Leading Sustainable Organizations
Three teen-aged girls are at a shopping mall looking for sunscreen. It’s an impulse purchase, and it has to be an all-natural choice. They think they’ve found what they’re looking for at one store, but on the way to the register one of the girls takes out her phone and swipes it by the barcode of the product they’ve selected. Moments later, as she’s pulling out a credit card at the register, her iPhone announces an incoming email. It’s a short message informing her that the item she is about to purchase contains compounds that are linked to the decimation of coral reefs. Moreover, the plastic container is difficult to recycle. Because her phone has pinpointed her location via GPS, she also learns that another store in the mall carries a “greener” sunscreen that has neither of those two problems. The girls leave the register and make a beeline for the other store.
This scenario is not a pipedream. In fact, the technology needed to make it happen is already in place. Retailers like Wal-Mart Stores Inc. are developing sustainability indices; one day soon comparative product ratings will be posted next to price tags. The website GoodGuide.com provides a free iPhone app that rates and compares tens of thousands of products on their environmental, health and social impacts. Because of such technologies, the guiding principle for many companies, increasingly, is caveat venditor: let the seller beware. As many markets become ever more “transparent” to environmentally conscious customers, the pursuit of sustainability will shift from a choice that companies make to a sheer necessity of survival. It will affect the de facto “license” of a business to operate — a license that customers won’t hesitate to revoke.
The Leading Question
How can organizations make the transition to sustainability?
- Sustainability differs from other large corporate initiatives.
- Sustainability concerns operational reality first, and public perceptions second.
- Leaders must recognize the skills required to lead in three distinct stages.
Many executives understand how these dynamics will fundamentally alter their businesses, and they understand that sustainability is, ultimately, about the sustainability of their own organizations. But they often stumble in making the transition because of basic misconceptions about what it will take to transform their companies. Many make the mistake of treating sustainability like any other large corporate initiative: It’s actually different in several crucial ways.
1. A 2008 white paper reporting the survey by David Montgomery and Catherine Ramus of UC Santa Barbara, “Calibrating MBA Job Preferences,” examines the trade-offs students are willing to make when selecting a potential employer. Based on the responses of 759 graduating MBAs at 11 top business schools, future business leaders rank corporate social responsibility high on their list of values, and they are willing to sacrifice a significant part of their salaries to find an employer with values aligned with their own. The researchers found that the students expected to earn an average of $103,650 a year at their first job. Nearly all (97.3%) said they would be willing to make a financial sacrifice to work for a company that exhibited four characteristics of social responsibility: caring about employees, caring for stakeholders (such as community residents), environmental sustainability and ethical business conduct. These students said they would sacrifice an average of $14,902 a year, or 14.4% of their expected salary.
i. While we found team leadership to be important throughout all three phases, it was not an abnormally strong competence in sustainability executives compared with other leaders with similar tenures and responsibilities.