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

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Psychology of Climate Change

26 09 2010

Recently Prof David Uzzell, Professor of Environmental Psychology at University of Surrey, spoke at the Royal Society on the role of psychology in addressing climate change. Leo Hickman quotes him at length in the Guardian Environment Blog.

As a great bastion of evidence-based and peer-reviewed scientific endeavour, I could imagine the Royal Society might wonder why the overwhelming evidence of anthropogenic global warming (AGW) is not enough to rationally convince Government, business and the public in general of the need for urgent and socially transformative change. The problem is that rational argument doesn’t work on an issue which is more ideological than logical. A deeper psychological understanding of what compels ‘belief’ and ‘denial’, and a more sophisticated examination of ‘denial’ (e.g. literal denial of evidence? or acceptance of evidence but denial of implications – splitting), enables more effective forms of influencing behavioural change. But as Uzzell points out, the discipline of psychology alone is not enough. What’s required is a trans-disciplinary approach that benefits from insights from science – conventional and post-conventional, from sociology and anthropology, and from new economics. I would add that a social psychological understanding, that acknowledges the fundamentally social source of our psychological patterns and drives, is necessary for developing responses to the complexity of Climate Change. This means engaging at the level of the individual in relationship rather than attempting to influence individuals as discrete, Leibnizian windowless monads.

Hickman’s blog also references a paper by Pitman and Newell that explores the psychology of judgement and how we make decisions, and the common traps that we fall into. It supports the case that the adversarial discourse of ‘belief’ and ‘denial’ is ridiculously simplistic and a much more sophisticated investigation of drivers towards action and away (disengagement and denial of implications) is necessary and urgent. The implications for organisational change is obvious – as with climate change a more integrated, trans-disciplinary and participative approach is required.





Authentic leadership for sustainability: Bovis Lend Lease Embercombe Leadership Programme

13 09 2010

Ashridge is currently leading a programme of research exploring innovation in leadership development in a changing global context: Leading Organisations of Tomorrow. I was really fortunate to be the researcher observing the Bovis Lend Lease-Embercombe Leadership Programme in Devon in June. My ears had pricked up at hearing that this had a ‘wilderness’ component, but I knew little else before my first client meeting. The Leadership Programme is an essential part of an ongoing development programme provided by Bovis Lend Lease to employees on their two-year graduate programme. I observed the first three days of the four-day programme. In this piece I’d like to capture a few of the key features that stood out for me in this unique programme.

The first thing that struck me was the INTEGRATIVE element of the programme. They are two very different organisations: with Bovis Lend Lease a major player in the construction industry, and Embercombe  an unique community of people committed to developing a viably sustainable lifestyle that is integrated with local communities. As one facilitator explained, ‘I want to live in a way which would be possible for all of humanity’. It was clear that the programme has benefited from a partnership of around five years that enables Bovis Lend Lease and Embercombe people to co-design and present the programme. This ongoing collaboration has also enabled ‘sustainability’ to move from being an implicit element of the context to a clearly highlighted value of the programme, in line with Bovis Lend Lease’s stated values.

So what exactly was the programme? In brief, around 20 participants were divided into 5 project teams, headed by an overall team leader. Each project had a specific building task to deliver within the four days of the programme – given the introductory time and hand-over, there were only about two full days for design and delivery. What struck me from the start was the elegant simplicity of the whole process. It was clear from informal chats I had with participants that the combination of authentic tasks and time for considered reflection gave rise to some significant personal insights and rethinking . This is what makes for sustainable leadership.

AUTHENTIC TASKS: Here were real construction tasks, with a real client in a real delivery time. In terms of ‘leadership development’ input, the emphasis was on trusting that the essential lessons for each and all would emerge form the very nature of the projects and the roles each participant played. The underlying principle was that each individual needed to identify his or her own leadership style, strengths and development areas in the context of being leaders, followers and team members. And this was the case. Mac Macartney, who is the founder of Embercombe, acted as co-ordinator, alongside Michelle Palin of Bovis Lend Lease. Mac has an abundance of leadership material to offer, but chose to rely on a few pithy illustrations that surfaced in the context of the project. This was a truly emergent, experiential process.

COMPLEXITY AND DEPTH IN SIMPLICITY: Core to each of the projects was the need to use principles of sustainability in design, material and process. The projects included:
• extending the volunteers hut,
• completing the construction of a central yurt,
• a second firewood shelter to allow for 3-years of drying out,
• a movable male and female compost toilet, and
• extend the ablution block to allow for more hand-basin access.
As the projects were allocated, I had the sense that the teams felt their projects were not overly-challenging. By project handover, however, their appreciation for the intricacies of well-considered, sustainable design and delivery had multiplied.

REFLECTION: Another core element was the attention given to reflective reviewing; drawing participants back from the detail of specific task delivery to promote a broader and deeper awareness of the wider context and their personal learning. This facilitated reflection took place through a joint meeting at the start and end of each day, and at pertinent points through each working day. Each team had a ‘facilitator’. The facilitators were themselves craftsmen with the capacity to guide on key elements of sustainable construction principles, a well as the ability to lead learning review sessions as incidents took place, or significant project phases passed.

RELATIONSHIPS: I’ve already mentioned the Bovis Lend Lease-Embercombe relationship underpinning the programme. On our first day on this programme, there seemed to be at least four different clusters of people: the Bovis Lend Lease participants with their co-ordinators and facilitators, the Embercombe volunteers working and living on site, the Embercombe staff/volunteers who provided the meals, and a group of long-term unemployed youth on a work experience programme. It soon became clear that the project teams were going to need to enlist the support of volunteers and people involved in the work experience scheme to complete aspects of their projects. In a rich (and very real) process of reaching out, miscommunication, misunderstanding and dialogue, the final days saw the emergence of a connected community pushing for successful project completion.

SUSTAINABILITY: The unanticipated need to build community in order to build the various constructions was remarked on by many participants as significant in sustainable work and leadership. Similarly, I found that all the participants I spoke to had shifted from a sense of ‘this is a strange/interesting/weird/intriguing place’ (just as ‘sustainability’ is often seen as a strange/interesting/weird/intriguing concept) to a very personal appreciation of both the Embercombe community and the challenging demands of a commitment to sustainability. In other words ‘sustainability’ had shifted from being something ‘out there’ to something each had made part of their personal meaning.

It will be interesting to explore how this experience impacts on the participants’ Bovis Lend Lease work and lives in the months and years ahead. We plan a number of follow-on interviews with past programme participants to see how they have worked with their Embercombe experiences.

Dave Bond, Ashridge Faculty Tutor

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.





Earth Overshoot Day: Business and Business Teaching Must Respond

16 08 2010

The fact that Earth Overshoot Day arrives one month earlier this year should be a wake- up call for Boardrooms and business schools alike.

We are trapped in a web of our own making, a web of concepts, beliefs and practices that  places the entire world in service of the economy: but the economy is a sub-system of society, and society is a sub-system of the bio-sphere. A subsystem just can’t grow beyond the capacity of the total system of which it is a part. To make policy as if it can is, to quote Jonathan Porritt, is “as close to biological and thermodynamic illiteracy as it is possible to get.” 

Business thinking and most business school teaching sees humans as separate from the living world, operating “on” the world and having an instrumental relationship to it. This fallacy of “separate from” allows us to view the living world as “resources”, legitimising the “take, make, waste” processes of the way business works.

There is an alternative framing available, seeing the entire earth as a living process of which humans are one interwoven thread, but this perspective has little currency in the world of business or in most business teaching.

We need business schools to be much more rigorous about what is taught and with what consequences. Leading academic Sumantra Ghoshal wrote that “bad management theories are destroying good management practices”. He might have added that they are denuding the planet too. In trying to make management into a science we have stripped out ethical responsibility by simplifying the role of managers into the empirically testable proposition that management’s role is to maximise shareholder value.

This is too small a role and too small a way of studying business. We need business schools to expand their ways of looking and their ways of knowing and to bring in insights from many fields into the management curriculum. We need less scientific management papers and more honest explorations of people experimenting with better ways of working in practice with the complexities of really being a sustainable organisation.

The truth is that no one yet knows what a sustainable economy is and we need business schools that develop people to explore creatively to find out. The Ashridge MSc in Sustainability and Responsibility is based on the principles of Action Research – asking leaders to question their assumptions and reflect on the consequences of their actions. This form of management education opens the way for a creative exploration of possibility that is not bound by blind acceptance of commonplace assumptions about the purpose of business and the role of managers.





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.