My Key Thinking

Making business sense of sustainability at this time in the 21^st century

Given the current socio-ecological developments, transforming companies and ecosystems for a truly sustainable economy is vital and unavoidable for both business and society.

We find evidence for a variety of strong signals such as increased public awareness of our severe ecological issues demonstrated by overshoots in Planetary Boundaries as well as shortfalls in our social foundations; shifting customer and shareholder preferences; new competitors from many unexpected places; unanticipated demands of legislators, regulators and other stakeholders; abrupt disruptions in supply and infrastructure caused by severe weather events; and massive human climate refugee migration on the horizon.

Business leaders can either stand off on the sidelines and watch this economic and socio-ecological “tsunami” approach, or they can learn new skills to adapt to and hopefully benefit from this situation.

My Key Thinking section is designed as an open source of inspiration for readers to advance their level of awareness of sustainability issues in their operating environment and to gain actionable business knowledge about how to address this evolving new business paradigm. It will be enhanced and continuously extended based on fresh evidence and unfolding new approaches and examples. The “word cloud” at the end of this section reflects a snapshot of topics I am dealing with in my daily work.

According to my honest assessment of the current situation, business leaders with strategic foresight must …

…future-proof their companies for the years of disruptions ahead. Business leaders around the world realize that their early sustainability efforts and pace of progress to-date may not be enough for what is required. Their strategic and operational space is narrowing, thus making it more and more difficult for them to maneuver at the strategic level. On the one hand, leaders increasingly realize that their current business practices have significant financial and human cost. The painful reality for most companies is that the financial numbers capture only a small portion of their real economic activity in terms of impact on our natural, human and social capital which needs to be managed as well. Companies enjoying economic success at the expense of environmentally or socially detrimental activities can expect a serious decline in business, as they will be targets for disruptions by more sustainable competitors, regulatory constraints, lack of talent looking for positive impact, and other stakeholder interventions. On the other hand, there are leaders who recognize the huge business opportunities for companies that pursue solutions. Understanding that their business is irrevocably nested in socio-ecologic layers, they pursue value creation beyond financial profit to include the planet and society as a whole. Either way, as sustainability best practices such as materiality assessments, integrated reporting, and addressing self-selected sustainable development goals are becoming more widely adopted in various industries, business leaders who are making bigger steps to future-proof their companies for the years of disruptions ahead are likely to accrue significant benefits.

They are fully aware that these disruptions are not only technological but include giant and abrupt socio-ecological challenges to their strategic and operating environments. They know that sustainability and competitiveness will be inseparable for success in the future and need to be integrated for achieving viability advantage.

…envision their business in a truly sustainable economy and craft a transformation journey toward that vision. Leaders with strategic foresight think “from the future backward” to envision their business in a truly sustainable economy and craft a transformation journey toward that vision from wherever they are right now. Following this “today forward” thinking transformation journey will allow them to shape their business toward full alignment with sustainability principles that do address root-causes and not symptoms of unsustainability. For these leaders, the future is not the anticipation of an externally “given” state but rather something they actively shape by considering both the positive and negative impacts of advanced technologies with regard to their sustainability aspirations. They are fully aware that the strategic choices they make today about what to produce, how to produce, and how to distribute it, determine which future we will get. Depending on insights from their forthright baseline assessment and their specific industry conditions, some leaders will recognize that they need to improve their core business model at least somewhat in order to operate in a truly sustainable economy. Others may need to make a more radical shift in direction and (re-)design future-proof and resilient new business portfolios and models. And some companies will need to pursue both simultaneously by managing an ambidextrous and agile organization. Either way, the resulting transformation journeys will look different, are likely to change along the way, and typically will require an adaption of strategy, structure, and culture as well as the corresponding corporate steering model and managerial systems.

…think beyond their own operations and strive for systems change at scale.

Business leaders with truly transformative sustainability aspirations are not just looking to optimize their own operations and value chains in order to deflect stakeholder backlash (Strategizing-As-Usual) or to realize short-term business cases for sustainability (Sustainable Strategizing 1.0). Knowing that the root-causes of unsustainability may lie outside their own organizational practices and immediate competitive landscape, a new type of leadership mindset is striving for systems change at scale. These leaders engage with multi-stakeholder coalitions, legislators, regulators, customers and even unlikely bedfellows such as competitors and activists through dialogue and collaboration to transform entire ecosystems toward true sustainability. They recognize that leaders of significant business enterprises around the globe have major opportunities to change the course of civilization in a constructive direction. Human thriving depends on planetary thriving, which both can be positively impacted by thriving businesses. These leaders do not ask what sustainability can do for their business. They ask what their business can do for sustainability. This is what I call Sustainable Strategizing 2.0.