Sustainable Enterprise (SE)
Core Concepts:
• What is a sustainable enterprise?
• What are its defining elements?
• How can organizations act on these elements to transition towards Sustainable Enterprises (S.E.)?
• What are the barriers to change? How to address them?
• Capabilities to innovate, learn and adapt the key elements
• This transition process is fundamental to achieve any SDG and related target
• Policy interventions should be informed by the micro-foundational aspect
What is distinctive of SE?
• It applies to all types of organizations: governments, businesses, NGOs/civil Society (cities, communities,
associations, etc.)
• It introduces an exhaustive list (a framework) with mutually exclusive, inter-related, elements critical to
transition towards S.E.
• “Enterprise of the Future” prioritizes digitalization & technological change as core trends to adapt to, with (some) elements of S.E. as “means to that end”
• S.E. does the opposite. SDGs are the core trends to adapt to, and digitalization/technological change is a
“mean to that end”
1. Purpose
• The first element to adapt for transition to SE
• Every organization needs to define what value is for all its stakeholders and set the purpose of its existence as the creation of value for one, some or all of them
• For SE purpose usually evolves towards:
1.1. The definition of value creation for a broader set of stakeholders, rather than only one or few categories.
1.2. A broader definition of purpose, beyond only economic value, inclusive of common goods
– quality of the natural environment
– equal access to growth opportunities for community members
– Well-being, trust, care diffused among internal/external stakeholders
2. Governance
• The rules and norms defining the rights and responsibilities of the key stakeholders investing in the well-being of the firm
• In the transition towards SE, it typically evolves:
2.1. To give voice to a broader set of stakeholder categories in top (board) level decisions
– Representation in Board of Directors and/or key decision committees at the Board and the executive levels
2.2. To recognize the investments made in different forms of capital (financial, human, social, natural…) through sharing/allocation of residuals from operations
3. Strategy
• The set key decisions related to how the organization intends to the realize its purpose:
3.1. Scope of activities (degree/type of diversification)
3.2. Speed and mode(s) of growth
3.3. Mode of competition in existing/new markets
3.4. Extent/mode of cooperation with stakeholders
• In transitioning to SE models, strategies focus on value creation for stakeholders, aligning:
– Decisions across different strategic domains (#1-4)…
– With firm purpose, governance, capabilities, culture…
– With strategies of key stakeholders (e.g. value chains)
4. Activities
• Action systems dedicated to functional, support, transactional or relational processes
• Developed to realize the firm’s purpose through its strategic choices, within governance norms
• In sustainability-driven transformational change, activities adapt in several ways:
– Oriented to create value for multiple stakeholders
– Assessed towards multi-dimensional performance metrics (economic, ecological and societal impacts)
– Engaging all relevant stakeholders in decision-making, execution, performance tracking and learning processes
5. Capabilities
• Organizational capabilities necessary to tackle the transformational change challenge related to developing a SE include competence in:
– Innovation: product, process, business model
– Relationship development vs. all stakeholders
– Change/adaptation processes (dynamic capabilities)
– Deliberate learning: from experience to insight
• In SE transitions, capabilities of these kinds can make the difference between shallow or failed change efforts, and successful ones, leveraging stakeholder support throughout the process
6. People
• Individuals and groups of employees carry/own human capital (capabilities) and social capital (relationships) of the firm
• They choose how much of this capital to invest in firm’s success depending on:
– Rewards and purely extrinsic incentives
– Recognitions, reputational gains, well-being
– Intrinsic motives: aligned value systems and cultural traits, personal development goals
• In SE transitions, people hold the keys to success in transformational change processes
– Stakeholder oriented behavior will emerge and be embedded in cultural norms/routines only if all motivational mechanisms are aligned in the same direction
– Diffusion of stakeholder-orientated mindset requires very specific and typically non conventional forms of education, since they need to stimulate and facilitate the evolution of cultural norm and value systems
7. Values & Culture
• Cultural traits and the fit between individual and shared values are paramount for a SE:
– Cooperativeness, rather than competitiveness
– Self-transcendence, rather than self-enhancement
– Resource-sharing: fairness vs. “winner takes all”
– Long-term value vs. short-term rewards
– Integrated economic and social well-being
• The key challenge is to identify the most effective public/private interventions to facilitaate the development of such values
• To this end, a collaborative effort by public, private & academic actors to experiment, select and diffuse
the most effective approaches for systemic change
Transformation Map
If you would like to know more about the alternatives or how to be more "green" today, I would encourage you to visit the page of United Nations about the 17 goals, or get in touch today here on my contact form.
Source: Bocconi University, Maurizio Zollo
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