In part 1 yesterday, we chatted with corporate sustainability expert Chris Laszlo about Embedded Sustainability, Reinventing Fire, and sustainability fatigue. That conversation continues today with a discussion of the role of incumbents, disruptive innovation, and the flourishing enterprise.
PB: You’ve mentioned disruptive innovation, which brings to mind startups and venture capital. But what about the role of incumbents?
CL: There is a case to be made that business leadership in the years ahead will not come from incumbents, and not even from the U.S. and OECD countries. If you look to where business models and product designs are going to come from, you’re going to need to look to places such as rural India. The Emergent Institute, for example, which has a lot of heavy hitters behind it, including Stu Hart [Professor of Management at Cornell University’s Johnson School of Management]. Investing in startups, in emerging markets, is where you’ll get the kind of disruptive change that’s going to finally and truly address the kind of global challenges that we face, especially if we are going to really make a difference with business as an agent of world benefit.
What role is there for the incumbents? It will be just as tough for [the incumbents to create] any disruptive or radical innovation. Paul Pohlman at Unilever has a “sustainable living plan.” Is he able to change the culture there around decoupling Unilever’s growth from energy and materials intensity? And what does it mean for employees? I don’t know. Are they able to come up with a business model that’s really going to be disruptive? The consumer products area, aka consumerism, is an elephant in the room, with everyday low-cost material consumption. Is that a model that’s sustainable?
I like emerging markets. Simpa Networks in India. Their model of really low-cost distributed solar on a pay-as-you-go model is highly socially inclusive. It’s a base-of-the-pyramid model that will make it highly affordable for people. Is that something the big players in Germany and the U.S., such as First Solar… would they be thinking of coming up with that kind of model? It will be tough for incumbents…
Although when you look at a company like DuPont, what they’ve done is remarkable. In the early 1990s voted least-desirable corporation in the U.S. and top polluter by the EPA. In 2013, 20 years later, it’s gone from being an energy-intensive business, one that owned Conoco, commodity chemicals, harmful in manufacturing, to now the world’s most creative science company coming up with sustainable solutions everywhere. With over 25 percent of sales in sustainable agriculture, including its Pioneer seeds business. Kingfisher is another example of a big mainstream corporation pursuing radical innovation in its business model. It is possible for an incumbent to reinvent itself in short period of time, but I don’t think that there are many.
MB: So whether via disruptive innovators or transformative incumbents, what does flourishing really mean?
CL: Some observers, like John Ehrenfeld, have argued that sustainability has become an empty concept. That it’s often taken to mean continuity, survival, and primarily meeting material needs, all of which are insufficiently inspiring for today’s workforce and customers. By contrast, flourishing is far more content-rich and engaging. The word is defined as “thriving, successful, doing well, prospering” (Collins Thesaurus) or “growing or developing in a healthy or vigorous way especially as the result of a particularly congenial environment” (Oxford Dictionary). It’s about the world we all want, not the world we just get by in.
Corporate strategy at the organizational level has been about the competitive environment, what Michael Porter calls competitive positioning, looking at industry structure, what the organization chooses to offer as a value proposition, and how it operationally delivers on that value proposition. Labor is an input to be made productive. The focus extends to individual competencies and capabilities, but almost never with regard for individual wellbeing. None of the literature ever asks whether those employees are able to live their personal values in the organization, whether they feel that they can bring their whole selves to work. The next wave in sustainability will have to do more to raise the bar from mere survival to economic and environmental prosperity; it will also have to pay more attention to individual well being. We cannot expect to have a thriving business in a flourishing world without individuals who are also able to experience a greater sense of wellbeing and connectedness to their self, to others, and to the world around them.
Unless we have such a vision that will inspire and engage employees and other stakeholders, you won’t get creativity or authentic commitment to corporate mission. It’s about doing well by doing good. You’re not going to attract the best talent, best customers, best ways to drive disruptive innovation.
MB: You’ve also spoken of flourishing as spirituality, and that it’s hard finding the right words to talk to companies.
CL: Very early on my colleagues and I at the Fowler Center for Sustainable Value defined spirituality as the basic feeling of being connected with one’s self, others, nature, and the entire universe. Many empirical studies, such as the Mitroff and Denton piece in The Sloan Management Review (Summer 2009), show that when you really question executives about what spirituality means for them in a non-religious sense, it’s about meaning and connection. When executives get that it becomes a much easier conversation.
Yet everybody was telling us that to talk about the spirituality stuff is crazy, that you’ll offend people, they’ll be put off. Now I’m teaching and giving talks half about business case and half about flourishing. The only thing people want to talk about is the flourishing. They want to experience a greater sense of connectedness to the world around them. To think that there might be practices at work to allow them and their teams to be able to put some attention on caring for yourself. [Author and management consulting expert Peter] Drucker said that managers cannot manage others unless they manage themselves first. He also said that spirituality is not instead of material activity, but a way to give material activity greater value.
MB: In your work you’ve referenced the 1920s work of Martin Heidegger, who described our primary way of being as that of interconnectedness—with other humans, technology, and nature. This sense of connectedness… How does that contribute to business success and sustainability?
CL: Yes, [Heidegger] called it Dasein. I’m personally convinced that when people feel a greater sense of connection, they are more likely to understand what sustainability-as-flourishing is all about. The task of management leadership is to help everyone in the business system pay more attention to customers, employees, suppliers, local communities, to make a greater sense of connection part of how they do business.
[Connectedness and care as a way of being] helps people, inspires and engages people, enables them to be part of the company’s work in a way that sustainability has lost the ability to do, and certainly just making money doesn’t do. If people are connected to a mission of doing good in the world, and connected to a level of flourishing at every scale, including at the personal level, you get high levels of engagement. My hypothesis is that that yields greater creativity.
If you pay attention to individual well-being in a deeper sense, more than salary, taking care of their hearts and spiritual well-being, not in a religious or cult sense, but in enabling employees, giving them generative space to do that on daily basis. You’re going to get a much more productive and loyal workforce ultimately able to be better at innovation, etc.
When people feel deeply connected, they will habitually make decisions that support flourishing, which will support the Reinventing Fire vision, because it’s not just the business case. Making purely the analytical business case has proven over the last 10–15 years not getting companies to go far enough fast enough. We and they need to do something more. Reinventing Fire—and its promise of economic prosperity, environment and health, security, and resilience—has the potential to lead to flourishing. But to get to that end state sooner than later, we need to invest more in business-led, market-based disruptive innovation, which we’ll only succeed in doing if we can overcome sustainability fatigue. And doing that may depend on cultivating flourishing at every scale, including individual emotional and wellbeing.
This blog post also appeared on GreenBiz.