Positive Impact Blog

Thought provoking insights for change makers


Reimagining capitalism – Three concrete options for business

Rebeccca Henderson is a University Professor at Harvard Business School in the area of sustainable business. In her passionate new book “Reimagining capitalism” she looks at a world on fire and develops a model of what sustainable business in a fundamentally transformed capitalism would require and look like.  She distinguishes three strategy levels for business, which I find very helpful and which I link to my experiences in Switzerland.

Massive environmental degradation, skyrocketing economic inequality, and institutional collapse (by looking at the USA and other nations turning increasingly autocratic, but also at multilateral organizations like the WHO or the WTO) grow more important by the day. She argues convincingly that this is something that cannot be left to governments and civil society alone, as classical economic thinking declares, while companies continue with business-as-usual. If we fail in transforming capitalism and putting its significant power and resources to better use, we will not be able to effectively address these problems. And business will put its own – but also our future at risk.

What can be done in such a situation? What are the available options for business?

Three different progressively more far reaching but also more demanding strategy levels can be found in the book, although in a somewhat different logic and argumentation as presented here.

Creating Shared Value

A first strategy level is based on the idea of creating shared value, a concept championed by Michael Porter and Mark Kramer. They define shared value creation as creating economic value in a way that also creates value for society by addressing its needs and challenges. “In today’s world, reimagining capitalism requires embracing the idea that while firms must be profitable if they are to thrive, their purpose must be not only to make money but also to build prosperity and freedom in the context of a livable planet and a healthy society.” (R. Henderson) However, as long as shared values are defined by business looking from the inside out, their perspective will focus on reducing the bads of their existing activities. They will reduce waste, resources, or risks and happily report on newly created shared values. This cannot be sufficient. Only when they start to look from the outside in, starting from the problems society is facing and finding economic solutions for them, will their contributions address problems of real social relevance. Only then, they may be approaching what Katrin Muff and I call “true business sustainability”. For this, they clearly will have to follow a larger purpose than simply maximizing their profits.

Cooperative Self-Regulation

A second strategy level is based on cooperative self-regulation. It engages firms with each other, with the third sector, and with government partners in the pursuit of solutions to common problems, which cannot be solved by any of the partners alone, often prototyping solutions that prove to be a model for subsequent practice. Famous examples are Nike trying to get child labor out of its supply chain by creating the Sustainable Apparel Coalition or WWF and Unilever which spearheaded the creation of the Round Table on Sustainable Palm Oil, both as a response to the massive critique by NGOs. A current example on a national level, where the author is personally engaged, is PRISMA, an inter-industry cooperation of major companies in the food production, retailing, and packaging sector engaged in bringing about a circular economy solution in Switzerland for consumer goods packaging. While the existing system of materially separated collection systems has been working well in the past, it has reached its limits of including new packaging materials and of demanding an increasingly difficult contribution from the consumers to separate and collect the different materials. The new model developed and promoted by the PRISMA-coalition is an innovative One-For-All collection and recycling system. It consists of a blueprint for a future collection system, prototypes of different elements of a practical solution, and a roadmap for developing and promoting an industry agreement.

Supporting Inclusive Political Action

Cooperative self-regulation is a powerful new way to mobilize the business community in support of promoting collective goods. The increased reach, however, comes at a price. It is hard to achieve and even harder to sustain over time. It needs to be carefully managed. To create more stability and to counter market deficiencies, we need to turn to the third strategy level which is supporting inclusive  political action. Environmental degradation, climate collapse, inequality, and public health are systemic problems that cannot be solved without government action. Free markets need democratic, transparent and effective governments, if they are to survive, as well as the other institutions of an open, inclusive society including the rule of law, shared respect for the truth, and a commitment to vigorous free media. Free markets need free and effective politics to continuously balance and rebalance the evolving rules of the market in light of changing conditions and challenges.

The challenges are huge

Energy demand is projected to double over the next 50 years. Stopping global warming will mean ensuring that every new plant that’s built is carbon-free. It also means shutting down or decarbonizing the world’s existing fossil fuel infrastructure. Inequality, poverty, and migration present a similarly tough set of intertwined systemic problems that can only be fully addressed through government action. Most of these challenges are beyond the reach of individual countries and need international political cooperation. A good example is the Montreal Protocol, an international agreement to phase out ozone-destroying chemicals which became effective 1989. It has been remarkably successful. It proved to be possible to find CFC substitutes relatively quickly, despite strong opposition from major business players, and the Antarctic ozone hole is expected to return to its 1980 status by 2030. It has also reduced global Green House Gas emissions by about 5,5%.

The systemic problems we are facing today confront us with the fact that we must build effective global institutions. Business must become an active partner in shoring up the institutions that we have and in building the new ones that we need. And to be clear, this is not about improving the framework conditions for one’s own business or industry. It is about supporting the foundations of our society and of its healthy development. It is about protecting and developing the institutions that have made business and all of us rich and free.

A current example from Switzerland is the public vote on a popular initiative holding Swiss corporations legally accountable for environmental and human rights violations outside Switzerland. While 50,7% of the people voted in favor of the initiative, the second condition for an acceptance – the majority of cantons – was not achieved. The strong lobby of multinational corporations, their business associations and political allies prevented a move that could have paved the way for a more responsible and accountable form of supply chain management in a developing world context. In this case, it was a missed chance to go beyond simply reporting good news and demonstrate real engagement in one of the current hot spots of global development, although public and political pressure in Switzerland and on an international level will not go away It demonstrates how challenging it is for business to find a new role in this profound process of social change and business transformation.

Different strategy levels – different reach – different competences

Creating shared value, cooperative self-regulation, and supporting inclusive political action – on a national or an international level, depending on the issue at case – must be seen as three crucial sustainability strategies for business. While the first strategy is located on an organizational level and allows companies to act by themselves, this is easier to do, but its reach is also limited. Cooperative self-regulations offer a wider reach, often including whole industries or multi-industry and stakeholder coalitions. But this is clearly more challenging and demands very different competences and resources in the collaborative field to practically succeed. And a strategy of supporting inclusive political action aims at the political level and needs again very different competences and resources to act effectively. Here it will need political coalitions with business being only one player among many. But this level may prove to be the most important in the years to come.


Anybody can contribute to the mindset shift that is needed to create a positive impact!

We know that it takes an enlightened leader to reposition an organization to provide also value for society and the planet. And we also know that there aren’t enough such leaders. However, latest research shows that there is hope: any engaged employee can increase their changemaker potential by inviting external stakeholders to traditionally internal decisions-making meetings. The current digital meetings are a great bridge for this. Learn here more about the magic of external stakeholders in triggering the organizational mindset shift towards creating positive value.

What lesson does COVID-19 crisis have for business?

Covid has shown us how important it is for organizations to become resilient. There is one guaranteed way to increase your resilience, and that is by orienting yourself to the burning challenges that society and the world face today. Pioneering organizations do this by matching their core competencies with these challenges in order to develop new business models and revenue streams for their business. This requires you to create value, no longer just for your shareholder, or even stakeholders, but to think beyond the existing markets and clients to think broader. The question becomes: How can you as an organization with all the competencies, resources, and capacities you have contribute to solving societal and environmental challenges that are out there?

How do leading positive impact organizations accomplish this?

The pioneers show that in order to transform from a traditional organization to a positive impact organization, there are two predictors of success:

  1. an enlightened leader, meaning somebody who gets the benefits of contributing value to society beyond just looking for creating value for your business, and
  2. an organization that is capable to work outside of its business boundaries, as effectively as internally. I call this the co-creative organization. In addition to managing your business internally, you need to learn how to be co-creative outside, and not just the CEO, but actually many people in your organization.

So that’s why I talk about two mindset shifts: 1) one of the leader who needs to shift somehow the purpose of the organization to want to create more value than just for shareholders. And 2) the mindset shift of the organization where suddenly a sufficient number of employees in the organization learn how to work creatively outside of their boundaries and make sense for their own organization out of it. This external fluency is an entirely new expertise that typically doesn’t get developed in business schools.

But there aren’t enough such leaders, are there?

Indeed, there are unfortunately there aren’t enough leaders. But our research offers great hope. Since it takes two things, the leader, and a co-creative organization, I have some ways to make sure that your organization can become co-creative. Even if you don’t have an enlightened leader, at least you now have one of the two success factors. And we have seen that process of becoming co creative co creative becomes a mindset shift trigger for the CEO. By engaging in the practices to become co-creative, there is a transformation. Even with the leader so you may have initially a leader who doesn’t get it.

Are you saying anybody can bring about change?

Indeed, we are calling them intrapreneurs or change-makers. It could be the head of sustainability, the head of strategy, head of innovation, who says: «Hey, we’re going to bring in such new practices».  In addition, there is a younger generation, an amazing amount of changemakers that are already kind of intrapreneurs that are ready to bring in a lot of energy, new thinking and dynamism, to be the changemakers that can bring in that that can work on that co-creation part.

But what would such a change agent do?

There is a method for turning a traditional organization into a co-creative one. There is a specific way to bring in external stakeholders. I call them Collaboratory events. The change agent invites constructive external stakeholders and together with them the company participants develop a solution to a problem that is out there. In that one-day workshop, particularly if you have the CEO present, our research shows that something happens with people. Exposure to different thinking, arguments, ideas, perspectives opens your mind. And sometimes, the little opening that happens triggers a mindset shift. A mindset shift is nothing else than an expansion of mind. The key to the organizational mindset shift is all about creating triggering incidents where participants minds expands. There are specific proven processes for this. My book «Five Superpowers for Co-creators» is all about it.

So what do you suggest for changemakers out there?

If you have an appetite for helping your organization to identify what are the positive opportunities in there and get together with the innovators and the strategists in your business together, what you need to do is to find a professional facilitator, ideally somebody trained with the SDGXCHANGE methodology, and organize a multi-stakeholder meeting. You pick a day, invite some external stakeholders and a diverse range of your work colleagues – new and long-time serving your organization, all ages, genders, backgrounds and skills. And together with a skilled facilitator, the group has a conversation about what could be the positive role or contribution of your business to address these issues out there. This is what it would mean to put yourself on the «offense» team.

Take-away message

Even if you work in an organization that currently isn’t focused on creating a positive impact for society and the world, and your leader doesn’t necessarily get the importance of such an orientation, there is something you can do: find ways to bring in external stakeholders to your next meeting you have in your department. Any meeting that benefits from a broader perspective and new ideas will be perfect for this. With this simple act, you will start broadening the mindset of your colleagues and help position your organization for a mindset shift. Be surprised with how the positive benefits start to spread in your organization.

If you need help in how to go about this, feel free to reach out to me katrin@katrinmuff.com.


Costa Rica is now running completely on renewable energy

Have you heard the news? Costa Rica has managed to shift to 100% renewable energy! And they are not alone – more and more countries are following suit, and I hope you are part of a community and a country that is also moving in this direction. Is there anything you can do to fasten the pace?

My friend Jan Arend, who I stayed with just recently, just took his family and home off the grid – he was so excited to share how much energy he is feeding into the grid and the many places he found he can save energy. Hats off!!

http://qz.com/367985/costa-rica-is-now-running-completely-on-renewable-energy/?utm_source=huffingtonpost.com&utm_medium=referral&utm_campaign=pubexchange


We are a part of something BIG. Can you feel it?

I am so pleased to share the trailer for the film “Planetary” with you which was released on EARTH DAY — 22 APRIL 2015. Here is what the film promises: “We are in the midst of a global crisis of perspective. We have forgotten the undeniable truth that everything is connected. PLANETARY is a provocative and breathtaking wakeup call, a cross continental, cinematic journey, that explores our cosmic origins as a species.”

More info: http://weareplanetary.com/ / PLANETARY COLLECTIVE

Rent the film today!

planetary


Switzerland has published its CSR Swiss Action Plan

On the 1st April, 2015, the Swiss government has produced their report and action plan for Corporate Social Responsibility, suggesting how business should embrace its societal responsibility. The action plan on Business and Human Rights and the Swiss response to Special Representative John Reggie’s framework principles on Business and Human rights is envisaged for summer 2015.  The Irish Government is already a few steps ahead, they are now working on the Business and HR plan. The question is: is the plan good enough? Will it get us to a world where 9 billion people can live well and within the limits of the planet? How will we know? What do you think?

https://www.news.admin.ch/message/index.html?lang=fr&msg-id=56760


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Is there really a business case for sustainability?

Thanks to a comprehensive, aggregate study completed by the Natural Capital folks, we have now a clear and solid answer: YES. If you need convincing or would like to see some evidence, click here to download their report for free. Happy reading!

 


San Francisco Becomes The First City to Ban Sale of Plastic Bottles | Global Flare

I am so pleased to read this! How soon will other cities follow? How we as citizens support this? What can you do in your local community? http://globalflare.com/san-francisco-becomes-the-first-city-to-ban-sale-of-plastic-bottles/

At BSL, we have made plastic bottles redundant by offering all students a BSL bottle.

BSL-Bottles-sm

 


2014: watershed moments in sustainability | Guardian Sustainable Business | The Guardian

2014 is a year with some important progress highlights towards a sustainable world, including the now public secretly negotiated US-China 2025 CO2 emissions reduction deal, and more. Here all the details:

http://www.theguardian.com/sustainable-business/gallery/2014/dec/29/2014-watershed-moments-in-sustainability?CMP=new_1194

The Guardians predicts 2015 to be the year of “the beginning of the end of climate sceptics”… Let’s hope for more great news ahead!!


Goodbye Global Greed

Some of you may have heard of an exciting thing happening in Europe – the Economy of the Common Goods movement which started in Austria and was spearheaded by Christian Felber (www.gemeinwohl-oekonomie.org – no worries there is English information). As the first university worldwide, Business School Lausanne has undertaken the company self-evaluation of the “matrix” and is currently in the official audit process. What an amanzing and eye-opening experience this was for us! It allowed not only to identify important blindspots, but also to speed up an internal transformational process towards fully embracing and integrating sustainability and responsibility in everything we do. Take a look now at a funny and provocative comic that was developed by Herbert Wegscheider, a contributing member of the Economy of the Common Goods movement (click on the image below to download the file):

Click here to see the Goodbye Global Greed comic

 


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Planetary resilience. What is it and why does it matter?

When it comes to resilience, what good does it do a single business or industry to prevail if it does so at the expense of other sub-systems or even the bigger system itself? I’ve shared my views in Planetary Resilience on PwC’s Resilience site: http://pwc.to/12PscYV

What are your thoughts on that?