Retooling NextGen Leaders For Sustainability

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In this presentation, given to 30 Next Gen members of AFBN, I spoke about the need (and opportunity) for Next Generation leaders to retool themselves and their family businesses.

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Retooling NextGen Leaders For Sustainability

  1. 1. Retooling Leaders, and <br />Family Businesses for <br />Sustainability<br />
  2. 2. Sustainability<br />Currently Accepted Definitions <br />- Wikipedia – <br />Sustainability, in a broad sense, is the capacity to endure.<br />In ecology, the word describes how biological systems remain diverse and productive over time. For humans it is the potential for long-term maintenance of wellbeing, which in turn depends on the wellbeing of the natural world and the responsible use of natural resources.<br />- WashingtonStateUniversity - <br />Sustainable means using methods, systems and materials that won't deplete resources or harm natural cycles" (Rosenbaum, 1993). <br />Sustainability identifies a concept and attitude in development that looks at a site's natural land, water, and energy resources as integral aspects of the development" (Vieira,1993) “<br />Sustainability integrates natural systems with human patterns and celebrates continuity, uniqueness and placemaking" (Early, 1993) <br />Definitions that are heavily focused on the environment, and all things “green”<br />
  3. 3. The Global Context<br />Conversations about sustainability have largely driven <br />been focused on climate change, and as have the solutions.<br />Conversations<br />Solutions:<br />
  4. 4. The Asian Context<br />In Asia, sustainability is being framed by different constraints<br />……..constraints that were far more personal than “carbon”<br />Resource Management<br />Labor Safety<br />Consumer Safety<br />Urban Planning & Urbanization<br />Food & Agriculture<br />Landfills & eWaste <br />Overpackaging<br />Healthcare (Elderly & Family)<br />Traffic and Transport<br />Air, Food, and Water Quality<br />Income Gap – Poverty Alleviation<br />
  5. 5. Changing Dynamics for Business<br />Economic Cycles<br /><ul><li>Global Economic downturn freezes debt markets and reduces demand
  6. 6. Interest in corporate roles and responsibilities grow
  7. 7. Regulations and austerity measures add cost to SME</li></ul>Environmental <br />Degradation<br /><ul><li>Environmental awareness has taken quantum leap
  8. 8. Domestic / International press coverage
  9. 9. Public support, NGO engagement, and regulations</li></ul>Supply Chain<br />Failures<br />Price Inflation<br />Labor Issues<br /><ul><li>24/7 Full press coverage on TV, newspaper, blogs, &twitter
  10. 10. Public awareness of problems with industry, and calls for changes
  11. 11. Ongoing investigative reporting into other areas / other companies
  12. 12. 24/7 Full press coverage on TV, newspaper, blogs, &twitter
  13. 13. Public awareness of problems with industry, and calls for changes
  14. 14. Ongoing investigative reporting into other areas / other companies
  15. 15. Public acknowledgement of system failure and call for change by party
  16. 16. Cost of talent increasing due to supply shortages and costs of living</li></li></ul><li>The Door was open for change…<br /><ul><li> Consumers were becoming citizens
  17. 17. Citizens were become activists
  18. 18. Governments were responding</li></ul>The Business Case For Sustainability was made<br />
  19. 19. Why Firms Are Not…<br />Why Firms Are Going “Green”<br />Strategic Interests Supplier Performance Customer Satisfaction<br />Lack of Expertise. Lack of Incentives. Lack of Regulation???<br />
  20. 20. New Systems and Solutions<br />Active <br />Engagement<br />Real <br />Solutions<br />New <br />Definitions<br />
  21. 21. Changing Models<br />Starting from Scratch<br />Some Firms will be sustainable from day 1<br /><ul><li>Burt’s Bees
  22. 22. Bambu Home
  23. 23. Shokay </li></ul>Others Will Wait<br />?<br />Going the Long Way<br />Low Hanging Fruit<br />Some Firms will see new opportunity<br /><ul><li>Interface Flooring
  24. 24. Haworth
  25. 25. Nike</li></ul>Some Firms will start with a single product<br /><ul><li>Puma
  26. 26. HP
  27. 27. Esquel</li></li></ul><li>Family Business Context<br />Goal: To completely eliminate any negative impact we may have on the environment by 2020<br /><ul><li>Established in 1973
  28. 28. Manufacturing of modular carpeting
  29. 29. 900 Million USD in revenue
  30. 30. 3000 employees</li></ul>Ray Anderson – <br />“The typical company of the 20th century: extractive, wasteful, abusive, linear in all of its processes, taking from the earth, making, wasting, sending its products back to the biosphere, waste to a landfill. I, myself, was amazed to learn just how much stuff the earth has to produce through our extraction process to produce a dollar of revenue for our company. When I learned, I was flabbergasted.”<br />
  31. 31. Family Business Context<br />Culture:<br /><ul><li>5 Es:
  32. 32. Ethics, environment, exploration, excellence & education</li></ul>Leadership:<br /><ul><li>Leading user of organic cotton production
  33. 33. Established in 1979
  34. 34. 60 million shirts
  35. 35. 500 Million USD in revenue
  36. 36. 50,000 employees
  37. 37. Production 5 countries
  38. 38. Tommy Hilfiger, Abercrombie & Fitch, Hugo Boss, Nike ,Polo Ralph Lauren, Lands' End and Muji</li></ul>Investment:<br /><ul><li>Over 50 million in energy efficiency and eco-friendly projects
  39. 39. 9 of 10 production sites meet Worldwide Responsible Apparel Production (WRAP) standards</li></ul>Capacity:<br /><ul><li>Provide bonuses to employees for sustainable ideas
  40. 40. Sponsoring organics R&D within universities</li></ul>“I am fortunate because the company I lead is a family-owned group – <br />I can do anything I decide to do”<br />
  41. 41. Retooling Leadership<br />Going forward, leaders will need to possess:<br />Clear Mission and Vision <br />Understanding of “externalities” and impacts<br />A business plan for change<br />Ability to Manage Time<br />Focus on systems and building<br />Able to engage and activate stakeholders<br />System of monitoring and reporting<br />Commitment to execution<br />
  42. 42. Engaging Family Leadership<br />Where Family Businesses Have An Opportunity, and Advantage, is legacy<br />Internally<br /><ul><li>Core Decision maker are invested in company
  43. 43. Ability to craft (remake) vision and mission
  44. 44. Vision over profit can be tolerated at higher levels
  45. 45. Spectrum of family interests can be accommodated
  46. 46. Timelines more flexible</li></ul>Externally<br /><ul><li>Niche markets are good markets
  47. 47. Not beholden to shareholder profit motive, or their interests first
  48. 48. Ability to explore and expand in secrecy
  49. 49. Focus on value over advertising
  50. 50. Able to focus on building and investing in long term relationships</li></li></ul><li>A Relevant Opportunity<br />Why don’t developers choose to go green? <br />Perceived extra cost of green building by developers <br />Source: CEIBS / SRUP Survey to the developers and customers<br />Willingness of extra pay by customers<br />
  51. 51. Takeaways<br />The business case for sustainability has been made <br /><ul><li>Economic sustainability is not mutually exclusive or independent from social or environmental sustainability</li></ul>Consumers Have Changed – and So Have Their Expectations<br /><ul><li>Consumers are becoming citizens, and citizens are becoming active
  52. 52. Consumer pressure on industry will only grow stronger</li></ul>Global Supply Chains, Must Change… Will Change<br /><ul><li>Environmental, labor, raw materials, water, and energy constraints have all changed</li></ul>Changes will begin with design and end with product take back<br /><ul><li>Entire organization will be involved in the process</li></ul>Solutions Exist, Cost Savings Exist, and Options are Readily Available<br /><ul><li>Technology gains are growing – energy, transportation, etc
  53. 53. Commoditization of parts, components, and technologies reduces cost of investment</li></ul>If you don’t make the changes willingly, you will be force to through competition, regulation, or consumer action.<br />
  54. 54. Q&A<br />“In the end, environmental, social and economic sustainability cannot be separated. A sustainable planet must include a sustainable human civilization – resilient human systems that respect the complicated relationships among poverty, human rights, economic development, environmental health, and human success” <br />- Institute for the Future, 2008<br />Richard Brubaker<br />Founder and Managing Director, Collective Responsibility<br />Founder and Executive Volunteer, HandsOn China<br />Adjunct Professor, Sustainability and Responsible Leadership, CEIBS<br />rich@collectiveresponsibility.org<br />

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