Establishing governance structures to enable sustainable transformation
The challenge of aligning statements and vision with tangible outcomes
In the complex and interconnected environment in which we now live and work, navigating the evolution of a company’s vision, commitments and actions is complicated. The practices that will enable us to succeed will require us to change our understanding of not only what management means, but also how we set targets and define and measure business success. Management centered on the short-term plays a major role in the difficulties that managers face when putting their company on the path to sustainability. It’s still far too easy to be distracted by short-term returns to investors than long-term outcomes for a better planet, and the challenge to managers comes — in our opinion — from the difficulty in turning a long-term vision into short-term, deliverable actions.
Distant, far-off ambitions, such as becoming carbon neutral or achieving a regenerative economy by a given year, are often difficult to turn into real, concrete actions. Establishing and communicating an often-ambitious long-term vision is only the first step in the process; projects that take steps to actively bridge the gap between that goal and the current state of play are far rarer.
If you don’t take tangible steps toward realizing that vision, you risk the company’s reputation in the eyes of your most important stakeholders — customers, clients and consumers. According to a study by Harris Interactive for Impact France, 75% of French people expressed distrust toward companies that announce lofty pledges, particularly those concerning the environment.
Addressing this challenge starts at the top, with the executive power, which Philosopher Pierre-Yves Gomez describes as made up of “those responsible for engaging the community in the company’s vision. They organize and legitimize the hierarchy of power within the organization to ensure it is effective.” Managers today need to shift to an approach that reroutes lofty statements toward practices that are within reach and actionable to render these visions attainable and effective. That much is clear. All that’s left is to figure out the how.
Moving from centralized hierarchy to collective leadership
“Leadership must be collective: a leader needs to draw from the engines around them.”
Philippe Zaouati, CEO Mirova
Collective leadership is necessary to adequately address the challenges of transformation. In collective leadership, objective-setting for the organization moves from the individual to the group; a democratized approach to developing goals in the spirit of sharing both the ambition of the target and the responsibility of achieving it. Organizations adopting a collective leadership method have reported a greater sense of engagement and motivation within teams, a breakdown of silos between departments, faster acceptance and adaptation of change and innovation, and improved productivity.
If we apply this approach to the challenge detailed above, the collective leadership team breaks down the future vision into projects and actions within the reach of each business line. The vision must be filtered through each level, from the Managing Director to the Executive Committee, then from the Executive Committee to the middle managers, and on to the local managers. The latter can use their close proximity to the field and knowledge of the specific circumstances or constraints to turn intentions into operational realities. The vision then cascades down into areas of focus, roadmaps, projects and then actions.
Cascading in this manner also allows for the development of SMART (1) goals; that’s to say Specific, Measurable, Attainable, Realistic, and Timely. Developing goals that adhere to this framework ensures that your business has a reasonable chance of delivering them; and in the realm of responsible social commitment, goals that are defined, measurable and within reach are key.
So what’s cascading in practice?
Let’s take a look at the key factors to cascading:
- Leaders must set an example: a company functions through imitation. Teams copy the standard operating procedures followed by their superiors, making it essential for transformation to be tangible and practical at the highest level of the company. Linking executive pay to the success of sustainable transformation has been used to achieve this.“An executive must be ready to resign if social and environmental objectives are not met,” insists Brune Poirson, Chief Sustainability Officer at Accor.
- Projects and resources must be aligned, even in times of crisis. Transformation cannot be pushed to the side at the first sign of trouble, as this risks both the credibility of the organization and the authenticity of its commitment to the overarching vision. As Quantis itself has reported, times of crisis have the potential to unleash a tempest that could jeopardize sustainable commitments and actions of the corporate sector.
- Management rituals: To keep the company’s transformation at the heart of its activities, this transformation must be thoroughly integrated into the teams’ management rituals. Philosopher Elinor Ostrom calls this “nested enterprises” whereby multiple, interlinked levels of management drive a company’s activities forward. By creating teams that are coupled with a business’s hierarchy, it is possible to create a network that is both cross-functional and top-down.
From collective leadership to local leadership
Ostrom’s work also advocates “interdependent enterprises with multi-level decision making centers and smaller entities at the ground level.” That’s to say, on-the-ground responsibility for driving forward transformation sits with those who are most familiar with and connected to the areas where this transformation is taking place. According to Ostrom, allowing actors to form smaller-scale communities encourages shared understanding and well-considered action that takes into account the individual needs of both the business and its stakeholders in that local area.
Not convinced? Several of the world’s biggest companies have adopted this approach in transforming their business activities with an eye on the future. At Decathlon, France’s leading sporting goods retailer operating in more than 55 countries, high water consumption in their supply chain impacts the communities in which their suppliers are based. “We were eager to develop a project in India that would be closely linked to the people there,” former CEO Michel Aballea explains. “We worked with local partners who shared our vision…and today we have factories in India that produce results in water treatment that match the best Japanese companies.”
Following the success of this project at Decathlon, it also became a best-practice example disseminated across the organization to inspire and motivate other teams to act within their field of influence. And they’re not the only proponent of knowledge-sharing to inspire collective action. The Economics of Mutuality project, a joint initiative from Mars and the University of Oxford, had its beginnings as a small-scale effort in Nairobi, Kenya, and demonstrated that solutions to social and environmental problems need not be at the expense of profits. “This new school of thought has since spread to dozens of companies and will be taught in 1000+ universities over the next three years,” Founder and CEO of Economics of Mutuality and former Chief Economist of Mars Bruno Roche shares. Another advocate for collaboration around initiatives for the good of humankind.
French Philosopher Apolline Dumont is an advocate for another approach: bottom-up. “Tomorrow’s leaders are those who make up the foundation of our ecosystems, to which they know how to connect and which they actively nourish. Instead of being at the top of everything, they participate actively and naturally in their ecosystem.” Being anchored in the hyper local plays a key role in the decentralized management of shared resources – which is fundamental to overcoming the challenges of sustainable development. Not only does this allow for the substantive actions required to build out the transformation vision, it also puts the transformation into the hands of the employees in direct contact with the local ecosystem.
And how do you know if it’s working? As Camif CEO Emery Jacquillat notes, “Transformation is put in place gradually [but] it ends up overtaking you, and that’s when it’s working.”
1 George T. Doran, « There’s a S.M.A.R.T. way to write management’s goals and objectives », Management Review, vol. 70, no 11, 1981, p. 35–36
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Rose Ollivier
Isabelle Grosmaître
Founder of Goodness & Co
isabelle@goodnessandco.one
Heath McKay
Director of Marketing, Quantis
heath.mckay@quantis-intl.com
Rose Ollivier
Research and Editorial Manager, The Boson Project
rose@thebosonproject.com