When Toyota came out with the Prius as the first hybrid vehicle, they demonstrated a highly lucrative core competency that competitors could not duplicate for quite some time. This requires the sharing of important intellectual capital. In other words, companies are starting to lose the argument that they are not responsible for system degradation and so want to show that they are responding to pressures of stakeholders, especially consumers. The earth, on the other hand, is not expected to gain any more acreage at a whopping 197 million square miles — 71% of covered by water, and the remaining 29% by land. Ashley Madison is an organization whose fundamental premise is based on a service that a majority of society argues erodes social systems. We can see similar types of initiatives in the social realm as well. For instance a company might engage in philanthropic activities that are both related (defensive) and unrelated (denial) to their operations or they may both defend against the impact of their operations while still having a department that contradicts the seemingly careless operations of other departments (isolated). Companies in the transformative strategy want to avoid these standoffs and establish a common standard that competitors can use as well. Unlike the previous strategy where companies feel that there is no need to adjust operations, the companies in this strategy work to lower their impact incrementally but avoid any serious reconsideration of their strategy. Competitive positioning becomes one of leadership where competitors look to the company for the next wave of technological innovation that they too need to adopt or, at least, be mindful of the market’s response to what the company is doing. [i] P. Lacy, T. Cooper, R. Haywood, and L. Neuberger. As a result, a transformational strategy presents firms with a paradox because they are typically trying to push a sustainability agenda on actors in society who are not ready for it. Did you know that by 2025, 1.8 billion more citizens of Earth will join the global consumer class? Chapter 4:Ways to Conserve Resources & Reduce Pollution. As Harvard Business School Professor Rebecca Henderson notes in the online course Sustainable Business Strategy, you … If your company doesn’t recycle, today is the today! Oftentimes, companies that embed sustainability have a very strong culture where employees, feeling that they are part of something that aligns closely with their values, are more productive and committed to their work. On what employees are rewarded, how they are trained, how decisions are made, and company policies and mission statements all support culture. Almost all public companies and most non-public companies lay claim to the notion that they are doing something to preserve these systems either by minimizing harm (i.e. That said, those consumers who are supportive of these businesses, however niche in nature, are more willing to pay premium prices that support the extra costs that often come with these practices. Patagonia, for instance, is a good example of a company that has clearly differentiated itself from competitors like North Face or Timberwolf. The most common initiatives are related to reductions in energy and fuel use in manufacturing processes or a reduction in waste through an increase in resource efficiency coupled with an increase in recycling efforts. Owing to globalization, nature of business operations has undergone a huge change. One has to have a sense of humour to not balk at the company’s initiative to raise money for child food education by selling sugar-laden cookies through their Smile Cookie Program. Rivalry is lower because for any transformation to take place in an industry, it is easier to have competitors on board for the change. Finally, Toyota introduced a vehicle part that removed completely the need for a particular toxic mineral. **Make sure to scroll for links to several organizations helping businesses better their supply chain & business sustainability**. The era of stand-alone sustainability strategies, with subsequent integration of sustainability into company strategy, needs to end; the creation of resilient business strategies that take sustainability as their foundation needs to begin. That is, in the context of sustainability, managers that think of the company as a distinct organization is unhelpful. In addition to performance appraisal mechanisms of Strategy 4, managers may also be accountable to the networks they create with other participants while decision-making processes within the firm encompass a wide range of external actors. Other businesses may simply consider sustainability to be one of the many things that they do and don’t hide the fact that there is a contradiction because, in their mind, they are simply responding to the highly diverse set of demands in the marketplace at the time. Companies are therefore positioned as the sustainability leader based on all of the ways that they’ve worked to reduce the impact of their existing operations, products and services on systems. In response, CEOs regularly tout their efforts to “embed” or “weave” sustainability into their operations and culture as the ultimate commitment[v] while scholars and practitioners have offered a number of prescriptions to achieve this objective[vi]. The third strategy is one where sustainability begins to make substantial inroads into the firm’s strategy and operations. Any innovation developed in the transformative strategy is often less valuable than the processes that created the innovation. Before continuing, let’s define some terms. But a key difference from the fourth strategy is that their focus wasn’t just on embedding sustainability, it was about rewriting the regulations associated with the carpet industry by demonstrating that more sustainable modes of manufacturing carpet were possible. This latter, rather less studied, reason has important implications for competitive positioning because it offers consumers an opportunity to be activists through their purchasing power. Interface Carpets is a US-based carpet company that has pioneered a number of technologies that have revolutionized the once very toxic carpet industry. Articulate the importance of sustainability in business, and drive social responsibility across your organisation’s value chain. How do we make products so we can make money today without jeopardizing our future growth tomorrow? CIBC’s Run for the Cure, although a worthy cause, ignores how their everyday decisions associated with capital lending might actually be greasing the wheels of those companies making products that have shown linkages to cancer. Why is Sustainability Important in Business? When done successfully, the strategic benefits become quite lucrative for businesses that adopt this strategy. The organizations involved range from businesses, to non-governmental organizations, to community based organizations and even governmental bodies. Luckily, we’ve managed to make the most of what physical land we have, and who knows, maybe floating houses are the future….and we always have Mars as a back-up plan. Oil and gas companies have also undergone tremendous criticism for touting their commitment to reducing climate change but have invested substantial resources in lobbying against policies that would support renewable energies such as wind and solar. A sustainable business strategy aims to positively impact one or both of those areas, thereby helping address some of the world’s most pressing problems, such as climate change and income inequality. Thinking beyond just the ecological dimension, an investment bank might indicate that they have reduced their portfolio of subprime loans from 60% to 40% or a fast-food chain might announce that they are reducing sugar and salt content of existing products by 15% over the next several years. Sustainability is defined here as the long-term maintenance of systems according to environmental, economic, and social considerations. In a study of 766 CEOs worldwide, KPMG concluded “that sustainability is truly top-of-mind for CEOs around the world”[i]. 5 Business Strategies for Sustainability The term sustainability or corporate social responsibility has grown increasingly prevalent in corporate boardrooms and on executive agendas. This sounds counter-intuitive because competitors are supposed to ‘compete’. Culturally, employees see virtually no relevance of sustainability to their daily operations and at most consider the company’s identity to revolve around some philanthropic endeavors. Sustainability is built on the assumption that developing such strategies foster company longevity. Common across the acquisition versus greenfield approach to sustainability is that there is potential, however remote, for these initiatives to gain greater traction in the organization. The interesting thing about this strategy is that employees of these companies, when asked about what they do in their job that demonstrates their commitment to sustainability, struggle to answer the question because they don’t see sustainability as distinct from their daily routines and activities. Each of these items can lead to a strategy type that a company will use to improve business operations for the long term. SEKEM is an organic conglomerate located just outside Cairo, Egypt that specializes in agricultural commodities for a wide range of industries. Sustainable Business Strategies is a consultancy founded in 2005 by Andrew W. Savitz, author of The Triple Bottom Line and formerly a lead partner running PricewaterhouseCoopers’ sustainability consulting practice. From an internal competence perspective, what distinguishes the firm from its competitors has virtually nothing to do with sustainability. That said, research has shown that companies can be categorized into specific adoption levels of sustainability according to important organizational dimensions. A change-management guide for business, government and civil society (Sheffield, UK: Greenleaf Publishing Limited, 2003); D. Dunphy, A. Griffiths and S. Benn, Organizational change for corporate sustainability (London, UK: Routledge, 2003); M. J. Epstein, Making sustainability work. 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