Strategies for implementing sustainability: five leadership challenges.
Without question, "sustainability" is the latest buzzword in many sectors, public and private, for-profit and nonprofit. Is it just the latest fad? This paper, the first phase of a larger research project, agues that sustainability is "creating permanent shift in the very nature of business." Sustainability integrates three spheres--profits, the planet, and people--often viewed as competing or contradictory. How can management integrate them to boost the "triple bottom line?" This study identifies the leadership challenges through a literature analysis and emphasizes that measurement tools often miss the point: the pursuit of an organization's particular brand of success is a journey, not a destination.
"Sustainability" has come to have many different meanings. It's the latest buzzword among business, government, and nonprofit entities. Business leaders must be wondering if it's just the latest management fad of a concept that will fundamentally change how businesses are managed and measured. This paper is based on the notion that sustainability is more than a fad, but rather is creating a permanent shift in the very nature of business. Since the advent of the paradigm of sustainable development in the 1980s, the private sector has been shifting from a narrow economic conception of responsibility toward a comprehensive approach that attempts to balance economic objectives with environmental pressures and changing societal expectations (Robinson, 2000).
The Brundtland Commission (World Commission on Environment and Development, United Nations, 1987) is generally credited with introducing "sustainability" in their report, Our Common Future. The report states that "Humanity has the ability to make development sustainable--to ensure that it meets the needs of the present without compromising the ability of future generations to meet their needs." Thus the term was coined originally in reference to sustainable development, and the purpose was to encourage development with a dual focus on reducing poverty and taking into consideration long-term ecological effects. Critics have written that the term is an oxymoron, an illusion, or both (Livingston, 1994; Sachs, 1999). The concept has expanded since 1987 and now has a focus on economic profits, social impact, and the environment. The term triple bottom line, or TBL, was coined for this tertiary focus by Elkington (1998) in his book, Cannibals with Forks: The Triple Bottom Line of 21st Century Business. Elkington also refers to the triple bottom line as the three P's: "people, profits, and planet."
For this study, the author likes the definition set forth by Dow Jones (www.sustainabilityindexes.com): "A business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental, and social developments." The literature on sustainability is expansive. A Google search in February 2009, on the term turned up 28,100,000 entries. A search on "sustainable" leadership turned up 13,700,000, and within Google Scholar, 230,000 entries. The literature includes numerous studies on evaluation and reporting concepts, which will be expanded upon later in this report, and to a lesser extent on how organizations manage their relationships with various groups of constituents, i.e., stakeholder management. However, there is little empirical research on sustainable leadership strategies. In other words, the focus of much of the research is on evaluation and monitoring, with little attention to strategy formulation and implementation of how leaders create a sustainability strategy among organizational members.
Sustainability as a concept is based on the integration of three historically separate communities: those primarily interested in profits, the planet, or people. How can business leaders manage this juggling act? Should the strategy be to treat them as separate communities as an emerging coalition? There is a tendency to view the three communities as contradictory, with competing interests. This results in a balancing act, in which the emphasis is on trade-offs among the three communities rather than on a synergistic approach seeking mutual gain. The problem is exacerbated by separate training of experts in the three fields, the collection of data in each category, and the frequent division of government mandates into separate economic, social, and ecological bodies (Gibson, 2006).
As interpretive research, the primary task of this study was to identify the leadership challenges inherent in managing the triple bottom line. How can the demands of the triple focus be integrated? How is organizational support achieved? How is sustainability coordinated and integrated across corporate, business, functional, and project-level strategies? As noted, much research has been conducted on evaluation and reporting methods. However, sustainability may be more a journey than a destination: It requires continuous management attention as well as development of capabilities (Jones, 2000). This article summarizes the literature in five distinct areas, each representing a leadership challenge. These are discussed along with the implications for capability building. The focus of this study is on the journey, not the destination.
This paper represents the first phase of a comprehensive research project on sustainable leadership. The larger project adopts a grounded theory approach. This method utilizes secondary data in the form of a meta-analytical literature review to identify existing research (the focus of this paper). The literature is then critically reviewed and analyzed through a process of conceptualization, which disaggregates a mass of data into meaning and related parts or categories. This is followed by the second phase of the project entailing empirical research comprising case studies conducted via a questionnaire and in-depth interviews. The final phase is the development of a conceptual framework for sustainable leadership and validation of the framework.
The triple bottom line approach represents the three pillars of sustainability. Each of the three can be associated with a specific community of interests represented by various organizations including governmental entities and nonprofits. How does an organization balance the needs of each of these communities? Is balancing the correct approach? The literature reveals a tendency to neglect the interdependence of these factors and to see them as conflicting rather than complimentary (Gibson, 2006). This pillar approach might also encourage a thought process driven by the notion of trade-offs, which may have some implications but should not be the assumed approach to stakeholder engagement. Colbert and Kuruez (2007) conducted a study of companies with positive reputations in terms of sustainable practices, based on community or national awards or global recognition in indices such as the Dow Jones Sustainability Index. Their research found that organizational leaders have different conceptions of what sustainability means to their company. Each of these schools of thought has implications for stakeholder engagement. They found that companies either had a propensity to balance the stakeholder group, or to pursue a more integrative approach. Those in the former group described stakeholder groups as entities whose interests were to be traded off--the various needs of stakeholders were depicted as discrete and mutually exclusive. The triple bottom line approach represented to them three separate types of risks to be managed and mitigated. The latter group held a more inclusive view of sustainability, viewing it as an opportunity to leverage an inclusive stakeholder view to create broad value for society.
The integrative approach to stakeholder management is not new to the theory of strategic management. Although there will always be conflicting demands and interests among stakeholders, there is value in exploring how an organization can achieve benefits for all (Dess, Lumpkin, and Eisner, 2008). This process referred to as "stakeholder symbiosis" in the strategic management literature, recognizes that stakeholders depend upon each other for their success and well-being.
We might understand this concept better when it is applied to our personal lives. An analogy of the three pillar approach might be managing three aspects of our lives: work, family, and personal health. One example of a symbiotic strategy is physical fitness. Good habits and regular exercises have positive implication across each of the three pillars, enhancing overall health, work, and family life. Thus, regular exercise is not a trade-off but a mutually beneficial strategy. Similarly, the leadership challenge with regard to sustainability is to think in term of mutually supporting gains. This perspective is supported by Liebold, Probst, and Gibbert (2002, 16), who contend that "linkages, networks, and symbiosis are the order of the day."
Symbiosis requires leaders to integrate the needs and interests of all stakeholders, not appease them through trade-offs. The related capabilities involve the ability of an organization to engage in a continuing dialogue with each community of interest. The most common strategies appear to be governance frameworks that address cross-pillar concerns. Examples of this include representation on the board of directors from each of the three communities, and representation among senior management. Many organizations have created a management position with responsibility for business sustainability, e.g., vice president for sustainability, or director of sustainability. This also raises the question (which will be explored in later stages of this research project): Who should be the C-level advocate for sustainability?
Creating the culture
Organizational change has become constant, and people are weary of it. Sustainability, like any new initiative, may be received by employees (and other stakeholders, particularly vendors) as yet another fad or the flavor of the month. Organizational change can be compared to rafting, which involves high exertion and stress while in the white water, followed by calmer waters allowing rest and recovery before entering the next set of rapids. No organization should be in the white water all the time. People need time to adjust in between major initiatives. The constant rolling out of new business approaches (e.g., six sigma, project management, lean, etc.) is often compounded by the fact that new changes rarely overlap or integrate with former initiatives. Companies that implement sustainability without addressing these issues run the risk of adversely affecting employee morale and productivity. The response may be resistance to change, accompanied by thoughts of "here we go again."
Companies ate more likely to mitigate resistance to change if the initiative is understood in terms of the desired cultural change. Schein (1993) defines organizational culture as:
A pattern of shared assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.
Schein has conducted extensive research on culture and maintains that culture is the core concept in managing and improving organizational behavior. He also insists that one of the pivotal elements in leading organizations is acknowledging and understanding shared values. It stands to reason that if an organization undertakes an initiative as significant and integrative as sustainability, with all of its far-reaching implications, then sustainability must become a core value.
How can a company infuse sustainability into core values? Understanding the purpose of the change is the starting point. If a change initiative is going to stick, the members of the organization need know its purpose. Why change, and why now? Because the CEO recently went to a conference and heard about 3BL accounting, or attended a session on sustainability, is not a compelling reason to change. Because it is the latest buzzword is not a compelling reason. Because the board of directors wants to improve the company's position in the Dow Jones Sustainability Index is not a compelling reason. Employees need to appreciate and value the reasons for change. Once they are convinced, the organization's readiness can be assessed and a detailed action plan drawn up.
Business leaders might also review their mission, vision, core values, codes, and commitments in regard to sustainability. Do they reflect the sustainability intent? Most large organizations have a code of ethics. Does the code address the needs and interests of society and the environment? Some companies have also created a list of "commitments" in addition to core values. For example, Novo Nordisk states that their commitments are to financial, environmental, and social responsibility. This also raises the question: How are commitments different from core values? Are we not committed to our values? Perhaps an alternative approach would be to incorporate the commitments into the core values. This might minimize confusion and enhance the clarity of the intent of a sustainability focus.
Existing theories of leadership and business strategy have traditionally been based on the role of the leader in reducing complexity and uncertainty. The effective leader is expected to gather data and conduct analysis to understand a situation, develop a strategy for the best course of action, and then lead, direct, and inspire team members around a vision for the future. These approaches to strategy are predictive processes whereby leaders are expected to devise thoughtful, informed, and deliberate decisions that will lead to organizational success. In this view, the effective leader is the grand strategist. The leader is expected to know the way, show the way, and go the way.
Popular strategy models from the last three decades encourage leaders to think of organizations as systems they can control and direct. Organizational leaders face a much more complex world than existed when most of the classical strategy and leadership models were developed. Companies must differentiate their products and services more than ever, while producing at a low cost and balancing the impact of their operations on the environment and society. Many of these objectives seem contradictory and competing, requiring leaders to understand the concept of paradox and to lead in innovative ways, developing strategies that sometimes defy long-held assumptions. Traditional leadership and strategy models are grounded in the Newtonian science of reductionism, which views organizations as mechanistic systems rather than complex organic ones. The literature suggests that an organic approach is more appropriate for a concept such as sustainability.
The dilemma in applying these models today arises from their simplicity. Existing models focus on balancing only a few variables: bottom-line results and human relations, or, as often referred to in the literature, as task and process. The modern business environment is characterized by increasing global integration, connectivity, and complexity, which requires more holistic and organic leadership strategies.
We are just beginning to learn about holistic approaches to business strategy and how the many parts affect one another (e.g., local and global economic systems, human capital, natural resources, social conditions, etc.). The research is also just beginning to explore the nature of managing uncertain and ambiguous situations. Appreciation of uncertainty is necessarily part of the sustainability concept (Gibson, 2006). The leadership challenge is for business leaders to recognize and accept a new reality in which easy answers, quick fixes, and magic bullets are difficult to find (Jonahs, 2005). The pathways to success are increasingly complex and ambiguous, requiring strategies in which organic growth and innovation become the drivers of sustainability.
The implication of a holistic approach to a complex environment is that traditional management strategies no longer suffice in bringing the necessary organizational change. Spreitzer and Quinn (2001) propose that organizations need the knowledge, energy, and innovation of every employee to meet the challenges of a complex and dynamic environment. This perspective is mirrored by Senge (2006) who asserts that "it is no longer sufficient to have one person learning for the organization. It's just not possible any longer to figure it out from the top, and have everyone else follow the orders of a grand strategist." The organizations that excel in the future will be those that understand how to engage every member of the organization, gain their buy-in to new initiatives, and build capacity for learning at all levels of the organization. Other scholars have argued that a high capacity for learning is a crucial feature of successful organizations (Bedeina, 1986; Mohrman and Cummings, 1989). Specifically in regard to the topic of this paper, several scholars have proposed that the capacity of an organization to learn effectively plays an essential role in sustainability performance (Nattrass and Altomare, 1999; Senge and Carstedt).
Nattrass and Altomoare (1999) stress the importance of organizational learning to support a sustainability initiative:
Our research has shown that for those business corporations that make the commitment to sustainable development, the understanding and practice of the organizational learning disciplines will be the indispensable prerequisites of a successful transformation to sustainability.
Senge et al. (1999) also argue that the development of an organizational learning culture is necessary to foster a culture of sustainability. Jamali (2006), in his research on integrating the triple bottom from a learning organization perspective, identified the most common characteristics of a learning organization. Although he cites 12 different characteristics, Jamali notes that the most important are the notions of systems-level thinking (i.e., holistics) and learning culture.
Another area of organizational learning that deserves attention is leadership development. Dive (2008) notes that distributed leadership is the foundation of sustainable leadership. It would be a mistake to focus only on the top-level leaders, or the "Napoleon Sydnrome" that believes the leadership is the result of only the top person. Sustainable leadership is best achieved by providing an appropriate conceptual understanding of the initiative to every level of leadership.
One final aspect of organizational learning that should be addressed is the notion of individual commitment, or buy-in. Some organizations are taking steps to reinforce a personal sustainability ethic. For example, Wal-Mart has implemented the Personal Sustainability Program, referred to as PSP. It is not uncommon to see employees at the corporate office wearing lanyards that say: "What's your PSP?" This concept encourages every employee to identify strategies to minimize environmental impact in their personal lives and to share these strategies with others. This encourages dialogue about sustainability, and infuses the concept into the day-to-day culture of the organization.
A thorough treatment of organizational learning interventions that might support sustainability is beyond the scope of this paper, but a few examples are listed in Table 1.
Measurement and reporting
The extant literature on sustainability focuses largely on the implementation of monitoring and evaluation systems. Perrin and Tencati (2006) report that over a period of 15 years, more than 100 standards and management solutions were developed to evaluate and report the economic, social, environmental, and sustainability performance of organizations. Some of the most common systems include triple bottom line (TBL) accounting, the balanced scorecard, international standards such as the sustainability reporting guidelines fostered by the Global Reporting Initiative, and the Dow Jones Sustainability Index. One of the most well-known approaches is TBL accounting, which has been adopted by 68% of the Fortune 250 (KPMG, 2005).
The proliferation of reporting systems has created confusion and lack of clarity for management, employees, and external stakeholders. The purpose here is not to evaluate the relative merit of any one system, but rather to ask whether there should be one single system. Business leaders understand there is not any one barometer for measuring financial performance. Financial evaluation of a firm is multi-faceted and includes measures related to the income statement, balance sheet, cash flow statements, earnings per share, etc. Just as there is not a singular measure for measuring financial performance, there is not a silver bullet for measuring sustainability.
The leadership challenge represented by sustainability measurement and reporting systems has to do with the integrative nature of the issues and whether these systems really make a difference. Cerin (2002) suggests that the traditional environmental, social, and sustainability reports are defined more as public relations products than as effective methodologies to control and manage the corporate performance. The main challenge facing business leaders has to do with strategy formulation and implementation, rather than which measurement system to use. Anthony and Govindarajan (2004) define the systems used to implement management control as follows:
Management control systems are tools to implement strategies. Strategies differ between organizations, and controls should be tailored to the requirements of specific strategies. Different strategies require different task priorities, different key success factors, and different skills, perspectives, and behaviors. Thus, a continuing concern in the design of control systems should be whether the behavior induced by the system is the one called for by the strategy.
This topic also cannot be considered without referencing the previous discussion regarding holistic systems and the ability to manage ambiguous situations. Many business managers have a propensity to follow directions outlined by a particular process or control system, rather than to deal with ambiguity. The leadership challenge is to create a culture of innovation and creativity that will identify appropriate strategies for implementing sustainability and then choose the appropriate measurement and monitoring system, based on what will work within the unique culture of the organization.
Summary and Conclusions
This article contributes to the sustainability literature in three ways. First, an analysis of the extant literature on sustainability reveals five leadership challenges: stakeholder engagement, creating the culture, organizational learning, holistic thinking, and measurement and reporting. The common thread in these five areas is integration. Any one area cannot be considered without looking at the whole.
Second, the fallacy of a measurement or reporting focus is that the emphasis becomes the destination rather than the journey. There is no silver bullet to ensure success. In fact, part of the difficulty lies in determining what success means for a particular organization. The approach of simply implementing common measures does not encourage innovation or creativity. Sustainability is an integrated effort that requires dialogue among the various communities of interest and organizational learning directed toward every employee level. Business leaders who implement a piecemeal approach to sustainability are unlikely to achieve the desired results.
Third, this report is the first phase of a research study based on the grounded theory approach. As interpretive research, the primary task of this phase of the study was to identify and conceptualize the leadership challenges involved with a sustainability initiative. The next steps are to collect qualitative data through a questionnaire and in-depth interviews, followed by the development of a model for sustainable leadership and pilot testing of the model.
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Derek E. Crews, Texas Woman's University
Dr. Crews teaches strategy, management, and leadership. He focuses his research on sustainable leadership, supervisory skills, productivity, and transportation and logistics management. In addition, he has provided consulting and training services for numerous Fortune 500 companies, government agencies, economic development groups, and universities.
Table 1. Organizational Learning Implications Organizational Learning Implications Category Interventions Talent Management * Integrate sustainability objectives into recruitment and selection process to seek better fit with new hires. * Acquire talent with knowledge and skills to support a sustainability initiative. Training and Development * Support sustainability objectives through training initiatives at all levels of the organization. * Integrate sustainability intent throughout mentoring, coaching, and career development processes. Leadership Development * Identify the role of leaders in aligning business objectives and processes with sustainability. * Provide development opportunities and drive dialogue among all levels of leadership to build conceptual consensus on sustainability.