Linking Corporate Leadership with Successful Sustainability

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What is the connection between the mindsets of corporate leaders and successful sustainability strategies? A new study by Avastone, an international consultancy focusing on leadership and organizational effectiveness, set out to answer that question. Avastone interview 10 global corporations currently in the process of moving to a higher stage of sustainability. Their study found that it isn't a lack of systems and activities that limit a company's success, but rather the scarcity of what it calls "higher capacity leaders." GreenBiz Executive Editor Joel Makower sat down with Avastone's Cynthia McEwen, co-author of the report, to learn more about what it takes for a corporate leader to succeed at sustainability.

Joel Makower: Cynthia, thanks for talking to us. Tell me about the report, what you set to do, and how it all came to be.

Cynthia McEwen: I'd be happy to about the study and the report, Joel. Well, Avastone has worked as organizational consultants for over 20 years, in particular on the people side of the business, and we work in the areas of executive and leadership development, and organizational change, and several of the key leaders at Avastone, myself being included, have a real, genuine care and love to the area of sustainability.

So we started getting involved in conferences, and using formal education programs, and even doing some client work. Once we got under the tent and got a sense for this, kind of, great green way system motion, we found out there's a lot happening. There's a lot of different approaches. There's a lot of activity. It's somewhat messy. There's a lot of noise, and arrows point in all directions.

And we noticed there is a particular heavy emphasis on the technical and the systems side of sustainability. So this really prompted us to want to understand what's being done sustainability wise by some of the best global companies in the world and to find out what can be learned from them in a coherent way.

So we decided to sponsor an initial qualitative study, and our approach was to take a deeper, more personal look at corporate sustainability, and by interviewing and listening to real people doing the real work.

And so we interviewed ten global companies. They represent a range of industries like food, and textiles, high tech, pharmaceuticals, industrial consumer products, metals and mining, transportation.

All ten of the companies have an orientation to sustainability. They varied in size in terms of global revenues. In fact, eight of the companies are in the $11 billion to $40 billion dollar range, and they varied in age. Some of them were younger companies like 30 years old, but most have been around and been in business for quite a long time, 100 years and even going back longer.

So we did this study, hiring an outside research firm to ensure really good methodology, and I conducted the personal interviews one-on-one on the phone with company officers, vice presidents, or directors of sustainability or corporate responsibility from each company.

JM: So what was interesting about this is that you were not necessarily looking at their sustainability or environmental initiatives, so much as the patterns of, as you call it, patterns of the mind that shape the companies ability to be effective in supporting whatever environmental or sustainability commitments they have. Tell me a little bit about what that really means. What you were trying to find out.

CM: What we were interested in, first and foremost, we wanted to look at the direction and the progress. So where are these companies heading, and what's their progress, and so we looked at that in a particular way.

We actually used a side-by-side comparative framework, and we were able to plot them or map them on that, but in addition to that, to your question, what we were interested in was what are the mindsets of the business leaders, and how do those mindsets influence where a business is heading, and how do those leader's mindsets help or hinder their progress. And so we started to explore the nature of mindsets in a way that's never been done in the sustainability field.

JM: Why don't you explain what mindset is? Because I'm not sure everybody really understands exactly what that means.

CM: I think that's a great question. Mindsets, simply put, are interior patterns of mind. So it's something that can't be seen. They're frames of reference from which a person sees the world, reasons, and makes meaning.

Now, what's been missing, because the term mindset is used in the sustainability field here and there, but what's been missing is an understanding that there are stages of mindsets or a series of differentiated mindsets, you know, milestones, if you will, and stages of development, there's nothing new there.

Corporations go through stages, and the nature of human development has been studied, particularly around leadership, and researchers have discovered these distinct stages of leader mindsets that go from early stages to later stages, and each one of them has a theme, if you will, or a tendency around how a person makes meaning. and then how they respond.

JM: So give us an example of a mindset or two, and how that might affect sustainability.

CM: Okay. Well, each mindset stage has a different -- they have different capacities, and they expand. The capacities expand. There is a particular framework that we work with called the Leadership Development Framework, and it actually has six distinct mindsets, and I'll just talk about a few of them with you, but they're representative of the adult population, especially in business, and especially in leaders.

And so a couple of them would be -- one is called an Expert, and this is a person who demonstrates a specialists knowledge or expertise. So they know the answer, if you will, and what they contribute in sustainability are really strong tactical ideas and solutions. So that would be an Expert.

The next one has a higher vantage point is an Achiever, and the Achiever is someone who wins the game, and they achieve goal driven success. In sustainability, they can optimize strategic outcomes of current systems or, like, a single business system whether it's local or global.

And then a third one would be the Individualist, and this is somebody who starts to really recognize that there's relativism of positions and the way we see things, and they start to question the underlying assumptions of the business, and they can actually compare different systems with each other. So they're going beyond just the single business system and starting to compare systems. So those are three examples.

JM: So how many mindsets do you have altogether?

CM: The framework that we work with has six.

JM: And are you saying that some of these are better suited to help drive sustainability throughout an organization, or do we need all six of them to be successful?

CM: The answer to your question is both. Some of them are better suited. For example, when I talked about this Individualist who can compare systems, how that would play out, for example, would be if -- those are the kind of people who starting to really -- they are adapting and breaking some rules, inventing new ones, and they're bringing a greater awareness of greater world news to bear.

So they can start to compare and contrast systems, and if we go back and look at sustainability, the framework that we used to compare these ten companies had five stages or gears, Joel, and they go from a very beginning stage to a very complex stage. So those five gears go in that direction.

These later stage mindsets are more suited to be able to see -- they have the vantage point that they can see and make business -- see as business relevant some of these very advanced stages of corporate sustainability.

JM: So some of the mindsets are better suited towards different aspects of leadership, or are we looking for top management to have one or two of the specific mindsets as seeing them as being more suitable for that kind of initiative?

CM: Well, what would be an ideal situation would be to have a management team that's comprised of a range of mindsets and also has some of these more later stage mindsets as part of that make up, because those folks, that kind of a mindset, does have a vantage point.

So each of the different mindsets have different advantage points, and they make different contributions. So all have inherent value, and yet the vantage point of some of the later stages mindset are more well suited to the complexities that are coming on line in more complex corporate sustainability challenges.

JM: So give us an example of how this works in a real company, one of the ten that you looked at, and talk about how mindsets played to help or hinder a company's progress in sustainability.

CM: Probably one of the best examples I might be able to give is in the looking at, like, let's say let's start it with an auto industry, if you will, and that this is a project that is sponsored by World Wildlife Fund U.K., and it's called One Planet Business, and they have a specific project around personal mobility.

And so what they're doing is linking automobile companies, say Ford Motor Company, which is one level. So that's one system, if you will, and they're linking it to the sector, the impact of the sector, which is in a second level or second system, which is then being linked up to the aggregate impact of global human demand for mobility, which is another system, another level, and then linking that up to planetary environmental limits and realities around materials, and emissions, and so on.

So what we're finding is that some of these later stage mindsets have the ability to actually see those linked systems in a way that some of the others don't. Some of the others, really, are operating specifically at the auto company level, and they're optimizing their current system. They might be embedding sustainability deeply, working into the supply chain, working through policy.

I got feedback from interview companies that are working through policy and business systems. They're working through people, implanting people, and those are really important efforts to be making. Yet, if later stage mindsets have this ability to link that system to the sector system, to the human global consumption system, all the way up to the planetary system.

JM: So how do companies act on this information that you've discerned in your study and your report? Is this something that people can change? The companies can say, "We need more people of different mindsets, or we need to change our overall mindset." How do those play out in day-to-day business?

CM: Well, how it plays out in day-to-day business is that what's being called for in greater numbers are leaders with mindsets that can see all five, you know, that can see all the complexity of sustainability as business relevant.

And so how it can play out is a company can either -- they just need to engage as many -- they need to have a basic understanding of mindsets. So they could identify what's an operation in their organizations where, what mindset do they have? What are the current leaders in play? And then they can also look at a sustainability framework, and look at that in light of the mindsets that are in play, and how are those two informing each other?

And then the classic business make or buy. I mean, mindsets can be brought in from the outside, and they can be developed, Joel. So no matter where they are, having an understanding of mindsets and then bringing in some later stage, and even one later stage mindset, makes a difference.

JM: You mentioned before that you talked about -- created, sort of, five gears that companies are in or can be in potentially in their progression along the sustainability continuum, and the highest of those is gear five, which you said is one that no company, and certainly none of the ten companies that you interviewed, had achieved. Talk a little bit about what that is, what gear five is, and why that's so important.

CM: Yeah, that is important. Let me just quickly step through the first four. The first one is called Compliance. That's regulation and philanthropy. The second one is Volunteer. It's impact reduction. The third one is called Partner, and that's really some proactive risk management, reputation and brand building. The fourth one is Integrate, and that's where sustainability really finds its home strategically. and companies are really embedding in business processes.

And this fifth gear is called Redesign, and that's the systems change that's happening, including the redesign of markets, of governance, of institutional frameworks. That's where we're stating to change business models and bring in new ways of working and living.

And the importance of that fifth gear is its reach. This is where real scale is actually gonna happen. Scale, in terms of, some of the systems changes that need to happen to root out what's supporting unsustainability, and change these systems so they actually drive and support sustainability.

And I have a great quote that I think really represents this well. It's from a gentleman named André Fourie from the National Business Initiative in South Africa, and André says, "The corporate responsibility movement forces companies into thinking, 'what am I doing?' They think more about what goes into their GRR report than how they connect to systems change. Yet, ultimately, this is not about reducing CO2 emissions by one percent, but about helping build a system that reduces society's total emissions by 60 percent, and that's fifth gear redesign activity. It's redesigning those systems."

JM: So do you think an individual company, even a big company of billions of dollars in revenue, can itself affect the system, or is something else needed, regulation or some other kind of influence for that to happen?

CM: Well, it's a combination of things. That fifth redesign, Joel, it's really -- business is a player, but it's a player with governance. It's a player with civil society and NGOs. It's a player with these multilateral organizations, but it does involve itself in trying to reshape the rules of these games.

JM: So what does success look like if a significant number of companies get, achieve, or arrive at fifth gear?

CM: I think success would look like -- it would be similar to, in industry specific, it would be similar to the personal mobility example I gave earlier where a company is doing all that it can to be strategic about sustainability, and embed it, and operationalize it within their own business and their supply chains, while at the same time, they're stepping it up and looking at the sector.

They're stepping it up again, and they're looking at human consumption, global consumption, of their products and services worldwide, and then they're stepping it up to see the impact of that on our ecology, our planetary ecology, and what some of the ramifications and realities are there, and then working to redesign the systems that can make all of those connections work well and work within each other.

JM: So if I'm a business leader or a business student who wants to be a business leader, how should I be thinking about this? What are some of the things I need to be doing or positioning myself to help my organization or for a future organization I'll work for achieve the kinds of success that you're talking about?

CM: Well, I would start with understanding and applying a sustainability framework like the gears that we just talked about, and to remember that the upper gears, the upper reach, really matters.

So whether someone is at the earlier stages in their sustainability efforts, maybe what their efforts are incremental at this point, or they might have some fragmentation, having an understanding of this kind of framework, especially with this upper reach, helps them to understand the whole, and so they can leapfrog in and build a more integrated approach having this really nice scale and reach in mind. Knowing that it's a journey, and it's gonna take some time to get there.

So I would really work with some kind of a framework like that, and I would also get a real good understanding of mindsets, because it's actually not a nice to know idea. They're at play in sustainability and in sustainability efforts whether they're recognized or not.

So they can be cultivated and leveraged, and research is showing that leaders with these later stage mindsets just are more effective. They have more impact, and they create more dollars and cents results. So I would get an understanding of mindsets, getting an understanding of sustainability framework, and look at them in terms of how they relate to one another.

JM: Great, Cynthia. We have a lot to think about here, and I'm sure that listeners will want to download the report. Cynthia McEwen from Avastone Consultants, thanks so much for taking the time to talk.

CM: It's my pleasure, Joel. Thank you.

Joel Makower is GreenBiz's executive editor. He also maintains a blog at http://makower.typepad.com.