Since I started thinking about sustainability and corporate responsibility some 20 years ago I have read so many reports, studies and surveys that tried to make us understand what these words now actually mean, one could think that the penny should have dropped after such a long time. But when talking to the different levels of management, function specialists and people from different cultural backgrounds I realize that these words are still blurry terms to many. They miss a framework that helps them to translate their meaning into a daily ‘ cooking book’ of do’s and don’ts. I was wondering if I should add another definition to the discussion, but since I made such good experience with what I call the S.W.I.T.C.H. framework, I dare to do so. Let me explain in two steps: first the general explanation of sustainability and corporate responsibility in my view, and second what S.W.I.T.C.H., that derived from this thinking, means to me – and hopefully to you as well soon.
So what is sustainability and corporate responsibility?
- Sustainability is a paradigmthat tries to find the right balance between economical, ecological and social interests, globally, regionally and locally, and between different constituencies.
- Sustainability is a blueprint for the successful management of globalization. There is simply no sustainable business on a dead planet, nowhere!
- Sustainability urges for long-term thinking –short-term focus leads to long-term loss for all. The pattern so far: wins are privatized, losses are socialized, a dilemma why the idea of markets for sustainability will only work if the – still to be set – market boundaries will focus on balancing out this dilemma through pricing signals.
- Corporate responsibility is the management task to translate the paradigm of sustainability into a concrete vision, mission, as well as policies, strategies, business models, programs and success measures of an organization. CR doesn‟t equal philanthropy, but can be part of a CR strategy.
- Corporate responsibility asks for an integrated and holistic approach to define the role and responsibilities of an organization, informs responsible sourcing, producing, life long stewardship for the impacts created, marketing and branding and clarifies the individual contributions of staff and management towards sustainability.
- The understanding of “stakeholders” and their active integration into the organization‟s value chain is essential. Partnerships become key for solving crucial sustainability challenges: „we’re all in this together‟…
- Last but not least corporate responsibility is the ‘only way’ to transition from maintaining a license to operate towards developing the long-term license to grow. There is simply no other way.
Alltogether this may not sound so different from the hundreds of other definitions that you have heard before about sustainability and corporate responsibility, but I am amazed that the simple split between sustainability as the more macro/global paradigm to suceed as a human race and corporate responsibility as translator , cradle for an innovative path forward, and precondition for securing the survival of an organization is often not understood, but becomes much clearer after having mentioned those points.
What does S.W.I.T.C.H. stand for?
S.W.I.T.C.H. is a reminder of the mental switch we need to make to be able to survive. We are simply at the beginning of drastic eruptions in the industrial landscape, see my blog about the 6th Kondratiev cycle (in the ‘back to basics’ series), partially caused by of all sorts of distortions or even non-existing market signals. Looking at the impacts we cause we are dealing with this planet like a company in liquidation. That needs to end, our window of opportunity is slowly closing. Therefore only the combination between technological change AND behavioral change will help us out of the squeeze.
But S.W.I.T.C.H. itself is also an abbreviation that carries more detailed ‘reminders’ of what an organization should think about when they transform their business towards being future-ready:
S: All business transformations need to take into account the need for systemic change, esp. those industries that are very resource-intense. Remember: To be less bad is not good enough any more. Also, let’s not forget that many industries are dependent from each other, so working through the complete value circle (forget chains) is essental. There is a reason that cradle-to-grave or even cradle-to-cradle strategies are becoming so prominent.
W: Macroeconomic trends have implications worldwide and everywhere, a too narrow perspective (either in one industry or regionally) is counter-productive. Constant learning, updating and reacting is essential, working with scenarios are needed to take these into account. Serious gaming will become a mature technology and tooling to visualize these effects for a company-specific environment.
I: Corporate responsibility asks for integrated strategies. It needs to become part of the genes and the DNA, part of the ‘everything we do’ in an organization; patchwork and add-ons will not deliver the necessary performance and speed needed to be called a winner in the race for ‘ future-readiness’. There is now an inflation of the ‘genes and DNA’ talk by many CEOs; honestly, I don’t know any organization that has already fully found the right genes to be both ready on the ‘technicalities’ side and the ‘behavioral’ side of the challenge (apart from maybe those that have actually started their business out of the need to cure certain environmental or social shortcomings), and I really hope most of the CEOs should be very careful using these terms already.
T: Transparency ist simply the basic fundament that enables sustainable change. Transparency enables trust, trust enables partnerships, and only those enable continuous improvement and carry the potential to create and develop new business models. The scrutiny towards non-disclosure grows and the opportunity costs to hide will become too expensive, the reputational damage too high to dare not to be transparent. If an organization doesn’t look after it, somebody else will! The old saying counts: ‘If you’re not around the table, you’re most likely on the menu!’ Authenticity, a basic ingredient for success, will only derive from being transparent. That includes that cherry-picking communication is highly questionable and a balanced strategy towards stakeholder information needs must include admitting the shortcomings as well as mentioning of dilemmas. Some may be solvable together and everynow and then ‘agreeing to disagree’ at least helps to clarify the gaps.
C: Corporate responsibility is a collective task from top-down and from botton-up. An integrated strategic approach needs to take into account the driving forces that both directions can enable. There is a constant need to showcase that the organization cares and ‘practices what it preaches’. This as well will add to the authenticity!
H: Sustainability teaches us to understand the challenge in front of us from a holistic perspective. This also helps to clarify roles, responsibilities and ‘reasons to be’ for an organization in a society. Therefore the views of all stakeholders need to be taken into account. There is no ‘them and us’, there should only be ‘we’.
If you take those ‘reminders’ seriously you will find great value in assessing your current business model based on S.W.I.T.C.H.. But how to make sure you’re not forgetting important parts in your assessment? In my next blog I will present to you the S.W.I.T.C.H. ‘ diamond’, a high level dashboard for companies, a starting point to get ‘future-ready’. As this will be a full series of half a dozen blogs, please refer to all of them in the extra category on S.W.I.T.C.H. on this blogsite.