Sustainable Frontiers: Unlocking Change Through Business, Leadership and Innovation

For me it comes down to what I call the four DNA elements of sustainability. And that is, that it has to be about value creation (which is an economic element,) it has to be about good governance (which is about institutional effectiveness, ethics and leadership,) it has to be about societal contribution (which is about stakeholder orientation) and it has to be about environmental integrity. And those four DNA principles run through all of the definitions of all the different concepts and, so long as companies are tackling those, I think they're doing sustainability.

Rachel Salaman: So it sounds like some people might think of it as a kind of two-dimensional "green" idea but, from what you're saying, it's much bigger and broader than that, and therefore presumably more significant?

Wayne Visser: Yes, I think what we've seen is two streams coming together; they did evolve separately. So we had an evolution of responsibility starting in the 1970s, after a focus purely on shareholders going through the movement, where we started to think about stakeholders and about accountability and responsibility. And then we had the second wave that started really with the environmental movement, also around the 1970s. And they've come together now so that, today, I would say they're indistinguishable.

Rachel Salaman: So why is it important today that this is high up on the agenda of businesses?

Wayne Visser: I asked myself when I was writing the book, when I talk about frontiers, what is the first thing that comes to mind? And two of the things that come to mind for many people are cowboys, living on the frontier, and space, the final frontier. And it so happens that these two concepts are related. Because there was an American economist called Kenneth Boulding who, in the 1960s, talked about us living as if we were in a cowboy economy. So we were just using resources as if there were no limits: there was a recklessness about the way that growth and expansion and business was happening. And he already then was saying we needed to move to a spaceship economy, and that of course is an economy where you reuse everything – if you're in a spaceship you have limited resources, you can't throw anything away. And that really was quite visionary because it pre-dates the whole sustainability movement.

So, today, there are many of us that talk about sustainability as being that next frontier and, quite simply, it's important because if we don't get it right, then things start to collapse. Ecosystems start to collapse on which we depend, societies start to collapse, communities start to disintegrate. If you look at the range of issues we're tackling under the broad banner of sustainability, they are the things that define what it means to have a good quality of life. So that's why it's important: we want life to be better for all of us.

Rachel Salaman: So your book is sub-titled "Unlocking Change Through Business Leadership and Innovation" and you say that that's really important to keep sustainability alive for businesses. And that connectivity is the underlying catalyst for change. So those are quite complex ideas – could you explain them for us?

Wayne Visser: Sure, well, in terms of the broad idea behind it, I like the quote by Lao-Tzu, who was the philosopher behind Taoism in the East, who said, "If you don't change direction, you may end up getting to where you're headed." You know that, at the moment, we're headed very rapidly towards a cliff and it's up to us whether to change direction, but at the moment the evidence is we're just stepping on the accelerator.

So that's why for me sustainability is about a change agenda and I talk here, or I explore, eight frontiers of change. So we have to change leadership, we have to change the way that enterprises are structured, legally and in terms of the way that they operate, we have to change technology, transparency, the way we engage with stakeholders, social responsibility itself, something I call integrated value and future fitness. So these are the eight areas where change needs to happen.

And I talk about connectivity as being the catalyst because what connectivity does is it amplifies change. We know that, in Africa it took just six years for mobile phones to go from zero to overtaking fixed lines, in Africa, and you can more or less track how that has impacted on the prosperity of the continent. Some research by Vodafone, if I remember correctly, says that you can attribute about half a percent of GDP growth just to people being more connected. So what connectivity does is it spreads ideas, it amplifies messages, it actually creates innovation and that's what we need right now. We need the creative and innovative ideas to find solutions to what are very difficult and complex problems.

Rachel Salaman: If I could just ask you about a term that may come up quite a lot in this discussion, which is "sustainable change." What do you actually mean by that: is it about a change that is sustainable or is it a change that leads to greater sustainability?

Wayne Visser: Yes, in the words of Pooh Bear, I might just say "same difference," in the sense that the message is really that we need a change that is going to last a long time and the only way that change is going to last a long time is if it takes into account the different facets of sustainability.

Because these elements are so interconnected in our life and in our society I sometimes think that the six capitals model that's been introduced by the integrated reporting framework, derived from the work of many others beforehand, is quite useful in thinking about this. They talk about us always either eroding or building up the six different types of capital. And they are financial capital, which we are very familiar with, and manufactured capital, but also intellectual capital, human capital, social capital and environmental capital. So sustainable change is one that ensures that we are continually building up that capital rather than destroying it. Because we know what happens when you destroy capital – eventually you get no flow of benefits or value coming from that capital – and in this case it happens to be the very thing on which we depend for our quality of life.

Rachel Salaman: So what are the barriers to sustainable change?

Wayne Visser: Here I find a little formula useful. It's by someone called Richard Beckhard, and he talks about change requiring always that we overcome resistance. And so R in his formula is resistance. And he says that there are three factors that have to combine to be greater than the natural resistance we all have to change – we don't like change.

So the three factors are Dissatisfaction with the status quo, Vision of what's possible in the future, and First steps towards the solutions. So R must be less than D times V times F. And so when you talk about the barriers and we think about sustainability, each person might have a different answer.

But one of the biggest ones, I think, is that people are not actually believing that we have a problem; the Dissatisfaction with the status quo is not very high. If I'm living a fairly comfortable life and I get to shop every Saturday and do a little bit of retail therapy and I see a bit of poverty in the world on the news, but it's not affecting me – so there isn't that energy for change, and I think that's one of the issues.

The second could be the Vision: have we articulated a sustainable future in such a way that people are thinking, "Wow, that would be a fantastic place to be! I want to be part of creating that!" I don't think we've done that, I think we've talked so much about the doom and gloom that people are not really interested in the vision of a sustainable future.

First steps I actually think we have made progress on, so I don't think that's the barrier. There are plenty of excellent examples of what's possible.

Rachel Salaman: Now you mentioned earlier that corporate social responsibility was almost synonymous with sustainability. Could you talk a little bit more about that, because a lot of people will have their own definitions of the term "corporate social responsibility" which might not actually involve sustainability? So what's your experience?

Wayne Visser: Yes, we have seen this change over time and the model I tend to work with, when I speak to companies especially, is to say, look. CSR started out as a fairly defensive way of responding to, usually, the requirements of the lawmakers and perhaps the needs of your employees, and that defensive approach is all about compliance and risk management. And then some moved beyond that to a charitable approach where you thought, well okay, it's about giving back, it's about philanthropy. Then there was a move onto a promotional approach which said, well, there are reputational benefits here and if I make sure people know all the good I'm doing, I'll stand to benefit from that.

Most companies have moved through those stages to something which is more about strategy, and a strategic approach says I will align the issues I care about with the type of business I'm in. So if I'm Coca Cola, I'll focus on water issues. I actually think we have to go beyond all four of those stages and I call it a transformative approach that we need. And that is really about how do we change the rules of the game?

Now in most people's definition of CSR they're thinking about their charitable approach, but in fact, if you look at something like the ISO 26000 standard which came out in 2010, this is the global consensus – 93 countries signed up to it. And there are seven core subjects and, if you look at those seven subjects, community development is only one of them. So companies also have to be doing good governance, they have to be doing human rights, labor rights, they have to be tackling consumer issues, environmental issues. So if you look at that kind of definition and then you look at how some people might define sustainability as a triple bottom line, for example social, environmental, economic, what you find is that we're talking about the same thing.

You're listening to Expert Interview from Mind Tools.

Rachel Salaman: In your book, you say that rewards for managers are important to get them on board with sustainable change. And you actually go so far as to say that, unless sustainability is built into the company's compensation schemes, we can't expect middle managers to align their attitudes and actions behind sustainability goals. Is that really what you've seen?

Wayne Visser: Let's take the opposite of that being true. If we look at a company like Enron or Lehman Brothers (both of which have collapsed as you know, went bankrupt), in fact both of those companies had something which they might have called sustainability or CSR or business ethics. And because they were in no way linked to the way that people were rewarded, they were something completely peripheral. They didn't really change the culture of the companies, which was all about greed, and they didn't change the behavior of the managers. Rather bizarrely, Lehman Brothers actually won a CSR award after it went bankrupt for some community project they'd been involved in!

By contrast, if you look at a company like Intel, for example, in 2008 they started linking sustainability outcomes to their incentive schemes, to their compensation schemes for their employees, and it's worked. By 2012 they'd already cut their greenhouse gas, their carbon emissions, by a third. In fact a report by the NGO Ceres finds that today, among large companies, roughly a quarter of them are already linking their sustainability impacts to compensation schemes, and that's up from 15 percent in 2012, so it's growing fairly rapidly. So we have seen it and it does work and it really is the only thing that is going to change behavior within the company in any meaningful way.

Rachel Salaman: Well, leadership is also really important and you carried out research at Cambridge University that looked at sustainability leaders and in that you pulled out seven characteristics that defined them. Could you briefly tell us about your findings?

Wayne Visser: Sure, what we did is we looked at leaders like Paul Polman, CEO of Unilever, or like the head of Patagonia, or companies that were really felt were making a huge difference on sustainability, and what we found is that they had a combination of characteristics.

• So the first is that they could think systemically, they could see the connectivity of things and cross disciplines, so they weren't operating in silos.
• They had emotional intelligence, they could really make connections to people and respond in a caring way.
• They led with their values; there was definitely a moral dimension in the way that they led their companies.
• They had a very strong vision for what they are trying to create for the future. For example, if you take the Unilever sustainable living plan, they're setting the target to double in size while halving their environmental footprint and helping a billion people out of poverty and having all of their agricultural products certified sustainable, all by 2020 – and they are pretty much on track to meet that. So that's a real vision that people can get behind.
• They also tend to be inclusive, so they are very good at what we would call stakeholder engagement.
• They focus on innovation, so they see sustainability as an area for opportunity, not just as a risk area.
• And they can think long term, so this is not about the quarterly profits. Again Unilever as the example, they refuse to report quarterly results to their shareholders because they said that creates the wrong incentives and the wrong sorts of behavior.

So it's that combination of skills we find among those that are really pioneering on sustainability.

Rachel Salaman: Mm, that's all very impressive! What lessons can middle managers draw from that study?

Wayne Visser: One of the other things we've found in researching leadership was that there is another concept, which is of distributed leadership. So we often think of the person at the top, but actually there is a lot of research that suggests that people can be leaders at all levels of an organization. And some of my PhD research in fact focused on the idea of champions, that people can be champions for whatever it is they care about in an organization, and they have quite a lot of discretion to do that. So it becomes the idea for middle managers of "be the change."

I call it purpose-inspired leadership because one of the things I've found is the most effective driver for leadership at any level in an organization is figuring out what it is that gives you meaning, what it is that gives you satisfaction, and then really going after that. So they can also take on some of these characteristics we've found in the top leaders, but, effectively, they need to become their own change agents.

Rachel Salaman: In your section on revisiting the purpose of business you suggest that profit could be relegated in the list of reasons why businesses exist, and service to society and the earth could be moved up higher. What do you say to people who suggest that's a bit idealistic?

Wayne Visser: Well I just say, look at the biggest companies that we have in the world today and do you really believe that they're existing and being driven by people who think that it's all about the money? If I said the name David Packard, most people would make that connection and realize that he was the co-founder of Hewlett-Packard, today a massive and successful company. And he actually said, he's quoted as saying, "People say that we get into business to make money, but actually that's not true. We get into business, we form a company, because we can achieve things collectively that we couldn't do on our own."

If we look at the founders of Google, Larry Page and Sergey Brin, they weren't motivated by money to start with at all. They had this grand vision of setting the knowledge of the world free and making sure that that gets made public, and that's still the vision that drives them. OK, they figured out later a way to make money, but it's not really what drives them.

So I think there's plenty of evidence that companies don't exist to make money, that's not their purpose. That's like saying that we exist to breathe. Well no, of course we need to breathe. We need profits in companies, but that's not why they exist. They exist to serve society by creating value through products and services.

Rachel Salaman: You include a chapter on unlocking change through technology innovation, where you say that technology presents citizens with greater opportunities to engage with sustainability issues than ever before. Could you give some examples of that?

Wayne Visser: Well what technology is doing is, it's democratizing information and it's putting the power back into the hands of the consumer. If you take an example of an app called the Good Guide which has, I think it's about 25,000 products on it – it's more actually, I think it's 250,000 now – what you can do is go into a supermarket, you can scan the barcode of a produce and you get a rating of that product on its impact on health, environment and community. And so that's putting the power back in our hands, and there are other examples of this.

One that I'm working with is a platform called Wikirate. It's applying the Wikipedia idea to the idea of actually the public or the crowd rating companies and saying what their performance is and whether it's acceptable. Convetit is one where you can use crowdsourcing to get expert groups together to comment on companies' sustainability performance. One called Things.info is giving us access to where our products come from and where we can dispose of them, at the click of a mouse. So I think technology gives us power, that's the point.

Rachel Salaman: And in the book you link this to trends in corporate accountability. So what is that link?

Wayne Visser: Accountability is about being able to give an account. It's the move we've seen away from responsibility, which is saying "I do good things," to accountability, which is "well, prove it to me!" and the only way it can be proved is through information and through transparency. And this is what technology is doing for us: it's unlocking that information, it's unlocking performance data, so we can make our own minds up about the performance of companies on sustainability.

The research we did through my think tank Kaleidoscope Futures found that there were actually 10 trends in this area of corporate accountability and I'll just mention them so that you've got an idea.

We've seen an explosive growth of sustainability reporting, we've seen a proliferation of standards and actually mandatory disclosure becoming much bigger, we've seen quality and quantity improving through the technology, and we've seen a shift from corporate-based data to value-chain data. In other words, we want to know what's the impact of the product on the environment and society.

And so there are these kinds of trends that we see happening and really all we're saying is that technology is a facilitator for, that it's an amplifier for giving us the power to hold companies to account.

Rachel Salaman: We hear a lot about stakeholder engagement across the business landscape. What does it mean for sustainability?

Wayne Visser: It's part of this trend to move away from the idea that companies only are accountable to their shareholders. So there are multiple interests and people who genuinely can impact a company. And so for sustainability, what we see is that companies are having to survey their diverse stakeholders and actually find out what it is they care about, and then decide for themselves what impact they could have on the company.

And so we see examples like Rio Tinto, one of the biggest mining companies in the world. Well, who would you expect to be their enemy? Probably the biggest conservation organization in the world because they have a massive impact on biodiversity, so that's the IUCN, the world conservation union. Well in fact what they did was, they consulted with the IUCN and they got into a partnership to say, "How can we work together to actually solve this problem? We're not going to stop mining, you're not going to stop caring about biodiversity, so let's find a solution together."

So I think that there are lots of examples of how stakeholders now have far more power than they had, and that companies are having to listen to them, and actually it's good for business when they do that.

Rachel Salaman: You talked a little earlier about the importance of "integrated value," of creating integrated value. Could you talk a bit more about that and perhaps tell us some steps to achieving it?

Wayne Visser: This is back to the idea that if sustainability or social responsibility sits on the side it has very little impact, and so what we have to do is integrate it into the way that we design and run companies. And there's a very practical methodology for doing that which I'm calling integrated value.

You've got to integrate at various levels, so you integrate first the stakeholder expectations once you've gone and done that listening. You integrate them across all of these social, environmental, ethical and economic issues the strategic goals that you set, and then you drill it down and you say how do those translate into risks? So you integrate your risk methodologies across all of these issues and then you look for innovation at the process level in the company. And then you align all your systems so that instead of having a management system for environment, and one for health and safety, and one for quality, and one for social responsibility, you design them so that they're all integrated.

And that's just the idea that it has to become seamless, otherwise, frankly, companies will go out of business because there are now over 450 sustainability standards that they're expected to comply with and you can imagine being audited by all of those. So it's just the only practical way. And the emphasis must be on creating value: if you do this right, it's good for business, it's good for the society and it's good for the environment.

Rachel Salaman: In the book, you say that resilience is very important in creating integrated value. What tips do you have for building resilience?

Wayne Visser: The important thing to realize here is that you can have strategies which will make you more resilient, so the future happens in two ways. One is that we create it and we can be very visionary about that, but the other way is that the future happens to us, and often in crises or catastrophes, and so if you prepare for that you can really cope much better when things get difficult.

And there are five strategies that I think companies, and in fact communities, can use for this.

• So, one is to have defensive strategies – this could include things like insurance, or literally defense of infrastructure like the Thames Water Barrier.
• The second is to diversify. You diversify your people and you diversify your investments – you don't have all your eggs in one basket, and of course diverse people are more innovative in a crisis.
• Then you decentralize. This is especially your infrastructure: if you think about the internet the reason it doesn't go down is it's not [de]centralized. We think about energy now – there's a big move now to decentralize energy so that we're not dependent on a centralized grid.
• The other is to decouple: so you want to be able to grow economically and in terms of your business without impacting on the environment, and we call that decoupling. And the only way you do that is you embrace the circular economy where there's zero waste.
• And finally, it's to define a purpose, so to have a vision that people can really believe in.

And I guess those things, if you do them, will help you to cope when things get rocky.

Rachel Salaman: We've covered a lot of ground in this discussion: what do you think are the top three takeaways for managers?

Wayne Visser: I think the first one is admission, getting to the stage where you admit that the current version of capitalism that we've been implementing isn't working, it is fundamentally flawed. And it's not just me saying that, it's people like Bill Gates, it's people like the head of McKinsey's. You know, we have a problem with the way that we've designed capitalism and that's the shareholder-driven model. So admit that we have some big challenges: climate change, biodiversity loss, growing gap between the rich and the poor, corruption and so on. Admit to those things and don't pretend that they're not happening, and admit that business actually at the moment is still a big part of the problem.

The second is ambition. Be prepared to set those audacious goals in whatever influence you have so that you can inspire people so that you can actually transform the society. That's what we're good at in business especially, we can innovate to that, but we have to have that ambition. And this is something where the "net zero, net positive" movement is having a big impact. Aim for zero waste, aim for zero fossil fuels, aim for zero accidents, and so on. We have to stretch ourselves.

And the last is to be purpose inspired. Really connect with what it is that gives you meaning in your life and in your work, and that's going to give you the passion and the energy that you need to make these big changes in the world and in the company.

Rachel Salaman: Wayne Visser, thanks very much for joining us today.

Wayne Visser: You're welcome, thank you very much.

Rachel Salaman: The name of Wayne's book again is "Sustainable Frontiers: Unlocking Change Through Business, Leadership and Innovation." I'll be back in a few weeks with another Expert Interview – until then, goodbye.