The S.W.I.T.C.H. Diamond Areas (2) – Behavioral Readiness
Why do we need to focus on behavioral readiness?
It was in 2005 that I first saw the diagrams produced by the now called Global Footprint Network(GFN) that showed in a very easy and understandable way the different sorts of needed transitions towards a sustainable world, differentiating between the developed world and the developing and emerging economies. On the side of the developed world a mix of ‘eco-efficient technologies and behavioral change’ was recommended to get us globally back on track regarding resource use and absorption capacities of planet earth, while in the rest of the world building ‘development capacity and technological leap frogging’ were recommended as the necessary tactics. The latter was based on fact that at this moment 4 billion (and by 2100 potentially up to 7 billion) people still live way below the allowed use of footprint hectares (if nothing changes), but if they all were about to simply adopt a western lifestyle and copying these consumption patterns, our overuse of planet earth would rise to 4-5 planets. While globalization in these parts of the world needs to continue to not risk migration waves, war on resources, uncontrolled effects of climate change, unfavorable dictatorship or other even worse alternatives of failure, at the same time drastic changes in the consumption and production patterns are unavoidable. The set of tactics for the developed world was focusing on reducing our ridiculous footprints back to the ‘1 planet line’, while the diagrams showed an existing overuse by 4-10 times of the allowed, depending where in the developed world people consumed. Also here, change in the consumption and production pattern are unavoidable. What an enormous challenge! While the message is so crystal clear and the tactics are generally undisputable, 6 years later we are still on the slow death path.
Reflecting on myself, 2005 was also the first time where it became clear to me that my own career was up to that point in time fully focused on helping to improve the technicalities’ side of sustainability – working on management systems, indicators, reporting, dashboards, target-setting, etc. – while somehow assuming that managing sustainability with all these partially new/partially adapted great tools would automatically lead to the enlightened leaders that will then understand that they need to make a S.W.I.T.C.H., inspired by the that new transparancy that so obviously showed that all together they have driven our global economy to unsustainable levels in which they simply alltogether risk the continuation of their businesses; wouldn’t there be anything more needed to really make them move? I couldn’t have been more wrong! There is of course nothing wrong with the development and digging up of the necessary IT, data, systems, governance, measurement, reporting and communication aspects of sustainability, and sure there are companies that have started the change, but we need to realize that it’s just one side of the coin, and that we have so far failed to give the other side of this coin the same level of recognition to be future ready: behavioral change!
It all starts with the understanding that sustainability is first and foremost a set of beliefs! Top managers really need to BELIEVE that the economy will never be a superior way to manage the ecology; it’s vice versa: economy needs to adapt to the rules of ecology. I’d like to quote from Gregory Unruh’s insightful book ‘Earth Inc.’, in which he says: ‘While Joseph Schumpeter is credited with coining the term “creative destruction”, nature is the inventor of the concept … in a sense, nature is the world’s most efficient market. When a particular participant in the natural world is failing to use available resources efficiently, nature will, without sentiment, evolve a replacement that will.’ The economy will also need to adapt to society’s new rules of transparancy, community building and crowdsourcing as well as co-creation of intellectual capital. Again, Gregory Unruh can be quotes here: ‘No company or product is an island. Even the most vertically integreated business depends on a huge number of relationships with customers, communities, regulators, and suppliers of energy and other needs … As a consequence, no company can be sustainable by itself.’
If the vision, mission, values, the corporate culture and strategies are absorbing those beliefs, if management is consequently walking the talk and no ‘shadow realities’ exist in the recognition of what an organization stands for, there is a fair chance to achieve a consistent appearance that can really lead to a sustainable organization. And this is where the development of role model behavior is barely needed.
In the last 15 years I have seen some attempts of companies that tried to get to an understanding of the behavioral change side of sustainability, and as a result implemented codes of conduct, installed ethics officers and whistleblower procedures, imposed e-learning courses or ran stakeholder dialog sessions. They did this while they continued to deepen the technicalities side of sustainability even more. But how much have they really developed a good understand of the needed role mode behavior? How much has top management really started to BELIEVE?
Unfortunately most of the successful concepts came out of those board rooms that were confronted with really severe cases of unsustainable behavior and practices – with the potential to completely ruin the reputation of their organizations, and where it really neeeded radical transformation and often also new staff and top management representatives to make the necessary progress, think of Nike’s case as the ‘mother of all case studies’ or more recently Siemens and their complete turnaround after the corruption scandal. On the other side of the continuum we saw organizations that simply started out of deeply societal motives, mostly driven by one charismatic leader that saw the urgency. Just in recent years the examples of Interface (with a complete shift of mindset of ex CEO Ray Anderson) or more recently Unilever (with CEO Paul Polman introducing societal targets to define how the company wants to be perceived and held responsible for) gives some hope that the huge amount of companies in the middle mass of the continuum also start their turnaround, away from the slow death path.
The 4 ‘L’s’ that enable behavioral change for sustainability
If one looks at the common patterns of the (supposed-to-be) successful cases, I found the following ‘four L’s’ a useful cluster of recurring enablers; they describe basic areas of attention to trigger behavioral change and none of them can be in my view left out in order to develop a holistic perspective on this part of the S.W.I.T.C.H. Diamond and an overall sustainability approach at all:
• Learning: understanding sustainability well is very much a translation challenge of how macro-trends will effect the micro-cosmos of an organization and what the answers of the organization towards these challenges actually are. Only from there you will be able to see if an organization is part of the problem, part of the solution, maybe both. Of the roundabout 70.000 multinational organizations on this planet only a small percentage (20% if I remember right) uses scenario planning or visioning, and those who do often don’t plan longer than 3 -5 years. The argument that the world is changing that quickly so that a view beyond that time-frame doesn’t make sense is just a bad excuse and caused by reactive motives. Be the change you want to see in the world! All change starts with one thought! Consistent awareness raising taking into account the macroeconomic realities and their long-term effects (using a North Star approach), while consequently translating them into the micro-economic boundaries of the organization is therefore as crucial to sending the right signals regarding urgency and importance on all levels of the organization. If people understand they will also start to BELIEVE!
• Leadership: sustainability needs consistent leadership behavior that doesn’t allow any question about the intentions of management to maintain and grow an organization short and long-term. Is it visible that the organization is a conglomerate of excellent skills existing to create economic value that can visibly be linked with shared value for stakeholders that relate to the organization’s value cycle? Responsibility and authenticity are the keyword here, and a clear commitment is needed to do everything possible that there are no ‘losers in the value cycle(s)’. One can often observe cases of what in medical terms would be called ‘split personality’, meaning a split between what top managers say and what the organization than really does (externally) or how their talks are perceived at the shop floor level, if recognized at all (internally). I am getting really nervous when a CEO tells the world that sustainability would be so much part of the genes and DNA of their organization. How do they know? What measures tell them that this is actually the case? Sustainable leadership needs to be lived from the top and needs to find its way into the organization through the right messaging and behavior on all management levels. Islands of non-believers, wrong incentives, different beliefs of part of management are in my view the reality, and a clear idea of the needed role model behavior hardly exists anywhere.
• Legitimacy: when it comes to test the real level of understanding of sustainability within an organization, try to find out their understanding of the difference between what is legally right and what is legitimately feasible. The financial crises has given us so much case studies about the failure of an organization to develop this little, but very fine difference between the two. It is exactly that same fine line of understanding that is needed to enable and explore if economic value added created can indeed also create shared value added or not – think about it for a moment! In order to develop these antennas organizations need to consistently synchronize with stakeholder perceptions, it’s this fine line where the primary focus of the business intentions really come to light: is the organization a vehicel to make as much money as possible and stakeholders should just swallow whatever the company says and does or is there a social purpose that enables the organization to thrive economically as well and therefore not everything that is legally possible is also legitimate? The upheaval about bonuses given to top management of banks while they are still dependent on tax payers money after the fiancial crisis is just one example. Not seeing that there is a need to take fuller responsibility for the human rights and labour rights abuses in supply chains is another, taking money for call center calls to enable customers make a complaint about the malfunctioning of a product or service (if that possibility exists at all!), not seeing the powers of social media to collectively advocate against unsustainable practises and then be surprised about the waves of unrest – on top of many other examples – is where the rubber hits the road. Let me say it that way: a company that just needs the articles of law to commence with a certain practice takes a quite questionable path. A company that absorbes the reaction of stakeholders and can make the difference between what is legally right and legitimately appropriate has made big steps in becoming a sustainable organisation and building reputational buffers.
• Legacy: I have spoken to many top managers and have often asked them how they would describe what they think their organization is famous for and how they would decribe their own contribution to this legacy. I observed that most of them have no problem to go to the past, describing some of he motives of their founders, but there is often radio silence when asking about the future. While having a certain legacy from the past is great since you need to know where you’re coming from in order to describe where your heading towards, developing a future legacy is in my view an absolute must to move to a sustainable path. It offers a way to shift a mindset since it is a way to anticipate how the outside world will look at your organization in let’s say one generation from now. It forces you to connect to the macrotrends and their influence on global environmental and societal changes, how stakeholder perceptions might change and what the actual positioning of the organization will be towards stakeholder influences. It is a difficult task and there is no absolute thruth, but isn’t that where radical innovation starts?
The link to the 5 other S.W.I.T.C.H. Diamond areas of readiness
Let’s again pick up the idea of the diamond and see what glue behavioral readiness can contribute to the future readiness of an organization. In how far are learning, leadership, legitimacy and legacy aspects that should be supported through the right level of attention in the other 5 areas.
System readiness: in general I think it merits to remark that all that we do is or remains an outcome of the work of people, even if they often use tools and think they CAN leave responsibility to tools. How often have you all heard things like ‘the system doesn’t allow me to make that change’ or ‘I don’t have access to the system right now’, or ‘in order to serve you well I would need to change or bypass the system’. In our IT driven world you can already say: ‘if it’s not part of or IN the system, it doesn’t exist’. Using systems as an excuse or inability to change, or responsible acting is not possible because the system takes over, is awfully wrong (being a ‘slave to the system’). One of the biggest challenges though for system engineers is really to create systems that are adaptable, able to learn, and easy to use. Regarding sustainability, systems support should enable change and not block it!
Let’s now look at some of the other subsystems and how they need to be designed to support behavioral readiness
- Governance: A company’s governance describes roles and responsibilities and allows people to take ownership for themes relevant to the functioning of an organization. The development of especially corporate governance codes in the last decade have shown a path to generally open up to reputational aspects and sustainability, King III of South Africa being the leading code. For the first time sustainability has been adressed and it has been recognized that ‘sustainability is the primary moral and economic imperative for the 21st Century and it is one of the most important sources of both opportunities and risks for businesses’. Most corporate governance codes at this moment haven’t absorbed sustainability aspects explicitely or at least beyond thinking of remuneration of top management, a viral discussion at this moment. The development of codes should enable the 4 L’s, not restrict them, so enabling the macro-micro thinking, intergenerational aspects of the effects of an organization’s doing, the development of a view of legitimate action and an idea of a company’s legacy in the light of a sustainable world should be enabled.
- Management system: Using the standard plan-do-check-act management systems approach is generic enough to capture sustainability in its totality. The use of ISO 9000, ISO 14000, ISO 26000 and other standards of the ISO family and policy, reporting and assurance standards, aggregated towards an integrated management system approach, has all ingredients to manage sustainability. The fluidity to absorb new stakeholder signals and to react to them is partially dependent on how smooth the management system works, meaning the ability to adapt the system to a changing environment.
- Risk management: Sustainability and its variuous aspects need to be absorbed in the risk management evaluation of a company. How much that is done is dependent from the way the company breathes the 4 L’s and is willing to constantly question its own view of the world and its ambitions therein. Aspects like carbon risk, biodiversity loss risk, water risk, human rights risk, corruption risk (amongst others) need to become part of the risk holistic.
- Strategy development: The development of future scenarios, taking into account the big macroeconomic shifts and work on long-term strategies that absorb the idea of creating shared value instead of focusing on just pleasing shareholders is dependent on the 4 L’s level of maturity. The same is of course true for innovation and the ability to radically transform. Working with the right visioning tools, like e.g. the Natural Step funnel, need to become standard tools of the strategist.
- Data management, internal audit and management information systems are the quality and information backbone to assemble, aggregate and inform about the existing situation, in order to be able to anticipate the future. The spectrum of data available needs to cross the company borders and go further than just the usual inhouse software solutions. The willingness to benchmark and to assure data by professional service firms is a sign of the seriousness and prioritization of sustainability within the organization. Not really astonishing is the fact that organizations that realize the 4 L’s do not question those needs.
Stakeholder readiness: There is a clear symbiosis between behavioral readiness and stakeholder readiness. The more the 4L’s are living within an organisation, the more value stakeholder dialog and interaction will develop. Ignoring any of the 4 L’s will cause stakeholders to react and will lead most likely to reputational issues or damage.
Product and service readiness: The most direct contact to the outside world is through the products and services offered, often through direct company representatives (workers, consultants, sales people) or through intermediates (goods or services sold in shops or by third parties). They all represent part of the identity as well as the products themselves and the way they have been produced and by whom. More and more of this information is available today and supports buying or contracting decisions, relationships, or simply gutt feelings. Anyone in an organization should be able to explain in how far a certain service or a certain product helps supporting the specific needs of a client, but in the same way should be able to raise awareness about additional benefits created in sourcing, production, delivery or takeback. Again, the 4L’s can be a good focus point to create the right messaging.
Infrastructual readiness: A lot of what a company represents is visible through buildings (production sites or office buildings), logistic equipment (planes, trucks, carpark) , IT infrastructure (data centers, individual IT equipment, phones), and other visible ways representing itself (from shops to cantinas to gyms) and shows a special recognition for sustainability – or even not! Each move an organization makes will be recognized by some stakeholders in one way another. The integration of the 4 L’s allows for a greater awareness on how an organization will be perceived, represented and profiled.
Behavioral readiness is an essential area of the S.W.I.T.C.H. Diamond. It cuts through all other areas and simply needs the open-minded and caring credentials of people who see their role in society partially realized through the work they do. It is a visible trend that younger people do not want to work for and identify themselves with an organization that can’t tell what their specific role in the intra- and intergenerational development challenges are, independent from size of the organization or market(s) the organization interacts with. The 4 L’s is a set of focus areas to tackle holistic behavioral change in a world of creating today’s and tomorrow’s shared values. Using the 4 L’s will lead to a change on how we see systems serving us, stakeholders collaborating with us, and how we understand the use of our products, services and infrastructure. It helps to position a company from inside out and outside in, taking intra- and intergenerational aspects into account.
See earlier posts on the S.W.I.T.C.H. paradigm, diamond and dimensions: