Engaging your Organization for Environmental Social Governance

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TBLI AcademyEngaging your Organization for

Environmental Social Governance (ESG)

2008 TBLI conference, EuropeAmsterdam, 13-14 November 2008

By Tom Cummings

Copyright © by Executive Learning Partnership, CVBA, 2007. All Rights Reserved. No part of this publication may be reproduced, stored in any retrieval system, or transmitted in any form or by any means –electronic, mechanical, photocopying, recording, or otherwise –without the express written permission of Executive Learning Partnership.

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The ELP – TBLI Business Case

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Systems Maps - Only Useful if we do it together!

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Leadership Landscapes

Individuals

Team

Organisation

Industry, Markets and CustomersMacro Business Perspective

What the ELP – TBLI Academy stands for

• 1) Informing companies - the landscape and next gen business

• 2) Engaging with leaders and their teams at both the rational and emotional levels

• 3) Enacting the business plan in a sustainable way

Ministers’ LunchRéunions informelles des ministres en charge de l'environnement et de l'énergie

Learning Journeys

CSR and Strategy

“The current economic cycle doesn’t represent a cycle, but a reset –CSR and strategy have to become part of the same conversation instead of competing ones.”- Jeff Immelt, CEO GE, BSR conference, 2008 New York

Next Generation Business

Existing Paradigm – Existing Business and Organizational Models

Vs.

New Paradigm – New Business and Organizational Models

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ROI on Sustainable Investment

Source: Lawrence M. Miller: Sustainable Wealth, 2008

Assumptions of the Existing Business Models

• Size = Comfort, Safety• Experience = Competency• Knowledge = Formal Education, Diplomas• Measurement = Money

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Existing Business Models

• What rights are being sold (and bought)?• What assets are involved?

– (physical, financial, intellectual, human)– Things are created or invented, distributed, used

and brokered or matched with buyers– Beyond serving needs– To what extent was scarcity vs. plenty considered– What is the lifecycle of this business model?

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Leadership Landscapes

Individuals

TeamMotivational StatesMindtalkMBTI - InsightsEquanimity shift/Dynamic EquilibriumLogos, Ethos, PathosCompeting CommitmentsAttention Units, Motivational States“User Guide”Diagnostics

Organisation“Why Behaviors matter” values and behavior exerciseDesired BehaviorsLeading ChangeConvening Authority/ Organisational Uniqueness Branding, Engaging

Industry, Markets and CustomersValue mappingHero’s JourneyLandscape OrientationMust-win Battles

Macro Business Perspective

20-20 viewNew External RealitiesFuture FactsForecasting and BackcastingTrendpullingStakeholder Mapping

Supporters

Agnostics

Antagonists

Champions

Cynics

Isolate

Convert

Surround

Encourage

Stimulate

“They”

“We”

“It’s a job”

“Yes, but”

“I’m proud”

Commitment Curve

ContactAwareness

Understanding

Positive Perception

Implem

entation

Adoption

Institutionalization

Internalization

Contact

Business Model Canvas

16Source: Alex Osterwalder

Business 3.2

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New Business Models

• For the TRANSITION in which the incentive system will remain

• Shareholders Stakeholders• Production costs True costs• Efficiency Effectiveness and Efficiency• Monetary value Overall value• New measures of well-being, beyond GDP

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New Business Models

• Shareholders Stakeholders

• Production costs True costs

• Efficiency Effectiveness

• Monetary value Overall value

New measures of well-being, beyond GDP

Sustainability vs. Sustainability

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Unsustainable Behavior

Sustainable Behavior

Sustainable Company

Unsustainable Company

Companies with a success

formula that no longer works

Strategy & Financial Perspective

Industry Laggards

e.g., Body Shop after 10 years

Greenmail

Business 3.2

Behavioral Perspective

Aspen Principles for Long Term Value Creation

• 1) Define metrics of long term value creation – Maximize future value – even at the expense of lower near-term earnings– Understand firm-specific issues– Look into industry best practices

• 2) Communications– Frequent corporate – investor communication– Avoid focus on quarterly earnings

• 3) Compensation– Align company and investor compensation policies with long-term metrics

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Source: Aspen Institute

Engagement beyond traditional borders of

leadership

Over the last two decades, large companies have moved through five stages:

Being world classRole modelProactive CSRStage 3

Helping out where governments fail

Activist local citizenDevelopment agent

Stage 4

Joining others in moving urgent global problem-solving along

Global citizenGlobal problem-solver

Stage 5

Reputation protectionGood corporate citizen

Defensive CSRStage 2

PhilanthropyPatronCharityStage 1

MotivationRoleCategoryStage

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New Leadership QualitiesFlat organizations-style personality

Vision and charisma, great communicatorA pattern-seeing mind, providing structure amidst complexity

Creating an opportunities-grabbing rather than issues-raising cultureInnovation-friendly traits

More emphasis on right brain-based skills and attitudesInnovation-friendly values: “workmanship mistakes no, innovation

errors yes”, “management by asking to be stunned”Structuring for innovation: hotspot teams, open innovation setup

Managerial bendsNumerator management rather than denominator management

A relentless enemy of internal process overgrowthYet a stickler for compliance

And a builder of dream teamsIdentity and Mindset

Cosmopolitan, broad based, world-awareRe-energizes through outside networking and scanning

Fearless in fearsome times

Business 3.2 – constant reframing

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Transitions

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Pioneers Followers “Laggards”

20% 60% 20%

Time

Seniorsponsors

Champions

Multi-Level Commitment

‘initiate’ ‘involve’

‘inspire’

‘integrate’‘infiltrate’

All employees

Cross-functional core team

Board members and senior management

senior managers able to influence and make recommendations to the sponsors

Brand workshop champions challenge current practice and act as catalysts in the team workshops

Source: ELP and The Brand Inside

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The ELP/TBLI – ESG Tool Box