Waste Management, SAP prove the value of an ‘against’ position
Waste Management, SAP prove the value of an ‘against’ position
Most articles work up to a conclusion, but the conclusion of this article is right up front, stated by Gavin Newsom, former San Francisco mayor and current lieutenant governor of California, in his keynote address at the California Economic Summit: "You can't continue to do what you've done and continue to get what you've gotten."
From the survey:
"CEOs see business caught in a cycle of 'pilot paralysis' — individual, small-scale projects, programs and business units with an incremental impact on sustainability metrics — and while they see a role for business in promoting sustainable development, their responsibilities to the more traditional fundamentals of business success, and to the expectations of markets and stakeholders, are preventing greater scale, speed and impact."
At CSRWire, we constantly advocate that global corporations can learn from social entrepreneurs in order to build business in emerging markets. Interest in SocEnt innovation revealed itself in the 2012 article "Social Entrepreneurship & Social Innovation: Not the Same Thing."
Although that post dealt with the comparison of for-profit (or hybrid) social enterprises with nonprofit social innovation, two key parameters from the article offer opportunities to innovate and drive sustainability for all organizations:
1. The "against" position
In branding, claiming the "against" position means using a competitor's dominant spend and mindshare to carve out an anti-space — the "Uncola," for example.
Social entrepreneurs are quintessential actors against positioners. At the New York Forum on Africa held in Gabon, professor and Nobel Peace Prize recipient Muhammad Yunus stated it clearly: "I looked at how traditional banks do business, and we did the exact opposite."
2. Buying impact, measuring success
Jason Saul of Mission Measurement exhorts funders to stop thinking about giving to charities and shift to buying impact.
Funds should flow to the organizations making and reporting measurable progress and actually solving key challenges. But impact buying reinforces the prevalent tendency in the nonprofit world to spend significant dollars on measurement. Funding those added "measurement investments" makes solutions more expensive and less sustainable.
Successful social entrepreneurs create business models where measurement is integral to the normal course of solving a challenge. This one innovation actually can make the difference between a profitable and a non-profitable model.
Social enterprise models have to operate in low-resource environments, and they have to scale without big capital investments — two of several reasons why doing the opposite is a must. Several of the most profitable global-scale successes have followed low fixed-cost scaling. Google, with its data center in a container model, is a prime example of how doing the opposite can happen in many ways. Waste Management and SAP also reveal the power in taking a different approach.
Waste Management's turnaround
"My greatest weakness is that I have never run a local operation. My greatest strength is that I have never run a local operation," said David Steiner, CEO of North America's largest trash hauler, Waste Management, in his keynote speech at the BSR Conference this year.
Steiner outlined how the company faced increasing pressure a few years ago when low or zero waste was being emphasized. Many Waste Management executives felt that advocacy was an attack on their raison d'etre. Many chose fighting environmentalists as the way to execute the corporate reinvention that was required. A lack of vision was demonstrated by previous management, which spent more of its time cooking the books than creating the recycling and renewable energy recipes that now power the company.
Taking the opposite approach in less than two decades, Waste Management has transformed into the largest environmental solutions provider in North America, serving more than 20 million customers. In its own words, Waste Management is "committed to developing new waste solutions that can help communities and organizations achieve their green goals, including zero waste."
According to Steiner, Waste Management produces more renewable energy than the entire U.S. solar industry and has converted 134 landfills into wildlife refuges.
The company's future was transformed when it realized that billions of dollars in value were locked up inside its collection and transfer vehicles, and began to shift significant resources to realizing that value. Doing the opposite also has resulted in Waste Management being named to Ethisphere's World's Most Ethical Companies for six consecutive years. It will continue to "develop strategies to extract value from waste, which both minimizes our environmental impact and saves our customers money," said Steiner as he accepted the most recent award.
SAP's sustainability approach
On a similar note, expanding the tag line for SAP from "Run Better" to "Make the World Run Better" did not begin in the marketing department. The beginning of the thinking is represented in this statement from a September 2010 interview with Peter Graf, named SAP's first CSO (Chief Sustainability Officer) the previous year:
"As we started to develop our own sustainability approach, we found that software tools weren't very well-developed to gather and collect information as part of a business process. There were no links to common master data, no organized workflow and little built-in reporting standards. So we identified several different opportunities to create or improve existing tools. As a result we established our 'enabler' strategy to help customers use software to become more sustainable, and make it much easier to track and report progress, allowing for more time to focus on improvement."
SAP published its own integrated annual and sustainability report this year, putting the company on the cutting edge of sustainability reporting just three years after the 2010 report that experimented with transparency for the first time. It didn't hurt that sustainability efforts saved SAP $285 million over a similar period.
As Graf shared at BSR, the initial conversations around sustainability did not yield immediate resources to implement the full Global Reporting Initiative standards. "Not interested" was the more common stance. But he saw a different vision of the future. His insight was that no software company could help the world's big companies "run better" if they could not show them how to run more sustainably.
Fortunately, SAP's customers were seeing the same things. It came in pieces at first, in managing product safety, traceability and energy management. With a CSO in place, SAP had a focal point for role model awareness and shared its approach with customers. As customers bought in, resources flowed, schedules were met and standards were adopted. Sustainably managing the business became an integral part of running better.
As Newsom pointed out, we can't continue to do what we've done. Sustainability is a must, and these two leaders show how to shift, scale and drive corporate sustainability.
Photo of Waste Management truck via Waste Management