Purposely profitable: What companies miss about sustainability
Purposely profitable: What companies miss about sustainability
The following is an excerpt from "Purposely Profitable: Embedding Sustainability into the DNA of Food Processing and Other Businesses."
"It is not enough to be industrious; so are the ants.
What are you industrious about?"
— Henry David Thoreau
Strategic planning is nothing new. There are countless models available, some very effective, and others not so much.
Reinventing the wheel on strategic planning is boring — that is not what this is about.
This is about disrupting the current approaches and shifting the paradigm on strategic planning to reflect reality. This can be done in a number of ways.One step is placing a purpose beyond profit at the center of a company's strategy. Moreover, providing a system of strategic planning that embraces change instead of resisting it incorporates the spirit of sustainability to drive triple bottom line performance.
Instead of having two strategies — one strategy for the business, and one for sustainability; two separate and siloed strategies — the model presented here provides a proven, dynamic and successful solution to integrate sustainability into overall business strategy.
Instead of building a "business strategy" and then building a "sustainability strategy," the model integrates the two together to develop a strategy that is sustainable, as illustrated in the first figure below.
Having an overall purpose beyond profit for developing a strategy in the first place changes the game even more.
Many organizations today struggle in realizing their full potential not just simply because sustainability is not properly integrated into the overall strategy or there is no greater purpose beyond profit for their existence.
Many times, it is because the entire organization is not aligned and focused on a common vision of the future. The result is organizations implement a bunch of initiatives and have people running around working on things that do not add value.
For example, when it comes specifically to sustainability, many organizations today have some sort of environmental initiatives in place. However, without clearly understanding what environmental aspects and impacts are really important to the longer term direction, organizations come up with some generic project that is popular today, like a "recycling" program.
That’s great, but what if waste is not really a big issue or cost for the organization relative to, say, energy or water conservation or shaving materials out of a design?
The answer is simple; it is the wrong initiative to be working on. Even though it is nice to do, the efforts do not create real value and are pointed in the wrong direction since they do not align with the longer term picture of the future.
Obviously this is a simple example and not every organization operates this way but it is frightening how many organizations have not even identified the factors critical to success or the direction they want to head, never mind making sure that all activities are aligned to a common picture of success.
The figure below illustrates what a typical misaligned organization looks like:
The organization is "busy" working on a bunch of stuff, but it is not the right stuff because efforts are pointed in the wrong direction — they are not aligned with the long‐term "vision" of the organization.
Additionally, because sustainability has not been properly integrated into the overall strategy, there are pieces missing.
Where is the "community" or philanthropic aspect of sustainability? If this is a focus for the organization, it is not clear or it has been hidden somewhere. Furthermore, why does the organization exist in the first place?
There seems to be no purpose beyond profit for existing, or the purpose has been pushed aside and is no longer a central component to driving the overall strategy.
The framework shown below, which is the foundation for the strategic planning system presented in this book, addresses a number of the issues with the current approaches to strategic planning.
First, it corrects the misalignment by requiring a clear vision of the future that is supported by a set of critical success factors — aka "pillars," such as "employees" or "partner relationships" — which keep the organization focused.
Furthermore, it addresses the failure to properly integrate sustainability by ensuring all aspects of sustainability are covered across the pillars.
Finally, having a purpose beyond profit as the central motivator, changes the game of strategic planning.
One can clearly see the difference between the before and after. In the integrated model, the organization has identified the focus areas critical to success in the form of pillars, which contain all dimensions of sustainability and are clearly aligned to the long‐term vision of the organization to fulfill a purpose beyond profit maximization.
You, too, can learn how to build a strategic plan that is aligned, focused, and integrates all aspects of sustainability while deliberately fulfilling a greater purpose.
For organizations that have adopted this approach, the results are incredible; double digit margin improvements, increased revenues, greater employee engagement, enhanced risk mitigation and elevated stakeholder value.
The process for developing a strategy that is sustainable can be illustrated this way:
It all starts with finding the purpose — beyond profit, for the organization. This is the reason why the organization exists.
Purpose serves as a great motivator for employees and other stakeholders while also providing a north star that will guide organizations along their journey.
With a purpose in place, a vision of the future state will be developed. Achievement of this future state is required in order to fulfill the purpose and serves as the point of alignment for all activities across the organization.
The next step is where the "magic happens." A set of strategic pillars are developed that will provide the focus areas that are critical to organizational success and required to achieve the vision. Collectively, these pillars will include all aspects of sustainability, allowing sustainability to be embedded into the overall strategy and laying the groundwork for building a strategy that is sustainable.
These pillars will help keep the organization focused and aligned.
Once the pillars have been developed, a set of financial business objectives are developed.
Following this, a set of Key Performance Indicators (KPIs) aligned to the pillars will be developed to measure overall organizational performance. These KPIs are critical to the overall strategy since they will be used to develop clear organizational goals. The KPIs, together with the goals, create a mechanism for building accountability, driving action and achieving the financial objectives.
With clear goals set, the next step is to leverage the foundation that has been built to develop the programs and initiatives that will be put in place to achieve the goals that have been set. These programs and initiatives will drive all the improvement activities that employees will be working on.
The final step in the process focuses on how to execute the strategy that has been developed.
In summary, the system produces a strategy where all the "stuff" employees are working on adds value by contributing to achieving the goals that will improve the KPIs, which drive the pillars to achieve the vision in pursuit of fulfilling the purpose.
Profit is still part of the equation, but it is an intended by‐product of fulfilling the purpose in a sustainable way.
Not only will the strategy be sustainable and have a purpose, everything is aligned. It will accelerate the velocity at which organizations improve performance and realize profit while at the same time doing it in a way that positively impacts the environment and society.
By following the process, organizations will have a strategy that is sustainable, where there is purpose to making a profit, and profit is realized on purpose — the organization will be purposely profitable.