STRATEGY, SUSTAINABILITY AND COMPETITIVE ADVANTAGE

1. STRATEGY, SUSTAINABILITY AND COMPETITIVE ADVANTAGE ROB ABBOTT ABBOTT STRATEGIES The real act of discovery consists not in finding new lands, but in seeing with new eyes. - Marcel Proust

2. FIRST PRINCIPLES • Long-term business success in any industry is characterized by: • Conservative financing; • Sensitivity to the world; • Awareness of identity; • Tolerance of new ideas; and • Skill at the management of change. Arie De Gues, The Living Company, 1997 The most powerful tools are ideas

3. THE NEXT GENERATION At my local high school, an awful lot of kids are writing their term papers on sweat shops and biotechnology. The values were there all along, but the convergence of understanding among so many different people happened that week. Sarah Van Gelder, editor of Yes!, 2000 The most powerful tools are ideas

4. POP CULTURE AS STRATEGY Only corporations have no code – they can’t, because the only thing of any importance is money. Who you are, where you come from, what you believe in – none of that matters in the modern, corporate reality. I don’t want it to sound like hipsterism – but corporations don’t care about anything good: it’s a culture of greed. Jim Jarmusch, acclaimed independent film director The most powerful tools are ideas

5. ENVIRONMENT Millennium Poll on Social Responsibility. World Economic Forum announcements (1999). UNCED in 1992 (“Earth Summit”). WCED in 1987 (Our Common Future). UN Conference on Human Environment in 1972. Resources for Tomorrow Conference in 1961. North American Conservation Conference (1909). BUSINESS & FINANCE Resource-Based Theory spurring new thinking about competitiveness. Managerial competency and capacity for innovation very important differentiators. Convergence with environment? Environmental performance a surrogate for managerial competency? FRAMING THE DEBATE The most powerful tools are ideas

6. A MICRO VIEW OF STRATEGY • Environmental performance is a demonstrable proxy for the quality of corporate management, which, in turn, is a key determinant of relative financial performance. Innovest (1999) • Sustainable development is emerging as a profit generator that predicts share price appreciation. Feltmate and Schofield (1999) The most powerful tools are ideas

7. THE MACRO VIEW • What business are you in? • What problem are you trying to solve? • Are you doing the right thing? • Is there another business you could be in? Thom Thompson, President, ICBC, March 23, 2000 • Reputation is the differentiator and the first building block for commercial success. Jan Walsh, BT, March 23, 2000 The most powerful tools are ideas

8. SUSTAINABILITY PROPOSITION Forget everything you’ve heard about sustainability or social responsibility. Stripped of rhetoric, 3 things remain: - Economic value added; - Environmental value added; and - Social value added. The proposition is about putting a filter on decision making so that each is considered. The most powerful tools are ideas

9. WHAT DOES THIS HAVE TO DO WITH STRATEGY? PART 1 The match between what a company can do (organizational strengths and weaknesses) with the universe of what it might do (opportunities and threats). Andrews, The Concept of Corporate Strategy, 1971 A combination of the ends for which the firm is striving and the means by which it is striving to get there. Porter, Competitive Strategy, 1980 The most powerful tools are ideas

10. WHAT DOES THIS HAVE TO DO WITH STRATEGY? PART 2 The direction and scope of an organization over the long term which achieves advantage for the organization through its configuration of resources within a changing environment, to meet the needs of markets and fulfil stakeholder expectations. Johnson and Scholes, 1997 The most powerful tools are ideas

11. ONE STEP FURTHER • Sustainability is (or should be) shaping strategy. • The generation behind us (max. age now of 35) will determine who wins. • Strategic activity now to secure future (competitive and otherwise). The most powerful tools are ideas

12. THE BUSINESS CASE - GENERAL The most powerful tools are ideas

13. Coca Cola Microsoft IBM General Electric Ford Disney Intel McDonalds Marlboro Nescafe $83.8 billion $56.6 billion $43.8 billion $33.5 billion $33.2 billion $32.3 billion $30.0 billion $26.2 billion $21.0 billion $17.6 billion Interbrand, 1999 BRAND MANAGEMENT, ANYONE? The most powerful tools are ideas

14. STAKEHOLDER ENGAGEMENT Over an eleven year period, established US companies which balanced the interests of customers and workers with those of owners demonstrated sales growth four times and employment growth eight times that of companies which followed a ‘shareholder first’ strategy. James Kotter & John Heskett, 1991 The most powerful tools are ideas

15. TRUST AND LOYALTY US companies lose on average 50 per cent of their customers every five years, 50 per cent of their employees every four years and 50 per cent of their investors every year. But the most successful US companies have lower turnover rates. Frederick Reichheld, The Loyalty Effect, 1996 The most powerful tools are ideas

16. THE STRATEGIC QUESTIONS • What are we doing to protect natural capital? • …To decrease persistent unnatural substances? • …To improve our internal corporate practices? • …To systematically reduce adverse partner impacts? • …To excite our employees and prospective employees? • …To improve fiscal responsibility and long term viability? • …To make sustainability central to the task of management? IN SHORT, WHAT ARE WE DOING TO MAKE OUR COMPANY BETTER? The most powerful tools are ideas

17. WHO’S DOING THIS, ANYWAY? • THE COOPERATIVE BANK (UK) • BRITISH TELECOM (UK) • NOVO NORDISK (DENMARK) EACH IS PUTTING SUSTAINABILITY AT THE CORE OF ITS STRATEGY. The most powerful tools are ideas

18. MAPPING THE JOURNEY • Success is a function of strategic position. • Three kinds of capital will shape strategic positions. • This can be about altruism, but it doesn’t have to be; there’s a powerful business case for sustainability. • Competitive advantage in the 21st century will go to the most sustainable companies. They’ll also be the most strategic. The most powerful tools are ideas

19. THE FUTURE: CHIPS AND TRUST The network economy is founded on technology, but it can only be built on relationships. It starts with chips and ends with trust. Kevin Kelly, New Rules for the New Economy The most powerful tools are ideas