding the complexities and dependencies of these relationships and developing stronger bilateral relationships and partnerships will strengthen resilience.

Understand risks – all organisations are at risk from the environment in which they operate in addition to the risk they also pose to that environment. Each dimension of risk should be assessed.

Use less stuff – using fewer resources, less energy and water. First and foremost, this saves money, it also reduces dependencies and risk.

Use different stuff – prioritise things that are abundant and ‘clean’. If you have to use ‘dirty’ or scarce materials use less and prioritise a stewardship approach.

Keep it safe – do your products or services create pollution in any form? Clamp down on processes and products that give rise to persistent, poisonous or problematic (to people or the natural environment) substances.

Play it fair – do your products and services rely upon the contribution and labour of others? Have you examined your value chain and developed a systematic plan to address inequities and unfair practices?

Steps to success

The characteristics above describe a desired situation but how do you move your organisation from where you are to where you want to be?

There are three key steps;

1. Audit/Review your position – improve understanding of your position and how it might change. Develop dialogue with important stakeholders and assess your organisation’s position, working from global megatrends to a local context. Think of sustainability issues in terms of dependencies, risks and importantly, opportunities. Change always brings opportunities.
2. Develop your plan – in spite (and because of) uncertainty, its vital to have a plan. Develop your strategy in the context of your businesses values and competitive strategy. Develop objectives that support business ambition and set appropriately stretching targets to demonstrate transparency and progress. Finally translate these into operational route maps owned by staff and teams to develop business processes and deliver progress against targets – for a seven-step guide to build resilient, sustainable strategy, you can download our free “Developing Sustainable Strategy” briefing.
3. Develop and nurture your capacity to change – the first two steps (above) are vital, but the final and crucial piece in the puzzle is the organisation’s capacity to change. Many organisations have analysis and awareness but lack the capacity to deliver change. Arguably, this was the fundamental problem Nokia struggled with. This requires good leadership and effective creative management structures and processes. It is arguably the most difficult piece in the puzzle – but also the most valuable.

The challenge of change

We need to look beyond operational strengths and develop contextual intelligence on the relevant and priority issues and pressures on an organisation. This will provide knowledge and information on how to act, but the benefits can only be realised in the presence of the capability to manage and deliver change.

We all know change can be hard, especially when time, effort, resources and customary practice tell us that continuing our current course of action makes sense. How often have we heard the phrase “but we always do it like this”? However, we also see change happening all the time, and companies that can anticipate and respond to changing conditions are those that thrive in the long term.