Note: This is the second in our series on sustainability and organizational structure. Read the first blog here.
In 2005, the Harvard Business Review published a study by Robert Kaplan and David Norton about the disconnect between strategic intent and execution. The authors revealed some surprising facts: Sixty percent of organizations do not link strategic priorities to budget, and 95 percent of employees in many organizations do not understand their own company’s strategy.
What does this have to do with sustainability and organizational structure? Quite a lot, actually. Many of the world’s greatest companies have declared their strategic intent to institute sustainability, and some have made remarkable progress. But many are still struggling with the fundamental question of “what to do” to realize these ambitions: how to integrate sustainability into their core business model, their daily operations, and the personal performance of thousands of disparate employees. According to the global consulting firm BCG, even among companies that embrace sustainability, nearly half struggle to build a strong business case for the effort.
The British rock group Ten Years After captures this conundrum: “I’d love to change the world, but I don’t know what to do.” In other words, most companies understand the why of sustainability, but are grappling with the what. In fact, this is where the positioning of CSR becomes so important. To change the world, people need to own the change, and the owners need to be in a position to make a difference. Accordingly, the decision on where to place sustainability in an organization will have an impact on, well, it’s ability to make an impact—not least of which is the ability to command both corporate resources and access to key decision-makers.
This, of course, is not the whole story. Putting CSR in, say, corporate planning or strategy will not magically integrate sustainability into the business model. In fact, one blog reader made an excellent comment: While acknowledging the need for specialized offices to lead the charge, he pointed out that a key role of that group is to help educate non-CSR staff and give them the resources to advance sustainability in their daily work. And he’s right. Without this sense of shared responsibility, even the most well-managed office will have limited impact.
So, the initial answer to “what to do” is fundamentally one of maintaining a balance between central position and broad-based engagement. In many companies, sustainability begins with a mandate from on high but is best fulfilled when it is properly positioned to fulfill that mandate—not just used as a vehicle for PR or risk avoidance, but as a core operation of the business. At the same time, sustainability must be broadly embedded in the culture and front-line functions that constitute every business, from product design to procurement to sales.
In my next blog, I’ll explore this more, looking at the critical link between message and engagement, including how we may need to rethink the way sustainability is defined in the “marketplace” of the C-suite.