A growth of business focus on adding sustainable value…
I have, in recent months, been asked on a number of occasions what the term sustainability means in the context of growing value for the business community. To be honest I have struggled to articulate an acceptable answer so I will now spend a little time attempting to define a response that will hopefully not only better address future query from others, but also serve to better educate myself on the issues.
To quote directly from the BusinessNZ/Sustainable Business Council website, the classic definition of sustainable development, “Meeting the needs of the present without comprising the ability of future generations to meet their own needs” expresses a view on the idea, but it has proven hard to put the concept into practice and communicate it effectively to the general public.
The website comment continues to point out that sustainable development is a holistic concept, a strategy that requires the integration of economic growth, social equity and environmental management. Then there is a UK definition of sustainable development that appears to be better understood by the public at large: “Sustainable development is about ensuring a better quality of life for everyone, now and for generations to come”. A key component within the sustainability mix appears to be debate specifically focused with an emphasis more on solutions than on problems.
We now have over eighty of New Zealand’s major companies as members of the Sustainable Business Council (Fonterra, Fletcher Building, Air New Zealand, Shell NZ, Sanford, Auckland Airport, Toyota NZ, Ports of Auckland, Contact Energy to name just a few) so very clearly within the nation’s top-tier of management circles, there is a wide appreciation of the sustainability value focus.
If there is any thought that you see sustainability as a cost please think again. A growing number of businesses are showing that it is a great opportunity to reduce costs and to grow market share. The application of embracing a sustainability culture should be based on the development of an understanding of how the market is changing, why that change is occurring, and more importantly, how organisations can capture material benefit from what is these days a quickly evolving marketplace.
The growth of the global population (9 billion plus) and the associated pressure points linked to the expansion of industrial and agricultural systems along with the waste by-products they produce are increasingly stretching our capacities to deal with the demand for new resources and the associated price and product supply volatility issues. At the same time the growing amount of waste material emitted to air, land and water is significantly lifting pressure on environmental integrity. These concerning issues, together with the recognition that all people should be treated fairly and ethically, should serve to sharpen human focus on the identification and implementation of remedial measures.
To help expand my own understanding of what a successful approach to business sustainability might deliver I asked Simon Harvey of the Adding Sustainable Value Programme to provide some case study comment.
He was happy to do so and his Blanchetts Furniture and An Extra Pair of Hands feedback is as follows.
Judy is the owner of Blanchetts Furniture, a 20 year old business making premium investment quality furniture that lasts a lifetime. Her main competition is from imported furniture that has a life expectancy of about 20 – 30 years and is significantly cheaper. Judy saw an opportunity to improve the value and appeal of Blanchetts’ products by promoting the benefits of environmentally sound, long lasting furniture combined with a story of local production and strong business ethics. But to leverage that, she realised that she needed to educate her market first, so people would recognise what they were currently missing out on. It worked, with a 20% growth result in the first year.
Judy went through her entire supply chain and made some decisions to work only with those businesses that would support her story including sourcing new framing timber only from Southland firm Lindsay & Dixon, New Zealand’s only FSC certified sustainable native timber supplier. Production processes were audited to identify any scope to reduce waste and replace toxic substances, like adhesives, with non-toxic alternatives. With the changes in place Judy hosted an evening event at the factory to which she invited suppliers, customers and potential sales channel representatives. Themed ‘from the forest to the lounge’ the hugely successful event showcased a story of responsibility, business ethics, sustainability and premium quality.
In a very different industry, Jane Richardson runs a luxury and rapidly growing home services business called An Extra Pair of Hands. She was alerted to sustainability for the first time because of questions her customers had raised about how eco-friendly and healthy the cleaning products being used were. Jane developed a strategy that not only addressed those concerns but actually turned customers into advocates resulting in a low-effort source of new business. The logistics strategy she developed improved efficiencies to keep fuel costs static whilst the business grew by 15%. And, as an integrated part of both those strategies, Jane extracted herself from an operational role in the business to spend more time working on governance and strategy.
Jane experimented with making her own cleaning products, but whilst delivering the desired health and environmental benefits they took longer to use, which increased costs. After a lot of searching, Jane found a supplier who could provide a suitable cleaner with a recognised environmental certification. By making a point of this with her customers, people started to tell their friends and new unsolicited business began to arrive. To make the business logistics more efficient, by reducing fuel use and eliminating wasted time, Jane redesigned the sales and service delivery approach. She trained service delivery staff to play a sales role whilst they were on their rounds; and make sure each round was concentrated in separate defined zones to avoid any unnecessary travel. The savings all flowed through straight to the bottom line.
So I feel that peer group learning on new initiatives such as the sustainability role in business can at least be helpful, if not powerful. The Adding Sustainable Value training programme currently being offered through the BusinessNZ regional partner associations backs this up with a number of participants saying that fifty percent of the course value came from learning with other owners, executives and management people.
In the coming months we will be providing more information on the timing, content and cost of specialist sustainability training programmes to be offered in Otago and Southland and we would strongly encourage all our members to closely consider a participation assessment. We would be pleased to at any time provide more detailed information on these issues.
These articles and much more available in the latest Update - The Official OSEA Magazine