Tuesday, September 4, 2012

CHARACTERISTICS OF SUSTAINABLE INDUSTRIAL ORGANISATIONS


What makes some organisations more sustainable than others? Is there a set of defining characteristics that organisations can aspire to that, if achieved, would improve their performance on sustainability issues? There is a general appreciation that the world is still learning about what sustainability really is and what it means for different industries. So what I want to explore in this post are some of the characteristics which I believe are important for organisations wishing to embark on the process of becoming more sustainable. These are my views, not the product of any research, but are of course founded on my observations of different industrial organisations and how they are managed, and which ones appear to be more successful at driving sustainability issues.



First and foremost, sustainable organisations have to be successful in economic terms, and hence many of the characteristics I will talk about will overlap with characteristics required of successful businesses in general. There are however some characteristics that are unique to sustainability-focused organisations and in reading this post, consider each characteristic within the context of sustainability rather than general business practice.


Sustainable Organisations are Outward Looking
Sustainability has a lot to do with how your organisation fits into the world, how it interacts and impacts on stakeholders and how quickly it can identify and assimilate best practices. All of these things require continuous scanning of the environment and ongoing interaction with stakeholders, followed by deployment of acquired learnings within the organisation. No man is an island, and certainly no sustainable organisation can be one either. Sustainable organisations keep abreast of environmental, economic and social issues impacting on their industry, and also are continually assessing what their contribution is to improvements in these areas within the broader environment within which they operate.

Sustainable Organisations are Innovative and Flexible
Balancing economics, the environment and social challenges, not just in terms of policy but as a fundamental way of doing business, is difficult, and requires innovation at all levels of an organisation. Becoming more sustainable implies constant change, new products, new processes, new ways of managing people, new ways of engaging with consumers, communities and staff and basically ongoing reinvention. This doesn’t mean making every business process an exercise in all-out creativity, but it does mean encouraging fresh thinking and being open to new ideas.

Core Employees within Sustainable Organisations are Industry Experts
While the principles of sustainability are generic, industrial sustainability presents very specific challenges to individual industries, along with a lot of generic ones. All industries largely face similar challenges and opportunities regarding the usage of electrical energy for example. However, the pulp and paper industry faces additional challenges in terms of persistent organic pollutants, the electroplating industry has to manage risks regarding heavy metal pollution, the coal-fired power generation industry has to mitigate sulphur dioxide pollution risks and spray painters have to manage employee exposure to volatile organic compounds, as examples of industry-specific challenges. Individual industries generally come with a number of key sustainability challenges. To effectively deal with these issues while still remaining profitable and not compromising other areas of performance requires deep industry knowledge, and sustainable organisations invest heavily in the development of this knowledge within their ranks. This is achieved through in-house training, strong internal mentorship programmes, structured training programmes for new recruits and the creation of opportunities for knowledge sharing and development.

The Dominant Paradigm within Sustainable Organisations is one of Integrated Thinking
Sustainability-minded organisations view individual issues as part of a larger whole and are always looking to optimise the system rather than individual processes. A piecemeal approach to individual problems with no consideration for how they relate to each other is a recipe for confusion, disarray and ultimately organisational paralysis. Becoming sustainable is not about achieving a single goal, but about finding an optimum position at which a number of often-competing objectives are met. This applies even more so to high-performance organisations. When you are coming off a low base, it is fairly easy to make simultaneous improvements in costs, quality, flexibility and other operational objectives. For organisations on the performance frontier, incremental improvements can often mean compromises, or where these compromises are unacceptable, additional investment to remove constraints. Organisations seeking to become sustainable are keenly aware of their limits, look at the whole picture (which is the big picture and the detail) and make choices accordingly.  This applies all the way through from the shop floor to senior management. Sustainable organisations also are very clear on the issues which cannot be compromised, such as compliance with legal frameworks and the safety of employees, local communities and consumers, as examples.

A Real Desire to be Responsible Drives Decision-making
The moral aspects of sustainability cannot be ignored, and if “being sustainable” is merely an organisational goal but is not driven by real organisational values that embrace responsibility, the chances are that success will elude your organisation. This applies even more prominently in poorly regulated environments, where organisations have to make their own decisions as to what “the right thing to do” is. The challenge here is that being responsible comes at a cost, and the temptation is to only spend what the organisation is forced to spend, rather than what should be spent to protect employees, the environment, local communities and consumers. I’m not referring here to the obvious things that any going concern would do, but also to the issues with longer term implications, such as long-term occupational exposures that are not regulated, but which do have an impact on employee health. The resource efficiency aspects of sustainability are easy to justify based on the short-term economic benefits, but matters of pollution prevention and safety tend to introduce costs in the short term that are not accompanied by immediate economic benefits. Sustainable organisations recognise however that in the long term, these are actually investments. This brings us to the next characteristic of sustainable organisations.

Sustainable Organisations take a Long-term View
Another apparent truism of good business practice, this is not only about being patient and avoiding instant gratification, but also about being cognisant of the cumulative impacts of the actions taken by the organisation in terms of potential harm. In industrial environments, acting quickly is of course imperative, since in high-volume operations, impacts can mount up very quickly. The trick here is to act quickly, but to take the sort of actions that are preventive, rather than corrective in nature. This means getting to the root causes of problems and putting systems in place to prevent their recurrence. It means being able to make a bigger investment now for larger cumulative returns in the future. It means understanding that short term decisions that compromise the environment can  come back to haunt the organisation at some point in the future, resulting in large potential liabilities and immense reputational damage, but even more importantly, that such decisions impose a cost on society.

Sustainable Organisations are Disciplined
When short-term returns are not forthcoming, discipline is essential. Sustainable organisations have the discipline to follow through, taking comfort in the knowledge that their actions are delivering results in the long term and building capacity. This is not based on blind faith, but on robust measurement systems that provide ongoing feedback, and reinforce sustainable behaviours within the organisation.  Discipline is also required to maintain high levels of operational performance. The most successful organisations have very clear documented practices (typically embedded within quality management systems) which are followed by all employees. Rigorous adherence to these practices is an example of the kind of discipline needed to achieve sustainability, and this adherence does not need to detract from the organisation’s ability to be innovative and flexible. Instead, documented practices are changed as improved practices become known, and their rigorous application means that discipline and innovation live comfortably side by side in sustainable organisations.

These are just some of my preliminary thoughts on the key characteristics of sustainable organisations. There are no doubt many others, and I would be keen to hear your thoughts.