Ralph Thurm recommends Aron Cramer + Zachary Karabell’s ‘Sustainable Excellence’

Reading Aron Cramer and Zachary Karabell’s book ‘Sustainable Excellence – The Future of Business in a Fast-Changing World’ started with a big smile on my face. I first opened the book in a restaurant in Dubai’s Old Town, right opposite of Burj Khalifa, the world’s tallest building, early January 2011. I often start a book by reading the acknowledgments first, and found there that Cramer and Karabell started the idea of the book in the same place two years earlier; what a nice coincidence. Looking at Burj Khalifa, one can easily think of ‘the sky’s the limit’, and the book breathes that notion as well, as the title clearly indicates. So I was eager to learn about excellence in sustainability. My first question indeed was if there actually WAS something like excellence in sustainability already? How would it be defined and how and against what would it be measured?

Cramer and Karabell give directions TOWARDS what could be sustainable excellence, namely: 1) Think big: Create business strategies that meet big global challenges, 2) Use sustainability to drive innovation, 3) Set the right incentives internally and externally, 4) Embrace the transparent world – and collaborate, and 5) Make consumers your partners. They pick up on some of the global megatrends and simply state that if a business takes these into account and can come up with ‘resilient strategies’ in the so-called VUCA world (volatile, uncertain, complex ambitious), structural changes in the economy could be anticipated and new waves of ideas could be adopted before the competition does; Cramer and Karabell call this ‘chasing the disruption’. Examples that follow come from Coca-Cola, PepsiCo, Nike, Ford, ANZ, TNT. No surprise, the usual suspects that all had their ‘disruption’ some time ago and since then properly integrated and innovated sustainability.

More necessary ingredients towards sustainable excellence are discussed in the next chapters of the book: the need for leadership (Starbucks, Siemens, GE, Aramex, Unilever, Walmart, FedEx), looking through the value chains to unlock solutions (H&M, Ikea, P&G, Levi’s, Walmart, Nike), renewed or new products that serve a societal purpose – also in he light of the more concerned and active consumer (Clorox, Interface Ford, Shai Agassi’s Better Place), the need to be authentic and practicing what you preach (Marks and Spencer, Nestlé, Unilever, Nike, Starbucks, Natura, ITC), and adapting the governance to open up and using unfamiliar voices as a new form of risk management and open up to a enable new ways of partnerships (mentioning examples of confrontative ‘disruptions’ that made space for collaborative approaches up to co-creation partnerships).

In between those mentioned chapters are a couple of ‘interruptions’, in which Cramer and Karabell describe the developments towards a higher degree of sustainability in a couple of industries, namely the financial sector, the energy sector (with an intersection on the role of IT towards grids and smarter cities) and the commodities sector (oil & gas, mining & metals). Furthermore there is a chapter on the new regional champions from emerging markets, especially China, India, Brazil and how those have created a fundamentally new global architecture given the structural changes caused by the economic downtown, rising resource constraints and the shift of financial and political capital. It is a bit unfortunate that these chapters are intermingled with the more internally focused chapters, as a reader I felt a bit confused and wondered what the reason for that sequence was.

The book ends with a trial. Cramer and Karabell predict ten companies that they think will shape the (sustainability excellence) world in 2020. These are Walmart, Better Place, Dupont, Schneider, Google, Autodesk, Grupo ABC, Iberdrola, ICICI, Tsing Capital. The reasoning is understandable, but many others could have also been chosen, and while this remained an interesting experiment, the value added is somewhat limited.

Overall, Cramer and Karabell have written a proper state-of-the art description of why it is crucial for companies to act and integrate sustainability into strategy creation, implementation and delivery. They describe how leading businesses move to higher levels of professionalism and instigate change and cross-fertilization, internally and externally. For those who look for good arguments why a proactive take is necessary, the book is  a great collection of rationale and examples. For the more advanced experts the book is just ‘reassuring’.

Some caveats remain: the book – given Aron’s BSR affiliation and center of activity - is sometimes too much US-centric, and many BSR member companies repeatedly come back in the different chapters. This also leads to a notion that leadership towards sustainable excellence remains a matter of a few enlightened leaders, not a good omen given the challenge in front of business and the broad uptake it needs.

In the end the book title promises a bit too much with regard to what sustainable excellence really IS. It is a good collection of examples on how to move TOWARDS sustainable leadership and why that is a must-do, a definition and measurable performance of sustainable excellence is missing, and in my view also remains impossible (my plea for Zero Impact Growth Strategies could be a way out, see my earlier blogs this year). I also missed some more analysis with regard to needed systemic enablers (towards sustainable capitalism, taxation and world trade regimes, the need for a broader accounting that internalises external effects, and the need for integrated reporting) that would also help to define sustainable excellence and are as necessary as the other ingredients the authors cover. I guess I was hoping for more of that since I know and have heard Aron speak on those topics many times, a brilliant analytic and also a great inspirator. Room for another book then?

 

Davos2012.me – the (missed) great transformation?

The leaders are back at home. The powder snow of Davos and all the red eyes from getting up very early and going to sleep late given all the late night side events are now remembered by those who were there as a sort of romantic ‘extra mile to save the planet’. We saw all the video clips from the Davos and corporate marketing machinery that told us how useful it was to meet again, and that steps were made towards what was called ‘the great transformation’ – at least that was the bold title of the annual meeting this year.

But what did Davos 2012 do to me, or you? Now that all tweets and annual meeting blogs are written, initiatives were launched and reports got published, I do have to say that the annual meeting did give us a good description of the current status quo, but did not give us what it promised – to be the instigator of real change towards that great transformation. This would have only been possible through visible signs of leadership, so this urgent quest was the red thread through all the discussions – and unfortunately it remained an unanswered one.

Don’t get me wrong: every year hordes of experts from many industries discuss, develop, and prepare stuff that their proud CEO’s can carry with them to Davos or can jointly present to the world as another step forward. Reports are published that have good insight, like in every year the ‘Global Risks Report’, or the very interesting report by the Ellen MacArthur Foundation ‘Towards the Circular Economy’. Deloitte offered the ‘Business:Society – What is business for’ study, done in collaboration with the Economist Intelligence Unit and alerted us to the views of the so-called Millenials. And yes, the many side meetings of the CEO’s and Vice Presidents with likeminded and/or corresponding protagonists from politics and civil society will increase the understanding for each other. For sure, consultants again found an excellent fishing pond for new business and profiling for what they have done throughout the year, and for many specialized niche players Davos fills the 12 months pipeline until the next meeting and offers food for thought for surveys, training, facilitation and visualization.

And then there is the other Davos, the event that mostly always gets overshadowed by the short-term problems, this year the Euro Crisis, the Israel – Palestine conflict, the Iran and Syria agenda etc.. Angela Merkel and other heads of state orchestrate their yearly update, and at latest in these moments the idea of ’the great transformation’ gets downsized to either ‘the great stagnation’ or for some ‘the great paralysis’, even more for those who were not physically taking part in all the Davos idea labs, workshops, interactive sessions, brainstorms, work studios, one-on-ones, and – not unimportant – the interactive dinner and lunch sessions (let’s hope it was all biofood) and simply missed the not broadcasted, by-inivitation only, closed-doors part of Davos. I was one of those out there that took the burden to listen and/or watch as much as I was able to to the livestreams. Now, three weeks after, and with some reflection, there are two main aspects in which I think Davos 2012 has missed important opportunities, and let me underscore them by some anecdotal evidence:

1. Producing confidence through visible leadership: I listened to the World Economic Brainstorming session, led by BBC World Anchorman Nick Gowing. He tried to really carve out from some of the business leaders in the room what they would actually do the next day, taking leadership for sustainability issues (since this is what the great transformation needs to achieve, but somehow remained in the snowstorm outside), how they would confront perceptions and the scrutiny out there (refering to the latest Edelman Trust Barometer), and how they would work towards new models for our world in which they would need to acquire a ‘license to lead’. The session also included so-called ‘Global Shapers’, young and already successful entrepreneurs between 20-30. The remark of one the Global Shapers at the end of the session summed up what I also felt more and more while listening to the 90 minutes session: [quote] ‘You should be feeling my pulse right now. I’m not only impatient, I am actually angry. You asked the leaders if they feel the pressure? I can tell you that I DO feel the pressure, and not so far from now the next generation will hold me accountable, and I can tell you that they won’t be as nice to me as I still am right now. Everybody here is pointing with the finger at somebody else, to the investors, the corporations, the politics’ [end quote]. And Richard Edelman just added: ‘Business and governments are not telling the hard truth’. So the session ended with the advice that the young people should go out and look for those companies in which leaders are not hierarchical, and where mindset changes could be produced due to a willingness to accept the necessary tradeoffs. Or even better, found their own businesses! Does that leave you puzzled and nervous? Nick Gowing tried to cure the situation by remarking that that particular brainstorm was just the kick-off to more sessions in which more depth would be developed. 
2. Hesitation to predict the future and help guide leadership: I was hoping to actually get more depth and clarity through an early sunday morning session called ‘Pundits, Professors & Predictions’, but that was just another example of leadership paralysis. I am a big fan of Thomas Friedman and I admire the candid stance of Nouriel Roubiny to go out and tell a straightforward story of how he interprets the world from his (financial market) perspective. But the comments both gave were more an interpretation of the existing status quo than predicting the future and by that missed the boat giving guidance for further discussion on what leaders need to actually lead towards. Prof. Bob Shiller from Yale University just added to the discussion that people tell him that they have no time to think nowadays, and that he still struggles what consequences that may have for leadership. Kishur Mahbubani repeated himself several times by saying that Asian optimism will overthrow European scepticism (the reason for the Asian century, so no news here). Gideon Rachman was there too and said that whatever governments there are, they all seem to somehow fail to rise to the occasion (no matter if democratic, technocratic like Greece and Italy, or authoritarian), but nothing that would help in the search for directions towards the great transformation and needed leadership. Actually, Nick Gowing, who also moderated this discussion, continuously reminded the panelists that they were invited to make predictions, but the panel refused to make some, and one panelist even remarked that he was possibly invited to that panel by mistake.

I admit that the WEF has made great improvements in the last years to open up the Davos sessions to a greater public. So yes, I was able to follow panel discussions and add twitter feeds. I also realize that there is an awful lot of work done between the yearly annual meetings, like regional meetings or the different industry-specific working groups. There is also a great aim to build an agenda around major sustainability issue areas. For all transparancy, I was actually involved in some of that work through my GRI and Deloitte affiliation in earlier years. But how has that helped to lead to the sort of joint and globally accepted leadership movement, so necessary for the great transformation?

Possibly, both Thomas Friedman and the young Global Shaper did in the end help me to find an answer I can live with for the moment: don’t wait for governments, don’t wait for the (still few) corporate leaders, and don’t wait for strategy professors. Thomas Friedman thankfully mentioned what he coined ’Carlson’s Law’ (named after Curtis R. Carlson from Stanford Research Institute): The more hyperconnected the world becomes, the more top-down approaches become dumber and slower and everything bottom-up becomes smarter and chaotic. Necessary decisions that touch public interest in whatever way need a two-way conversation with stakeholders, otherwise they fail. SOPA, Mubarak, Putin were mentioned as examples of failure. The sweet spot for innovation is moving down and towards stakeholders! Effective leadership will occur where leaders unleash the power from below and meet it somewhere. And that laid the connecting to the Global Shaper from the earlier discussion I listened to, those social entrepreneurs that connected the purpose of their organisation with societal needs. So, the litmus test for real leadership is simple: prove the societal purpose of your organisation, innovate at the heart of the matter (my understanding of the Friedman’s sweet spot of innovation moving down), be transparent and report about achievements and be a vocal advocate around all needed political boundary setting changes, e.g. in financial markets, on taxation and subsidies, in education and innovation support.

What would then be my big themes for Davos in the next year? Here are some thoughts: 1) Cluster the existing bottom-up movements out there and invite them to a structured dialog, not all of them are or will remain leaderless movements; 2) Challenge existing top-down movements regarding their success towards achieved societal purpose and how more can be done if the sweet spot for innovation is actually moving down; 3) Discuss what our common success measures are globally, regionally, and on corporate level; if it’s not GDP or EVA, what is it then instead?; 4) Tackle the really needed areas for change: the unsustainable taxation and subsidies regimes, an adjusted curriculum in education, support for innovation, new levels of transparancy, governance and regulation in a bottom-up world in which natural conservation and well-being of humans are centerpiece; and 5) invite politicians into multistakeholder discussions.

The great transformation has surely already begun, but in Davos? Maybe next year.