Articles

When it comes to tapping into the passions of employees, the opportunities and threats that sustainability presents are two sides of the same coin.

As sustainability-related pressures change the competitive landscape, what kinds of capabilities and characteristics will that landscape demand of companies that aim to thrive? Here's what Business of Sustainability Survey respondents and sustainability thought leaders say.

In 1994, when Interface Inc.’s founder and CEO Ray Anderson began to think about his legacy, it made him uneasy. Deep down, Anderson realized that the business model of the commercial carpet manufacturing company he had founded 20 years before was based on “digging up the earth and turning petroleum and other materials into polluting products that ended up in landfills” — not something he wanted his grandchildren and great-grandchildren to remember him by. So at age 60 Anderson broke with the old model and began anew. Standing up to naysayers (whose ranks included associates, suppliers and Wall Street analysts), he set out to transform Interface from a traditional business built on consumption and waste to one whose focus — that is, beyond profitable growth — would be zero waste and restoring the earth. Since the start of the journey, Anderson and his associates have confronted technical barriers that no one could have anticipated. But inch by inch, kilowatt-hour by kilowatt-hour, recycled pound of carpet by recycled pound of carpet, Anderson’s vision has moved closer to reality. In addition to becoming increasingly efficient in its energy and materials usage — for example, 89% of Interface’s global electricity and 28% of its total energy come from renewable sources — Interface prides itself on its ability to turn an increasingly large percentage of its carpet into new product. It is also proud of the influence its sustainability efforts are having on other companies. This article presents a timeline showing how Anderson’s “mental model” changed and how he and his company moved along the road to sustainability.

Companies need to help telecommuters overcome workplace isolation and limited visibility.

When venture capitalists are more tolerant of failure, the successful companies in their portfolio tend to be more innovative.

In 2009, the business concerns with sustainability intersected with an urgent global economic crisis.

Many companies are taking the first incremental steps toward sustainability, such as energy conservation and recycling. That's a good start — but going further can yield significant competitive advantage.

Sustainability is the buzzword du jour, but how do you actually go about achieving it? Well, it’s clear there isn’t a one-size-fits-all strategy. Look at five companies, and you will see five different paths, each particular to a specific company’s market and problems. Take Nike Inc., whose brand is synonymous with cutting-edge design. Redesigning the athletic shoe to cut down on material became a core element of its approach to reducing waste. But what works for Nike might not exactly work for a company like start-up electric vehicle supplier Better PLC, LLC, which is rolling out electric car recharging stations. How does it pursue sustainability? By identifying the countries most receptive to its cutting-edge idea. General Electric Co. takes yet another approach, seeing sustainability not only as a cost-savings measure within the company (cut energy use, and emissions and costs go down) but also as a solution to sell to other companies–hence, its $17 billion ecomagination unit. Mining giant Rio Tinto, in turn, looks at it through a social lens, while Wal-Mart Stores Inc. sees sustainability as a challenge to revamp the practices of its more than 100,000 suppliers. In short, sustainability is less a target than an approach, which is why it is continually being refined. As companies ramp up understanding, they also push the envelope of what can be accomplished. Though it takes investment and commitment, the rewards are seen in cost savings, new products, customer engagement and employee commitment. In this way, sustainability becomes a competitive advantage.

MIT Sloan Management Review's Business of Sustainability survey and thought leaders interview project identified numerous management challenges presented by the new competitive landscape that sustainability pressures is creating. Perhaps the biggest challenge, though, is how to build the "business case" for investing in a sustainability-related project--even when you believe that the project addresses a significant opportunity. What do executives need to know about sustainability as a business proposition? Interviewee Amory Lovins, co-founder of Rocky Mountain Institute, co-author of Natural Capitalism Creating the Next Industrial Revolution and recipient of a MacArthur Foundation "genius grant," argues that executives labor under several pernicious misunderstandings about how sustainability affects business--the worst being that sustainability efforts have to cost a company, when in fact, says Lovins, they nearly always increase profits. How does one begin to build a persuasive business case for undertaking sustainability-related initiatives? Map your flows and costs of materials and energy, says Lovins; you will find fiscal "leaks" that can be fixed, with direct bottom-line benefits. He also points out numerous side benefits of sustainability-related efforts: gains in innovation, labor productivity and appeal as a collaboration partner. Those benefits, he argues, will exceed the direct ones.