Sustainability-driven Collaboration, Part II: Value Creation and Vision as a Driving Force

In the first post of this three-part series, Sustainability-driven Collaboration, I discussed the imperative for profound systems change to address sustainability challenges, which provoked the question: how we can provide a platform for sustainability-driven collaboration in which participants are able to embrace complexity and reframe ‘wicked problems’ as ‘wicked opportunities’?

TNSblog3At the level of individual organizations, there is a long history of studying the distinction between efforts leading to incremental change versus transformational change, in particular sustainability-driven change. Research and experience in this area have led to methodologies like the Framework for Strategic Sustainable Development, by which organizations can credibly aim for sustainability-driven transformational change.

Although multi-stakeholder collaboration differs from such methodologies in many ways and presents a host of unique challenges, it seems likely that at least some lessons from sustainability-driven organization-level change can apply, or be adapted to apply to the context of multi-stakeholder collaborative change efforts. Approaches that have been successful at the organization level may similarly improve the capacity of collaborative efforts to achieve transformational systems change towards sustainability.

1. Focus on value creation – For organization-level change initiatives to achieve transformational results, it is crucial that sustainability be seen as a driver of business value as opposed to a cost centre. Nowhere is the case for sustainability as a driver of business value better made than in the work of Bob Willard, whose “Seven Business Case Benefits of a Triple Bottom Line” continue to be used to build boardroom buy-in on sustainability initiatives around the world. At an organizational level, the seven benefits are as follows: Easier hiring of top talent, higher retention of top talent, higher productivity from employees, reduced expenses in manufacturing, reduced expenses at commercial sites, increased revenue, and reduced risk and easier financing.

While a focus on value creation is no less important in a collaborative context, the added complexity that stems from the need to align the various interests and value-drivers of diverse stakeholders can make finding mutual benefit a much more complicated task than at the organization level. A multi-stakeholder collaborative effort must be capable of achieving compelling value creation at both the collective and organization/individual levels. This is the key insight and opportunity in Michael Porter and Mark Kramer’s popular Shared Value concept. Collective value acts as a centripetal force, lending cohesion to collaborative efforts, while value to the organization/individual dictates whether each party is willing to stay involved in a messy process with the sort of “emergent outcomes” typical of collaborative efforts.

Change Lab and Transformative Scenario Planning pioneer Adam Kahane, speaking at the 2013 Accelerate: Collaborating for Sustainability conference, summed up the importance of value creation, saying that: “The key to people choosing to stay at the table is understanding that they cannot get where they want to go otherwise.”

2. Use vision as the driving force – In order to move beyond incremental changes that still feel like costs to the kinds of breakthroughs where real value lies, organizations must be clear about what sustainability requires and therefore get ambitious about goal-setting. If one thing has been learned through work at the organization level, it is that vision-driven change efforts consistently lead to more profoundly transformational results, which tend to accrue the most value.

MIT Sloan Management Review

MIT Sloan Management Review

Peter Senge uses the metaphor of an elastic band being stretched between two hands – one representing current reality and the other representing the desired future. This metaphor describes the innovation and motivation that can be generated through creative tension. This tension is most powerful and most useful to drive innovation and change when:

a)     The vision remains ambitious;
b)     The accounting of current reality is rigorous and honest; and
c)     The gap between the two can be clearly and simply expressed as key transitions (i.e. we need to move from a system with X characteristics to a system with Y characteristics).

The power of vision as a driver of change in organizations seeking breakthrough outcomes has been demonstrated again and again by businesses such as Interface, Nike, and The Co-operators.

The need for a shared sense of success will be no less important for participants engaged in collaborative efforts. That said, it may not be advisable to rush towards a detailed shared vision in a multi-stakeholder context. In collaborations involving diverse stakeholder groups with widely different interests, the pressure to get agreement on a unifying vision risks generating something very high-level and abstract.  As the director of the Sustainable Food Lab, Hal Hamilton, said at a Breakthrough Capitalism event in Toronto in November 2013: “We don’t believe in a common vision. Oxfam and Walmart will never share the same vision.” Getting to a shared vision that is detailed enough to actually provide direction risks consuming a great deal of precious time and threatens participation levels, particularly among groups where there is a strong orientation to immediate action.

Although a single, detailed vision may not be possible or helpful when dealing with systems as complex as those targeted by collaborative systems change initiatives, it is difficult to be strategic in the determination of key priorities, or to maintain energy and momentum, without the tension provided by some shared understanding of success. However, success need not only be defined as a vision statement; it can also be articulated using principles.

The Natural Step

The Natural Step

Fortunately, scientists and thought leaders have done some helpful heavy lifting for us in this regard. Natural and social science can tell us the system conditions for sustainability, beyond which ecological systems will be eroded and social well-being will deteriorate below minimum levels, leading to divisiveness, instability, or breakdown. These system conditions address the root causes of our unsustainable path and use them to describe a principle-based articulation of a future sustainable state.

With reference to the elastic band metaphor, these science-based system conditions can serve as tacks on either end of the band, helping maintain the creative tension. They help ensure that the visions we create remain descriptive of a sustainable future state; in our analysis of the current system, they help us make sure we are rigorous so we don’t “lie to ourselves” about the current situation.

While they do not describe a specific sustainable future, the system conditions provide the boundary conditions within which society and systems can operate indefinitely and within which any sustainable future must exist. As such, system conditions serve as design constraints and can act as a compass for ongoing, adaptive change efforts. This is an approach referred to by The Natural Step as backcasting from principles.  It has been used by hundreds of leading organizations in the sustainable business and sustainable community fields.

In the context of multi-stakeholder collaborations, backcasting from system conditions for sustainability can help address the dilemma presented by the need for compelling, ambitious goals versus the difficulty of developing meaningful shared visions amongst diverse stakeholders. For example, we can collectively agree that we need to design a transportation system that doesn’t contribute to climate change and then each actor at the table can find ways to describe their organization’s role within that broader context – the organization’s vision will be specific, while success for the broader collaborative effort will be expressed on a principle level, but with no less ambition.

In the third and final entry of this three-part series, I will discuss three more lessons learned from organization-level change efforts that can be adapted for multi-stakeholder collaboration: simplicity without reduction, authentic leadership, and the importance of process design.

Want to engage further in the conversation about sustainability-driven collaboration? The Natural Step Canada is excited to host the 2nd annual Accelerate: Collaborating for Sustainability Conference on June 5-6, 2014, in Toronto. Join us to deepen learning about collaboration from experts and practitioners, experience collaboration by creating connections with other change agents, and seed new collaborative initiatives. As an Endorsing Partner of Accelerate, members and friends of the SiG community are encouraged to use the Exclusive Partner Discount Code SIG10 to automatically save 10% when registering. Learn more and register today!


Creating Shared Value: What does it mean for the nonprofit sector?

When JS Daw & Associates announced our new role as certified Shared Value consultants, it prompted much feedback – from notes of congratulations to specific questions and queries about specialized services. But one email stood out – “What does this mean for the nonprofit sector? How will it affect fundraising? How will it affect our role in community?” These are important questions. I firmly believe that Creating Shared Value (CSV) offers exciting new opportunities for nonprofits to collaborate with companies for mutual benefit, to build truly meaningful and impactful partnerships and advance positive social change. If you plan on starting a nonprofit organization check out how to get a 501c3.

Creating deeper strategic partnerships

shared_value puzzle

c/o Jeroen de Flander

Today most nonprofits view corporations as funders. Even though many nonprofits call their funding relationships “partnerships,” they simply are not. Funding relationships are transactional exchanges in which financial support is given to fund community work. Occasionally in-kind talent and time is provided from employee volunteers. While these relationships are important and beneficial, the full value of a mutually beneficial partnership, which is based around common goals, is not realized.

Creating Shared Value is a new form of corporate community involvement. Shared value is created when companies generate economic value for themselves in a way that simultaneously produces value for society by addressing social and environmental challenges. Companies that undertake shared value initiatives need community partners to help them reconceive markets and services; build clusters; or reduce the costs in their value chain. Shared value initiatives require the expertise, experience and knowledge of the community sector. At its heart, shared value requires cross-sector collaboration and deep partnerships.

Providing new support beyond philanthropy

Shared value initiatives represent new resource development opportunities for nonprofits. However, CSV will never replace traditional philanthropy and strategic giving. The billions of dollars companies already contribute to community organizations will not be lost, nor are these contributions likely to shrink.

Shared value initiatives will be an addition to what most companies already do in community. Shared value allows companies to generate value for themselves as they identify the immense human needs that must be met, large new markets to be served, and the internal costs of social deficits—as well as the competitive advantages available from addressing them. Their nonprofit partners, vital to the success of shared value initiatives, will benefit from additional resources spent by companies to build value for themselves and the community.

Accelerating social value and impact

Shared value engages companies more deeply around social issues. It holds the promise of greater resources for the nonprofit sector and a multitude of innovations to address today’s most urgent social needs. It also accelerates and expands the potential for social impact as major corporations launch initiatives that reach millions of people at a pace and scale that have rarely been achieved by the nonprofit sector alone.

Nonprofits are a critical piece in identifying opportunities for social change, but they are often not able to scale to the appropriate size. Most NGOs are not set up to affect millions of lives. If you combine NGOs’ local knowledge with a company’s ability to scale up, you can really create value on both sides of the equation. By the same token, companies must listen to NGOs so that they take local circumstances into account, and they don’t go to the wrong places or do the wrong thing.

Seize the opportunity

Shared value is a management strategy for companies that are focused on creating measurable business value by identifying and addressing social problems that intersect with their business needs. The shared value framework creates new opportunities for companies, non-profits and governmental organizations to leverage the power of market-based competition to address social problems.

Creating Shared Value will enhance the relationship between companies and nonprofit organizations. It creates a mutual interdependence and heightened accountability for delivering results. In the end, companies are part of a broader ecosystem that contributes to creating societal value. Business must work with governments and with NGOs to build better societies and better communities.

Creating shared value is here to stay. Its growth and wide spread adoption is inevitable. Nonprofits can seize this opportunity. They can embrace the change and realize new advantages for their organizations and their communities! At the same time, shared value demands a delicate balance between social needs and corporate profitability that must be carefully monitored and challenged when necessary.

Keep an eye out for a related future blog posting on the JS Daw Blog: Can nonprofits create their own CSV initiatives?

Editor’s Note: This blog originally appeared on the JS Daw Blog. It has been reposted here with permission from the author.

Corporate Social Responsibility is Dead: Long Live Corporate Social Innovation

As Harvard’s corporate strategy guru Michael Porter points out, over the past century the boundaries between business and social issues have undergone dramatic changes.  One hundred years ago a large business enterprise might have been the social patron, providing housing, education or other forms of welfare for its company town residents.  But over time the scope of corporate responsibility retreated.
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