L4 Strategic Management2

L4 Strategic Management2 - L4 Strategic Management: L4...

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Unformatted text preview: L4 Strategic Management: L4 Strategic Management: The depth and breath of integrating sustainability BG: C1 How to Integrate How to Integrate Sustainability with Strategy Forecasts that include a healthy environment, society and economy Decisions that include circular systems instead of linear Understanding what sustainability means to your organization and then how to integrate into an entire industry both locally, nationally and globally What’s the difference? What’s the difference? Corporate Social Responsibility (CSR): obligations to give back to community and society Ethics: Choices managers make regarding moral responsibility Sustainability goes beyond ethics and CSR. It is a necessity not a choice. Externality: societal change and human awareness Who’s On Board? P. 11 Who’s On Board? P. 11 Every industry! Energy: BP, Utilities Manufacturing: Pepsi, Coca­Cola, GE, GM, HP, Mattel, Nike, Toyota, Honda Food: Whole Foods, Frito Lay, Heinz Universities across the globe Benefits of Sustainability Benefits of Sustainability Reduce energy, waste and costs = Saves money which increases profits Differentiation, Core competency Regulatory Opportunities instead of Threats Innovation to Solution Open New Markets Attract/Retain the BEST Employees More Benefits More Benefits Improve your image/reputation Reduce legal risks and insurance costs Provide quality of life Employee and customer commitment The end goal: real loyalty Risks Risks Liability for end of life products and anticipating regulations Supply problems of raw materials Attacks on your image Legal risks – cleaning it up Being closed out of markets Risks in Pursuing Risks in Pursuing Touting “Going Green” without any effort Cannibalizing your own company – obsolescence Unrealistic expectations – Urgency – Time to change – Time to forecast consequences Is Sustainability New? Is Sustainability New? NO! It is a new set of societal expectations As business evolved as a technical expertise, the study of the economy, society and the environment have always been crucial The environmental impact was never thought through. Out of sight out of mind mentality Strategic visions were 5 year forecasts Sustainable strategies focus on impacts to ecosystems and people in them long­term Finding the Sweet Spot Finding the Sweet Spot The common ground between business The common ground between business interests and stakeholder interests Meeting in the middle is the Sweet Spot – New products/services – New processes – New markets – New Business Models – New methods of Management/Reporting – AHA – Strategy at its finest hour! The challenge to the greatest innovative business minds on the planet! The Journey: Create Maps The Journey: Create Maps Incorporate sustainability into company vision Review inputs and outputs Review core processes, value of product Assess materials and supply chain upstream/downstream Assess: – Energy, Waste, Water, Pollution – Community contributions Strategic, Tactical, Strategic, Tactical, Operational When you know where you stand and identify what needs to be changed you’ve hit the sweet spot. Now for tactics: Low hanging fruit: short term goals Cradle to Cradle: long term goals – Redesign – Re­imagine – Reinvent Bottom Up or Top Down? Bottom Up or Top Down? Strategy needs to be supported by senior management for: – Vision – Funding – Accountability – Systemic Change Bottom UP: where the best ideas happen. Right on the ground. The Sustainability The Sustainability Revolution We are at a crossroads – We can continue in a direction that cannot be sustained for your children – OR we can change – YouTube ­ Ray Anderson, CEO Interface, Inc. How to do well by doing How to do well by doing right? The Interfaceflor, Inc. Model 1994: Ray Anderson, CEO and President read the book Ecology of Commerce by Paul Hawkins and inspired to – Reinvent – Replenish – Reengineering by Remanufacturing Strategic Management Strategic Management Focused on what we take, what we make, what we waste 1995: – Extracted 1.224 billion pounds of materials. 400M from earths crust, 800M in coal, oil, natural gas. 2/3 of this burned up in production. 1/3 to product. – Produced $802 million products – Does the market price cover the cost? The challenge to The challenge to employees: Become restorative: put back more than we take. Do good to the Earth and no harm. How? Cyclical not linear – – – – – Use recycled raw materials Carpets and textiles Nylon to nylon yarn for new carpet Recycled polyester to polyester fiber Zero waste to landfill Really, how? Really, how? QUEST: framework used Quality Utilizing Employees’ Suggestions and Teamwork First 3 years reduced waste worldwide by 40% = $67M Goal = $80M per year in savings Lighter, but better durability The 7 Fronts of Mt. The 7 Fronts of Mt. Sustainability Eliminate Waste: Eliminating all forms of waste in every area of business; Benign Emissions: Eliminating toxic substances from products, vehicles and facilities; Renewable Energy: Operating facilities with renewable energy sources – solar, wind, landfill gas, biomass, geothermal, tidal and low impact/small scale hydroelectric or non­petroleum­based hydrogen; Closing the Loop: Redesigning processes and products to close the technical loop using recovered and bio­based materials; Resource­Efficient Transportation: Transporting people and products efficiently to reduce waste and emissions; Sensitizing Stakeholders: Creating a culture that integrates sustainability principles and improves people’s lives and livelihoods; Redesign Commerce: Creating a new business model that demonstrates and supports the value of sustainability­based commerce; Realizing Efficiency Realizing Efficiency The cumulative avoided costs from waste elimination activities since 1995 are calculated to be over $372 million. http://www.interfacesustainabi http://www.interfacesustainabi lity.com/whatis.html Each choice we make has a "cost." True cost is a combination of the economic, social and environmental costs set against the offsetting benefits associated with each choice that we make. QUEST QUEST Focus on five core competencies: – Solar energy – Closed loop recycling – Zero waste – Harmless emissions – Resource­efficient transportation OWL OWL One World Learning (OWL) – Created a task force. – “If you dream up a sustainable business, we’ll create it.” – Started with internal learning of the Natural Step (Karl­Hendrik Robert) http://www.interfacesustainabi http://www.interfacesustainabi lity.com/biobased.html As a first step, we have chosen to explore fibers made from PLA (polylactic acid) to yield products that are more sustainable. PLA fibers today are derived from non food grade #2 corn and potentially other starch containing agricultural plant materials and waste products.They are similar to polyester synthetic fibers and can be used for commercial fabrics, textile backings and carpet applications as well as garments, packaging materials and household products. Reverse Logistics Reverse Logistics Leasing carpets instead of selling Evergreen Lease: service is the value instead of the stuff – – – – – – Color Design Texture Warmth Acoustics Improve air quality Long Term Long Term “In the 21st Century, I believe the winners will be resource­efficient at the expense of the resource inefficient.” Coming to our class on 11­19­08 – Ray Anderson, Mid Course Correction – ISBN 0­9645953­5­4 ...
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