Change is coming!

The world is changing at a fast pace. The population is growing explosively and consumption is growing with it. We cannot remain bystanders while we eat the planet. These words come from Paul Polman, CEO of Unilever, one of the world’s largest producers of nutrition, hygiene and personal care. Companies play a role in the world of tomorrow, but how?

Abiding the law
National and international laws are often the decisive factor for the behaviour of companies: as long as the laws are respected, it is good. But is that enough for a sustainable future? Polman does not think so: 'CEOs need to understand that they cannot be bystanders anymore. They need to move from a license to operate to a license to lead and take on an active role.'

Ambition
At Unilever they put their money where their mouth is: in the Sustainable Living Plan Unilever expresses their ambition: by 2020 halve the impact while doubling turnover. Unilever does not yet know how to achieve this, because this requires many innovations throughout the supply chain. However this does not result in Unilever playing the waiting game. On the contrary: they publicly announced this ambition making clear it is optional any longer. Moreover they are completely transparent about where they are now.  By publishing a 'wish list' with innovation areas they invite stakeholders throughout the value chain to support them in finding better solutions. This creates a proactive focus on society making it a fixed part of the strategy of the business.

Collaboration
Of course there are risks: there is relatively little attention for the real problems in the world, globally confidence is low and the powerful internet can make or break a company. At company level there are problems with managing the value chain: we know little about where our raw materials and semi-finished products come from and under which conditions these have been created. So we need transparency and cooperation: we really cannot do it alone.

Paul Polman, CEO Unilever: 'Shape, share and stimulate.'

Exemplary Role
The powerful product brands are perfectly capable to fulfil an exemplary role. Think of the soap brand Dove where Unilever in their campaigns emphasized the importance of washing your hands, or using a food brand to support educational programs around eating healthy. The possibilities are endless and are sometimes simply obvious. Mostly it is a matter of wanting to do it and then making it happen. Or, as Polman puts it: shape, share and stimulate.

How happiness can make any company stronger

Today - Wednesday, 20 March 2013 - is a special day. It is the first International Day of Happiness, proclaimed by the General Assembly of the United Nations, because the pursuit of happiness is a fundamental human need. But what is happiness anyway? And what does this mean to companies?

Putting people first

The status of a country is usually deduced from their Gross National Product: the total value of all goods and services produced in a given period. Not in Bhutan, where King Wangchuk in 1972 developed a new measure: Gross National Happiness. On the basis of 33 indicators the 'turnover' of the country is measured, including health, psychological well-being, education, culture, governance, community, ecology, living standards and the use of time. In Bhutan they look further than their pay check, people come first. Notwithstanding these noble initiatives, there are also critics: many measures are subjective and negative developments (such as crime) are not deducted. But still, we can learn much from Bhutan.

Mental health

Over the years Bhutan has become an inspiration. In 2012 the Earth Institute published - commissioned by the United Nations - the World Happiness Report. Some notable conclusions in it:
- 'Rich' countries are happier than 'poor' countries. This does not mean more money, because the strength of the social safety net, the degree of personal freedom and the absence of corruption have a bigger impact on happiness;
- Job security and good working relationships are more important than salary and working hours;
- In each country, the most important factor is: the mental health of its population.
How entrepreneurs can use this knowledge?

Illustration: Ivo van Leeuwen.

True faith

Ricardo Semler is the CEO of a Brazilian company called SEMCO. He is a man devoid of authoritarian structures. This is proved by the fact that on his first day as CEO he fired as much as 60% of his executive team. Multiple times Semler was proclaimed 'Brazilian businessman of the year’ because of his unorthodox management style. SEMCO is characterized by an open culture with lots of room for personal initiatives: there are no fixed working hours, no dress code and a minimal number of procedures. The company consists of independent cells where every employee has access to and participates in de business, even on financial level. The employees have real freedom, there is a genuine trust. And it pays off, because annually SEMCO grows 25% on average!

Fun

Actually, the message is simple: the happier employees are, the better they perform. Ensure that people are genuinely involved in the organization and enjoy their work, that's the point. Or as Semler himself puts it: "If we do not let people do things the way they do, we will never know what they are really capable of and they will just follow our boarding school rules."

Practicing sustainability difficult? Of course not!

Often there is a world of difference between theory and practice. How to make the transition from model to reality? How to implement a sustainability strategy? When using the EFQM Excellence Model that is not so difficult.

Sustainability
From the very beginning the EFQM network felt ‘society’ needed to be one of stakeholders in the EFQM Excellence Model. And as a result the interests of the public at large have always been part of the values underpinning the criteria of the model. These values, there are eight, are called the Fundamental Concepts of Excellence. In the 2013 revision of the model the ‘society concept’ is titled: "Creating a Sustainable Future".

Good management
The EFQM network always considered the EFQM Excellence Model to be a 'sustainable model'. Implicitly, but also explicitly, society is part of the EFQM model criteria and sub-criteria. And during more recent evaluations of the EFQM Excellence Model 'having a positive impact on society’ has become even more apparent as one of the principles of ‘good management’ according to the EFQM.

Illustration: Ivo van Leeuwen.

 Supply chain
To create a sustainable balance between the interests of companies, people and the environment (people, planet, profit) strategic focus should be directed towards international socially responsible supply chain management. This supply chain approach is also the point of attention in the debate on transitioning from a linear economy to a circular economy, going from ‘take-make-waste' to 'borrow-use-return'. All this goes far and beyond the realized positive or negative impact of the company itself.

Golden combination
Using The Natural Step Framework an organization develops a sustainability strategy with the planet as one of the stakeholders. With the EFQM Excellence Model, consisting of the Fundamental Concepts, the nine criteria of the EFQM Model and RADAR, this sustainability strategy can be implemented. Using the EFQM Excellence Model an organization can develop a culture of excellence, bring consistency in the management style, compare themselves to the good examples of others and encourage innovation to improve results. The Natural Step and the EFQM Excellence Model are therefore sustainability’s golden combination.

The planet is everybody’s stakeholder

Sustainability is about creating the kind of world we want for ourselves, our neighbours, and future generations. It challenges us to live our lives and make decisions as individuals, organizations and societies so that we make sure that future generations have access to the same opportunities and quality of life that we do. How do we get there?

Shared Value
In 2013 sustainability plays an increasingly important role. 'Creating Shared Value', that is what it is about these days: "The concept of Shared Value - which focuses on the connections between societal and economic progress - has the power to unleash the next wave of global growth." The thinking is that every business is part of society and therefore has a role to play in societal development. By understanding these developments and examining how a company can make a positive contribution, shared value is created that benefits both the company and society.

Society
The challenge lies in recognizing the stakeholder groups within in the ‘society category’. Focus quickly is put on local communities, local authorities, non-governmental organizations and universities. Still we insufficiently realize that 'our planet', which is threatened by pollution, destruction and overconsumption of raw materials, is an important stakeholder of us all. This is crucial piece of awareness when designing a global durable balance between the interests of companies, people and the environment (people, planet, profit).

Cost reduction
It is a noble aim, but to date, the focus of sustainability in organizations is mainly relating to measures that increase efficiency: less waste, less transport and less resources. These objectives have one thing in common: cost reduction. There is nothing wrong with that, but this is different from taking responsibility for the entire product, from raw materials suppliers to the end consumers.

The Natural Step
Our planet is at the center of The Natural Step (TNS) Framework. TNS is a tool for strategic sustainable development that uses a '5-layer framework'. To prevent that organizations get lost in the details of problems, TNS looks at the causes 'upstream' on planet level. Through the method of 'backcasting from sustainability principles' a sustainability strategy is developed.
Sustainability is a complex issue. To make sure the actions resulting from the sustainability strategy are realised, the TNS Framework is best used in conjunction with other tools. In my next post I will discuss the use of the EFQM model in relation with The Natural Step Framework.