Tag Archives: Harvard Business Review

Sustainability, Peter Senge, and the Necessary (Supply Chain) Revolution.

29 Sep

I just finished reading an interview with Peter Senge in the October Harvard Business Review.  Senge, for those of you that are unfamiliar, founded the Society for Organizational Learning, is a faculty member at MIT Sloan School of Management, and the author the The Fifth Discipline and The Necessary Revolution.  Senge maintains that to make progress on environmental issues, organizations must understand that they’re part of a larger system. Senge also makes a great point that companies will be in a better competitive position if they understand the larger system that they operate within and to work with people you haven’t worked with before. And while these two skills might seem distinct, in practice they’re interwoven. This is generally because systems are often too complicated for one person to grasp, crossing over many boundaries, both internal and external.  It’s these external boundaries that supply chain management issues begin to become apparent.

According to Senge, and as I mentioned last month in an earlier post about Starbucks, supply chains support whole systems thinking because they focus on the “nature of the relationships”. In the HBR article, Senge maintains that in most supply chains, 90% of them are still transactional.   Manufacturer or retailers still pressure upstream suppliers to get their costs down and little incentive is given toward innovating together.  This in turn erodes trust, however, as I have mentioned in this space, changes are everywhere.  Some companies like Starbucks, Coca-Cola and Walmart are also partnering with Non-Governmental Organizations (NGO) and working in an open source manner with industry associations to innovate.   Successful ventures like Walmart/Environmental Defense Fund, Unilever/Oxfam and Coca-Cola/World Wildlife Fund are taking a collaborative approach to problem solving that drives innovation, breeds trust and industry “cred” and offer NGO’s a wider voice in addressing social, environmental performance issues in the supply chain.

But success in levering supply chains to impact environmental performance ultimate resides with corporate leaders.  Senge maintains to successfully engage thousands and thousands of people around the world from multiple organizations, you’ll need technical innovations, management innovations, process innovations, and cultural innovations.  And to effectively achieve these innovations take bold, often heretical leadership.  Organizations need to often take a step back from the details and “see the forest for the trees” (and hopefully not just see more trees!)

Research and practice in supply chain management is beginning to prove once and for all that supply chain as a “practice” offer unique learning opportunities related to triple bottom line based sustainability.  Learning experiences can range from relatively simple, incremental modifications to a current knowledge set – for example, new environmental regulations like REACH and RoHS – through to complex new approaches which will involve experimentation, small scale piloting and larger scale adaptation (such as those designed to help transporters manage their carbon emissions).

How does your company use “whole systems” thinking to manage supply chain issues? In coming weeks I will begin exploring supply chain learning and management through a sustainability lens, and share some findings from various manufacturing sectors.  It’s my hope that readers can then begin to understand how to apply whole systems approaches across enterprises in the supply chain.  It’s my grand plan that these ideas will gel into practical steps that add value and become a core operating principle in your company.

Embracing Sustainability and Innovation to Get (and Stay) Ahead in Business

21 Apr

This week, I am sure that you are reading this along with the many other blogs that mark the 40th anniversary of Earth Day.   For 40 years, as Americans, we have aspired to change the world through enhanced environmental consciousness, policy making, and technological innovations that drive sustainability.  In the U.S. we have lurched forward, sputtered badly, recovered, then stopped all together, then jumped forward again.  So our choices and actions moving forward in this new “green economy” have not been entirely without influence or challenges, from ourselves and from nations afar. The only certainty is that it’s our own actions that can shape the path of our own organizations, communities and markets.

Disruptive technology and disruptive innovation are terms used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically by being lower priced or designed for a different set of consumers. http://www.claytonchristensen.com/disruptive_innovation.html.  Christensen’s’ theory, featured in both “The Innovators Dilemma” and “The Innovators Solution” provides a prescription for a small entrant with less resources to compete with and beat a large incumbent. A quick look at the Disruptive Innovation model is at http://www.youtube.com/watch?v=DaKgMcFP4Mo

Disruptive innovations either create new markets or reshape existing markets by delivering relatively simple, convenient, low-cost innovations to a set of customers who are ignored by industry leaders. Historically, companies that dominate an industry have had little interest in pursuing these types of innovations because profit margins are often lower and the innovations don’t address the needs of those companies’ best customers. http://www.innosight.com/documents/diprimer.pdf

What does this have to do with “sustainability”?  I had the chance to participate in a recent Leadership Summit here in Portland, hosted by the University of Oregon.  The goal of the summit was to vette business and sustainability leaders in Oregon/SW Washington are as to how the U of O Center for Sustainable Business Practices could serve as a catalyst for innovation and bring sustainable solutions to the marketplace in Oregon and beyond.  One goal that the Center has is to seek innovative approaches that can break the endemic boom-bust cycle that Oregon and many western states have often found themselves in.  Never mind that there are tax related issues or brittle governance, or well intentioned but ineffective public-private partnership infrastructures that add to the fiscal malaise.

The discussion that ensued was interesting and of particular note because of the many references to disruptive technology.  From this dialogue, it became clear that collaboration- finding ways to harmonize research, policy, manufacturing and service – is vital to a stable, sustainable economy.  It was generally agreed that  in order to support meaningful job growth, an educated community and sustained economic performance, two things must happen:  1) all parts must be working together and 2) there needs to be a policy/governance, educational, and public-private infrastructure that supports disruptive technology and innovation.

A book that I have been reading, The Silver Lining, A Playbook for Uncertain Times, by Scott Anthony, provides some answers as to how communities and organizations can move forward to realize opportunities in their markets. This 10-point checklist synthesizes The Silver Lining‘s key messages and provides practical guidance for leaders. Each item links to a blog post describing the item in more depth.

Does your organization:

  1. Recognize today’s transformation imperative?
  2. Have a handle on the future potential of innovation?
  3. Have a process to prudently prune its innovation portfolio on a regular basis
  4. Have clear consensus on the 1-3 top growth opportunities?
  5. Always ask, “How does the customer define more?” before asking people to do more with less?
  6. Match technological experiments (“can we?”) with strategic experiments (“should we?”)?
  7. Constantly search to share the innovation load to de-risk innovation?
  8. Have a plan to “love the low end” in existing and emerging markets?
  9. Run an innovation factory with systems and structures to make innovation repeatable?
  10. Have a plan to help leaders transform themselves?

Finally, I want to share with all of you a seminal piece which I recently purchased from the Harvard Business Review (HBR) and that I “tweeted” about last fall http://bit.ly/2yfirf.   Please read this!  Authors Nidumolu, Prahalad, and Rangaswami have found that the quest for sustainability can unearth organizational and technological innovations that yield both top-line and bottom-line returns. That quest has already begun to transform the competitive landscape.  The authors found that companies on the journey to sustainability go through five distinct stages of change:

  1. viewing compliance as opportunity
  2. making value chains sustainable;
  3. designing sustainable products and services;
  4. developing new business models; and
  5. creating next-practice platforms.

By going through these key stages of change, the study found that “sustainability isn’t the burden on bottom lines that many executives believe it to be. In fact, becoming environment-friendly can lower your costs and increase your revenues. That’s why sustainability should be a touchstone for all innovation.  In the future, only companies that make sustainability a goal will achieve competitive advantage. That means rethinking business models as well as products, technologies, and processes.”

This research was for me transformative and insightful, and offers compelling reasons for embedding sustainability into operational practices and strategic business strategies.

Whether you read Anthony, explore Christensen’s ideas or the review the HBR article, history shows us that innovation flourishes, no matter how dark the times. You can either reflect on this time in our economic recovery as the beginning of the end or a jump-start to transform your business or your market space. It all depends on your actions, so get innovative now!

All Parts Working Together

What Really Matters in Business Happens at the Edges- Take the Lean and Green Challenge!

28 Mar

Is the economic downtown turning a corner? Well, yes it is…just which corner it’s turning no one really knows…yet. In the meantime, most companies are sitting tight, private capital is hanging on the sidelines, and the “green” natives are getting restless. So it was with great interest that this week an article was published in the MIT Sloan Management Review which echoed the sentiment that I have carried forward with my clients for years. Recalling Michael Douglas’ “Wall Street” character’s statement that “Greed is Good”, MIT Sloan’s basic message is… “Green is Good.

MIT presents two ways of thinking:

Old Thinking: Companies have long mistakenly thought that adopting environmentally friendly processes adds costs.

New Thinking: Green practices like recycling, reusing and reducing waste can cut costs because they make a company more efficient.

Using an example set by Subaru of Indiana, there are many proofs to the axiom that prevention of pollution and continually improving efficiencies …one idea that focuses on environmental improvement, and the other on business economics, works even in lean times. Subaru found that:

1.Profits come by increasing efficiency and reducing waste—but they don’t always come immediately.

2.Management’s leadership is vital in setting goals and getting departments to cooperate.

3.The front line workers have to be engaged to spot opportunities to reduce, reuse, recycle, and find other ways to create efficiencies.

4.Sustainability initiatives achieve maximum benefit from involvement of their supply chain.

5.All waste by-products are potentially new products

6.Green initiatives foster creativity and can enhance competitive advantage.

Let’s all be honest…that last point…competitive advantage is what really motivates business. So company sustainability initiatives cannot and should not be viewed through strictly an environmental lens, but through the balanced “sweet” spot of the Triple Bottom Line.

To paraphrase Guy Kawasaki in his book, Rules for Revolutionaries, what really matters happens at the edges. The action is not in the centers or areas of sameness. Organizations must challenge conventions and change the way products and processes are thought of and delivered.

So take the Lean and Green challenge…do what Subaru has done and get to work innovating and creating.