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!
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!
I am not the only one to have suggested that if we want to save the (corporate) world, we have no choice but to clone Paul Polman. As a matter of fact, this is one of the comments Kate Robertson (Co-founder of One Young World), who received a Dr. Honoris Causa from BSL along with Paul, made to Paul and me on Saturday. The idea of cloning Paul Polman has two elements:
Reflecting back on our big BSL day last Saturday, 20th September, I cannot but help realize that our two big events converged into something bigger. Paul Polman was a part of both events in a significant way – maybe this was part of the magic (more here):
Mark Drewell, outgoing CEO of GRLI and one of our BSL Academic Advisory Board members, shared his impression of the event as follows: “the change of energy from previous years was palpable. You have now accomplished the shift at BSL – the community is really there and there is a powerful sense that there is not only willingness and desire to contribute to this new world we need, but also competencies, determination and real action.”
And indeed, as I observed our graduates receive their diplomas, proudly spending a moment with their classmates and continuing the bond they started to build during their studies, I sense more determination, clarity, courage and passion to find a way to contribute to this world than I have ever picked up before (and it is not that we have lacked high-spirited students in previous years!). Bruno Oberli, the Director of the Swiss Federal Office for the Environment (FOEN) commented on it during the Swiss Sustainability Hub panel discussion. We had our audience vote on who should drive the launch of the Swiss Sustainability Hub, government or business, and just about everybody broke the voting rule by holding up both options. Bruno laughed and said: “If you are able to shift beyond either/or to a new paradigm of both/and that easily, then we really don’t have anything to worry about as you understand the key element of what we need in future: a pragmatically new way of considering our options!”
A big part of this sense was also how smoothly and collaboratively our BSL team worked for, during and after this big event. Despite perfect preparations, events like this always require many miracles behind the scene dealing with changes, emergencies, adapting what was planned to the emergent reality. There is nobody I would like to rather work with than the BSL team consisting of Aurea, David, Denitsa, Katarzyna, Mary, Massimo, Olivier, Teresa and Yasmina. If everybody assumes their place and space with the same sense of service, dedication, passion for the common good and spirit of collaboration as our team, then maybe there are alternatives to cloning Paul Polman.
If the BSL team and our graduates have this sense of purpose, then we know that it is possible to create environments that stimulate such alignment of purpose, competency and cooperation. We all know that there are many many teams and individuals who are truly connected to an inner sense of purpose in many places around the world. And maybe rather than waiting for cloning technology to get up to speed, we simply need to trust in the human capacity and in the emerging leadership that is happening across so many organizations at so many levels. What we can do in the meantime is getting better in building the right environments and capacities to speed this up. Educational institutions are an obvious starting place AND any other organization that has people showing up for work. This reminds me of what Mischa Liatowitsch, who graduated on Saturday from our MBA program, said during his studies (see short 1 minute video here).
Riding up the elevator of the brand new building of the Design Faculty at the Hong Kong Polytechnic University sets the stage: 4th floor Collaboratoy, 8th floor Innovation Think Tank. I haven’t seen the use of “Collaboratory” formally used to designate an entire floor of a building! We must be in the right space! Clearly Cees de Bont from the Design Faculty and Alison Llyod from the Business School are not only an experienced but also a very creative and effective team. Everything was set for a memorable first Collaboratory event in Asia!
Cees’ design students have worked over the past weeks to create more than half a dozen of benches made out of recycled or repurposed material. Special acknowledgment goes to Claudius Bensch, Art Director of the project, for developing the original Bench Circle installation concept. As we walked into the space, our jaws dropped at the sight of these benches! True beauty and an astounding variety! Each bench was designed by a known designer and produced by design students. Here is a short time-laps film that shows them at work:
Allison’s business students had masterfully arranged the space into the signature inner circle held by two rows of outer circle chairs. They had helped to mobilize the key stakeholders for the event and ensured that all concerned parties in Hong Kong concerned by “Green Living in Hong Kong” were not only present but had been briefed in great detail on what to expect. An energized group of approx. 50 engaged citizens, representatives of business, consulting, real estate, NGO, social entrepreneurship as well as various relevant faculty members and students was curious to see what would happen next. Everything was set for an intense 3 hours of co-creation!
The first hour served to lay out all the different perspectives on the topic of what Green Living in Hong Kong might mean, why it was possible, impossible, covering current important issues such as air pollution and the impact of the increasing inequality, the high dependency on the “Hong Kong shopping center”, the dramatically negative impact of the recent frugality strategy of the Chinese and the sky-high real estate prices that drove social entrepreneurs out of town. Yet, the fact that 40% of the land was labelled as national parks and only 30% of the surface was actually built, opened up a discussion around the potential of Hong Kong with its 70+ islands, beaches and many hills and hiking trails for every level of difficulty. We heard stories of permaculture, roof-top gardens, and the need to go beyond organic food to radically re-localize food (the footprint of organic food not being sufficient to balance population growth). A young social entrepreneur shared his initiative of in-house gardening and tourist operator a dream around eco-tourism. The elevator was introduced as a highly sustainable solution to save land (vertical city) and elegantly delegating the cost of mobility infrastructure from government to private investors (well, that’s the real-estator’s perspective). The idea that if green choices need to come more attractive (adding a price on unsustainable living), they would take off. The question of how design can help advance green living in HK. The dilemma of the importance of education and the fact that it takes too long to produce results. The businessman’s pragmatic perspective: “how much are we willing to pay to make Green Living a reality?” countered by the psychologist who believes that it is all a question of behavioral change. One sentiment expressed the rather upbeat sense of the discussion best: “If there’s anybody who can do it, it is Hong Kong!”, this despite the fact that a concerned voice reminded us that returning to a simple living also implied consuming less and that companies would need to radically reinvent themselves. A final voice made a historical comparison, reminding us that in 1972 the Hong Kong government campaigned against corruption which was considered mission impossible and today in Hong Kong corruption was largely gone. So why not campaign against unsustainable living? Well…
After a break, we shifted into the visioning phase of the process and went on a journey where we collectively dreamt up a Hong Kong that had realized Green Living. The traditional sharing round among all participants was among the richest I have experienced today: a new vision for Hong Kong came alive! A vision where Hong Kong would adopt Singapore’s positioning as an education hub to become Asia’s Sustainability or Green Living Hub. Conscious of the fact that Hong Kong in many ways plays a role model function for many cities and people of mainland China, the power of such a transformative change was palpable. Descriptions of such a future vision of Hong Kong included clean air and blue skies, a slower pace and fresh vegetables at hand anywhere to eat. Shopping as a way to secure happiness was replaced by more profound offers that would lead to a more sustainable well-being and happiness. People would come to Hong Kong to “slow up”, to recharge, re-energize and to co-create and develop great ideas.
In the final third phase of the Collaboratory, we asked the question: so what can we concretely do in the next 2-3 months to make steps towards this utopian future. To enable this, we transformed the center space into an entrepreneurial brainstorming space: at least 20 ideas were developed and any last signs of Asian shyness disappeared. The spark of a shared and embodied vision had triggered not only enthusiasm but also creativity. I was challenged to summarize and group the many ideas into 8 main prototypes of which each participant would choose one he or she wanted to spend the last hour of the Collaboratory exploring. We initially thought to vote the best 4 of these 8 ideas but there was enough energy for all of them that we split the circle into 8 sub-circles and empowered each group to self-organize and further develop their ideas. After 40 minutes each team was ready with a solid prototype idea and had identified one responsible person among them who was willing to carry-forward the project until Alison and Cees would decide on how to proceed with a next Collaboratory event to further develop if not all, at least some of them.
Here is an overview of all the ideas:
Cees and Alison have expressed an interest to integrate the first three into their current project development structures which are available in both Faculties. Furthermore, the PolyU business school has platforms on which other prototypes could be further developed. Both of them will communicate with everybody involved in the Collaboratory shortly to ensure that these prototype will start to be realized where possible and where the teams feel energized to further work on them.
Walking into the Silverbox Conference room at the ICON hotel in Hong Kong the next day felt VERY similar to walking into the UN RIO+20 PRME Business Education conference back in June 2012 when we launched the 50+20 agenda: 3 benches were lined up as I walked off the elevator towards the registration desk and the back of the room was displaying with 6 more benches. Awesome! It is amazing what kind of difference some real art can make. More on the conference: http://www.bsl-lausanne.ch/news/school-news/events-and-conferences/bsls-dean-gives-keynote-speech-at-conference-on-renewing-business-education-in-asia
Here’s a great article by Michael Townsend and The Guardian. Michael Townsend is an important thinker in the space of new economic solutions – this article is important for any concerned business leader!
Enjoy reading the full article here: http://www.theguardian.com/sustainable-business/gap-between-corporate-bahaviour-sustainability
As every year for two decades, IMD issues their annual World Competitiveness Report comparing a wide range of parameters to establish which country is ahead of the pack. For a number of years now, the United States maintains its pole position, closely followed by much smaller economies such as Switzerland who has been doing very well in this ranking for as long as I remember. I question the pertinence of this report for a number of reasons:
1) the Competitiveness Report is still based on old 20th century “survival of the fittest” fear-based thinking. Today, given the current realities of a resource- and demographic-constrained world, we would be much better advised to highlight and celebrate countries that a) have found alternative ways of dealing with their economic challenge (of no-growth in developed countries and of high-growth in developing countries), b) have found alternative ways to the widely questioned GDP indicator to measure relevant progress for its citizens and nature (Bhutan with its happiness indicator is a widely cited and respected example), c) have found ways to reduce their negative impact on the identified nine planetary boundary developed by Johan Rockström et al., d) have found ways to significantly increase the relevant dimensions of the eleven social issues identified at the RIO+20 Conference, e) have used their innovation power in the critical domains that develop and critically enhance the “safe operating space for humanity“, the target area for all economic activity as defined by Kate Raworth of OXFAM, f) and have demonstrated an ability to significantly help and support other countries in their transformational journey towards a sustainable and just future.
I could go on! The point here is that I don’t get it why we are still celebrating countries that are significantly unable to manage their own budget, that have debt levels that should have long resulted in a national bankruptcy, and have social policies in place that endanger the current and future well-being of their citizens (examples for the U.S. would include its continuous health care disaster, the absurd income disparity between rich and poor U.S. citizens, a student loan debacle that is likely to cripple not only its future generation of leader, entrepreneurs, inventors and employees of all kind, and a nutritional challenge connected to its obesity problem that may well cripple its economy and societal well-being in serious ways).
I am thus launching a Call for Action to join us at BSL to start collecting data for an alternative World Collaborative Report that will highlight and celebrate countries that serve as role models in their own way of becoming a country with a vision and clear actions to enable all of us global citizens to “live well and within the limits of the planet” to quote the Vision 2050 of the World Business Council for Sustainable Development (WBCSD). We are seeking resources and global partners to provide an alternative for old century thinking by embracing the current burning challenges of this 21st century. We are also engaged to help Switzerland embrace its own potential to become such a leading role model. Contact me if you are interested and have means to contribute. Together, we can change the world into a place worth living in for all of us!
90 students from nearly all chapters from around the world met in St Gallen for a two-day session to inquire how to place OIKOS in the future of management education. I was invited as one of a number of thought leaders from around the world to trigger their creative process. What a delightful experience it was!
The other thought leaders were Max Oliva of the HUB Global and Teamlabs, Martin Cadée of The Journey Network and Knowmads, Traian Bruma who created CROS a student-led university in Romania and Rasmus Johnsen teaching philosophy at CBS in Copenhagen. What an amazing assembly of experience and creative vision in the emerging space of the future of management education.
After a first day spent getting together onto the Journey and applying the Impact Canvas, inspired by the Osterwalder Business Model Generation Canvas, to various concrete projects within the OIKOS framework, day two was dedicated to co-creation. OIKOS is the largest sustainability-focused student organization world-wide with chapters on all continents. We facilitated the initial part of the co-creative process of the students which involved painting a picture of the future of the business school in 2 phases.
Phase 1 consisted of a first group of students of drawing together a picture of what such a university could or should look like. Phase 2 consisted of a second team inheriting the drawing and determining what role OIKOS might want to play in such a scenario. The discussions which accompanied the creative painting exercise were both fascinating and revealing. While we typically think that we need to first know what to point, thus starting with a lengthy debate that ends with a few hasty scribbles on a nearly empty page, our first group immediately attempted to visualize each idea they had about the future university on paper without fully understanding what was emerging or what the final picture might be. About half-way through, one part of team 1 who had worked mostly on one side of the drawing explained what they had ended up painting and vice-versa. The team exchanged places and enhanced the designs of their friends. What emerged what a comprehensive picture which shows the future university as an open space embedded in both society and the environment thus showing the larger planetary context, while also showing the journey of an individual student working on his quest (what do I want to do in future) in his own time, working both in the collaborative open space with facilitative professors, business professionals and thought leaders as well as within reflective spaces, moving back and forth between practical experiences in society (hospitals, businesses, etc.), creating their own individual curriculum in the process (see image 1).
Phase 2 started with an immensely grateful new student team who was amazed by the creative piece of art the first team had drawn up for them. Their analysis of the picture opened the debate on what such a future university could be and what role OIKOS might want to play in there. The second team was nearly afraid to destroy the beautiful foundation work of the first team. Again, rather than trying to first finding the solution, they launched in daring to create a huge infinity loop all across the 3 posters indicating that OIKOS could be the connecting enablers supporting the student in her journey from society, the environment and the university and along her individual learning journey. The open space of the university ended up being the crossing over of the two lines which was drawn up into a green heart. The team furthermore highlighted the planetary context the first team had hinted at by filling in a blue background to the entire picture immensely strengthening the message and providing a common space which symbolized the potential of OIKOS as a universal platform of learning (see image 2).
What impressed me most is how effortlessly this creative process went along and how painting thoughts actually helped to develop thinking. We tend to think it works the other way around. We were accompanied by an amazing artist Klaus Elle who provided the visual track (as compared to the sound track) of what was going on. His ability to summarize sessions with one telling image must have seriously inspired us all!
The Swiss people are preparing to vote about the option to legally set a relative earning limit of 1:12 in organizations located in Switzerland. Despite the fact that earning inequality is widely considered one of the biggest social challenges of our times, no country has yet taken concrete steps to address this aspect of the problem. 2013 Economics Nobel Prize Winner and Yale professor Robert J. Shiller says: “rising economic inequality is the most important problem that we are facing today.” The Swiss vote will most certainly make international headlines, hopefully igniting a global debate on the topic, particularly if the Swiss vote will be in favor of the new law. With only three weeks to go, current chances are estimated at 50:50.
Over the past 2 decades, executive compensation has exploded in Switzerland and elsewhere. Salaries in other income categories have increased as well, but by far not to the same extent. While in 1984, a Swiss top manager earned on average 6 times more than his lowest paid employee; in 1998 CEO’s located in Switzerland earned 13 times more than their assistants. By 2011, top manager compensation (salaries and bonuses) are on average 43 times higher than the lowest salary in the same company. This means that salaries of top earners have grown 7 times faster than those of lowest earners. In the UK, in the same period, top salaries increased 11 times faster than those of other income groups. The national average in Switzerland is above 1:350, meaning that the comparison across top and low earners on a national level are a lot more dramatic than when comparing these differences within a company. In Germany, the income disparity between the top 1% of earners and the lowest income is 1:500. In the USA it is 1:6000. No, this is not a typo! The top 1% of American top managers earn 6500 times the salary of blue-collar workers. Much of this gap has occurred in the past 30 years. Imagine, it takes a top U.S. manager less than 4.5 seconds to earn the daily salary of somebody at minimal wage. In Switzerland, the dimensions are a bit less dramatic. Still, it takes a CEO on average only 11 minutes to earn the same salary as the daily salary of his lowest-paid colleague. Is that reasonable? Is it even remotely fair? And is it sustainable?
The Swiss soul is sensitive to unfair treatment and exaggeration, favoring understatement and modesty. It is thus not surprising that sufficient signatures were collected to bring a courageous proposal to the Swiss people to vote on: limiting the relative earning of the highest and lowest paid employee in an organization to a factor of 12. If a Swiss commercial employee of a service company earns the average Swiss salary of CHF 5’000 per month, his boss would be able to collect a maximum annual compensation of Fr. 780’000. Less than 1% of Swiss people earn salaries in and above that range. Those who do are mostly in the banking and financial services sector or work for large multinational organizations. Many organizations are well within the 1:12 range, including most of the small and medium-sized businesses which make up more than 90% of all companies. The largest Swiss employer Migros has published its income disparity and reports a factor of 1:12. At BSL, we are at less than 1:3. At its foundation, the Alternative Bank of Switzerland (ABS) started with a factor 1:1. There are a few exceptions, of course, most notoriously former CEO of Novartis, Daniel Vasella, earning approximately 370 times as much as an assistant in Novartis.
What is at stake?
Switzerland is famous for its meticulous, precious and proper professional attitude and its commendable work ethic. We have an inborn sense of fairness and for ensuring that everybody is treated as equal as possible. This has its advantages and disadvantages. On the up side, companies treasure the culture they find among their employees, the dedication, team spirit, serious engagement. Such an in-born culture quickly comes under pressure when fairness and equal treatment are circumvented. Salaries are not openly discussed in Switzerland – it’s a culture thing. The public declaration of top managers’ salaries has resulted in broad outcries and heavy criticism. To the point that earlier this year, we have voted for a law requiring shareholders to approve the compensation packages of top managers. A move that is unheard of internationally. We are now debating a similar question: do we really need to follow the exorbitant international compensation standards to attract world-class managers to lead our corporations? In the U.S., the compensation of the top 1% of earners accounts for 24% of total incomes earned, meaning that these 1% of people earn as much as the bottom 30% of the people combined.
Princeton University revealed in a study in 2010 the existence of a “happiness ceiling”. If an American earns more than $75’000, his personal satisfaction doesn’t increase anymore. While I don’t know where this “happiness ceiling” is in Switzerland, it is unlikely to occur at a level as high as CHF 500’000. And we can argue that high pay is not only counterproductive but also unnecessary. A relative earnings limit is an effective tool to reduce inequality at the workplace and to undermine the severity of hierarchies that exist in organizations. Besides happiness, I believe the aspect of organizational fairness is critical. Let me look at my own situation.
With an income disparity of less than 1:3 at BSL, I often wonder if my contribution to our institution really warrants a total compensation that is a bit more than twice that of my colleagues who work at least as hard as I do. Am I that much more impactful? Are my solutions and ideas twice as good? I know that I’m certainly not twice as effective. Our ladies are absolute administrative miracles who seem to have 6 hands and at least two brains working at once, while smiling at the same time. Not something I could flatter myself with. I am frankly glad I am not earning 12 times more than them – how would I feel as I look into their eyes? How would I be able to maintain our collegial, personal connection across such apparent differences? Is it possible to work as a true, non-hierarchical team, it is possible to truly live a democratic culture? Isn’t a fair relative earning differential an essential ingredient of a healthy, human-scale enterprise? I seriously doubt if an organization is able to maintain our typical Swiss work culture if employees are exposed to differences in salaries of 43 times as we currently have. Who knows where we might be in another 10 years. If the trend continues, we’ll be at a difference of 1:200. Meaning that it takes a manager 2 ½ minutes to earn the daily salary of his assistant. This will put a huge price tag on a manager’s toilet break!
Let’s look at what we consider as “fair”
Interesting, there are indications of what Europeans feel is a fair income disparity. Christian Felber of the Economy of the Common Goods movement in Austria (Gemeinwohl Ökonomie) has polled more than 50’000 citizens across more than 10 countries including Switzerland. His results: the factor between the highest and lowest salary that is considered most fair and provoking least resistance between those who would like to have a low disparity and those who feel that we should not impose a limitation, is an income disparity of 1:10.
The Swiss proposal that we will soon vote on promotes a factor of 1:12, thus more generous than what has been established across Europe as being the fair income disparity factor. Also, looking at pay differences within a company (in Switzerland on average 1:43) the new law is an effective way for dealing with such income disparities.
Another aspect of fairness is the consideration of risk. While executives earn 43 x more than their assistants, these rewards bear no relationship to risk. A UK study shows that bosses of big companies, the so-called risk takers, are 13 times less likely to be sacked than their lowest paid colleagues. And even in case they would lose their jobs and never work again, “they will have invested so much and secured such generous pensions and severance packages that they’ll live in luxury for the rest of their lives”. The true risks are carried by others.
If we look at what European and Swiss citizens believe is fair in terms of income disparity, we understand that the current proposal is an excellent way to address at least one aspect of the raising income inequality in Switzerland.
The other side of the medal
The counter-argument that is most often raised in Switzerland is based on the following fear: what happens to the many hundreds of European and international organizations that have set up their regional or global headquarters in our tax haven? Will they leave or will they stay? What is the risk in terms of tax income losses if such companies might leave?
It is interesting how fairness comes into play here as well. We can question how fair it was in the first place for Switzerland to attract foreign companies away from their previous headquarters locations to settle in Switzerland. We can now verify if we have attracted these companies for purely financial reasons, eg tax savings, or if they have to come Switzerland for the many other factors that make Switzerland a formidable place to locate a European or global headquarters. Beyond an outstanding public transport and educational system, proximity to international airlines hubs, we offer a rare oasis of stability and peace, coupled with an administrative workforce that easily speaks three languages and is culturally fluent. The uniqueness of who we are and what we offer is tough to find elsewhere. Imagine if a company would decide to relocate simply for the fact that its top executives could not be earning their hugely exaggerated salary anymore. Would these be the kinds of employers we would want to have in Switzerland in the first place? How compatible are such approaches to our culture and values? Would we indeed loose out in the tough international competitive landscape? Jeroen van der Veer, the former Chief Executive of Shell, clarifies the point quite explicitly: “If I had been paid 50% more, I would not have done it better. If I had been paid 50% less, I would not have done it worse”.
The missing link between compensation and performance
Borrowing from George Monbiot in the “The Guardian”: “Writer Dan Pink has shown it’s not just that there is currently no visible link between performance and pay; but high pay actually reduces performance. Material rewards incentivize simple mechanistic jobs but they lead to the poorer execution of tasks which require problem-solving and cognitive skills. As studies for the US Federal Reserve show, cash incentives narrow people’s focus and restrict the range of their thinking. By contrast, intrinsic motivators — such as a sense of autonomy, of enhancing your skills and pursuing a higher purpose — tend to improve performance. Even the 0.1% of the top earners concede that money is not what drives them. Bernie Ecclestone says: “I doubt if any successful business person works for money … money is a by-product of success. It’s not the main aim.”
Furthermore, psychologist Daniel Kahneman has shown that performance in the financial sector is random, and the belief of traders and fund managers that they are using skill to beat the market is a cognitive illusion. A link between pay and results is a reward for blind luck. Most importantly, the wider consequences of grotesque inequality bear no relationship to entitlement. Obscene rewards for success are as socially corrosive as obscene rewards for failure. They reduce social mobility, enhance plutocratic power and allow the elite to inflict astonishing levels of damage on the environment. They create resentment and reduce the motivation of other workers, who see the greedy bosses as the personification of the company.”
Exorbitant salaries come with outrageous expectations. Not just for the top managers, but all the way down the career ladder. We are starting to see the impact of burn-outs and we have had our first examples of CEO’s unable to deal with the pressures of their jobs, too lonely to reach out for help. Is this really the world we want to enter and the game we want to become a part of? Is this really adding value to who we are as a country and how we want to live together? Isn’t this uniquely brave initiative an outstanding way to make a dramatic and hugely important step into a direction that promises a future that is sane, healthy and human? We Swiss have sustainability in our DNA, and sustainability means balancing economic, environmental and social concerns. Putting a limit to one important aspect of income inequality, namely the relative salary limit, would be a courageous and important measure not just for Switzerland but also a sign that will enable a global debate on this critically important issue. Let’s find the courage and let’s do what our people tell us is fair and sustainable.
Big news in our small business school world:
GRLI who hosts 50+20 becomes the armed wing of EFMD and AACSB to implement sustainability and responsibility in business schools:
FT.com featured this morning the announcement about EFMD / AACSB supporting GRLI at: