Tag Archives: continual improvement

Organizational Collaboration, Transparency, and Metrics CAN Foster Sustainable Change

20 Nov

In an earlier post I mentioned the soon to be availability of “The Portland Bottom Line: Practices for Your Small Business from America’s Hotbed of Sustainability”.   Well, the book has arrived and I am more proud than ever to be a contributor to this publication.  The short 400 word essays by myself and over 50 contributors explores how small businesses can effectively and efficiently shift toward sustainability and thrive in a challenging economy. Contributors collectively chose, by vote, the local community organization Mercy Corps Northwest, which supports the launch and growth of sustainable ventures, to receive 100% of the profits from the book’s sales.

You can buy the book now on Lulu for $16.95 (paperback) or $6.95 (download).   www.portlandbottomline.com

My excerpt from the book can be found in Part 3- Prosperity and is included in its entirety below.  Enjoy, buy the book and make a contribution to the growth of sustainable enterprise!

A few years ago, I assisted a water utility in implementing a sustainability focused initiative based on the International Organization for Standardization (“ISO”) 14001-2004 Environmental Management System standard. Many public and private organizations operate in functional silos, often don’t coordinate well, communicate effectively or run efficiently. Creating a triple bottom line-focused organization requires that all parts work together—like organs of a living being. This utility was inefficient with taxpayer dollars and under intense public scrutiny to improve its operations. It was not healthy. Through the two-year journey with the [utility], I worked hard to know each of its parts, how they interacted, where the trouble spots were, and where good health was. The goal was to build a holistic, sustainable organization that capitalized on its best assets: the staff.

To be truly optimized and efficient, it was vital to shore up operational weaknesses. The program focused on new communication techniques, champion-building, public environmental awareness, and creating a culture of continuous change management. Public agencies are often stuck in a business-as- usual (“BAU”) mindset. The ISO 14001-2004 program and other internal performance turn-around initiatives required moving beyond the BAU mindset. Key steps and measures that contributed to the turnaround included the following spheres:

  • Environmental: Early establishment of cross-functional performance improvement teams that focused on key measurable indicators, e.g. energy efficiency, resource management, and waste reduction.
  • Operational: Collaborative fact-finding, problem resolution and decision-making around staff utilization and scheduling, resource optimization, asset management, emergency response, and predictive maintenance.
  • Social: Proactive external public education and awareness campaigns at city-run facilities to engage community support related to natural resource management and watershed conservation efforts; employee initiatives that encouraged buy-in and financial rewards for cost saving measures and led to a reduced environmental footprint.

The organization achieved its ISO 14001-2004 certification, garnered prestigious national awards, and saved the City over $100 million in 5 years. After the certification award, a 30-year veteran of the department approached me. He hadn’t believed in the programs value at the start—maybe because of his BAU approach, or maybe he didn’t like change. He said, “Dave, I want to thank you. You made us do something that we would not have done ourselves”. That is what cultural change is all about. For once, I was speechless.

The keys to the success of this sustainability program and others like it are: cross-functional collaboration and employee input (early and often), early stakeholder collaboration, and metrics. These ingredients alone will go a long way toward laying the foundation for long term success of your organization’s sustainability initiatives and going beyond business-as-usual.

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Green Supply Chain Gets a Boost from ULE 880- Draft Sustainability Standard for Manufacturing Organizations

14 Sep

Today marked the end of the initial 45 day comment period for ULE 880 – Sustainability for Manufacturing Organizations. [NOTE: the comment period has been extended until September 21st]. This draft sustainability standard is the culmination of a partnership between UL Environment (ULE), a division of Underwriters Laboratories, and Greener World Media.  The standard for businesses and other organizations, focusing on their environmental and social performance, was designed “to create uniform and global metrics for customers, stakeholders and trading partners”, essentially ‘harmonizing’  the wide variety of standards, guidelines and specifications for driving sustainability in organizations.

According to the draft document preface, “Our vision is to create a uniform, globally applicable system for rating and certifying companies of all sizes and sectors on a spectrum of environmental and social performance characteristics. ULE 880 will fill a major void in being able to consistently understand and measure how, and how well, a company is doing in understanding, addressing, and communicating its environmental and social impacts. It will also provide a standardized mechanism that allows organizations and their stakeholders to factor companies’ environmental and social performance into their core decision-making processes, thereby elevating the importance of these issues within companies.”

At its core, ULE  880 is designed principally as a procurement tool, allowing companies,  public agencies, and institutional buyers to assess the performance of  their supply chains and trading partners. It is intended to complement  existing and future product procurement specifications throughout many layers of an organizations supply chain.

ULE 880 covers five domains of sustainability:

  • Sustainability Governance: how an organization leads and manages itself in relation to its stakeholders, including its employees, investors, regulatory authorities, customers, and the communities in which it operates
  • Environment: an organization’s environmental footprint across its policies, operations, products and services, including its resource use and emissions
  • Workplace: issues related to employee working conditions, organization culture, and effectiveness
  • Customers and Suppliers: issues related to an organization’s policies and practices on product safety, quality, pricing, and marketing as well as its supply chain policies and practices
  • Social and Community Engagement: an organization’s impacts on its community in the areas of social equity, ethical conduct, and human rights

The 60-plus page draft standard contains 102 questions (or “indicators”), including 18 in Governance, 45 in Environment, 15 in Workforce, 15 in Customers and Suppliers, and 9 in Social and Community Engagement. Each of the indicators has certain “weightings” and not all of them equally distributed.  The Environment, for instance covers 80 points, Governance and Customers/Suppliers 40 points each, and Workplace and Social/Community 20 points each. In addition, there are also 18 “Innovation Points” — 3 points each for 6 different indicators — that reward companies for going above and beyond the standard.

Sustainable Supply Chain Elements

Direct sustainable supply chain elements mentioned in Section 6.5.3 of the standard include requirements and related point allocations for:

  • Supply Chain Policy
  • Tier 1 and Tier 2 Supply Chain Inventory (why not Tier 3 or Tier 4?)
  • Supply Chain Monitoring and Assessment (not a great deal of detail in this element)
  • Supply Chain Reporting

Also, like other elements of the proposed standard, ‘Innovation Points’ are allocated for Training and Targeted Continual Improvement Metrics.  In addition to this specific clause of the standard, there are specific elements associated with Environmentally Preferable Purchasing and ‘greener’, more efficient transportation planning and logistics…all of which represent vital parts of the sustainable supply chain.

The ULE 880 standard offers promise to take sustainability to a whole new level e.g. organization based certification, and acknowledges that supply chain considerations are vital to a ‘sustainability-focused’ organization.  The next step for the standard will be a peer-reviewed response to the more than 600 commenters from over 30 countries that have requested and reviewed the document to date.  In coming phases, a small set of manufacturers will be engaged to pilot  the standard and the verification/certification delivery model, prior to wider release and market implementation. Stay tuned!

This post was originally published on my New Green Supply Chain Blog, which can be found at https://community.kinaxis.com/people/DRMeyer/blog

Choose the Right Flavor: Ice-Cream, Sustainability & Business Innovation

27 Jul

Do you like your ice cream soft served or hard scooped?   What is your favorite flavor?  Do you like it straight up or with sprinkles on top?

So I heard on a very hot day recently with the kids at the ice cream “shoppe”.  This made me dwell over how my clients view sustainability.  You see, while a great deal of change has occurred in business over the years, sustainability is to the uninitiated as flavorful as the worst ice creams ever invented (http://bit.ly/aIuKYD).  Ironic that most of those flavors originate in Japan, the home of Lean, Quality Management Systems, Six Sigma, The Toyota Way, and all things continual improvement. Oh, BTW, there really ARE plenty of tasty ice creams and gelatos that are sustainably made (locally sourced materials, organics, community based giving programs http://bit.ly/dfGiaC).

The “look” and “feel” of sustainability then, depends on the level of enlightenment that a company has, the desired “end state” and on the depth of its resources to execute the change (see Joel Makower’s recent post in Two Steps Forward http://bit.ly/aTbzVz ).  So it’s important to note that while the main focus these days is on the environmental part of sustainability (i.e. “green”), that’s not the whole story.  ‘Sustainability’ embraces the legal, financial, economic, industrial, social and behavioral aspects of organizations as well as the environment.

In a new open source book, The Sustainable Business, by Jonathan Scott (http://bit.ly/bGhyu6), he describes seven key elements and criteria needed for organizations to evolve and meet the truest definition of a sustainable organization (the 7-P application model).   Briefly, the 7-P’s of sustainability are:

  1. Preparation – setting the stage for change (both physically and psychologically) and understanding what the reformer is up against when trying to implement profitable, long-term business practices while accepting the breadth and depth of this subject (e.g.: the financial implications of sustainability and the fact that it is not about being independent).
  2. Preservation – encompasses two areas: internal (collecting and displaying real-time measurement) and external (keeping ahead of laws, pending legislation, trends, and developments).
  3. Processes – sustainable belief systems, philosophies, business models, and thought patterns that help match a business with customer demands, core capabilities, and best practices.
  4. People – accepting the importance of training and education and working diligently to avoid the wasting of people, specifically: employees (who seek security and motivation), stakeholders (who want a return on their investment), customers (who want safe, value-laden products), and the world community – including the two-thirds of humanity who are currently left out of the global economic loop (who desire jobs and inclusion) and who represent an economic force all their own.
  5. Place – the buildings and places where work is performed and/or products are sold.
  6. Product – ensuring that goods and services are free from unnecessary waste (‘non-product’) and toxins – and designed so that the materials, energy, and manpower that comprise them (and their packaging) are treated as investments and continuously reused.
  7. Production – the physical, mechanical, biological, and chemical processes used to transform raw materials into products or services – and transport them.

Building on his Scotts multi-dimensional perspective on sustainability program development, three principal objectives of a sustainable organization must, at a minimum:

  • Minimize Resource Consumption, and
  • Avoid Damage to the Environment, while
  • Meeting Business Goals, Human Needs and Stakeholder Aspirations

So how does one get to there?  One way is through a systematic framework like an ISO 14001-based Environmental Management System (EMS).  While ‘sustainability’ is a guiding principle to keep organizations on track as an EMS is executed, an EMS is the framework – a set of processes and tools for effective mission accomplishment.

Supposing as Scott and Makower suggest that an organization wants to go beyond the environmental leg of sustainability and include the social and financial aspects as well…all good!  However, without the resources to make the leap and a systematic process to keep on track, the outcomes could be disappointing.  So before you leap, plan ahead.  Build a system to plan, implement, measure and check progress of the initiative.  Look for the quick wins.  Build an innovation-based culture and reward positive outcomes.  Measure, manage, report and build on the early wins.  Build the initiative in manageable chunks.

In summary, the keys to unlocking value through implementing sustainability initiatives require positioning through:

  • Identifying marketplace trends that reward innovation toward sustainability
  • Optimizing the linkage between sustainability, environmental and business objectives
  • Creating a systematic process and  internal champions that can drive the system from the inside out
  • Establish a manageable performance measurement system that demonstrates ‘triple bottom line’ results
  • Building assurance systems for compliance and credible and transparent public disclosure.

Are you ready for that ice cream cone?   What’s your appetite?   Single or  double scoop?  Sprinkles on top?

Using Sustainability Metrics to Drive Business Performance, Innovation and Stakeholder Satisfaction

12 Jul

Environmental metrics were not much of an issue when I started as a young environmental coordinator at a Utah coal mine 30 years ago. The few environmental metrics I used were mainly driven by regulatory-agency permits, inspections and audits.  How many spill occurred this month?  How many fines did we get this quarter?  Did we exceed waste water discharge requirements? Our entire environmental compliance philosophy was driven by permit limits, rules and regulations.  My company was actually more concerned about environmental pollution and managing impacts of operations on the environment than most companies in a large western state at that time.   But at that time, there was a major disconnect between environmental performance and business performance. Environmental protection was seen by management as a cost “sink”, and not as an integral part of conducting business. Metrics weren’t designed to optimize our environmental performance or to understand the long-term impacts of our decisions on either our business or the environment. All decisions were made within a limited point of view.

Like the mining company I worked for, and like most businesses today, it’s clear that the ship has turned.  Companies are looking strategically at how environmental performance can have a direct impact on the bottom line of an organization.  Some are even taking a top-line approach to business success by accounting for social, natural and financial capital (http://bit.ly/93VBWG). Drivers such as globalization of markets, customer and shareholder preferences, regulatory pressures and business process re-engineering can claim a role in this sea change of decision-making.  This approach has fundamentally changed the way companies operate, design, manufacture, and distribute products.

Why Measure Anyway?

Well, the two old axioms state that “you are what you measure” and “what gets measured gets managed”.  Without a way to establish an internal benchmark for continual improvement, it becomes harder to innovate, advance and proactively respond to stakeholder expectations.  Key advantages to monitor and measure environmental and organizational performance include:

  • Setting Effective and Value-Added Priorities
  • Benchmarking to Continuously Improve
  • Encouragement of Bottom Up, Organization-wide Innovation
  • Reinforcing Personal and Organizational Accountability
  • Strengthening Strategic Planning and Goal-Setting Processes
  • Improved Internal and External Communication

Metrics can do one of two things: They can tell you what you should do, or they can tell you what you should have done. If you use them to tell you what to do, you’ll be using them to measure your successes. But if you use them to tell you what you should have done, you’ll be using them to measure your failures. So clearly it’s the first approach, not the latter, that forward-thinking companies should focus on.

The Advent of Verification and Triple Bottom Line Focused Metrics

In the not too distant past, as I noted above, environmental performance was primarily based upon a company’s compliance with local, state or federal permits and environmental regulations. With the advent of the ISO 14001-2004 Standard and Specification and its companion guidelines over the past 15 years, companies are taking a broader look at the ways they measure environmental performance (http://www.iso.org/iso/iso_14000_essentials). In addition, the ISO 14031 Guidelines on Environmental Performance Evaluation provide for establishment of measurable and verifiable environmental performance indicators (EPIs) appropriate to any public or private enterprise.

Many of the potential benefits from linking environmental and economic performance depend on the ability to integrate environmental management practices into the normal course of a company’s operations.  The ability to quantify environmental performance in a meaningful way is critical to the effectiveness of this integration.

Adding to the mix of the benchmarks for environmental indicators are the Global Reporting Initiative (GRI)  (http://www.globalreporting.org), Global Environmental Management Initiative (GEMI) http://www.gemi.org) and the World Business Council for Sustainable Development (WBSCD) guidelines (www.wbscd.org).  Each of these measurements and reporting frameworks provide for reporting on the sustainability-economic, environmental, and social – dimensions of an organizations activities, products, and services.  More recently, Joel Makower (@makower) and the staff at GreenBiz.com (@GreenBiz) have been engaged with UL Environment to develop and commercialize a company-level standard for sustainability. This latest effort is being initiated in an attempt to harmonize all three of the above approaches and dozens of others into one global, measurable and verifiable third-party standard for sustainability (http://bit.ly/ajHxKy).

What to Measure and How to Frame the Message

Do your performance metrics have you tied up in knots?  Once organizations decide they have to do more measuring then the key question becomes: What do we measure and how do we measure it?  A few tips:

  1. Measure things that add value to organizational decisions. Measuring for the sake of measuring is a waste of time.
  2. Think about ways to measure things differently that your competitors.  Novel and unique metrics are just as important to differentiating you as your products.
  3. Measure at a minimum the same way others around the world were measuring, as this assures that globally focused metrics are harmonized.
  4. If you are a large company with multiple department, divisions or sites, the metrics of the individual parts must be able to be “rolled up” in a way that addresses the entire organization but still meets site or department specific needs.

When establishing appropriate measures (whether they are social, environmental, operational or financial), consider that metrics must be:

  • Representative
  • Understandable
  • Relevant
  • Comparative
  • Quantifiable
  • Time-based and Normalized
  • Unbiased and Validated
  • Transferable

Also, make sure that the metrics address the needs of all internal and external stakeholders in other words, your employees, customers, local community, government and shareholders.

Finally, good metrics if applied properly will foster innovation and growth.  Focus on continuous improvement as the primary driver for monitoring and measuring performance. If metrics don’t add value, they will not support continuous improvement and eventually will not be used.

Summary

Many of today’s environmental metrics evolved from the end-of-pipe command-and-control regulatory approach that has been implemented in a piecemeal fashion over the past 30 years since I joined the environmental profession. Why let regulatory agencies drive the key performance metrics that in turn drive business performance?  While compliance is a key benchmark for environmental performance, don’t stop there!

In this highly competitive, quickly changing and unstable business climate, organizational success requires agility.  Success also depends on having the correct set of metrics in place to gauge progress in meeting short and long-term business objectives.  Measuring performance with a sustainability lens is just one of the new responsibilities that companies can quickly embrace to nimbly drive organizational value.