Business is hitting against two important headwinds; climate change and technological disruption. In a recent panel discussion at Economic Times Global Business Summit, Dr. Ajay Mathur of TERI spoke of the worrying impact a world warming by 2 degrees will have on India with increased floods and droughts and erratic monsoons. Water would perhaps be one of the biggest challenges in the near future. Additionally, extreme poverty, waste, energy and biodiversity, are all discrete elements that need to be fixed, not just in India, but the world over. In this scenario, what kind of leadership will be needed to create an equitable and sustainable society? Can sustainability be achieved at scale? Can we limit emissions?
Increasingly, companies are dedicating teams to work on social responsibility and sustainability issues. They map the material risks that their companies face, interface with stakeholders, develop strategies to mitigate or eliminate them. The finance function that until recently merely counted the pennies that the company made has started to look at ways to measure the impact of the company’s sustainable and social actions. The production department tasked with improving the efficiency of operations now also concerns itself with using sustainable materials. The marketing team not only promotes the products but also promotes the well-being of people. The CEO’s thinking is moving from shareholder value maximisation towards maximising value for all stakeholders.
Business leaders, depending on their varied contexts are also prioritizing various approaches to sustainability challenges. For instance, Sanjiv Paul of TATA Steel says that sustainability strategy needs to be embedded into business to manage environmental risk, Tony Henshaw of Aditya Birla talks of the need to map supply chains in a transparent manner keeping sustainability issues in mind. Dr. Srikanta Panigrahi of IISD believes that global reporting standards can solve many of the sustainability issues of companies and Arun Maira who has been part of many large companies feels that a systems thinking approach is the way to go.
Yet, something is amiss. None of the environmental or responsibility challenges seem even close to being solved. For instance, the connected world, used to moving things and information, has no automatic way of managing discarded products. Which is why our landfills are showing no signs of reducing and possibly never will unless we start thinking of ourselves as part of a system that needs to be redesigned. As JP Chalasani, CEO, Suzlon says, “Our energy related issues are not just about adding more capacity but redesigning the grid to factor in renewables”. The flows of value—not just of materials, but of data, knowledge and participation need to drive a radical new design of business.
The more significant challenge is that we are in an age where large multinational corporations are themselves being disrupted by new challengers who have digital skills at their very core.
Perhaps the need of the hour for business is to hire more designers. Systems thinking is not just about mapping the system but about designing a better system. The future will witness a rate of change at a velocity never seen before. Acceleration due to technological change may bring the world closer, but it could also lead to a faster pace of wanton destruction. Designing a better world will not just be about new processes but a better way of thinking and communicating. Balancing the impact of our actions on people, the environment and everything around us. We therefore need people who are willing to collaborate in mapping customer journeys and product journeys with empathy as the central belief.
A new kind of leadership is needed that builds trust, is driven by values and is open to change. The leader has to be a trustee to all the stakeholders, rising above the stereotypes to decide what she will and will not do. As a trustee to the organisation, there is no exit strategy. The leader is responsible for the impact of her decisions. This could be food for thought for venture-funded companies that are currently destroying business models without taking responsibility for the damages caused. Deep, meaningful conversations and not just excel sheets hold the key to responsibility. Thinking not just about what new perspectives might be needed, but also finding entirely new ways to create and update our thinking models over time in collaboration with other people in the industry, policy makers and customers themselves. The corporate brand needs to be more human, responsive and above all trustworthy.
Based on Panel Discussion at ET-GBS 2019: “Sustainability – Embedded Strategic Planning”