Since I started with pollution prevention (P2) consulting in 1981, people were looking for the holy grail of good results. Goals were created out of thin air and results were reported. When P2 became popular in the late 1980s, thousands of success stories were created. With the increased use of the Internet, these stories were widely circulated. Green teams were formed to “pick the low-hanging fruit” and everyone was trying to feel good about P2 and the developing field of sustainability.
But something was missing.
In 1980, Philip Crosby published, “Quality is Free — The Art of Making Quality Certain.” Quality tools could be used as a means of improving processes to lower the costs of the products and services. In 1985, Michael Porter published, “Competitive Advantage: Creating and Sustaining Superior Performance.” The concept of value chains was presented as a means of disaggregating a company into “activities” as the discrete functions or processes that represent the building blocks of competitive advantage.
I was so inspired by these books that in 1987 I published a paper in the Journal of the American Institute of Plant Engineers. The article detailed the use of quality tools to improve operations as a means for minimizing waste. A year later, though, the U.S. EPA published a guide (titled the “Waste Minimization Opportunity Assessment Manual”) with over 30 pages of prescriptive checklists. This was a huge hit and all of the work of managing processes put aside.
So what about the measurement? P2 practitioners focused on results. Results are merely the outcome of the performance and do not measure performance directly.
The U.S. Securities and Exchange Commission requires the managers of mutual funds to tell investors that a fund’s past performance does not necessarily predict future results. When you examine a company’s SEC Form 10-K, you learn about “forward-looking” statements — those can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often include words such as "anticipates," "estimates," "expects," "projects," "intends," "plans," "believes" and words and terms of similar substance -- all in connection with discussions of future operating or financial performance.
The performance of forward-looking statements can be measured with quantitative leading indicators that are derived from performance frameworks used around the world since 1987, when the Baldrige Model was initiated in the United States. Companies use organizational processes (leadership, strategic planning, employee engagement, customer and stakeholder engagement, information and knowledge management, and process improvement) as quantitative leading indicators, then link to the lagging indicators. These performance frameworks help drive the lagging indicators over the long term, but you cannot find them in a sustainability report or P2 program.
Next page: No more low-hanging fruit