INTRAPRENEURSHIP: Having a positive impact in your workplace regardless of your position

Net Impact Webinar Series: Action Learning Call with Paul Hardt, Capella University

Thursday, April 14, 2011

In this Net Impact web call, Paul Hardt explains how to introduce sustainable business practices (SBPs) in the workplace and implement effective change.

I.  Challenges to implementing SBPs
“The hard stuff is the easy stuff.  The soft stuff is the hard stuff.”

Hard stuff = technical changes in an organization.  We have the best computers and management systems to measure carbon footprint, waste generation, energy and water usage, etc.

Soft stuff = human performance, motivation, relationships, training, resistance to change. 

It’s easy to get all the technology and systems in place, but it takes only one human performance error to ruin the implementation of a sustainable business plan.

II.  Management decision making styles

How to approach managers to suggest a sustainable business plan for your workplace

A common belief, while often true, is that we have to show proven bottom line impact to get SBPs in place.  However, the truth is that sometimes managers make decisions based on factors other than bottom line return.  There are a wide variety of decision making styles that managers take when looking at adopting a particular business practice.  The key is to cater your pitch to your specific audience by understanding the factors your manager considers when making a decision. 

3 basic decision making styles:

1)  NORMATIVE

Decisions made based on (usually financial) rules – ROI, profit margins, market value

2)  BEHAVIORAL

a.  Process – Decisions made based on the process of decision making.  These managers are more inclined to engage stakeholders in the decision making process to ensure that the decision reflects the interests of the people most affected by it.

b.  Risk – Managers with this style are more focused on looking at the risks and benefits of a decision.  They may be more inclined to take a short term loss in order to get long term gain.

3)  NATURALISTIC (a mixed bag of decision making styles)

a.  Stories – Some managers make decisions based on stories they hear at the decision making table, the golf course, happy hour, from a friend in a different company, wherever.  If they hear a story from another executive or manager that convinces them to adopt a certain strategy, they will be very influenced by that.

b.  Ethical – Decision based on, “Is this the right thing to do?”

c.  Idiosyncratic – Decision based on an argument from the latest book or article

Application

Assess the decision making styles of the managers to whom you are pitching your social intrapreneureal idea

* Some managers can have multiple decision making styles.  Be able to cater to the subtleties of their styles.

III.  FORCE FIELD ANALYSIS

A tool for understanding the dynamics of the forces within an organization that push towards change and those that resist change

Kurt Levine (1940s) developed a metaphor of using physical forces to understand the dynamics of change.  There are certain driving forces that move an organization toward change and certain barrier forces that get in the way of change. 

Organizations remain static when barrier forces counteract driving forces with equal pressure.

DRIVING FORCES

1.  Economics – Using resources efficiently can save money, and savings can be passed to customers.

2.  Regulation – Laws can push businesses to adopt SBPs

3.  Competition – Gain market share

4.  Ethics – Concern about the impact of using up the world’s resources

5.  Recruitment – Attract new talent.  Many new workplace initiates Generation Y look to work for an organization that is making a positive difference in the world.

6.  Customer pressure – When making purchasing decisions, conscious consumers demand products from sustainable businesses.

7.  Supply chain pressure – Some organizations demand that their suppliers adopt SBPs

BARRIER FORCES

1.  Cost – Too much investment

2.  Time – Too much time and trouble

3.  Motivation and values – People lack the values or motivation to find SBPs beneficial

4.  Political pressures – Board members, investors, and other stakeholders may squander organizational endeavors to adopt SBPs

Application

Strategy for dealing with resistance/barriers: Brainstorm what constitutes each of these barrier forces in your organization.  Rather than pushing the case for the driving forces, determine how the barriers can be removed or reduced.  If drivers are pressed too much, then the barriers will counteract with stronger resistance. 

IV.  BEHAVIORAL ENGINEERING MODEL (BEM) – Thomas Gilbert’s performance improvement studies

A tool for understanding the 6 different key human performance areas that can make or break the “soft side” of introducing sustainable business practices

When strategizing to encourage your organization to use SBPs:

1.  Identify each of these six factors of human performance within your company.

2.  Ask: How aligned are all of these factors in our organization?

If there is misalignment across some of these factors (with is very possible), your approach in getting people to adopt SBPs is not as effective as it could be.  For example, there may be clear expecations and resourceful information for people to do these practices, but at the same time, there may be a conflicting incentive system that rewards people for contradictory behavior.

Think about all of the individual factors and whether they are in place, AND also think about the relationships between these factors and whether they are aligned.

Behavioral engineering model:

V.  COMMUNICATING CHANGE

We have moved into a world and culture that is in a constant state of change.  How can we help our organizations move through endless instability?

5 factors to consider to promote positive change

(Diane Dormant, PhD, Professor at Boise State University)

1.  RELATIVE ADVANTAGE

“What’s in it for me?”  Be prepared to talk about the benefit that your particular audience will gain from adopting the change.

2.  SIMPLICITY

Is the change easy to follow?  Set clear expectations.

3.  COMPATIBILITY

Will the proposed changes blend smoothly into your company’s culture and standard practices?

4.  ADAPTABILITY

Be able to adapt the change to the characteristics and needs of the organization.  Be flexible and make some compromises to get the most out of the new practices. 

5.  SOCIAL IMPACT

Who will be affected by the change and how will they respond to it?

5 steps to introduce and encourage positive change (Dormant)

1.  AWARENESS

Raise awareness about the change before you try to push it.

2.  CURIOUSITY (a great opportunity!)

Provoke curiousity and inquiry.  Provide resources such as FAQ lists and other support tools to help get people informed and on board.

3.  VISUALIZATION

Have employees imagine what the change might look like in the near and distant future.  People will have both positive and negative outlooks.  For negative visualizers, help identify what the negative factors are that are causing concern.  Address those concerns to create understanding and a more positive attitude.  For positive visualizers, make sure the picture is accurate and realistic.  If people have high expectations that won’t be met, then progress will seem slow and unrewarding. 

4.  TRYOUT

Allow people to test the change strategies in a low impact, low consequence way.  They won’t immediately see the full impact of the change, but they can learn to adapt to the change without the fear of making a mistake.  Furthermore, you can adjust your sustainability strategy based on initial responses. 

5.  USE

Implement SBPs.  Set up systems to sustain the new practices.  Develop refresher programs.  Give feedback about how individuals are doing and how the organization is doing compared to the goals.

Sustainability in K-12 education: Long-term goals to transform market demand for sustainable brands

We are currently seeing a remarkable increase in the demand for sustainability and social and environmental responsibility curriculum in undergraduate and advanced education programs.  College students entering the working world and current professionals going back to school recognize the value they can bring to the work place with an education in environmental management systems, sustainable business models, and systemic thinking.  In response to this demand, these topics are becoming increasingly more integrated into undergraduate majors, professional certificates, and business programs.  However, because this evolution of curriculum spurred from a demand for professional competence in a green economy, we are overlooking another longer-term goal that sustainability education can achieve – building the demand for the green economy.

If we integrate the value of sustainable consumption into K-12 curriculum, we can produce a generation of consumers with the knowledge, values, and influence this sustainability movement needs to really take flight.  When today’s kids become tomorrow’s consumers, we need them to support responsible brands. 

I am fairly out of touch with today’s K-12 curriculum, as I’ve been out of it for a few years now and I don’t have kids of my own.  I imagine that it is so institutionalized and under funded that it is resistant to change and still closely resembles my own K-12 public education.  Admittedly, I don’t understand the politics behind the institutional paralysis of public education.  However, I’d like to propose a solution to the issue of insufficient funding. 

Socially and environmentaly responsible companies can invest in education to promote awareness of the environmental repercussions of consumerism.  Businesses can fund training programs to educate teachers on appropriate curriculum that addresses the importance of responsible and sustainable consumption.  Obviously this would require an investment that won’t pay off until these kids constitute a significant portion of the consumer market.  But isn’t the value up front investment for the sake of long-term returns at the core of the sustainable business mentality?

Of course, there are already resources that can assist schools in developing this curriculum.  In my preliminary Google research, I found a “Students and Sustainability” section on the US EPA website.  It includes links to EPA’s Environmental Education Center, Green Teacher Magazine, and a curriculum development resource called “Going Places Making Choices.”  GreeningSchools.org is a similar initiative launched by the Illinois EPA.  And FacingTheFuture.org is another organization that addresses global issues and sustainability curriculum.  While these resources exist and are readily available, it is up the schools and teachers to learn the new curriculum, get it approved by the school board, and integrate it into courses. 
So my question is: Can responsible companies be the bridge between having those education materials available and getting that material into classrooms?  If we are to create a future based on a green economy where consumers support responsible businesses and value sustainable brands, I think this idea is worth considering. 

Quarterly Non-Financial Reporting: A tool for improving social and environmental business strategies

Every public company in the U.S. releases a quarterly financial statement (the 10-Q) that shows their financial results – how money is flowing in, through, and out of the company – and any significant changes and events that occurred over a three-month period. For external stakeholders, the 10-Q and other financial reports help to uphold a company’s financial accountability to their investors and guide sound investment decisions.  Internally, this information is used to: 1) evaluate financial performance for the reporting period, 2) predict results that are likely to happen in the foreseeable future, and 3) adjust business strategy to capitalize on opportunities and avoid preventable loss.  Frequent quarterly reporting allows companies to constantly update and improve their financial strategy. 

As companies move into the new world of sustainability and shift to a triple-bottom line business model, it appears that they are ill-equipped to adjust their social and environmental strategies as efficiently as they can their financial strategy.  Why?

             Current reporting on a company’s social and environmental performance (CSR reporting, or corporate social responsibility) occurs, at most, on an annual basis, and this information is not released until 6 to 9 months after the reporting year.  More commonly, we see companies publishing bi-annual CSR reports.  This means that for every one CSR report released, there are eight quarterly financial reports. 

When information turnover is this slow, response is delayed.  By the time a company tries to mobilize and make improvements, conditions and needs have changed.  The data used to inform social and environmental strategy decisions is, at best, almost a year old.

If we are to create businesses that value economic, social, and environmental performance equally, then we need to report on social and environmental performance to the extent we do financials.  The speed of this reporting needs to catch up to the evolving world of business that's obsessed with real-time data and immediate response.

BARRIERS

There are two major barriers to incorporating comprehensive reporting in businesses: 1) resources, and 2) metrics.

Resources

Like the finance department that is central to any company, sustainable companies need a department whose primary function is to oversee social and environmental performance.  Only with this level of commitment can frequent triple-bottom line reporting (and thus continuous improvement) be possible.  It cannot be an ancillary function of a department whose main responsibilities lie elsewhere in the company.

Inertia sets on the whim of the financial department when the enormous investment in human resources, education, and infrastructure cannot be financially justified.  In physics, inertia infinitely continues until acted on by a force.  In this case, that force will be a new wave of morally informed investors who believe it is the responsibility of businesses to leverage their power and influence to effect positive impact on communities and the world.

Organizations such as the Social Investment Forum, SocialFunds.com, Calvert Investments, and GreenAmerica.org are helping to accelerate the growth of this investment trend.  They are attracting investors who have new values that extend beyond promising ROI and growing dividends.

Metrics

Fiscal strategy is based on fiscal measurements.  The unit of measure is the dollar (or other local currency).  Using these measurements and comparisons, companies can improve their performance by adjusting sales prices, operating expenses, and cash flows.

The problem with this new phase of sustainable business is that we measure everything in dollars.  The dollar is a product of the economy – NOT of the environment and not of human social interactions.  So why are we trying to measure social and environmental performance in a unit that doesn’t allow us to make the best informed strategic decisions regarding these issues? 

Functional environmental reporting measures electricity, fuel, natural gas, and water usage as well as pollution and waste reduction.  Social reporting assesses (among many other factors) health, safety, and turnover rate of employees, and quality of life, education, and health in global supplier communities. 

Another flaw in current CSR reporting is that numbers for the reporting year are compared only to a prior year’s baseline.  Measuring against past performance is crucial to understand the degree to which a company is improving.  However, in addition, these measurements need to be put into the context of the company’s long-term goals.  In other words, social and environmental performance need to be measured against both past performance and future targets.  Sustainability is a process of continuous improvement that will evolve and innovate into the future.  Businesses need to evaluate their position in terms of their broader sustainability goals instead of only considering their improvements compared to past baselines that were calculated when sustainability initiatives didn’t even exist. 

CASE STUDY: TIMBERLAND

In 2008, Timberland began an initiative to release quarterly social and environmental performance reports in addition to their financial statements and bi-annual CSR reports.  Each quarterly report includes four focus areas that inform their core CSR strategies:

1)  ENERGY

Measured in:

(a)  Metric tons of GHG emissions

(b)  Kilowatt-hours of renewable energy used

(c)  Total percentage of renewable energy used

2)  PRODUCT

Measured in:

(a)  Green Index score – a measure of product impact on the environment [http://community.timberland.com/Earthkeeping/Green-Index]

(b)  Grams of VOC per pair of shoes (volatile organic compounds)

(c)  Total percentage of organic cotton sourced

3)  WORKPLACES

Measured in:

(a)  Percentage of “High Priority” factories – score of at least 80 on the Timberland factory scorecard that evaluates production capacities and working hours

(b)  Percentage of production in “High Risk” factories – They strive for low production from high risk factories so that attention can be directed toward making health and safety improvements in those factories

(c)  Environmental assessment score – Scorecard methodology adopted from the Global Social Compliance Program (GSCP)

(d)  Assessment scores of business partners

4)  SERVICE (community greening)

Measured in:

(a)  Total hours used for community service

(b)  Total percentage of work hours used for community service

(c)  Total percentage of employees who engage in community service

(Source: Timberland Corporate Responsibility, http://community.timberland.com/Corporate-Responsibility/Our-Impact)

Timberland has overcome the barriers of resources and metrics.  They allot sufficient human and financial resources to match their commitment to social and environmental values.  With these resources, they are able to produce frequent comprehensive performance reports and adjust their strategies to meet current needs.  CSR performance is measured in non-dollar units, demonstrating how monetary units cannot adequately inform social and environmental strategic decisions. 

If we are to create a new culture of sustainability and continuous improvment, businesses must adopt this approach to comprehensive performance reporting.