The Network for Business Sustainability is please to sponsor the Best Paper Award at the PhD Sustainability Academy, an annual event hosted by The Richard Ivey School of Business at Western University.

The 2012 theme is Theories and Paradigms for Sustainability. The academy will explore, engage and encourage: the emergence, growth and diffusion of theories for researching and teaching sustainability; past, present and future paradigms for sustainability work in academe and practice; and ways to multi-dimensionalize our thinking and action for a more sustainable world.

NBS's Executive Director Tima Bansal and other international scholars will lead the interactive paper development workshops.

For those doing a doctorate on sustainability related themes, applications are welcome by August 30, 2012. For more information.

In this series, Joe argues that understanding the way we make decisions can help nudge us into making sustainable choices, and he features many examples from the report. Read the first article here. Dr. Arvai is Svare Chair in Applied Decision Research at the Institute for Sustainable Energy, Environment, and Economy, Haskayne School of Business, The University of Calgary.

Paradoxically, inspiration to overcome the current challenges is all around us. Nature has been dealing with dynamic change for more than 3.8 billion years, and the more we explore nature's ways the more we find inspiration for operating in a dynamically changing business environment.

Our understanding of nature has evolved over the last few decades. We once viewed it as a battleground of competition to one of dynamic non-equilibrium, where an order within chaos prevails due to unwritten natural patterns, feedback loops, behavioural qualities, interdependencies and collaboration within and throughout ecosystems. But the more we grapple with the challenges our businesses now face, the more we realize that nature's patterns and qualities inspire approaches and qualities for our own evolutionary success in business and beyond.

Case in point: Biomimicry for Creative Innovation (BCI), a collaboration of business transformation specialists which I helped co-found, has developed a set of business principles for the firm of the future originating from the life principles developed by the Biomimicry Institute in the US. The principles are aimed at creating conditions in business conducive to collaboration, adaptability, creativity, local attunement, multifunctionality and responsiveness; hence, enhancing the evolution of organizations from rigid, tightly managed hierarchies to dynamic living organizations which thrive and flourish within ever-changing business, socio-economic and environmental conditions.

Organizations that understand how to embed these principles from nature into their products, processes, policies and practices create greater abundance for themselves and their business ecosystems in times of rapid change; flourishing rather than perishing in volatile conditions. Organizations inspired by nature are resilient, optimizing, adaptive, systems-based, values-based and life-supporting. Let us explore these principles.

Resilient

In nature, we find resilience in almost all flourishing ecosystems. A forest, for instance, maintains different development stages within its ecosystem. Some parts of the forest are in a state of rapid growth or re-growth, while other parts are maturing, and yet others are fully mature and ageing. There is continual cycling through these stages, with disturbances (such as fire, flood or storm damage) driving release of resources that, in turn, lead to reorganization and regrowth, akin to new products being launched and new ways of working being introduced. By maintaining constant cycling at different time and space scales, the forest is able to flourish during short-term disturbances as well as long-term change. Diversity is key to nature's success.

Similarly, the more resilient an organization is, the more able it is to successfully deal with disturbances and volatility. Hence, business resilience is fast becoming the Holy Grail for businesses in these volatile times. The more diverse, decentralized and distributed a business ecosystem, the more able it is to seek out opportunities and capitalize upon a changing business landscape.

Example: UK brewery Adnams recently shifted their focus from a few product lines and customers to increasing the diversity of products and their customer base. The shift towards a greater variety of products and customers led to investment in adjacent markets. During this business transformation, Adnams also invested in its employees, ensuring they became more empowered to make decisions locally, reducing the need for overly burdensome centralized management. These changes have significantly increased Adnams’ resilience, leaving them far better equipped to deal with market volatility and seek out new opportunities.

Optimizing

In nature, optimization through economies of scope achieves improved cross-fertilization and species interaction (akin to improved interactivity across traditional department and organizational boundaries). Maximization is driven through homogenizing, scaling up, atomizing, industrializing and reducing complexities within a specific business function, system or process; optimization is driven through enhanced connections, interactivity and interdependencies across different business functions, systems or processes.

Economies of scale rely on mass production which can reduce the potential for synergies in an organization; reducing the variety of products curtails creativity and innovation, can lower staff engagement levels and ultimately weaken the company's overall resilience. Economies of scope realize benefits by unlocking synergistic win-win relationships and positive virtuous cycles, increasing co-creation through increased interconnections across the wider business ecosystem. This increases the system's overall resilience and improves the ability to optimize. It is not that maximizing or economies of scale are not good, it is more that a harmony of the two approaches needs to be found, thus ensuring the best delivery of services or products in any given market at any given time.

Adaptive

In the words of Charles Darwin "it is not the strongest species that survive, nor the most intelligent, but the ones most able to adapt to change". Adaptation is enhanced when the organization (individuals and communities of stakeholders) finds it easier to let go of the old and embrace the new. For example, geese when they fly in a V-formation rotate leadership to ensure that at any given point in the journey, it is always fit for purpose.

Unilever is undertaking significant adaptation across its business not just in the way it sources, produces and distributes products but also in the way it engages stakeholders across its entire business ecosystem. It is adapting its approach to business to become fit for purpose for the environment that it operates in.

General Electric is another company that is adapting and transforming its business strategy towards products and services that enhance the sustainability and long-term value of its customers and wider stakeholder community.

Systems-based

Fungi provide an interconnected web of life in the soil beneath our feet, breaking down plant waste and stones into food for plants, and in so doing, feeding the plants while also gaining food from them. The fungi distribute and share nutrients between different parts of the ecosystem as the health of the overall ecosystem benefits the whole, the parts and in turn the fungi. It is in the fungi's interest to be part of a healthy, resilient ecosystem, just as it is in the organization’s interest to be in a healthy, vibrant business ecosystem and social community.

Reducing complex business problems, projects or production lines into small, manageable chunks has the advantage of simplifying management and control. But, it can reduce the interconnections and interdependencies between activities that give rise to synergistic value enhancement.

Business, like nature, is lit up by interconnections and relationships that find success by being both system-focused and self-focused. Whatever the organization (or organism) does to benefit itself should also benefit the system; in benefiting the system it also benefits itself.

Values-led

As businesses are being called upon to continuously change, let go of old ways, seek out opportunities and embrace the new, values become the core of good business behaviour. Hierarchies of management and control slow down the ability for organizations to adapt. Rather than controlling the workforce, a firm of the future empowers the stakeholder community to take decisions locally, based on the core business behaviours set down by the values and culture of the organization. Hence values-based leadership becomes a differentiator for those organizations best able to transform towards a firm of the future.

Life Supporting

Sustainability is fast becoming embedded into business best practice. Life supporting goes beyond traditional sustainability and corporate responsibility – measuring, monitoring and reducing the negative effects of the business. It is about creating the conditions conductive for life; encouraging behaviours, products and services that seek to enhance the wellbeing of those within the business ecosystem. Some organizations are already transforming towards zero emissions (for example, Puma and InterfaceFLOR), yet there is neither rhyme nor reason why business should be limited to a zero goal. Reaching for net positive value creation where business relationships, products and services are mutually beneficial for the stakeholders, society and environment within which they operate is the true ambition for the firm of the future.

Of course that transformation is a journey not a destination. These business principles help shape the direction of the journey, yet there is no ideal business model or perfect way of operating; it is about finding the right way at the right time for the market conditions. The future is bright for those organizations and individuals bold enough to embark on a journey of dynamic transformation in the face of increasingly perilous market conditions.

Giles Hutchins is a business change agent with over 15 years of business and IT transformation experience with KPMG and Atos International. His passion is exploring ways of applying nature's inspiration to sustainable business transformation. His work draws on a range of theories and practices (such as biomimicry, cradle-to-cradle & industrial ecology) applying them to the challenges businesses face today, providing practical insight and guidance to help businesses redesign for resilience in these volatile times. He is the co-founder of BCI: Biomimicry for Creative Innovation. Giles regularly guest lectures at leading universities, presents at global conferences and blogs for a number of sustainable business sites. His book on "The Nature of Business" can be found here.

The consumer products giant Unilever sources from 10,000 raw materials suppliers worldwide and up to 100,000 non-production suppliers, earning annual revenues of more than $50 billion dollars from more than 400 brands.  Securing supply is critical to sustaining Unilever’s future business and growth, and it has discovered tangible business benefits through supply chain responsibility, championing working conditions, providing fair-wage incomes and managing environmental issues such as waste and climate change. “These benefits protect and enhance Unilever’s reputation, help secure supply for our business over the long term, provide increased stability of operations and create cost efficiencies. Ultimately, they generate competitive advantage,” notes John Coyne, Vice President, General Counsel, Unilever Canada, Inc.

It turns out there is plenty of research evidence to support this view. A substantial review of 25 years’ worth of academic and industry research on social and environmental issues in global supply chains was commissioned by the Network for Business Sustainability and conducted by Dr. Stephen Brammer, a professor at the Warwick Business School in the United Kingdom and Drs. Stefan Hoejmose and Andrew Millington of the University of Bath in Britain. The resulting report, Managing Sustainable Global Supply Chains: A Systematic Review of the Body of Knowledge, found that leading companies view these new risks in their supply chains as opportunities for competitive advantage. Those companies work proactively and collaboratively with suppliers to monitor their progress, helping them improve by taking into account a variety of cultural, legal, administrative, linguistic and political issues that come with a global network.

For companies that want productive and efficient supply chains, the research identified a range of factors that can influence your ability to succeed.

First, ask yourself how your firm relates to its peers and to its supply chain partners. Here, the evidence suggests that coordinated industry action often plays a critical role in successfully developing sustainability throughout an international supply chain by developing a norm of compliance and excellence in sustainability. This creates a competitive level playing field through which incentives for unsustainable supply chain management are reduced. Therefore, a clear imperative for firms, wherever possible, is to engage in developing the capacity for action across an industry sector.

Looking internally, executives are encouraged to think about the big picture: what exactly is motivating change in your businesses? The motivators for addressing social and environmental issues in a supply chain, as cited by research, are: customers, compliance, costs, competitive advantage and conscience. It can also help to identify the levers that will increase your odds of success. The research shows seven levers that can facilitate or inhibit efforts to build a sustainable supply chain. These include the internal levers of purpose, policy and people, which range from leadership/management support (people) to clear policy statements/codes of conduct (policy). External levers include peers, partners, public policy and power.

To implement improved sustainability practices in the supply chain the research shows companies should: 1) establish a code of conduct 2) obtain third-party certifications 3) select appropriate suppliers and 4) monitor supplier activity. It’s important to note there is no particular order to follow: different organizations may implement the practices in a different order.

Because of the complexity of the global business environment, there are some shortcomings to this “baseline” framework including how codes of conduct are relatively static and unresponsive to new issues or changes in stakeholder expectation, for example, and how third-part certification imposes substantial costs on suppliers. Introducing consultation, development and learning to business practice, however, can mitigate the shortcomings. For example, to manage for sustainability in its supply chain, Unilever developed a Supplier Code which defines the company’s responsible sourcing requirements. This Code is based on both local laws and internally accepted norms and helps create consistent expectations across the supplier network. Unilever requires not only that its direct suppliers adhere to the Code, but that direct suppliers ensure that their suppliers also comply with the Code’s principles.

By adding four “best practices” to their processes, businesses can build a sustainable supply chain. These are: 1) create meaningful expectations 2) confirm suppliers and agree to targets 3) evaluate and develop suppliers and 4) learn and improve.

Companies are encouraged to robustly scan the environment to anticipate new challenges and issues as they arise, as well as interact frequently with suppliers to encourage their participation in the development of a code of conduct, for example, as a way to create meaningful expectations. Evaluating progress made by suppliers is critical to supply chain improvement, and using probation periods and/or recognition reward programs are good examples of how to encourage suppliers meet expected targets.

Finally, continually improving practices through iterative communication and measurement will help companies learn and improve as they go forward. For example, establishing a company task force composed of in-house professionals and external academic and NGO expertise to review performance evidence quarterly to identify patterns and explore possible solutions might be one way to ensure accountability and transparency in achievements and performance.

As the research suggests, a developmental, supportive and mutually trusting approach to managing sustainability issues in international supply chains may offer the most robust set of “best practices” by which firms can minimize their exposure to risks and at the same time exploit a range of opportunities for performance enhancement in the buyer-supplier relationship. While it is recognized that these “high commitment” practices require substantial engagement from lead procurers and that these practices may not be suited to every organizational context, the researchers conclude they stand as aspirational “best practices” by which companies can benchmark their own progress toward managing their international supply chains sustainably.

Read the full research report for a detailed discussion of the best practices, case studies and implications for research and practice.

Attendees of this event will learn more about the Tim Hortons Coffee Partnership and...

• Why eco-labels (especially for coffee) often don't tell the whole story
• Tim Horton's supplier codes for coffee - driven by ethics and transparency
• How investing in the Tim Horton's Coffee Partnership led to other business benefits
• How sustainability reporting drove change at Tim Hortons
• And engage in an open discussion about, "Whose responsibility are all those cups?"

For more information and to register.

The good news: these products and policies aren’t just environmentally friendly, they can save consumers money. For example, energy efficient devices cost less to operate. And discounts are offered when consumers use their own shopping bags.

So to promote these products and policies, marketers can highlight the self-benefits (i.e. cost savings) or they can highlight the other benefits (i.e. environmental protection). Some say highlight the environment, others say “show me the money.”

What’s the best way to position products and policies that encourage consumers to go green? Todd Green (Simon Fraser University) and I conducted research using both environmentally friendly products (fuel-efficient vehicles and cold water detergent) and consumer policies (using a reusable coffee mug).

Results of our studies suggest that the optimal positioning strategy depends on who’s watching. Across several studies with a variety of both student and adult consumers, we found that the ability of one appeal or another to stimulate consumer adoption depends on whether the consumer is alone or in front of other people.

We know that consumers like to give others the impression that they are environmentally conscious by engaging in environmentally friendly consumption. But our research shows that it’s not that simple. Consumers respond positively to advertisements that focus on benefits to the planet when making their consumption decision in front of other consumers. It’s part of telling others that they really care about the environment. But when consumers see an advertisement focusing on their personal benefits in a public setting, they are less inclined to “go green.

When consumers encounter these same advertising appeals in private settings, the opposite effect occurs. People respond positively to advertisements that express how they can save money by going green, showing less inclination toward products promoted using the benefit to the environment.

What’s more, this desire to create an impression is so strong that consumers will even forgo cash value.  Consumers who took part in our coffee taste test were offered an extra 50 cent payment if they brought their own mug to the experiment. When participants thought the taste test would be public, they were much more interested in “saving face” than saving money. As a result, they showed markedly lower rates of participation when the reward was positioned as a cash bonus. When positioned as a means to demonstrate support for the environment, participation in public settings spiked.

For managers interested in seeing both environmental and business returns from their investment in environmentally friendly products and policies, the results are clear. Creating the right appeal is key to leveraging consumers’ desire to present a positive image to others. By aligning an appeal that signals self-interest on the part of the consumers in public settings – like a traditional retail environment – managers may be sabotaging their own environmental initiatives. Conversely, when communicating in more private consumption setting, such as television or internet, managers should play to consumers’ self-interest rather than their desire to do good.

Case in point: climate change. The conventional thinking? Incremental, uninspiring, regressive "sustainability" strategies. In blatant disregard for the great thinker's teachings, we continue to stick our heads deep in the sand and convince ourselves that if we simply do a little less bad, the crisis we’re facing will vanish like a bad dream. We have even packaged this thinking into neat little sound-bites: recycle a few more paper cups, build a few more green office buildings, drive a few more hybrid cars, buy a few more carbon offsets and it will all be fixed! Really? Has anyone ever done the math?

This reality has been a long time coming. When our parents and grandparents began to worry about some of the side-effects of uncontrolled capitalism, society's response was to build up a system of important checks and balances: health and environmental NGOs, government regulations, media watchdogs, etc. But by establishing organizations and legislation with the intent of “doing good,” we’ve effectively given companies license to “do bad.”

The explosion of prosperity and growth of industry in the western world through the late 20^th century resulted in an equivalent increase in the strength and pervasiveness of the counter-balancing systems. NGOs became huge and global, governments grew massive regulatory teeth and the media became angrier and sharper. And we went on with our happy lives, believing that we live in a beautifully balanced world...

Clearly, we had it wrong. We thought the model was balanced, but in reality it was just polarized – and the wealthier we got, the more polarized it became. Birthing "forces for good" and giving them the simplistic mission to mop up the mess that we created with our for-profit businesses actually made things worse. This model fueled the belief that you can't make a profit without harming the world – and that the only people who can do good are the ones who don't make a profit. In our obese, lazy, polluted, climate-threatened 21st century society, "giving back" has become one of the most fashionable lines – as if to imply that we really must have stolen something from the world as we were making a profit!

It's time to hit the reset button. Time to heed Einstein's advice. We're in trouble. Our "balanced" model isn't working. Our planet is getting sicker by the day; our children are already assuming they will have a lower standard of living and that their lives will be shorter and less healthy than ours. Could it be that we actually allowed ourselves to become the "peak" generation in the history of our species?

We need real solutions that shift the landscape – not yesterday's ineffective incremental stuff. How can we get there? First, by igniting the imagination of our seven billion fellow passengers if we stand a chance to really turn this thing around.  A few recycled cups and carbon offsets, when the Earth’s population is growing by a billion a decade, are not solutions. It's time to re-invent our path to profit and wealth, because that's what it will take to excite and drive our fellow passengers.

Human beings are greedy by design and we evolved that way in order to contend with historical challenges. Yesterday's sustainability preachings were all about suppressing our instincts and our nature. Tomorrow's solutions need to be about prosperity through innovation and about practical ideas about a new kind of capitalism, like Michael Porter's shared value model.

It's time for new, big thinking. Time to kill our polarized old models. Time to intertwine profit and good in new business models that recognize you can't generate one without the other. And it’s really time to ban that awful line about "giving back."

Andreas Souvaliotis leads AIR MILES for Social Change, a national social venture that offers government incentives to all Canadians for making healthier or more environmentally responsible lifestyle choices – powered by the unparalleled reach and popularity of the AIR MILES loyalty currency. He was the original founder of Green Rewards, the world’s first environmental consumer loyalty program which was ultimately acquired and fully integrated into the AIR MILES reward program. Prior to Green Rewards he was the President and CEO of one of the oldest retail marketing agencies in Canada. As a leading cause marketer and social innovator in Canada, Andreas writes and speaks across the country about social change, environmental responsibility and the new green economy. He has been trained by former US Vice President and Nobel laureate Al Gore and his innovative work has been recognized by prominent global social responsibility leaders including The Prince of Wales. He currently chairs the advisory board of the Centre for Responsible Leadership at Queen's University and he also chairs a WWF Canada advisory committee on climate change, energy and transportation.

It highlights a critical issue that has long plagued both researchers and businesses: “Management research often bears little resemblance to management practice. Although this research-practice gap is widely recognized and frequently lamented, there is little discussion about how it can be bridged.”

The paper calls for organizations like NBS to help bridge this gap. The authors include a manager, three academics and an administrator who collaborated closely to produce a research project that meets the needs of both practical and academic audiences. The Culture Project is described as an example of the work that can be done at the interface of research and practice, producing something that businesses can apply.

Says NBS Executive Director Tima Bansal in the paper: “We needed to generate easy-to-grasp models and frameworks — going the extra mile that researchers often don’t.” The framework developed for the piece resulted from the collective efforts of Stephanie Bertels’ research team, the managerial Guidance Committee and the NBS team.

The lead researcher on the culture project, Stephanie Bertels, was surprised at the impact of the work. “Within a few months of the report’s release, several large companies sent me their own adaptations of the Culture Wheel. Within six months, about a dozen organizations, including companies and a few municipalities, had shared versions that they had adapted to suit their context or needs.”

Says Leadership Council member Peter MacConnachie in the article: “...It strikes me that we’ve created a network of unlikely collaborators. Researchers seem most interested in advancing research rather than improving practices. The Leadership Council comes up with questions and gives researchers great access to us. NBS sits in the middle and helps researchers create useful resources from this access ... it equips us with quality information to inform our thinking and action.”

Note: All quotes are from Bansal, Bertels, Ewart, MacConnachie, and O’Brien (2012). Bridging the Research-Practice Gap. The Academy of Management Perspectives, 26(1), p73-91.

Read the full AMP article here. This article is available courtesy of the Academy of Management.

Learn more about Topic Editor Stephanie Bertels and the Culture Project.