Operating a Company to Account for Local Issues and Global Changes: What Have We Learned?
For Earth Week, we are running guest posts from a number of influential companies and individuals in sustainability. Today's post is written by Terry Yosie, World Environment Center.
Learning in today’s modern economy starts with a recognition that disruption, speed and complexity have changed the world in which we manage our businesses and govern our societies. These developments create major risks, but they also yield important opportunities. This is especially true in managing large enterprises that must account for local issues and cultures in their operations, while adapting to major changes in global society.
During the past decade the World Environment Center (WEC), a global non-profit organization that works with major companies, has implemented projects and initiatives in Australia, Brazil, China, Chile, Costa Rica, Egypt, El Salvador, Guatemala, Honduras, Mexico, Morocco, Nicaragua, and Romania. This work has involved suppliers and stakeholders from many industry sectors including aluminum production, automotive manufacturing, beverages, chemical and pharmaceutical manufacturing, food production, lodging and hospitality, paper production and textiles.
Five very important lessons have emerged from this decade long experience. They include:
1. On-the-ground skills and capabilities are critical to success. It is very important to find local partners with the right technical and cultural skills—these include suppliers that source raw materials or operate production and service facilities; university professors or students that provide technical expertise; and governmental agencies, non-governmental organizations and local professionals that share common objectives and have important voices in local economies. Adaptation and collaboration skills are especially important. There is no shortage of motivated and talented people who want to work to improve their own living standards and contribute to the further development of their countries.
2. Sustainable management of enterprises requires greater clarity and integration. In too many companies, sustainability objectives and programs continue to be managed differently across separate parts of the organization. For example, supply chain commitments made at corporate headquarters do not match with the reality of price negotiations between procurement departments and their suppliers. A major first step in achieving more sustainable management is to become more aligned across the various units of a company to ensure clarity and unity of purpose.
3. Increasing business risks from global megatrends are beginning to change business strategies. As tsunamis, storm surges, droughts and one hundred year flood predictions occur with greater frequency and magnitude, a growing number of corporations and cities are looking to make their infrastructures and supply chains more resilient. When the 2011 tsunami washed across the eastern shore of Japan, it disabled much of Japan’s auto manufacturing operations. However, General Motors, was able to continue much of its production because it was able to provide supplies of food, water and fuel to workers that were not able to leave its plants even while other Japanese auto manufacturers experienced serious disruptions to their operations. As the number of sustainability-related business risks multiply, there will be numerous opportunities for innovation and collaboration to ensure business continuity.
4. It is important to engineer the sustainability benefits into products so they become more self-evident to the consumer. We often read public opinion polls that report on the willingness of consumers to pay more for greener products. Yet, as Procter & Gamble has noted, there is ultimately “a moment of truth in front of the shelf” where the consumer combines both information about the product, and his/her personal experience in using the product, to make a purchasing decision. If we want consumers around the world to behave more sustainably we should not expect them to experience a religious conversion and buy green products regardless of price; rather, we should engineer the sustainability benefits directly into the products to simplify the consumer’s choice.
5. Global companies are engaged in a major competition for access to talent. The outcome of this competition will not only shape whether companies survive in the future, it is critically linked to strengthening the core skill sets for future business leadership. How companies adapt to this challenge, and replenish their personnel pipelines with relevant skills for a changing world, represents the emergence of a new context for implementing market capitalism. A key factor for success lies in the formation of new levels of strategic collaboration between global companies and universities that train the talent pool of their current and future employees. Presently, many graduates of leading business, engineering and social science and policy schools are only partially equipped to manage the myriad of challenges confronting the corporation.
The World Environment Center is launching a major new initiative entitled “Preparing Business Leaders for a Sustainable Future”to address this need. WEC is building new business-university relationships to: 1) accelerate the transmission of key business strategies and case studies directly to the classroom; 2) integrate the classroom and workplace as part of a continuous learning process; and 3) enable companies to identify future talent much earlier than traditional college recruitment processes and provide rewarding employment for graduates of business, engineering and social science/policy schools.
Terry Yosie is the president & CEO of World Environment Center.
