Sustainability: What about “values”?

I just published an article on “Helping business leaders talk about sustainability.”  The article focused on business “value,” with virtually no discussion of moral or ethical “values.” So am I a heathen or just a sell-out?

Neither, I hope.

In one of the first blogs I posted on this web site back in 2011, I wrote: “Remember both value and values. Any time you’re thinking about only one, you’re destined to fail one way or the other.”  I got some interesting comments then including:

  • “I strongly support … the focus on values driving value.” [VP corporate social responsibility, apparel]
  • “Value/value perspective [particularly interesting], as I do believe that to be the truth – when I have chased one without the other – I have not succeeded.” [CEO, marketing]
  • “I’m a big proponent of sticking to a core set of values that drives all decisions and actions.  Your values need to be your ‘rudder’ and there will be times that it results in sacrificing value or $.  I don’t see value and values as equals.  The old adage – stick to your values carries a lot of weigh in my book.” [VP HSE, manufacturing]
  • “Value and values should be the same.”  [Marketing executive]

So am I backing off of that exhortation to remember both value and values?  No. What I am doing is recognizing the realities of business, especially American business.

If there is a truly meaningful “values” conversation that your leadership engages in, and if you can be part of that conversation, fine.  But often there’s a Catch-22. If the conversation is open, it may not be the genuine, honest senior leadership conversation about values.  If it is that important conversation, it’s probably not going to be open to very many people.

Too often, the values conversation isn’t real. Many open discussions of values are more about internal branding than setting a moral compass.  Committees work to draft statements about “our values.”  More energy then goes to putting those values into a nice typeface than into putting them into action.

If the values conversation is real, getting into it is particularly tough for corporate sustainability leaders.  Given the nature of the sustainability role, many business leaders already have their shields up against their own staff preaching at them.

You have to earn the right to participate in those tougher values conversations by leading the simple, clear business value conversation first.

That’s all I’m saying. Think about value and values at the same time.  Talk about value first.

[Scott Nadler is a Senior Partner at ERM.  To share this post, see additional posts on Scott’s blog or subscribe please go to snadler.com. Opinions on this site are solely those of Scott Nadler and do not necessarily represent views of those quoted or cited, ERM, its partners or clients.]   

Connecting the Disconnected Executive

Many of us are suffering from Disconnnected Executive Syndrome (DES).  Regardless of what may show up in the CEO letter at the front of our corporate sustainability report, the CEO and the rest of the C-suite are largely disconnected from EHS and sustainability issues.  Fortunately, there’s a tool box that we’ve turned to over the years to help reconnect those executives.  For many of us, it’s time to go digging back through that toolbox, as well as listening for new ideas.

Looking backward, in some cases, it’s our own fault.  One of the biggest causes of DES is complacency born of success.  No crises, no attention.  As my CEO told me once back in my railroad days, “I haven’t seen you in my office in at least 6 months.  That must be good news.”  Some of my best work had been managing bad stuff so it didn’t escalate to a level warranting his attention.  By succeeding, had I failed?

It’s also our fault because we trained the C-suite to look at the numbers (and especially the numbers we thought we could influence most directly).  Injury rates are down, NOVs are down, waste is down, life is good.  Risk may be up, but the numbers are good – until they aren’t.

The economy is another good cause or at least accelerant of DES.  There are no secure CEOs and no secure companies.  No sector or region feels comfortably buoyant.  No one trusts public policy to leave well enough alone, let alone to help.  So the C-suite is in a state of permanent distraction.

And sometimes, it’s just time.  Messages, however compelling, get stale.  The half-life of a great internal campaign is probably about three years at best.  After that, the decay curve sets in, messages are tuned out, attention wanes, performance drifts downward.

What’s in the toolbox from before?

  • Get executives out walking around.  Even the best executives find themselves insulated in a world of meeting rooms and airports.  Walking around their own facilities and sites can often be an eye-opener.
  • Hijack an existing initiative for shock value.  Many companies periodically train and practice, even at the highest levels.  This may be around media training, preparing for Board or shareholder events, or more general emergency preparedness.  Hijack those efforts, make sure the scenarios and questions used make executives think about the right “what if” questions.  “Of course we’re world class [whatever that means], but what if X happens, how do I explain that?”
  • Change the numbers.  Show them some different numbers that look disturbing.  Those might be the rise in near misses, the drop in the average years-on-site for your personnel, the declining number of EHS professionals per 1,000 FTEs, anything to put some yellows and reds into the traditional traffic light slides, or some downward arrows where the executives aren’t used to them.
  • There but for the grace of God …” As our mayor here in Chicago used to say, never let a good crisis go to waste. When your competitor or customer or supplier or peer has a disaster (whether in West TX or Bangla Desh), make the most of it.  Brief the Board.  And when they say: “That can’t happen here, right?” don’t rush to reassure them.  That’s your opening.
  • Engage champions.  Sometimes we’re just tuned out or pushed out.  We have no real access.  Find someone who does.  Find the least likely and most compelling messenger – not your boss or someone from corporate communications, but a grizzled old manufacturing VP who has seen it all and has the respect of all.  If they say “we’re overconfident, we’re drinking our own bath water,” executives are more likely to listen.

What else is appearing in the toolbox now?  What’s emerging these days to help combat DES and reconnect executives?

  • Connect your customer’s executives to your executives.  Remember, you may be your customer’s problem.  Your counterpart may be struggling to get their EHS and sustainability messages through to their supply chain to reduce their risk.  That’s you; you’re somebody’s supplier.  Your executives may not listen to you – but they’ll certainly listen to their peers in a customer’s organization!
  • Tie your messages directly to the revenue stream.  Risk in general is a concern.  Risk to the revenue stream is an executive priority, especially in these markets.  EHS and sustainability leaders are reconnecting with executives by focusing on:
    • Risk to capital projects (“non-technical risk”).  Failures in these projects jeopardize revenues – so much that they also jeopardize share price and careers.
    • Risk to service revenue.  Many companies are tipping from making more in manufacturing to making more money in service. Much of that service takes place in your customers’ facilities.  Failure in your facility is bad enough.  Failure in your customer’s facility can stop this revenue growth in its tracks.
    • Opportunities and not just risks.  How can your services and performance reduce your customers’ EHS and sustainability risks and burdens?  Can you reduce their footprint?  Can you make their life easier?  Your sales VPs may be eager for something good to take to their customers, something that differentiates your business in a commoditized world.
  • Focus on one or two of the right numbers.  Showing your exposure on service or capital projects  or growth geographies may only take one or two numbers.  Throw out the rest of the deck and just show those.
  • Expose executives directly to your employees, especially the younger ones – both as employees and as leading indicators of the future marketplace.  Those employees care.  And they aren’t easily intimidated by management.

What’s not in the toolbox?  More PowerPoint or more data for its own sake. The disconnect isn’t intellectual, it’s emotional. Your executives are bright.  They get it. They just don’t think about it much.  If they do, they don’t think it’s their job to do something about it right now.  So don’t keep pounding the same old points and data. Focus on connection rather than cognition. Look for something that connects them emotionally.  Help make it their business.

[Opinions on this site are solely those of Scott Nadler and do not necessarily represent views of ERM, its partners or clients.]

Sitting here in (strategic) limbo…

Many of us are sitting here in limbo (with all due respect to the reggae management guru Jimmy Cliff).  Senior management faces an uncertain and uncomfortable economic outlook.  It’s not a recession, but it’s not really a recovery. It’s… limbo.

In response, many companies are trying to continue growing, but caution and even hesitation are growing too.  The feeling is far from smooth.  Companies aren’t taking their foot entirely off the accelerator.  But the other foot is simultaneously starting to tap the brakes.  Inside many companies, you can feel the friction, the drag, even some jerky starts-and-stops.

So what are EHS/Sustainability leaders supposed to do in this strategic limbo?  While they are “…waiting for the tide to turn… waiting for the dice to roll”?  Charging ahead seems risky.  But sitting still – and perhaps becoming a sitting target for cost-cutters – is even riskier.

Some EHS/S leaders are taking advantage of this strategic pause to refresh their programs and teams.  As I explained in a new article in the on-line EHS Journal, they’re taking five concrete steps:

  • Look backward: catch up with the changes that came at you too quickly.
  • Look forward: think about what’s coming.
  • Look to the bottom line: think about how you help the company make money.
  • Look inside your program: in light of the past transactions, future scenarios, and bottom-line impacts, what does your program need to do?
  • Look at your people: all of these actions may give you new insight into what your group needs to do and, therefore, what you need out of your team.

A client used this 5-step approach yesterday to help define his strategic priorities. We produced a practical action plan that will help him break out of strategic limbo – and may yield important improvements in his EHS/S programs in the coming year.

For the full article, and more insight into what some companies are doing, check out “Is Your Strategy on Pause?”

[Opinions on this site are solely those of Scott Nadler and do not necessarily represent views of ERM, its partners or clients.]

Which comes first: strategy or capacity?

That’s the chicken-and-egg dilemma most strategists face sooner or later: Do you develop the strategy you need, despite lacking the capacity to implement that strategy?  Or do you develop the strategy that you can implement, even if it’s not really the strategy you need? And how do you tell your CEO that you could have a brilliant strategy but it would require massive changes to build capacity? As companies emerge from the recession and struggle to thrive in an uncertain and uneven recovery, this dilemma is becoming acute.

It would be nice if you could do this in stages: first develop the right strategy for your organization, then neatly build the capacity the strategy requires, and only then implement the strategy.  That’s how the books say to do it.  And if time and resources allow, that’s certainly the best way to go.

In reality, there are a lot of reasons why you may not have that luxury:

  • You may have no resources.  The capacity issues may be in your own organization: Do you have the right people for the strategy you may need?  Perhaps not, but you have the people you have. In corporate EHS groups, that means they’re probably technical people, probably strong in compliance with US regulatory requirements. Your strategic needs, though, may be international, supply chain upstream or product issues downstream. Your team may have been great for the last decade’s needs, but for the next decade?  Not so much.  But budgets are tight.  You may not be able to add staff. Even if you make the difficult decision to lay off your own people to make room for new hires, you may not be able to keep the headcount.
  • You may have no leverage.  Some things are just outside your control.   The capacity issues may be above you: Does your company have the right senior team for the strategy you need?  Do you have a great financial control/execution team when you need a team of inspirational leaders?  Do you have the generals to fight the last war?  If so, you’re not likely to have much chance to change that.
  • You may have no time.  Turmoil (like recessions and recoveries), transitions, transactions or even transgressions may all require a change in strategy NOW.  Your only choice is to work with what you have.

As the saying goes, sometimes you have to go to war with the army you have, not the army you want.  (We won’t explore the source of that quote right now.) So what do you do?

  • Go with the best achievable strategy considering the capacity you have.  This will be frustrating but at times it may be necessary.  A good strategy you can implement is better than a perfect one on the shelf.
  • Use the strategy development process to educate and expand the capacity of the team you have.  You can’t coach height but can teach people to jump higher and to find ladders.  Interestingly, this approach sometimes can work both looking upward in the organization or downward.
  • Use the strategy implementation process to change out roles if not people.  If people buy into the strategy, they may be willing to buy into a redistribution of roles and responsibilities to implement that strategy – a redistribution that may put people in the roles they’re best suited to play.

It’s also useful to keep a little bit of skepticism about capacity for yourself.  If you and your senior management disagree about your assessment of strategy and capacity, don’t assume that you’re right and senior management is wrong. CEOs are usually pretty smart and didn’t get where they are without a strategy of their own – as well as shrewd assessments of capacity.  If the CEO disagrees with your strategic trade-off, don’t assume it’s because the CEO doesn’t have the capacity to understand or implement your strategy.  The CEO may understand exactly what you mean and be perfectly able to carry it out, but just choose not to.  Making those choices about what NOT to do is part of what got CEOs where they are.

Of course, CEOs often bring some caution to their role that can frustrate strategists.  As one CEO told me when I proposed a growth strategy that was more aggressive than felt comfortable to him: “They usually only let you run one of these things once in your life, and even that’s not guaranteed.  If you get that chance, you really don’t want to screw it up.”

There is no perfect answer to the strategy-and-capacity question.  But asking the question is better than charging ahead blindly.

Sustainable confusion

“Language gets in the way,” lamented a participant at a meeting of corporate EHS and sustainability officers. We had eagerly awaited insight from an annual survey that would tell us how CEOs’ views on sustainability have changed.  We were disappointed. In the prior years’ studies, we were told, participating CEOs had interpreted “sustainability” as “sustained growth”, rather than any of the broader issues we focus on.  As so often with sustainability, language had confused rather than clarified.

That “sustainable confusion” plagues well-intentioned efforts in many companies.  It is the growing gap between a sense of urgency to do something about sustainability and clarity around what it makes sense to do. Business leaders attempt to understand how sustainability affects their business, only to drown in a sea of terms and definitions.

For some, words and phrases like sustainability, sustainable development, sustainable business, global citizenship or corporate social responsibility are highly specific terms with distinct meanings.  For many, though, it’s mind-numbing gibberish.  (It hasn’t helped that sustainability has also become a branding issue. Companies, NGOs — and yes, even consultants — attempt to force-fit their issues into existing definitions or use different terms and definitions to differentiate their approach from others.)

The irony is that, beneath all the definitional mayhem, we are increasingly clear about the basics of sustainability for business. We know that sustainability:

  • Involves taking responsibility for environmental, social and economic impacts;
  • Means extending out the time range of impacts you consider, and bringing forward your responsibility to act on those impacts;
  • Reflects growing expectations on business to address these impacts (as skepticism grows about government’s ability to do so);
  • Includes both a business’ own operations and its offerings to its customers, not one or the other;
  • Requires fitting these issues into your business, not bolting sustainability on as an after-thought;
  • And is a journey more than a destination.

But somehow the language keeps getting in the way.

There is a path toward sustainable clarity.  It’s around getting the substance right first, and only then worrying about the wording.

Late last year, a client wanted to update their sustainability strategy including a definition of sustainability.  For months, the client struggled to come up with a definition that would make sense to everyone from their Board of Directors to work crews on the ground. Meeting after meeting, the definition refused to be wrestled to the ground.  Each version prompted dozens of more edits. Each added word reduced the clarity of the definition.

Then the client decided to put the definition aside and focus on what was important for their business.  Suddenly, once the strategy was clear, the definition fell into place.  The client team knew what they were talking about.  They turned that substance into a few clear, credible and compelling sentences.  When they took their strategy to their C-suite earlier this month, they only needed two pages.  The first was their definition of sustainability at their company and the proposed strategy, distilled down to a single page of text.  The second page was a single PowerPoint slide (yes, slide, not deck) to show how the strategy meshed with some complex organizational roles and responsibilities.  They won approval from the C-suite on the spot.  Now the team is working on actions rather than definitions.

Substance drove language, not the other way around.   That’s sustainable clarity.

[Opinions on this site are solely those of Scott Nadler and do not necessarily represent views of ERM, its partners or clients.]

“It’s the revenue…”

Back in the 1992 US Presidential election, James Carville reportedly posted a sign on the wall at the Bill Clinton campaign headquarters reminding staff  (and the candidate) to focus on what really mattered.  The sign said simply: “It’s the economy, stupid.”

Last week in a meeting of chief corporate EHS and sustainability officers, I had to identify the one “hot topic” driving my clients now.  Channeling my inner James Carville, I diplomatically said: “It’s the revenue, stupid.”

Certainly, some companies are moving ahead with sustainability because it is part of their core values.  That’s likely to create deeper and more enduring commitment. Others are moving ahead out of sheer momentum, because they’ve already got so much invested in sustainability and so many people working on it.  But for anyone working right now to get corporate executives interested or to reenergize flagging management attention, it really is all about the revenue.

That’s understandable.  The external drivers for corporate sustainability are sending weak and mixed signals.  The regulatory picture is fragmented, with governments everywhere distracted by debt and budget crises.  The climate change picture is fragmented, with US policy in disarray and the multinational process COP-ping out.  The consumer picture is fragmented, with markets still unclear about whether consumers are buying anything, let alone “green”.  Investors speak long-term but buy and sell on 24-hour news cycles (mostly reacting to debt and budget crises).  Even NGOs can’t agree on much besides “companies should report more.”  No wonder some at the meeting openly wondered if sustainability is a fad whose time has passed.

What is getting senior executives’ attention to EHS and sustainability now?  Anything that avoids risks and delays in creating new revenue streams.  For some companies, that means getting much better at avoiding the thicket of environmental, health and safety requirements that can keep new products out of key markets. For others, that means getting much smarter about understanding, minimizing and managing the concerns that can stall or even shut down critical infrastructure projects.  What are the biggest threats to many projects?  “Non-technical risks”: the long-term social, economic and environmental impacts of those projects, whether real or perceived. That may not carry the sustainability label, but it sure matches the sustainability content.

Call it “strategy noir”; maybe it’s the result of reading too many dark mysteries (or campaign histories) on too many long plane rides.  But if I had to get management’s attention now, I’d remember the old mystery mantra: “Follow the money.”

[Opinions on this site are solely those of Scott Nadler and do not necessarily represent views of ERM, its partners or clients.]