5 Steps to Sustainability Success
Patricia Calkins is vice president, Environment, Health and Safety at Xerox Corporation. She is responsible for policy and strategy development and strategic implementation of all EH&S and sustainability programs at Xerox worldwide. Calkins is also a member of the external advisory board for the University of Michigan’s Center for Sustainable Systems and a member of the board of trustees for the Nature Conservancy Central and Western New York Chapter.
During tough economic times, organizations today struggle to justify a meaningful investment in green initiatives, because they perceive the efforts will generate added costs, not concrete business benefits.
This misperception presents a major problem for global sustainability progress. In order to launch and maintain a substantive sustainability strategy in a profit-oriented organizational structure it must deliver a definable ROI.
There is a pragmatic solution to this problem. I believe it is possible for businesses today to develop environmental initiatives that will make a quantifiable contribution to both the environment and the bottom line. At Xerox, we know first hand that what is good for the environment is also good for business thanks to a decades-long commitment to sustainability.
Here are 5 steps to achieving sustainability success in your business:
1. Explore the entire value chain of your business
Don't narrow your focus to one functional area. Open your mind to improvements and innovations that could reduce environmental impacts throughout your value chain, from beginning to end. When you take time to consider all of the working components of your value chain, you will dramatically expand the playing field for smart green initiatives.
2. Use disciplined, quantitative analysis to identify your best opportunities
Analytical tools and methodologies developed for proven quality management programs like Lean Six Sigma can help you identify problems and opportunities that will produce the biggest benefits in the shortest time frame. Goals and metrics align and empower the organization. Establishing these will enable more people to contribute and you will accomplish more than you ever dreamed possible.
3. Make sure the proposed improvement or innovation will deliver both economic and environmental benefits
In today's highly competitive business environment, quantifiable benefits are an essential requirement for any "smart way to green." So it's important to assess the win-win potential of any project before you begin active development. Economics is one of the three pillars of sustainability. If you put the organization out of business while launching your sustainability program, that is not a sustainable business strategy.
4. Think "partnerships"
To maximize your opportunity for success, you need to team up with suppliers, customers, outsourcing providers and other partners. At Xerox, for example, we work with all of the partners in our value chain to reduce waste, energy use, greenhouse gases and our overall environmental impact. It's all part of our effort to achieve one of our long-standing company goals: We want to operate waste-free manufacturing facilities that produce waste-free products that help our customers create waste-free work environments.
5. Be innovative
No question about it. Innovation is a vital cog in the big green machine. So when you begin working on green initiatives, think outside the box. Take a fresh look at the way you operate throughout your value chain or how you are evaluating cost to the business. And look for opportunities to innovate. It could lead to breakthrough results—for the environment and your business.
Beyond these 5 steps, you must be passionate about what you are doing. In a very real sense, it's a privilege to be involved in work of such far-reaching importance. If you let that sense of mission inspire you, you will bring a deep sense of commitment and determination to your efforts, which will inspire those around you. That, in turn, will help you become even more effective as a champion of sustainability in your organization.
Patricia,
ReplyDeleteYou provide good, sound advice. I’m sure you will agree that the business case for sustainability gets a lot more complicated in the areas of innovation and social performance, where the ROI is as clear as a frappachino.
The IT industry had this problem nearly three decades ago when computers were introduced into offices. Remember “office automation”? Managers were deeply skeptical of the new whizzo machines that cost a fortune and promised to process words with greater efficiency than the typing pool.
Many companies were unconvinced by the ROI arguments put forward by the vendors (Xerox included) and often set up trials where typing pools were pitted against word processors. Keystrokes were measured, correction times quantified and mysterious metrics devised to compute the comparative strengths and weaknesses.
The results were rarely conclusive and in the end good managers simply looked into the future and decided that computers were the way forward. That’s why we don’t have to cost justify our laptops and PDAs – they are essential tools for business.
Corporate sustainability shares many of the problems of early office automation. Unimaginative managers can only see the costs and not the opportunities. And to be fair, the ROI is often rather murky.
If a company is going to innovate – and do it with anything like the passion you bring to your work, Patricia – it needs decisive managers who can think beyond tomorrow. It is forward-looking decisions that create opportunities for new, profitable business and liberate the ROI process from its often backward focus on cost savings.
Peter T. Knight
Context America
Peter, you raise good points and valid arguments.
ReplyDeleteI agree that using the traditional budgeting and “business case” approaches can present obstacles to seeing opportunities that have business viability and real value. We see the budgeting obstacle when we help organizations realize the value of print optimization.
Typically the cost of print is distributed among many budget centers and energy costs are embedded in facilities cost combined with energy cost; and when organizations understand the aggregated cost, they are very surprised and instantly understand the opportunity to both reduce cost and environmental impact.
An example of changing the perspective on the traditional business case has been our approach to remanufacturing. The typical approach to minimizing manufacturing cost is done by specifying lowest part cost. In order to enable remanufacturing, we had to design more cost into parts driving up UMC but enabling parts to have multiple lives. Making the business case required that we change from evaluating cost per part to evaluating life-cycle cost. Some companies are factoring project cost of “externalities” rather than current actual costs into their business case numbers. The other point is that not all benefits are hard core quantitative. The very essence of sustainability implies longer term investment. And, how do you put a hard core “bottom line” number on building brand equity as well as attracting talent? We have to get beyond short term thinking and view investment in sustainable business practices the same way an organization makes other longer term value creating investments in their business.
Patricia, thanks you for a great post and Peter, thank you for your thoughtful response.
ReplyDeleteAllow me to connect this discussion with an earlier post (and contribution to GE's sustainability report) 'The Role of Metrics and ROI in CR'. As I think you are doing in this discussion, I tried there to address the relationship between our desire to have sound ROI cases for sustainability with the holistic nature of the field. http://www.csrperspective.com/2009/08/role-of-metrics-and-roi-in-corporate.html
Patricia,
ReplyDeleteNice post. It is good to have the steps structured in a logical flow.
While analyzing the value chain for environmental impact reduction, we tend to focus on materials, manufacturing equipment, packaging, shipping, delivery, data centers, printers etc. All these are great opportunity areas.
But one area which is often overlooked & underserved is for changing employee behavior. We tend not to focus on employee behaviors that lead to energy wastage and environmental impacts. These behaviors can be easily nudged and improved (our solution does that), and could double the impact of the any organization's sustainability initiatives. But measuring ROI for such efforts is very difficult as the benefits are spread across the entire value chain.
So like Kevin Moss put it in his role of metrics blog for GE "to implement corporate responsibility fully is to embrace that our decision-making will not be conveniently packaged in a return on investment calculation captured in a spreadsheet and some metrics". CSR representatives need to figure out ways to juggle ROI and environmental impacts and show benefits to one or the other and secure investments for the projects. Tough role given the economic environment but I guess that is what that makes this roles exciting and challenging.
Thanks
Jagan Nemani
SpeakEnergy
Dear Patty:
ReplyDeleteThere is nothing like a good old ROI computation to kill a good idea.
However, your drive and determination look to have moved you to the top of the game.
Hope all is well, your very old friend, Alan Fougere, D-2 Incorporated.
Patricia, I met one of your dealers in Connecticut, Lloyd Fremed, while I was speaking at a Green conference and he sent me the link to this article. Great work--I'm going to Tweet it. I think the key statement is "instantly understand the opportunity to both reduce cost and environmental impact."
ReplyDeleteBasically, when you make it possible to both save money and become Greener, you make it a no-brainer. You take away the objection.
This is something I discuss in my award-winning book Principled Profit: Marketing That Puts People First. If you'd like a copy, gratis, I'd be happy to send one (shel AT principled profit.com or Twitter: @shelhorowitz)