The rules of business 50 years ago (even 20 years ago) were very different from the rules today. As a business leader, if you don’t take care to know what these rules are, and have a plan in place to address and embrace them, yours won’t be a brand of the future.
A new way of doing business
While the term was almost unheard of a few decades ago, today ‘sustainability’ is the pinnacle of leadership. The result is that leaders need to consider the impact of their actions on the business world, governments, as well as people and the planet.
This requires a paradigm shift, but it’s associated with numerous paradoxes and complexities. In an attempt to manage and understand these paradoxes, we look at three qualities of a sustainable leader and illustrate these with examples of real CEOs.
1. Financial growth is not a primary driver for organisational success
Previously, growth was the single most important driver of organisational strategies. Today, leaders are confronted with the paradox: Is growth feasible in a world running out of resources? Do we need to grow at all costs? How do we marry growth and sustainability? What is the risk and result of a growth-focused strategy?
Leaders can no longer base decisions purely on financial growth or be incentivised based only on financial performance.
Sanlam CEO Johan van Zyl has expressed his concern for South Africa’s short-term profit objectives and the use of incentives to support an immediate vision for shareholder wealth creation and growth. Sustainable leadership underpins the belief that this approach will undermine an organisation’s ability to grow economically and create an equitable, sustainable future for its entire stakeholder base.
2. Innovation is a tool to drive impactful organisational change
Incremental changes will not make organisations truly sustainable. In the past, most organisations focused sustainability efforts on cost efficiencies (by reducing consumption of resources) and compliance (by reducing risks and protecting their social licence to operate). Although small, these are steps in the right direction.
However, in the quest to become more sustainable, organisations cannot innovate just for the sake of innovation. Innovation requires positive changes to products and services, and eventually the business model. Only in this way can innovation lead to transformation and sustainability.
In 2011, bottled water manufacturer Valpré, owned by Coca-Cola, opened a state-of-the-art manufacturing facility in Heidelberg. Every detailed component of the plant underpins innovations to reduce Valpré’s carbon footprint and supports a business model geared towards sustainability.
The plant is the first in South Africa to produce PlantBottle packaging – a 100% recyclable bottle design comprising 30% plant material. In the US, the production of 2,5 billion PlantBottle packages eliminated the equivalent of approximately 60 000 barrels of oil from Valpré’s plastic bottles. This innovation may have been small, but its cost and environmental impact was transformational.
Perhaps the most visible example of an entrepreneurial trailblazer is Sir Richard Branson who predicts that the business world will enter unknown territory in ten years — running out of energy, yet remaining worryingly over-dependent on oil.
He views the opportunities of renewable energy as the perfect platform to develop new technologies and innovations for business success, marrying innovation with
impactful and sustainable change.
Leaders need to ask themselves whether their organisations have the resources, skills and internal capacity to drive innovation to become more sustainable in the future. If organisations cannot develop truly innovative business models, their ability to create long-term value may suffer and their economic survival will be at stake.
3. Value collaborative, altruistic capitalism
Business is inherently competitive. However, a stakeholder-based future may ask leaders to be more collaborative. The long process of stakeholder engagement will ensure that the organisation has the long-term stamp of approval of its stakeholders to continue to do business.
Leadership for sustainability requires a heart, rather than a head approach. An overriding traditional leadership quality was the ability to cut through emotional clutter and make decisions based on facts. In a sustainability context, predictability is hard to come by.
‘Emotional clutter’ – impoverished communities, contaminated water and endangered species – is part and parcel of what sustainability demands. Leaders cannot afford to ignore these elements.
Today, leaders have to base decisions on uncertain futures, unpredictable outcomes, deteriorating resources and incomplete analyses. This will often require intuitive or ‘heart-led’ leadership – an approach that may not come naturally to most 21st century leaders.
Unilever’s CEO, Paul Polman says one of the greatest challenges of this century is to provide good standards of living for seven billion people without depleting the earth’s resources or running up massive public debt.
He begs for a new form of capitalism, and the pledge by businesses to partner with government to collectively address socio-economic and environmental concerns. Business is part of society, not separate from it, and needs to recognise that communities carry the same weight as the demands of shareholders.
A new generation of leadership
Growth in difficult times, constant innovation to stay ahead of competitors, innovative products and services, and embracing change in an increasingly complex environment will remain imperatives for business. Simultaneously though, leaders will have to embrace the underlying paradoxes in these imperatives.
The sustainable leader will fearlessly face these challenges and establish a new generation of business leadership.