Getting the job done: The four essential steps
In my book, ‘Sustainable Value Chain Management’, I describe an inclusive approach to embed sustainability as part of a company’s strategy, without scarifying profits, markets and stakeholder interest. Sustainability is an opportunity for business, not a cost factor. To operate a sustainable business model, companies need to embed sustainability as part of their strategy, their products, supply chains and in the relationships they maintain with multiple stakeholders. Internal and external communication in a consistent manner is critical to change the business and to maintain integrity between ambition and action.
There are four essential steps to build an organisation that is sustainable from ‘inside-out’ and that builds its strengths on the capability to interact in a multi-stakeholder environment with diverse interests.
STEP 1 “Speak in a language that people understand”. To capture the opportunities in a multi-sector approach we need to overcome the ‘language barrier’ between private, public players as well as intermediaries. Business managers often don’t understand how sustainable value chains deliver economic, ecologic and societal benefits.
Talking in a language that the audience understands is the first step required to break the language barrier: moving from vague terms to clear deliverables, enforcing commitment and asking for deadlines and results. Don’t let business use consensus language and pay lip service to sustainability without taking substantial action.
STEP 2 “What matters for my business?” Despite the fact that business leaders tend to generally agree with the demands for
more sustainable business, it is often not clear how sustainability can help to stay ahead of the competition in a particular industry. The key is to translate complex concepts into relevant issues for businesses. The SDGs are a great example of using a language that businesses understand, specifically as they have been developed together with decision makers from the industry. It is important to recognise the efforts of the UN Global Compact, the Global Reporting Initiative (GRI) and the World Business Council for Sustainable Development (WBCSD) to make the SGDs understandable.
At the same time, business managers have not yet established the mechanisms to translate complex demands into the relevant opportunities. Often they look for help from industry peer groups, instead of working with the public sector. Yet, there are only a few experts with deep expertise that are able to do this translation between sectors and within businesses, most of them working for the private sector today.
Current funding structures of multi-sector initiatives prevent going beyond the level of recommendations and do not address specific industry issues. It requires the right mix of public and private sector experts to get the job done. We need new ways of multi-sector collaborating and funding if we want to see sustainable value chains at scale.
STEP 3 “Turning relevant issues into actionable projects”. Once the relevant opportunities for the business have been identified, it is critical to turn ambitions into actionable work packages and projects that lead to tangible results. Integrating sustainability from strategy to day-to-day operations and along the end-to-end value chain can be a daunting task. Often it is more difficult to overcome internal barriers in a business. Company culture will always win over strategy, if there is no clear management commitment for sustainability and an explanation why a certain course of action will make the business stronger as a whole.
Successful projects require the capability to drive cross-functional collaboration within the business, as well as dialogue and interaction with key influencers outside the company to structure the right approach to deliver the change. Many businesses don’t have that capability today. This requires to collaborate in a cross-functional manner and sometimes to change the target policies.
To embed sustainability in the core business, it should be implemented in all (or parts) of the following 8 ‘building blocks’ of sustainable value chains: (1) Value creation strategy; (2) sustainable products; (3) sustainable operations; (4) enterprise architecture; (5) stakeholder collaboration; (6) integrated business planning; (7) sustainable cost reduction; and (8) sustainable partner management. All of the building blocks have their touch points with society and environment and thus the potential to create triple value.
STEP 4 “Deliver the change and make it stick”. To implement the desired change in the business at scale takes time. Product strategies are not changed easily or fast. Global value chains are a network of hundreds or thousands of relationships that need to be managed. Besides the technical content of a project, the existing hierarchy and capabilities of the organisation provide a risk during implementation because it can take time to convince the entire organisation about the need for change. Constantly ensuring ‘buy-in’ and ‘stay-in’ of stakeholders is the key to success.
Generating economic, ecologic and societal benefits. Implementing sustainability in the core business is challenging but yields many benefits. Several businesses have embraced the sustainability opportunity through multi-stakeholder collaboration and through building sustainable business models. This includes multi-national corporations and SMEs across various industries. It is these businesses that are convinced that approaches like ‘Shared Value’ are beneficial for business and society alike. They invest the resources and partner with public sector, NGOs and intermediaries to change the status quo.
Examples like the StarShea in Ghana (supported by SAP and local NGOs) and Nestlé’s Rural Development Programs in Central and West Africa, demonstrate how the interest of businesses can be reconciled with the objectives of development programs. As a result, business that have adopted a sustainable value chain generate multiple benefits: economic growth through more sales of sustainable products, reduced resource intensity along the value chain and positive societal impact through stronger relationships supported by local community investments – for example with suppliers that are getting higher income and education.
There is no need to discuss if there is a businesses case. You need to create the business case for it and go beyond the traditional thinking of economics.
The time to act is now! Are you ready to join the movement?