OSI
WEEK 1
NIDUMOLU ET AL.
A DVANTAGES OF SUSTAINABILITY FOR FIRMS
Executives act as though they have to choose between the social benefits of developing
sustainable products/processes and the financial costs
- Not true:
Lowers costs because companies reduce the inputs they use
Additional revenues from better products/new businesses
They key to progress (especially in economic crisis) is innovation
Early movers have competitive advantage
F IVE STAGES OF CHANGE
1. Viewing compliance as opportunity
- It’s smart to comply with the most stringent rules, even before they are enforced -> first-
mover advantages in terms of fostering innovation
- Enterprises that focus on emerging norms gain more time to experiment
Companies in the forefront of compliance spot business opportunities first
- Companies that enforce a single norm (the toughest) at all their manufacturing facilities
worldwide benefit from economies at scale and can optimize supply chain operations
2. Making value chains sustainable
- Once they keep pace with regulation, they become more proactive about environmental
issues: many focus on reducing the consumption of non-renewable resources
- Initial aim is creating a better image, but often also reduces costs or creates new
businesses
- Induce suppliers to become more sustainable by offering them incentives
- Carbon management, carbon and energy footprint analysis and life-cycle assessment
help identify the sources of waste in the supply chain
- For a sustainable supply chain you need operational innovations that lead to greater
energy efficiency
- Encourage employees to work from home: higher productivity and job satisfaction
- Instead of scrapping returned products, try to recapture some of the lost value by
reusing them: better for costs and for reputation
3. Designing sustainable products and services
, - Executives realize that their business can score over rivals by designing sustainable
products
4. Developing new business models
- Ask at different times what the business should be
- Explore alternatives to current ways of doing business
- Understand how companies can meet customers’ needs
differently
5. Creating next-practice platforms
- Executives need to question the implicit assumptions
behind current practices: question the status quo regarding scare resources to change it
- E.g smart grid: use digital technology to manage power generation, transmission and
distribution from all types of sources along with consumer demand -> lower costs and
more efficient use of energy
I NITIATIVES THAT HELP
Two initiatives help companies become sustainable:
1. When a company’s top management team decides to focus on the problem
2. Recruiting and retaining the right kind of people
BANSAL ET AL.
T IME IS CENTRAL FOR SUSTAINABILITY
Unilever releases earnings figures semi-annually instead of quarterly: at first lower share price
(more uncertainty for investors), but eventually higher share price and more patient capital
- Room to make investments that do not necessarily deliver short-term returns, but realize
long-term benefits
Time is central to sustainability: time should be at the centre of organizational theorizing to
enhance both organizational and societal outcomes in the long term
Business sustainability: the ability of firms to respond to their short-term financial needs
without compromising their (or others’) ability to meet their future needs
- Time is central
From a systems perspective: for economic, societal and ecological systems to remain in
balance at the macro-level, resources must be distributed at micro-levels across time
Firms that do not manage intertemporal trade-offs are exposed to risks:
WEEK 1
NIDUMOLU ET AL.
A DVANTAGES OF SUSTAINABILITY FOR FIRMS
Executives act as though they have to choose between the social benefits of developing
sustainable products/processes and the financial costs
- Not true:
Lowers costs because companies reduce the inputs they use
Additional revenues from better products/new businesses
They key to progress (especially in economic crisis) is innovation
Early movers have competitive advantage
F IVE STAGES OF CHANGE
1. Viewing compliance as opportunity
- It’s smart to comply with the most stringent rules, even before they are enforced -> first-
mover advantages in terms of fostering innovation
- Enterprises that focus on emerging norms gain more time to experiment
Companies in the forefront of compliance spot business opportunities first
- Companies that enforce a single norm (the toughest) at all their manufacturing facilities
worldwide benefit from economies at scale and can optimize supply chain operations
2. Making value chains sustainable
- Once they keep pace with regulation, they become more proactive about environmental
issues: many focus on reducing the consumption of non-renewable resources
- Initial aim is creating a better image, but often also reduces costs or creates new
businesses
- Induce suppliers to become more sustainable by offering them incentives
- Carbon management, carbon and energy footprint analysis and life-cycle assessment
help identify the sources of waste in the supply chain
- For a sustainable supply chain you need operational innovations that lead to greater
energy efficiency
- Encourage employees to work from home: higher productivity and job satisfaction
- Instead of scrapping returned products, try to recapture some of the lost value by
reusing them: better for costs and for reputation
3. Designing sustainable products and services
, - Executives realize that their business can score over rivals by designing sustainable
products
4. Developing new business models
- Ask at different times what the business should be
- Explore alternatives to current ways of doing business
- Understand how companies can meet customers’ needs
differently
5. Creating next-practice platforms
- Executives need to question the implicit assumptions
behind current practices: question the status quo regarding scare resources to change it
- E.g smart grid: use digital technology to manage power generation, transmission and
distribution from all types of sources along with consumer demand -> lower costs and
more efficient use of energy
I NITIATIVES THAT HELP
Two initiatives help companies become sustainable:
1. When a company’s top management team decides to focus on the problem
2. Recruiting and retaining the right kind of people
BANSAL ET AL.
T IME IS CENTRAL FOR SUSTAINABILITY
Unilever releases earnings figures semi-annually instead of quarterly: at first lower share price
(more uncertainty for investors), but eventually higher share price and more patient capital
- Room to make investments that do not necessarily deliver short-term returns, but realize
long-term benefits
Time is central to sustainability: time should be at the centre of organizational theorizing to
enhance both organizational and societal outcomes in the long term
Business sustainability: the ability of firms to respond to their short-term financial needs
without compromising their (or others’) ability to meet their future needs
- Time is central
From a systems perspective: for economic, societal and ecological systems to remain in
balance at the macro-level, resources must be distributed at micro-levels across time
Firms that do not manage intertemporal trade-offs are exposed to risks:
