I’m belatedly back to blogging with a post on strategy. It will refer you to many of our tools and should help you deliver the best starting point for Sustainability integration. In Incite’s view, this is an overarching strategic framework that guides sustainability-related decision-making for your organisation. A framework that is unique to your organisation will kickstart the process of Sustainability integration.
(I’m starting to use the capital S to distinguish the big picture transition from the little picture. If your sustainability strategy aims primarily to improve ESG ratings, you’re targeting the booby prize. The real prize is resilience in the face of escalating social/environmental pressures. More adaptive. Anti-fragile. However you see it, it requires better decision-making at your organisation’s distinct intersect with social/environmental issues. That’s the purpose of the framework that should emerge from this process.)
An organisation’s intersect with society and nature is omni-present and complex. If we are looking for strategic integration, we want to make it easier to identify sustainability investments that enhance both profitability and positive social/environmental impact. Win-win solutions are not always possible, but there is no surer pathway to scale. When faced with complex issues, we make better decisions when we consider genuinely diverse views. So a clear sustainability framework with memorable focus areas (usually three) allows more people in your organisation to contribute their views. We have to solve for the right three though.
Three things will help you make sense of the tangle of issues at your organisation’s intersect:
- Direction: Honest reflection on how much sustainability / ESG matters, where you are now and which way is forward
- Ambition: Sufficient agreement on how far and fast you want to go
- Focus: Intelligent allocation of energy – attention, finance, effort – in pursuit of your sustainability ambition.
Too many organisations rush this. They skip over points one and two, jumping into quantitative sustainability commitments and milestones in pursuit of some target, the future validity of which is impossible to predict. It may take them a year or two to realise that the first two elements were not as obvious or expendable as they thought. We’ve looked for shortcuts and I don’t think they exist.
This five-step strategy primer and the wireframe at the end should help you avoid a potentially costly detour:
1. Find the way forward by tracking trends
From megatrends to local mutterings, sustainability trends intel is freely available and expanding by the hour. A good place to start is this overview of macrotrends and disruptions developed by thinktank Volans for the WBCSD. How these trends affect you depends – more than anything – on context. Talk to execs, staff and stakeholders to get local angles and context. Their quotes will help to make things real. How might these trends impact your business model: not at all, potential game-changer or something in-between? What does that actually mean? We’ve run many sustainability trends processes over the past two decades and have seen opinions on that question shift 180 degrees. Use anything you can to make big trends more digestible. If decision-makers haven’t worked out how real this stuff is by now, they probably never will.
2. Do ‘The Waves’ to reflect on where you are
Use Incite’s sustainability capability spectrum (‘The Waves’) to reflect on your organisation’s current capabilities in relation to social/environmental trends and pressures. What capabilities have you developed already? What don’t/can’t you do? Where’s your comfort zone and how would you like it to stretch over the next few years? Sometimes this is to the left. (For those tracking our tweaks on this model, I’ve dropped The Waves back to four capability zones, though the spectrum is fundamentally the same.)
3. Use VILROS to help you make sense of your intersect with society and nature
Your team may agree on the direction forward, but a good strategy process is going to get messy. Your organisation’s intersect has unique aspects – and we look for that difference because this is how you differentiate your response. Sustainability strategy requires a different approach to sustainability disclosure. In disclosure, we align with what is expected; in strategy, we hunt for something special. Before we hunt, we scout the territory. Incite’s VILROS framework can be used to guide a conversation on your organisation’s intersect. By facilitating these conversations in different parts of the business, and repeating the process every year or so, you will get more familiar with your intersect. (Once you understand VILROS, it does not have to be a formal process. The framework simply highlights the kind of things you are looking for.)
4. Determine your Profit-Enabled Impact (PEI) opportunity envelope
This is the interesting part of the process. You know that there are opportunities out there to scale your positive impact through the business model. How do you help the organisation zero in on the ones that are more relevant? You definitely don’t do it by going with the Chairman’s pet project or taking a blind guess. That approach is guaranteed to get expensive, if not immediately then down the line. Our approach is to ask what is already finding traction in the broader ecosystem – your own and those of your peers. You can get a good indication of this by analysing publicly-available Integrated and Sustainability Reports.
Focusing on your current PEI initiatives – fledgling, overlooked or otherwise – does not limit the potential for business model innovation. Nor does it prevent you developing new capabilities or exploring adjacent possibilities. It simply recognises that re-purposing existing assets and capabilities incurs less energy cost than investing in new ones. (Credit to Dave Snowden and naturalising sense-making for this insight.) Given the scale of the sustainability challenge and the speed at which your competitors are moving, you want to optimise every bit of energy you invest in this space.
5. Use heuristics to identify three strategic focus areas
You now know your organisation’s better options for scaling positive social/environmental impact through the business model. Cluster these into three broad focus areas. Iterate and improve. Support these three big goals by determining your key enablers. (Think fundamentals like culture, innovation, tech, partnerships that will help you respond more quickly and increase your range of options.)
You are developing your own strategic framework! Align these focus areas with the relevant SDGs. Your PEI areas are likely to deliver significant returns and it may be worth aligning with explicit SDG targets at some stage. No need to get your head around all 18 SDGs!
A few final suggestions:
- Build some flexibility into your focus areas. I prefer heuristics to big hairy audacious goals. It doesn’t make you a laggard – it keeps you open to possibility. (Science-Based Targets for carbon emissions are a possible exception here, assuming you’ve done the requisite granular work. If we’ve done the science on a fundamental constraint, we shouldn’t argue with nature. Though let’s remember that the global north had the leading hand in the SBT methodology and their interests and those of the global south do not always align…)
- Your focus areas and the enablers that support them form a decision-making framework for the entire organisation – not a plan of action for the sustainability team. If you get them right, they should orient and inform every decision from this point forwards – from global acquisitions to remuneration structures to deciding on the chemicals used by the cleaning crew. And perhaps create you some space to take off a few days and escape to the bush.
- The framework and its clarity of focus should have opened the door for further analysis. You analysis will get more granular as you explore tangible commitments, innovation opportunities, timelines, measures and many things that can be tweaked or nudged to bring your framework alive. There will be a lot of things, but now you should be allocating energy with eyes nicely open. (The final phrase is from my friend, film-maker and anthropologist Paul Myburgh, who taught me the bushman greeting Tsamkwa/tge? Are your eyes nicely open?).
Banner photo: Flock of pigeons scattering by JJ Shev on Unsplash.