Miliband’s got a point – we need to be more discerning in who we celebrate

30 09 2011

Who and what we celebrate, value and reward has a real impact on the decisions other people make and how they behave – that’s what all the research tells us.

So Miliband is right in some respects to draw attention to the problem that in public debate over the past 30 years political leaders, business leaders and business school gurus have tended to celebrate all business leaders, without necessarily distinguishing between those who have an overall positive impact on the wider world and those who don’t. This kind of talk does have a real impact on the kind of business we get and the kind of society we get.

Interestingly though, although Miliband’s been clobbered a bit for raising this in his speech this week I think he is picking up on what is already a growing trend – in our research on leadership at Ashridge, we’re seeing that more and more business leaders are recognising that they need more than commercial acumen and emotional intelligence to be effective in today’s world, they also need a strong personal commitment to making a positive contribution to the wider world through the way they go about business, and the skill to act on this.

Not only that, but they are increasingly choosing to measure themselves across a range of metrics that measure their broader contribution to society, not just the financial value they create for shareholders. This way of thinking is also starting to influence how their organisations are approaching their leadership development work.

Bringing this theme into the heart of public debate – and talking about recognising and rewarding good business through the tax system – could be a real boost to this trend. And it’s not necessarily hard to do in practice, despite the criticism Miliband’s received – think of all the work that’s gone into developing what could be appropriate metrics through the GRI process over the past decade. Bringing this nascent trend into sharper focus, paying more attention to who we celebrate, and aligning the influence of the tax system behind that, could play a valuable role in helping build the right kind of healthy prosperity for the medium and long term.


Cancún, the Economist, and self-fulfilling prophecies

4 12 2010

The Economist’s leader article on climate change at the beginning of the Cancún summit paints a bleak picture. Focusing on how to adapt to a changing climate, the story of the article to my reading seems to be that disaster is looming, and although it is technically possible to avert, humankind has largely given up the will to achieve this: “Even if the currently moderate pace of emissions reduction picks up, the likelihood is that the Earth will be at least 3oC warmer at the end of this century than it was at the start of the industrial revolution… in the wake of the Copenhagen summit, there is a growing acceptance that the effort to avert serious climate change has run out of steam… the fight to limit global warming to easily tolerated levels is thus over.”

Better, then, the Economist argues, to focus on how to live with warmer temperatures. Although there is talk of a massive transfer of resources to help the most vulnerable, it’s not unreasonable to come to the conclusion from the pretty thorough analysis in the accompanying article later in the same issue that in all likelihood, adapting to climate change will in reality involve richer people looking after themselves and leaving poorer people to a pretty bleak fate. Leaving aside the morality of this, even for richer people this strategy is only likely to work for a majority for a generation or two: “Since the beginning of time, creatures have adapted to changes in their environment. Unfortunately such adaptation has always meant large numbers of deaths.”

Now I’m not saying that adapting to climate change isn’t an important thing to be talking about, and its good to see the Economist putting it on the front cover, but the question this article raises for me is this: what kind of actions does a vision of the future like this provoke?

Ashridge Business School is a unique institution blending MBA and other executive degree programmes with customised executive education and change consulting for corporate and public sector clients. We consider our core strengths to be in the fields of leadership, strategy and change, and so we have plenty of specialists who think they know a thing or two about change. My colleague, Alexandra Stubbings, for example, is an organisational development and change consultant by profession and is co-head of Ashridge’s Engaging with Sustainability change consulting practice; her recent client work on climate and culture change includes working with new UK parliamentarians from across the three main political parties as well as several corporate clients.

One of the key principles of her work is that the small scale day-to-day decisions people make tend to be consciously or unconsciously informed by the ideas they have about what the future is going to be like. And these small-scale day-to-day decisions can actually play a pretty significant role in making these visions of the future come true. Think of a business going through hard times – if clients and employees start to believe the organisation’s going to the dogs, they begin to make decisions that often make it more likely that this will in fact be the outcome. Equally if people have something positive to work towards, and particularly if that vision is shared with others they’re working with, it’s actually far more likely that something like this positive vision will in fact come to pass.

Put simply, it’s the rule of self-fulfilling prophecies. And it leads to a delicate dilemma: how to talk about how serious things are, the gravity of the situation, enough to nudge people into questioning their habitual patterns of behaviour, while at the same time not tipping people into despair but building a positive vision of the future that inspires a constructive road out of trouble?

It means, I think, that we need to talk more about the positive implications of change that is already happening. From humble beginnings in the 1990s for example, there is now a real movement for change within the corporate world that is beginning to transform markets – think for example of the recent announcement by Unilever of its 2020 Sustainable Living Plan. Many companies are beginning to realise its possible to act on climate and not only remain commercially viable but actually to protect and create value (as we currently define it). Many are even going further to lobby public policymakers to change the rules of the game to make it commercially viable to act where it isn’t at the moment. While there’s clearly still a very long way to go, this change has a real momentum now.

What is provoking this change in corporate behaviour? In research by Ashridge and the Academy of Business in Society for the United Nations in 2009, over 90% of CEOs and senior executives polled in a global survey believed that building awareness and skill among senior leadership populations and stimulating a change in organisational culture were required for their organisations to effectively respond to challenges like climate change. And what’s really interesting is that there are actually many organisations investing considerable sums in precisely this area. Ashridge research to be published in early 2011 will present detailed case studies of these kinds of learning and change programmes from large and small organisations based across different regions of the world in different industry sectors. The research will draw out the learning from these innovators for the benefit of the many organisations now beginning to think about how to do this. The findings will be discussed at a major conference at Ashridge on sustainability and organisational change in June 2011.

The awareness, the commitment and the skill to lead change among business leaders is growing, and beginning to lead to developments that are having profound implications for markets as a whole. As with previous industrial transitions, there are tipping points which once passed give the change its own momentum. There are an increasing number of signals that we may already have passed such a tipping point with climate. And the more the corporate world begins to act and become a pressure group on climate, the more this change starts to take on its own momentum and create its own vested interests, the more likely it will be that the kind of public policy responses expected last year at Copenhagen will sooner or later come to pass.

Is the glass half full or half empty? Clearly both, but what we know about change would suggest we’re likely to have a far better outcome if we spend more time talking about it being half full. If people start to recognise that positive change is happening, this becomes factored into their visions of the future, begins to influence their actions today, and starts to contribute to and reinforce the positive change. A positive feedback loop. There is hard work ahead, the job is by no means done, but don’t give up hope yet.

Matthew Gitsham is Director of the Centre for Business and Sustainability at Ashridge Business School.

Unilever’s willingness to set themselves specific and quantifiable targets makes this a defining moment in the sustainability revolution

16 11 2010

A recent Harvard Business Review article argued that we are currently experiencing an industrial transformation – the sustainability revolution – to rival that of the major industrial transitions of recent times like globalisation, and the information age.

All periods of dynamic change are punctuated by defining moments, and one that comes to mind for me when thinking about sustainability was a week in 2007 when Tesco and Marks&Spencer vied to out-do each other when announcing comprehensive agendas for organisational change on sustainability – this was the birth of M&S’s Plan A, a detailed set of over 100 targets to be achieved by 2012.

The past week is perhaps another “moment” that people will look back on when telling the story of the sustainability revolution. Last week FMCG giant P&G announced a comprehensive package of sustainability targets and yesterday Unilever Chief Executive Paul Polman, joined by two of the intellectual architects of the sustainability revolution Jonathan Porritt and John Elkington, outlined Unilever’s sustainability strategy for the next ten years with some eye-watering commitments the organisation has set itself to achieve by 2020.

I came to the event in Unilever’s London HQ with three questions at the front of my mind: would there be anything new today? Was it real or just greenwash? And what might the broader implications be for others?

Unilever already has a strong pedigree on sustainability, this is the organisation that has been improving health and wellbeing for over a century with products like lifebuoy soap and Flora/Becel margarine. In 1997 Unilever worked with WWF and others to create the Marine Stewardship Council, and in 2007 made commitments to sustainably source all its palm oil, and all the black tea in Lipton and PG Tips, by 2015 – not insignificant commitments from an organisation that buys 3% of the world’s palm oil and 12% of the world’s black tea. Hence the first question I came with: would there be anything really new today? Would the announcement live up its billing as a step change or would it just be more of what we’ve heard before?

Well, what I think stands out Unilever’s announcements – like M&S’s Plan A a few years ago – is how comprehensive these commitments are, how long term they are, and how specific and quantifiable they are. Yes, Unilever has been able to showcase some great examples of sustainable behaviour from some of its brands in the past, but yesterday they announced targets that mean all brands right across their portfolio will be meeting a consistent level of performance. In aggregate, the announcements appear to represent a genuine effort to transform markets because of the influence they will have on the decisions others will make, rather than just window dressing to defend corporate reputations as earlier generations of corporate responsibility activities have often done. To give a flavour of yesterday’s announcements, they included commitments to:

  • Help 1 billion people improve their hygiene habits by 2020, and bring safe drinking water to 500 million people by 2020
  • Double the proportion of the food portfolio that meets particularly stringent nutritional standards
  • Halve the greenhouse gas impact of Unilever products across their lifecycle by 2020 (including the impact of production of raw materials and use by the consumer) as a contribution to meeting the United Nations requirement to reduce greenhouse gas emissions by 80% by 2050
  • Source 100% of agricultural raw materials sustainably by 2020, addressing both environmental impacts and livelihoods of producers and workers (moving beyond just palm oil and tea to all Unilever’s top ten agricultural raw materials – paper&board, soy, sugar, fruit&veg, sunflower, rapeseed, dairy and cocoa – and beyond)

The second question I came with was: how credible would this set of announcements be? It all might sound good, but was it about real change or just good PR?

This question was put to Polman in a variety of ways, and his answers were interesting. At one point, citing Stephen Covey’s Seven Habits of Highly Effective People, Polman argued “It’s difficult to talk yourself out of things you’ve behaved yourself into” – from small and pioneering first steps, Unilever has been taking bigger and bigger steps towards systemic change over more than a decade, which has created its own momentum within the organisation which will be hard to reverse and gives Polman confidence that the organisation will step up to the challenge these new targets represent.

Polman gave a wry smile when the point was made that CEO’s terms in office are becoming shorter and shorter, and change on this scale required more than just CEO leadership, it required a fundamental change in organisational culture. Ashridge Business School’s research lends weight to this argument: 92% of the CEOs and senior executives participating in Ashridge’s 2009 study with the United Nations and EABIS believe that change in organisational culture is required to effectively meet the challenges and opportunities of sustainability. That study documented some of the very specific steps that Unilever has been taking to provoke and accelerate culture change through a range of interventions led by the HR function, including innovative leadership development programmes, and the ‘brand imprint’ workshops led by Unilever’s in-house marketing academy for example. Ashridge is hosting a major conference on sustainability and organisational change in June 2011 that will explore these trends in greater detail.

A number of other challenges were made during the Q&A to Unilever’s central thesis that it was possible to double the size of the business at the same time as reducing material consumption.

On the barriers presented by the investment community, Polman was bullish: ‘We know this is the right way to manage our business for the long term, if you buy into this, come invest in us, if you don’t, then don’t’ was the gist of his response.

On consumers: “Consumers do want us to be taking this approach, even more so in developing countries which is where our future growth will come from, and the major retailers as market gatekeepers are really driving change through the whole supply chain. The trick is to innovate to be able to meet this demand without increasing price”.

On the role of government: “We can’t wait for governments to fix these problems, witness the failure of Copenhagen. Industry needs to step up”.

On integration with broader corporate strategy, Polman talked about the role of sustainability specialists in the due diligence process during acquisitions: “Will new acquisitions fit with this new business model in the long term is the key question we will be asking of them” he argued.

It wasn’t all plain sailing, there was some visible squirming when directly asked for the second time how much of Unilever’s marketing budget would be spent on promoting behaviour change rather than selling more products, and there wasn’t a good answer to a question about whether Unilever was really challenging the underlying ideology of consumerism that has dominated commercial thinking for half a century. But to be fair Unilever was upfront about many of the unknowns still to be navigated on the road ahead and overall this came across as both a sincere commitment, and one backed up with real intent.

So what, then, of my third question: what are the broader implications of all this? What are the implications for other organisations? It seems to me to be this: yesterday we saw another clear signal that lends credence to the notion that markets are changing, the rules of competition are changing, and a handful of organisations are playing a leading role in defining what these markets and rules of competition are going to look like in the near future. If you’re not already seriously engaged in this agenda for real change, you need to be.

What will be the next defining moment in the sustainability story? I think we’ll continue to see leaders in different sectors stepping up and announcing similar kinds of substantial long term targets for change that will signal the direction of change in their sectors. How soon, then, before we see coalitions of organisations from the same sector making joint declarations on long term targets for their sector as a whole?

Matt Gitsham is Director of the Centre for Busieness and Sustainability at Ashridge Business School

Trendspotting at the United Nations Global Compact 2010 Leaders’ Summit, and the implications for business schools

30 06 2010

Sitting in the United Nations Global Compact 2010 Leaders’ Summit, I am reminded of something I heard someone say at a conference many years ago. They were speaking of the movement for racial equality in the 1950s and 60s: “Those leading change often overestimate what they can achieve in the short term and underestimate what they will achieve in the long term.”

I think this summit is a story of slow but inevitable change.

In 1999, in the wake of riots in Seattle and Genoa, then UN Secretary-General Kofi Annan made a speech to the World Economic Forum in Davos “I propose that you, the business leaders, and we, the United Nations, initiate a global compact of shared values and principles, which will give a human face to the global market.”

The United Nations Global Compact was formally launched in July 2000, with just 44 companies from around the world. The Global Compact now, ten years on, has nearly 6000 corporate signatories from over 130 countries, and here in New York last week, 1300 business leaders met to review progress and consider the next ten years.

The UN Global Compact worked with Accenture to conduct a CEO survey for this summit. Among many startling findings were the following: 93% of CEOs now believe sustainability will be critical to the future success of their companies; 80% believe a tipping point where sustainability is embedded in the core business strategies of the majority of companies globally will occur within the next 15 years; 54% believe this tipping point will be reached within the next ten years.

As we know, history is littered with examples of slow movements for change that suddenly become rapid, disruptive and overwhelming – change occurs which is so comprehensive that we can hardly even conceive that it was different before. The idea that 80% of business leaders see such a tipping point on sustainability being reached within the next 15 years is therefore a compelling one.

So while there seemed to be something of an underswell of frustration among some business leaders on the floor at the lack of ambition and urgency from some business leaders on the platform, the real story here is that while the last ten years have seen a lot of greenwash, they have also seen some real innovation and change as many organisations have devoted considerable energy to experimenting with new approaches to see whether business really can act on the principles of sustainable development at the same time as being financially sound.

The platform was awash with CEOs, chairs and board members from some of the worlds leading companies: Bank of America, AREVA, Petrobras, ENI, China Minmetals Corp, Tata Sons, Hindustan Construction, Siemans, China National Offshore Oil Company, Munich Re, Infosys, SK, Allens Arthur Robinson, Schneider Electric and more.

We heard about what’s at stake: the state of human development and poverty around the world, ecosystem degradation and climate change, corruption, systematic human rights abuses and violent conflict.

We also heard about what’s at stake for business. Paul Polman, CEO of Unilever cited a recent study by AT Kearney which found that climate change and water scarcity could lead to a loss in earnings for the food industry of 47% by 2018. A number like this makes both management and investors take note he said, and when this is added to the fact that consumers now want products to be doing good for society and the planet as well as for them, and that retailers like Walmart and Carrefour only want to engage with suppliers that have a long term vision for sustainability, you start to get a clear picture of the only viable strategic path ahead. This is why Unilever has made decoupling commercial growth from material consumption a strategic priority, coming alive through commitments to sustainable sourcing and sustainable living – think for example of the company’s commitment that all tea (and it buys 12% of all black tea in the world) and all palm oil it buys will be from certified sustainable sources by 2015.

And as we heard from more and more business leaders on similar themes, the ghost of BP and its loss of more than half its market capitalisation since the beginning of the oil spill in the Gulf of Mexico never seemed far away.

Mayor of New York Bloomberg told us “the future is in our hands, this is not difficult stuff, it just requires some courageous decisions.” Lord Michael Hastings of KPMG reminded us of the story of Ron Wayne, the third founder of Apple, who sold his 10% share of the company in 1976 for US$800. “Don’t get caught out by not seeing the tipping point that’s right in front of you.”

Dennis Nally, Global Chairman of PricewaterhouseCoopers summed up the transition from the first decade of the compact to the second: “It’s taken a decade, but now a critical mass of business leaders have got the message. The next decade is about executing the change, and this presents business leaders with a time-sensitive opportunity for long term competitive advantage.”

And the implications for business schools…

The theme of ‘executing the change’ kept coming up throughout the summit. A representative from GE said at one point “Its not about working out what we’ve got to do, its about making this live in all places at all times across the organisation.”

This presents a clear role for organisations like Ashridge whose core expertise is in partnering for organisational learning and change. It also places a real spotlight on all business schools and institutions involved in developing the next generation of business leaders, a theme that has come up at these kinds of gatherings more and more in the second half of the last decade.

And so its no surprise that one of the key initiatives to have come out of the Global Compact over the past ten years has been the UN Principles for Responsible Management Education, presented to Secretary General Ban Ki Moon at the Leaders’ Summit in 2007 having been developed by a taskforce of 60 business schools globally (including Ashridge). In the space of three years, the Principles now have 300 signatories.

A whole day of this summit has been devoted to a side event for deans and directors of business schools on management education. As an input to this forum, the UN PRME secretariat invited Ashridge and EABIS to lead an analysis of CEO perspectives on the role of management education, drawing on data from the UN Global Compact-Accenture CEO Study.

Key findings include the following: 88% of CEOs believe it is important that business schools develop the mindsets and skills for future leaders to address sustainability, overall citing this as the second most important change that needs to accelerate for the tipping point to be reached, broadly equal in importance to the actions of customers, investors and government regulation.

One in four CEOs say that lack of skills and knowledge among senior and middle management is one of the top three barriers to them as a CEO implementing an integrated and strategic company-wide approach to sustainability, and 86% say their organisation should invest in enhanced training of managers to integrate sustainability into strategy and operations.

This isn’t just about companies in a minority of regions or sectors. These findings are remarkably consistent across different regions globally, across different industry sectors, different sizes of organisation, and across publicly traded, privately owned and state owned organisations.

What does this mean for business schools? Ashridge Chief Executive Kai Peters was quoted: “The clear message from these findings is that the debate about whether the sustainability agenda is a real issue is over. The question now is how should business schools address sustainability strategically… Business schools don’t just need a few specialist faculty. They need all of their faculty to understand sustainable development and see the implications for their own particular areas of expertise, whether that be leadership, strategy, finance, or marketing. As business schools, we need a much stronger emphasis on faculty development across the board.”

Many others contributed similar thoughts. Philippe de Woot of IAG Louvain School of Management spoke of the need for cultural change in business schools, rather than a piecemeal response. “This won’t happen with old professors” he said, “It will happen with a new generation of faculty and new, young deans.”

Rakesh Khurana, Marvin Bower Professor of Leadership Development at Harvard Business School, continued in a similar vein: “Business schools are very poor at adapting to changes in the broader external context. It’s almost as though they’re designed to resist change. They might add a course here or there, but they struggle to change their core model.” He cited three paradigms that are still core assumptions that now need to be revisited: principle agent theory, maximisation of shareholder value, and the notion that markets reflect the value of an organisation to society.

Rakesh also argued the opportunity for change comes when new deans are appointed. He cited several examples of schools across the US where recently appointed new young deans with different educational backgrounds and mindsets are working with entrepreneurs within their schools to lead significant change around the integration of the principles of sustainable development.

This trend towards sustainable development is probably the most urgent of several trends out there that are of material significance to business schools – one could also think of the rapid pace of ongoing technological change, the shift in economic centres of power, how to do more with less as austerity budgets are introduced in the wake of the banking crisis, Generation Y, and what we’re learning about what makes for effective approaches to real learning. With mounting evidence suggesting a potential tipping point on sustainability closer on the horizon, there is a clear strategic choice for business leaders and business school faculty alike: lead the change and seize the opportunity, or risk being overtaken by competitors and becoming increasingly irrelevant. We as a global society need them to choose the former.

As news of nation after nation getting ejected from the football world cup filtered through into the summit, I found myself thinking of the quote about change again, and reflecting that not only does the US now have its first black president, and that the African continent is hosting its first ever football world cup in post-Apartheid South Africa, but that soccer finally really does seem to have become a big deal in the US. Maybe some things really do change.

Ashridge is leading a major research inquiry ‘Leading Organisations of Tomorrow’ which is exploring innovation in leadership development through the experience of eight pioneering organisations that, having recognised the need to adapt to a changing context, have integrated a sustainability orientation into their leadership development strategies. Ashridge is inviting senior business leaders as well as professionals from the fields of leadership development and organisational change to come together to discuss these themes in London on 14 October 2010. You can find more information here.

Management education needs to change according to new CEO study

25 06 2010

In 2008, the United Nations invited Ashridge and others to lead a CEO survey to understand the perspectives of the business community on the role of management education in helping organisations to make sense of and adapt to a changing global context.

The results were compelling: 76% of CEOs thought it was important that senior executives in their organisations had the mindsets, skills and capabilities to lead in a changing global context marked by trends such as climate change, resource scarcity and doing business in markets characterised by poverty, corruption and human rights abuses.

Yet fewer than 8% thought either their own organisations or business schools were doing a very good job of developing these mindsets, skills and capabilities.

This week, 1300 business leaders have been gathering in New York for the United Nations Global Compact Leaders’ Summit, convened and addressed by Secretary-General Ban Ki-Moon. Notable speakers have included Chairs and CEOs from Unilever, AREVA, Petrobras, Bank of America, ENI, China Minmetals Corp, Tata Sons, PwC, Accenture and many others.

As an input to a forum on management education held as part of this summit, the UN again invited Ashridge and EABIS to take the pulse of the business community on management education, this time drawing on data collected as part of a CEO survey conducted by the UN and Accenture.

Headlines from the UN Global Compact-Accenture Study are:

  • 93% of CEOs believe sustainability will be critical to the future success of their companies.
  • 80% believe a tipping point where sustainability is embedded in the core business strategies of the majority of companies globally will occur within the next 15 years. 54% believe this tipping point will be reached within the next ten years. 

These findings mark a significant shift in thinking since a similar CEO survey conducted by the UN and McKinsey in 2007.

Key findings relating to management education are:

  • 88% believe it is important that business schools develop the mindsets and skills for future leaders to address sustainability. 
  • CEOs believe this is the second most important change that needs to occur for a tipping point to be reached, broadly equal in importance to the actions of customers, investors and government regulation.
  • Six out of the sixteen industry sectors surveyed said this is the single most important change that needs to occur. 
  • One in four CEOs say that lack of skills and knowledge among senior and middle management is one of the top three barriers to them as a CEO implementing an integrated and strategic company-wide approach to sustainability. 
  • 86% say their organisation should invest in enhanced training of managers to integrate sustainability into strategy and operations.  
  • CEOs say engaging with business schools to shape the next generation of leaders should be one of the top three strategic objectives of the UN Global Compact over the next five years. 
  • This isn’t just about companies in a minority of regions or sectors. These findings are consistent across different regions globally, across different industry sectors, different sizes of organisation, and across publicly traded, privately owned and state owned organisations.

These findings underline the timeliness of Ashridge’s research programme ‘Leading Organisations of Tomorrow’, which is exploring innovation in leadership development through the experience of eight pioneering organisations that, having recognised the need to adapt to a changing context, have integrated a sustainability orientation into their leadership development strategies. These organisations include IBM, Ernst & Young, HSBC, IMC Group, Bovis Lend Lease, BT Group, Fairmount Minerals and InterfaceFLOR.

The UN PRME analysis of CEO attitudes on management education led by Ashridge and EABIS is here:

The full UN Global Compact Accenture CEO study can be found here:  

The invitation to the Ashridge Leading Organisations of Tomorrow Symposium on October 14 2010 is here.

Copied  below is an excerpt from the commentary by Kai Peters, Ashridge’s CEO, published in the UN PRME-Ashridge-EABIS analysis:

“The clear message from these findings is that the debate about whether the sustainability agenda is a real issue is over. The question now is how should business schools address sustainability strategically. As the 2008 PRME-Ashridge-EABIS study found, CEOs think this is about more than an optional extra on ethics or new modules on old courses, it is about ensuring the entire management development process is built around helping today’s and tomorrow’s leaders develop the mindsets, understanding and skills to lead in a rapidly changing global context.
“For this to happen, business schools don’t just need a few specialist faculty. They need all of their faculty to understand sustainable development and see the implications for their own particular areas of expertise, whether that be leadership, strategy, finance, or marketing. As business schools, we need a much stronger emphasis on faculty development across the board.
“It would also be helpful if the various accreditation and rankings bodies could adapt their criteria to give greater recognition and reward to those institutions that are taking the lead in innovating.
“At Ashridge we have been experimenting with new approaches for a number of years, and learning from our experiences. We are also leading a major research programme on innovation in leadership development, looking at the experience of organisations that have pioneered new approaches to developing leaders in an age of sustainability, to understand the lessons they have learnt about how to do this well and the wider implications for business schools. Innovative experiential learning approaches are needed. We do not have all of the answers, but we firmly believe that this new agenda is central to business schools in the twenty-first century. We are determined to play our part.”

Business needs a new approach from management education

11 05 2010

Last week, the Academy of Business in Society (EABIS) held its annual Leaders’ Forum at the offices of Suez-Tractebel in Brussels. The Academy is a multi-stakeholder initiative created to stimulate change in the management education industry. Officially founded at an event at INSEAD in 2002 (Ashridge was one of seven founding partner business schools), the initiative now involves a cross section of 71 of the world’s leading business schools, together with over 28 leading companies, including founding corporate partners Shell, Unilever, IBM, Johnson&Johnson and Microsoft. These 28 companies lead the Academy on a simple premise: the context of doing business is changing, new organisational practices are emerging in response, but these need to be accelerated and management education needs to change with changing times to help make this happen – by developing a generation of organisational leaders equipped to navigate in a fast changing, complex and uncertain global society.

The Leaders’ Forum is a select gathering drawing together senior individuals from across the Academy’s members. The day began with a briefing on major global macro-trends, including the limitations in the global financial system exposed by the ongoing series of crises, the social challenges presented by 59 percent of the world’s population living in countries where inequality is worsening, and the rapid pace of ecosystem degradation and climate change. Reflections were then offered from Jan Müehlfeit, Chairman of Microsoft Europe, Sandy Ogg, Unilever Global HR Director and a member of Unilever’s Global Board, and Bruno Berthon, a Global Managing Director of Accenture.

All offered stories of innovation in organisational practices in response. Jan spoke of the huge commercial opportunity for the ICT sector offered by the transition to a low carbon economy, but told us that he had spoken with four European prime ministers during the past week and all lacked the appetite for the pain that would be caused by the public policy actions required to make this happen. Sandy spoke about Unilever’s opportunities for growth from developing commercial solutions to pressing social challenges, and the organisation’s vision of decoupling commercial growth from material consumption. Jan spoke about the need to look beyond GDP as a measure, and Sandy declared that the notion that shareholder value is the sole metric of business is dead.

Bruno offered more stories of organisations responding with new practices – how the automotive industry for example had stopped lobbying to block new environmental legislation and had instead begun seeking competitive advantage from competing to develop the most environmentally friendly vehicles. Bruno noted that success in this new context required new organisational capabilities and a culture of ‘embedded sustainability’, returning to the day’s core theme of the role of organisational learning, management education and culture change. Panel chair Bouwe Taverne of Rabobank cited Ashridge’s recent research, where CEOs had argued that their organisations would benefit from senior leaders who could see the strategic implications of a changing context, who had a personal sense of connectedness and relationship with diverse social networks and communities, and who could effectively navigate complexity and ambiguity through innovation.

After a variety of other fascinating provocations, including research on valuing non-financial performance, the day concluded with a contribution from Wim Vermeir, from the Executive Committee of Dexia Asset Management, giving an overview of the proprietary framework Dexia now uses to factor these issues into asset management. The day also concluded with a public policy perspective from Tom Dodd of the European Commission’s DG Enterprise and Industry.

Tom offered some powerful personal reflections, noting that the time may be coming when we might have to leave behind some collectively held values that we currently hold very dear: for example that the purpose of business is to maximise shareholder value, or that endless economic growth is both possible and necessary. Tom offered the old joke that anyone who believes endless economic growth is possible is either an idiot or an economist.

Tom concluded with a powerful call to all of us: reflecting on Jan and Sandy’s comments on the limitations of GDP and the metric of shareholder value, Tom noted that public policy is ultimately shaped not just by officials but also by the balance of what different stakeholders say, and all of us should therefore put more energy into finding opportunities to voice our perspectives in the mainstream policy-making process. All it will take to reform the system to enable resources to be allocated more sustainably is for enough voices, in public and in private, to echo those of Jan and Sandy.

Leadership development at the sharp end

15 04 2010

I recently led an observation for one of our case studies in the ‘Leading Organisations of Tomorrow’ project and thought I’d share my initial personal reflections on the experience.

‘Leading Organisations of Tomorrow’ is the working title of a research project being led by three of Ashridge’s research centres – the Centre for Research in Executive Development, the Ashridge Leadership Centre, and the Ashridge Centre for Business and Sustainability. We’re looking at eight examples of innovation in leadership development within major organisations to understand things like why did the organisation do this? Why did they do it the way they did it? What did they learn about what works well? And what kinds of impact did the interventions have? Each of these interventions included some focus on developing leaders capable steering and stewarding their organisations through the changing context of leadership in the twenty-first century.

The research involves interviews with key individuals within each of the organisations, as well as a sample of participants in each case. Where possible, we will also be observing programmes in practice to get a first hand perspective.

I joined for a few days participants in the middle of a two-week leadership programme organised for a family-owned Singaporean-based company employing around 6000 people across East Asia. The first part of the programme involved an intense week of classroom-based work in Hong Kong. I then joined the participants as they travelled to one of the company’s own palm oil plantations in East Kalimantan on the island of Borneo in Indonesia. Here participants were challenged to apply new thinking in practice with a live project to develop a management plan for this new investment that would develop a management approach combining economic success with sustainable livelihoods for local communities and sustainable stewardship of natural resources. The participants were tasked with preparing a plan and presenting it to the organisations’ senior management team, who were flying in for the final day of the programme.

I joined the participants as they engaged with the local management and toured the newly established plantation. We also engaged with local workers and their families in their homes, and other families living in local villages. Some things that really struck me were the complexity of power relations in the local villages, and the potential for these to be impacted by the coming of the plantation. I was also struck by the simplicity of the lives of families living in the villages, the sense of hope they had around new opportunities from the plantation, but also their fears around lack of health protection and education for their children. Workers and their families living on the plantation itself spoke about their isolation, and that it was impossible for them to get their kids to school as the nearest schools were too distant – but that this was an improvement on what their lives had been like before.

I was also really struck by the extent of environmental degradation across Borneo as a whole, where around two thirds of the primary rainforest has been cleared over the past 20-30 years – far more than I had imagined. This company is not destroying primary forest, which is illegal, but has been sanctioned by the government to clear secondary forest to establish the plantation, along with countless other companies across Indonesia. This company should be applauded for its aspiration to cultivate palm oil in the most sustainable way possible, but again I was struck by the scale of the challenges in meeting this aspiration – palm oil, one of the principle vegetable oils, is an ingredient in just about every food product you can imagine. But palm oil plantations are nearly always monocultures, with major biodiversity impacts, displacing forests which provide all of us with tremendously important ecosystem services, not least the role they play in the global climate. Indonesia is the world’s third largest carbon dioxide emitter (after the China and the US) principally because of the rate of deforestation. And that’s before we even mention orang-utans.

As well as experiencing these things first hand, it was also fascinating to talk with the programme participants about how they were experiencing this. On walking away from talking with one family in their simple home, a participant said to me that they had been sceptical about the programme initially, but talking with these families was having a real personal impact – ‘Those could have been my kids running around in there, this gives me a completely different context to the decisions I make back in head office, I now have a personal connection with the people who will be impacted by those decisions’

Ashridge faculty will be conducting interviews with a sample of these participants in three-four months time to explore their reflections on impact and value of the experience to them and their organisation. We’ll report back from this and the other cases over the coming months.

The Leading Organisations of Tomorrow project will share a draft report at a major event hosted by Ashridge in central London on October 14th. The final report will be published at the end of 2010 and a more in depth book exploring the key themes of the work will be published in 2011.