HR Magazine

Sitting in the United Nations Global Compact 2010 Leaders’ Summit, I am reminded of something I heard someone say at a conference many years ago. They were speaking of the movement for racial equality in the 1950s and 60s: “Those leading change often overestimate what they can achieve in the short term and underestimate what they will achieve in the long term.”

I think this summit is a story of slow but inevitable change.

In 1999, in the wake of riots in Seattle and Genoa, then UN Secretary-General Kofi Annan made a speech to the World Economic Forum in Davos “I propose that you, the business leaders, and we, the United Nations, initiate a global compact of shared values and principles, which will give a human face to the global market.”

The United Nations Global Compact was formally launched in July 2000, with just 44 companies from around the world. The Global Compact now, ten years on, has nearly 6000 corporate signatories from over 130 countries, and here in New York last week, 1300 business leaders met to review progress and consider the next ten years.

The UN Global Compact worked with Accenture to conduct a CEO survey for this summit. Among many startling findings were the following: 93% of CEOs now believe sustainability will be critical to the future success of their companies; 80% believe a tipping point where sustainability is embedded in the core business strategies of the majority of companies globally will occur within the next 15 years; 54% believe this tipping point will be reached within the next ten years.

As we know, history is littered with examples of slow movements for change that suddenly become rapid, disruptive and overwhelming – change occurs which is so comprehensive that we can hardly even conceive that it was different before. The idea that 80% of business leaders see such a tipping point on sustainability being reached within the next 15 years is therefore a compelling one.

So while there seemed to be something of an underswell of frustration among some business leaders on the floor at the lack of ambition and urgency from some business leaders on the platform, the real story here is that while the last ten years have seen a lot of greenwash, they have also seen some real innovation and change as many organisations have devoted considerable energy to experimenting with new approaches to see whether business really can act on the principles of sustainable development at the same time as being financially sound.

The platform was awash with CEOs, chairs and board members from some of the worlds leading companies: Bank of America, AREVA, Petrobras, ENI, China Minmetals Corp, Tata Sons, Hindustan Construction, Siemans, China National Offshore Oil Company, Munich Re, Infosys, SK, Allens Arthur Robinson, Schneider Electric and more.

We heard about what’s at stake: the state of human development and poverty around the world, ecosystem degradation and climate change, corruption, systematic human rights abuses and violent conflict.

We also heard about what’s at stake for business. Paul Polman, CEO of Unilever cited a recent study by AT Kearney which found that climate change and water scarcity could lead to a loss in earnings for the food industry of 47% by 2018. A number like this makes both management and investors take note he said, and when this is added to the fact that consumers now want products to be doing good for society and the planet as well as for them, and that retailers like Walmart and Carrefour only want to engage with suppliers that have a long term vision for sustainability, you start to get a clear picture of the only viable strategic path ahead. This is why Unilever has made decoupling commercial growth from material consumption a strategic priority, coming alive through commitments to sustainable sourcing and sustainable living – think for example of the company’s commitment that all tea (and it buys 12% of all black tea in the world) and all palm oil it buys will be from certified sustainable sources by 2015.

And as we heard from more and more business leaders on similar themes, the ghost of BP and its loss of more than half its market capitalisation since the beginning of the oil spill in the Gulf of Mexico never seemed far away.

Mayor of New York Bloomberg told us “the future is in our hands, this is not difficult stuff, it just requires some courageous decisions.” Lord Michael Hastings of KPMG reminded us of the story of Ron Wayne, the third founder of Apple, who sold his 10% share of the company in 1976 for US$800. “Don’t get caught out by not seeing the tipping point that’s right in front of you.”

Dennis Nally, Global Chairman of PricewaterhouseCoopers summed up the transition from the first decade of the compact to the second: “It’s taken a decade, but now a critical mass of business leaders have got the message. The next decade is about executing the change, and this presents business leaders with a time-sensitive opportunity for long term competitive advantage.”

And the implications for business schools…

The theme of ‘executing the change’ kept coming up throughout the summit. A representative from GE said at one point “Its not about working out what we’ve got to do, its about making this live in all places at all times across the organisation.”

This presents a clear role for organisations like Ashridge whose core expertise is in partnering for organisational learning and change. It also places a real spotlight on all business schools and institutions involved in developing the next generation of business leaders, a theme that has come up at these kinds of gatherings more and more in the second half of the last decade.

And so its no surprise that one of the key initiatives to have come out of the Global Compact over the past ten years has been the UN Principles for Responsible Management Education, presented to Secretary General Ban Ki Moon at the Leaders’ Summit in 2007 having been developed by a taskforce of 60 business schools globally (including Ashridge). In the space of three years, the Principles now have 300 signatories.

A whole day of this summit has been devoted to a side event for deans and directors of business schools on management education. As an input to this forum, the UN PRME secretariat invited Ashridge and EABIS to lead an analysis of CEO perspectives on the role of management education, drawing on data from the UN Global Compact-Accenture CEO Study.

Key findings include the following: 88% of CEOs believe it is important that business schools develop the mindsets and skills for future leaders to address sustainability, overall citing this as the second most important change that needs to accelerate for the tipping point to be reached, broadly equal in importance to the actions of customers, investors and government regulation.

One in four CEOs say that lack of skills and knowledge among senior and middle management is one of the top three barriers to them as a CEO implementing an integrated and strategic company-wide approach to sustainability, and 86% say their organisation should invest in enhanced training of managers to integrate sustainability into strategy and operations.

This isn’t just about companies in a minority of regions or sectors. These findings are remarkably consistent across different regions globally, across different industry sectors, different sizes of organisation, and across publicly traded, privately owned and state owned organisations.

What does this mean for business schools? Ashridge Chief Executive Kai Peters was quoted: “The clear message from these findings is that the debate about whether the sustainability agenda is a real issue is over. The question now is how should business schools address sustainability strategically… Business schools don’t just need a few specialist faculty. They need all of their faculty to understand sustainable development and see the implications for their own particular areas of expertise, whether that be leadership, strategy, finance, or marketing. As business schools, we need a much stronger emphasis on faculty development across the board.”

Many others contributed similar thoughts. Philippe de Woot of IAG Louvain School of Management spoke of the need for cultural change in business schools, rather than a piecemeal response. “This won’t happen with old professors” he said, “It will happen with a new generation of faculty and new, young deans.”

Rakesh Khurana, Marvin Bower Professor of Leadership Development at Harvard Business School, continued in a similar vein: “Business schools are very poor at adapting to changes in the broader external context. It’s almost as though they’re designed to resist change. They might add a course here or there, but they struggle to change their core model.” He cited three paradigms that are still core assumptions that now need to be revisited: principle agent theory, maximisation of shareholder value, and the notion that markets reflect the value of an organisation to society.

Rakesh also argued the opportunity for change comes when new deans are appointed. He cited several examples of schools across the US where recently appointed new young deans with different educational backgrounds and mindsets are working with entrepreneurs within their schools to lead significant change around the integration of the principles of sustainable development.

This trend towards sustainable development is probably the most urgent of several trends out there that are of material significance to business schools – one could also think of the rapid pace of ongoing technological change, the shift in economic centres of power, how to do more with less as austerity budgets are introduced in the wake of the banking crisis, Generation Y, and what we’re learning about what makes for effective approaches to real learning. With mounting evidence suggesting a potential tipping point on sustainability closer on the horizon, there is a clear strategic choice for business leaders and business school faculty alike: lead the change and seize the opportunity, or risk being overtaken by competitors and becoming increasingly irrelevant. We as a global society need them to choose the former.

As news of nation after nation getting ejected from the football world cup filtered through into the summit, I found myself thinking of the quote about change again, and reflecting that not only does the US now have its first black president, and that the African continent is hosting its first ever football world cup in post-Apartheid South Africa, but that soccer finally really does seem to have become a big deal in the US. Maybe some things really do change.

In 2008, the United Nations invited Ashridge and others to lead a CEO survey to understand the perspectives of the business community on the role of management education in helping organisations to make sense of and adapt to a changing global context.

I have a problem with what Gordon Brown and David Cameron have been saying recently. Keen to compete on “fiscal reality” they have both offered budgetary toughness and plans for debt repayment. The trouble is the debt repayment plan requires a return to “growth”.

I don’t like to be the messenger of doom, but we need old style “growth” like we need a return to business as usual. We can afford neither.

All governments of the post-war era have colluded to build a society where we measure our well-being by what we buy, consume and earn. We have replaced community and family with ASBOs and ISAs. It hasn’t worked yet and it can’t work in the future.

We have just one planet and it is plain stupid to place all our chips on a strategy for survival that depends on infinite energy and infinite mineral resources. We have neither. We need a more resilient way. Certainly not one based on ever more extraction, production, consumption and waste, with all the biosphere carnage and social injustice that goes with it.

George Osborne ⁽¹⁾ writes that a Conservative Treasury “will be a green ally, not a foe”. Good. Start by measuring national wellbeing by something less addictively illusory than economic growth.

Whoever rules, there are hellishly tough questions to be addressed. Let’s start by ending the delusion that we can grow our way out of this crisis. It is our addiction to growth that got us here in the first place.

 (1)     Source: The Independent, Tuesday 24^th November 2009

I am preparing the literature search element of a research project on “leadership and tomorrow’s organisations”. This research will be particularly related to sustainability. At this stage I am looking at writings which seek to define leadership from a wide range of perspectives, including

• Henry Mintzberg’s new book “Management” says that managers lead some of the time and leaders manage some of the time. Leading is a relatively small part of how they spend their time, not the whole of the job for anyone.
• Ron Heifetz of Harvard, Kennedy School of Government, writes or co-writes three books, which, with another by Sharon Parks illustrating his approach of creating situations where participants experience what is involved in leadership, discovering what it means in terms of attitudes relationships and activities. He distinguishes between the purely technical means of management and the adaptive leadership which has to deal with situations in areas where there is no ready answer. Leaders should not impose their own solutions but enable people to own the problems and develop their own solutions.
• The University of Hertfordshire under the “leadership” of Ralph Stacey, denies that an organisation has any kind of living existence, such as that propounded by Arie de Geus in “The Living Company”. Organisations are not run by leaders top down, but develop out of local conversations by all employees at all levels, so that the organisation is self developed at the edge of chaos, as nature is said to be by complexity theory. Individuals on their own don’t change things – it is the power of these conversations and relationships; they are somehow the energy for change. The question remains whether some individual leaders are needed to avoid descent into chaos. I have been unable to understand why Stacey et al are so hostile to systems thinking as presented by Michael C Jackson, Russell Ackoff and Peter Senge.
• Bill Tate in “the Search for leadership”, just out, says, in effect that we don’t need leaders, but leadership, which can emerge in all sorts of situations at all kinds of level in an organisation. This could fit with the Stacey view, except that Tate roots it in systems thinking, which Stacey belittles.

Other books and articles being considered include those by Adair, such as “Leaders not bosses”,  Kotter’s best book in my view is his parable of the Penguins whose iceberg was melting and whose problem was solved by one who was seen as a non leader, with the blessing of one of the formal leaders. This could be quite relevant. Some of Kotter’s books are somewhat mechanistic revolving around his seven or eight points.

One question that frequently emerges is the doubt whether one can put manager and leader into different categories.  Organisational learning expounded by Senge and others is not favoured by Stacey, because as organisations don’t exist as entities they can’t learn, according to him, though individuals don’t learn either, other than in relationship.

Also relevant to everyone being involved in leadership is the approach of the World Wildlife Fund (WWF). Environmentalists tend to seek to influence organisations to change course or persuade people to take small carbon reduction steps which will make them feel good. The best way according to the WWF is to work on changing people’s central values, so that they in turn will insist on action being taken by government. Hearts and minds being involved are stronger than mere checklists. They are working on changing the quality of the thinking of the population, so that they will insist that Governments act. Thus the whole population has a share in leading governments to do something. Leadership is enshrined in the people, which is the essence of democracy. Government of the people, for the people, by the people.

This has certain similarities with Stacey’s leadership stemming from the relationship between the mass of people almost mystically having an effect. But probably the media has a greater effect, and the basis of its work is not the instilling of the highest values, but the supporting of a favoured party to win elections. Perhaps the WWF is being highly idealistic and has a high view of human identity that is not generally borne out in practice. However  perhaps the only answer to environmental concerns is when we, the people, are led to lead our government to take uncomfortable but needed action  

Most of the authors agree that we can’t predict the future; a mistake that market systems often make is to think they can. And one of the qualities expected by those who look for it in hero leaders is such a capacity for foretelling the future. Is the distributed leadership we have been considering with some of the writings, capable of learning that if we continue as at present then disaster is certain? We can’t go on as we are. Thus we do know something about the future, sufficient to create scenarios about possible situations and how to handle them if they arise. If we actively lead our fellow citizens into Stacey like conversations about the future needed for a life of reasonable quality, we can start together in that direction, even if where we arrive is not quite what we expected.

When we, the people, provide such leadership and force the government people who think they are the leaders, to face up to realities, which are more significant than election winning, we may arrive at Robert Greenleaf’s, “Servant Leadership”.

Is it too much to expect research to be taken seriously if it considers such issues and possibilities, so far removed from current cynicism and starts talking about trust and courage, giving and not just taking, and seeing business as having a responsibility to Society, in spite of denials from the Friedman school. Positive results can stem from a different perspective on leadership.

Comment, including rigorous opposition, is welcome.

The recent Ofgem report that reviewed Britian's future energy supplies has been timid in its scenarios. Far more difficult outcomes are possible, as is a far better one. The factors Ofgem considers are correct: the UK faces a severe energy pinch. A combination of continuing demand rises (even if slow growth continues) coupled to nuclear retirement and the withdrawal of PowerGen's coal plant investment expose the UK perilously low levels of reserve on the electricity grid. Power outages (that is black outs and brown outs) are an increasing likelihood under all scenarios.

Growing energy demand in China - and across the traditional oil and gas exporting world - will both limit quantities of fuels available for export and push up prices. (See Jeff Rubin's book "Why Your World Is About to get A Whole Lot Smaller"). The UK will be exposed to ever scarcer and more volatile import sources. This isn't a scenario, it's an extrapolation of an observable fact. All that will vary in the scenarios is the timing and the price path.

The energy outlook for the UK is fragile. The UK needs additional energy investment and without it faces power shortages, price rises and a terrible and socially divisive increase in fuel poverty - we face the risk of a society of the energy haves and have-nots. We have built a society around a world of cheap and available energy and that is now coming to an end.

We need a radical and swift move to a more resilient economy using far less energy and far more renewable resources. The work being done around the UK - and now around the world - by the transition movement is one example of how local initiatives are offering insight into the way forward. The ideas of permaculture design also offer ways that can be embraced to get all of our needs met from far lower resource investment.

But we need much, much more. At this stage there is no expert solution to the challenges we face - in business, in society, in geopolitics. That is why we need to bring all available energy and creativity from across business and society to address the challenge of the future and here is the challenge for all those involved in leadership development - we need our leaders of the future to be eco-literate and to be able to work beyond the basic "be nice" message of sustainability. This is about bio-intelligent innovation, deep societal adaptation and learning to live in honest recognition that we are all part of a living process.

Learning and development can play a crucial role in helping both individuals and thus organisations to understand the realities of the challenges facing us in the coming decades. A sustainable future requires a huge mind shift and sustainability is no longer a 'bolt on' subject, but should be an integral part of how all individuals learn and develop. There are some good programmes out there such as the MSc in Sustainability and Responsibility at Ashridge and the various initiatives and Schumacher College in Devon amongst others and more will be developed by other learning providers. If we wish for a sustainable future, everyone needs to be involved and the L&D community has an important part to play in developing the innovative managers and working practises of the future.

All the noise surrounding the bailout of GM this week reminded me of a meeting I had a few weeks ago with an executive that worked for another large car manufacturer. He said that even 10 years ago they could see that they were making a product that was likely to be unviable in the next few years (recession or not) and yet they were structurally and psychologically fixated on making large inefficient vehicles and developing the SUV market.

So whilst we do need to save the jobs of thousands of car workers and that of the related supplier network, should we also be asking a fundamental question about whether this business/sector resembling its current form has any long term viability at all, and if not what long-term re-skilling and remodeling initiatives also need to be put in place?

As Rob Scott from the Economic Policy Institute said, by imposing strict new emissions targets without giving consumers incentives to buy the cleaner cars, the White House was safeguarding the “shell” of the company, but abandoning many of its workers anyway. 

In addition to this, the return of high commodity prices including fuel and steel, further legislation, consumer pressure etc will simply mean bailouts two, three, four, five and more for the tax payer.

So how do you know if you are working for another geriatric company or sector that isn't ready for the challenges we face today? Could it be something to do with high levels of resource dependence, an over reliance on intellectual property, scarily thin operating margins etc?

I don't know. In fact I am not sure even if I work for one now!

Rob Scott's comment can be found here:http://www.deccanherald.com/content/5599/obamas-plan-fire-general-motors.html

Unfortunately however it continues to mean different things to different people in different contexts and at different times.

The breadth of this topic is both enthusing and confounding organisations everywhere and whilst for many the risk and operations teams have a reasonable inkling of what they need to do, other parts that include HR, finance, marketing and strategy often do not.

The outcome is predictably schizophrenic and can sometimes be embarrassing. A recent example is the advertisement from Tesco that promises to give every customer 60 air miles when they buy an energy efficient light bulb. As the Guardian pointed out this is like being handed a Nicorette patch with every box of Benson and Hedges or dozen king-size Mars bars with each box of Ryvita. It totally misses the point! Yet this is so easy to do, so common and a can easily impede the trusted relationships we all desperately need to create right now.

I am guessing that what happened was that somewhere along the line it was a miscommunication between the CSR and marketing departments that caused this “Frankenstein” of promotional outcomes.

So

Why not, tell me your “light bulb” moments, both good and bad!

Writing the very first post is a little daunting.

However in the spirit of blogging I will just write whatever comes first. So here we go.

As a sustainability adviser, I try not to take black cabs. However occasionally I do. More often than not, if the cabby is talkative, the conversation goes something like this:

Cabby - “What do you do for a living then gov?”

Me - “I am a sustainability adviser” Cabby - “Oh right yeah, you’re the 5^th one of those I’ve had this week”

SHORT SILENCE

Cabby - “So what is your view on congestion charge, micro hydro, millennium development goals etc."

ITS AMAZING HOW MUCH EVERYONE KNOWS ABOUT THESE ISSUES NOW COMPARED TO A FEW YEARS AGO. THE GENERAL DISCOURSE HAS REALLY MOVED ON

Cabby “And of course why should I do anything whilst those MPs putting in all these green taxes and wind farms drive around in bloomin great three litre cars, have two houses and go on holiday to the Caribbean” 

SHE/HE HAS A POINT  

What I guess I mean is that unlike some other areas of activity, sustainability challenges demand a lot more walking the talk than many other elements.  Yet so far many of us have failed in the main to integrate either personally, professionally or organisationally.

The CSR department tends to simply compartmentalise the issues and this further emphasises our notion of them being seperate and some how external to the way we go about our daily lives.  

This is driven by two reasons in my view.

One is cognitive dissonance and the other is the perceived threat it poses to our way of life. Both of these areas are linked.  

Cognitive dissonance. The greater certain elements of our lives are discordant with others the less believable we become both to ourselves and to others. A CEO talking about sustainability and its importance with one breath and booking a private jet with another performs no solid framework for behaviour upon which others can follow and feel rewarded. In addition, when dissonance is too great something usually gives (this is a good test of what one might call greenwash). Linked to this are the threatening feelings some people associate with the sustainability agenda and what it may pose for our way of life. Unhelpfully, this agenda was initially adopted by groups that were also anti-corporate, seeing certain sectors as separate and harmful.  In reality, we are in the same melting pot at the same time and all facing the same problem, so need to find a way to work together. Some of these feelings and concerns are valid.

Some are not. Certainly, we have radical changes to make but these can on the whole be positive for our well being, our creativity and for society at large.  The essence of this blog is how we make sustainability more central and strategic for organisations large and small. This post is just a couple of thoughts about sustainability and leadership. Over to you.