Updated: Jun 14, 2019
January 31st I’m going to present at the National Sustainability Summit here in Dublin.
The title of the talk is ‘A designer perspective on sustainability’.
The message of my presentation is clear – (strategic) sustainability is becoming the next chapter for competitive advantage.
Many managers still framing sustainability through the lens of (CSR) Corporate Social Responsibility which is a way for businesses to (give back) to society.
While CSR offers an excellent opportunity to ‘redistribute’ the wealth created by businesses, it’s not strategic, in other words, is disconnected from the value proposition of a business and the way it competes in an industry.
Let’s consider here the three most important limitations of Corporate Social Responsibility:
1) Reducing negative impact on society: the primary focus of CSR is lessening the negative societal impact generated by businesses. There is none, or very little concern about increasing the positives, e.g., new value creation for undermined parts of society, which is a strategic opportunity for a company looking to differentiate its strategy.
2) Cosmetic: It’s more of a marketing campaign rather than a diffuse function (responsibility) in a business. Let me give you an example. What happens when your marketing department is creating a brochure introducing a new line of product and needs to add a paragraph about its sustainability? The marketing team should have all the information at hand, yet the reality is that after contacting the engineers and technicians in the production line the answer is ‘’sorry we have too many orders to fulfill… can we do this later?’’
3) No real benefit for a company: CSR, in a way, is like social media. It’s something that needs to get done (when not already forced by regulations), but without a direct, measurable impact on a higher level of profits. Frequently perceived as an expense rather than an investment.
But let’s be positive, after all, there are plenty of ‘good’ companies implementing the best CSR practices. The problem here is that they still trapped in an incremental innovation approach.
CSR and Incremental innovation
Let’s consider the example of a ‘good’ company that decides to voluntarily (not forced by regulations, e.g. reducing the level of emissions) to upgrade their production plant to increase the efficiency of production.
A company adopting the latest best practices emerging in its industry not only becomes more efficient but also gains a positive reputation in the community. This alone though doesn't guarantee the sustainability of its competitive advantage.
Let me explain.
Competing in an industry only by implementing and adopting the latest best practices isn’t sustainable. For the simple reason that competitors can do the same, therefore competitive advantage becomes a time game.
You can see the difference here.
Sustainability as being a good, green and a responsible player is different from the sustainability of the competitive advantage of an organisation.
In other words being good isn’t enough - a company today needs to be a good and also being different.
Welcome to strategic sustainability.
Strategically speaking companies can achieve this in two ways:
1) Strategic (Internal): looking at the activities the company performs to create value for the final user, finding the ‘societal’ touching points and defining ways to reduce the negatives (acquiring best practices) or boosts the positives. Here is the trick, merely acquiring best practices is not sustainable, a company needs to tailor those best practices to the specific strategy is pursuing. Also, a company need to create a new mindset, a new way to think about using new technologies to enhance value for the final user.
2) Design (External) starting a new growth initiative tackling unmet customer needs. Frequently these needs are thoughts as a not valuable business opportunity. The reason why micro-finance as a business idea didn’t come from established banks is that major banking companies think of their service conventionally. Only when a new competitor was able to see a new way to do banking as a micro-investment service that new opportunity for value creation started to emerge.
Creativity, the ability to shift our perception about what we do as managers is the missing point between CSR and Strategic sustainability.
The differences between CSR and Strategic Sustainability:
While strategic sustainability is no substitute for CSR (which still have an essential role for business in society), it complements it.
Differently, from CSR, Strategic sustainability is not about giving back to society by redistributing profits made by polluting and wasting precious resources, but rather an opportunity for companies to make an higher forms of profits – profits created by satisfying societal needs.
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