Drinking the Kool Aid

Can you state your company’s values? How about it’s mission?

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Did your answer surprise you?

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How does that make you feel as an employee?

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I started playing with this question myself this quarter as I witnessed three very distinct cultures around this difference, and decided to share a few thoughts.

Organization A – very prominent, clearly articulated corporate values. They are printed on the building walls, security badges, and are able to be recited verbatim by every employee (at least that I met). This is pretty phenomenal considering it is a multinational company with thousands of employees. Vision, mission and values are defined from the highest executive level and have remained consistent for many years, even through mergers and rebranding of the company.

Organization B – 50 year history with stated values, but each employee speaks of them differently. The essence is there, and is carried out in practice differently by the individual employees. The vision and mission have changed recently without much overall change or acknowledgement from the employees. They are mostly behind the idea of the vision and value verses the actual words set by the board.

Organization C – newer organization with a highly co-creation focused approach to setting direction and metrics for success. A newly revised mission was created from the Board level, and others engaged felt a lack of engagement that led to mistrust and challenge to the direction of the organization.

One central theme of these is that all 3 organization HAVE a mission statement (and values) that are clearly articulated. The source, history and embodiment of them is all different, but does that matter? This raised the question of how important IS a mission statement. I stumbled across an interesting perspective on the formality of a mission statement on an HBR blog: http://blogs.hbr.org/2011/01/do-you-have-a-mission-statemen/ that looks at the value of a mission statement or being on a mission.

With regards to values, the interesting part of this comparison for me is where the values are defined. Are they better suited to come from the leaders of an organization (like A and B) or should they be co-created as the participates/employees (as C seems to want)?

To answer this, lets step back and reexamine what corporate values are intended to do. Core values are what support the vision, shape the culture and reflect what the organization values.  They are the essence of the company’s identity – the principles, beliefs or philosophy of values. Many companies focus mostly on the technical competencies but often forget what are the underlying competencies that make their companies run smoothly — core values. Establishing strong core values provides both internal and external advantages such as:

• ·      Core values help in the decision-making processes. For example, if one of your core values is to stand behind the quality of your products, any products not reaching the satisfactory standard are automatically eliminated.
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• ·      Core values educate clients and potential customers about what the company is about and clarify the identity of the company. In this increasingly competitive marketplace, having a set of specific core values that clearly articulate to the public can be a competitive advantage.
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• ·      Core values are becoming primary recruiting and retention tools. With the ease of researching companies, job seekers consider the identities of the companies they are applying for and weighing whether or not these companies hold the values that they as individuals consider important.

When looking at these three bullets and reflecting on my personal experience (note: and mental model(s) that lead my personal preferences to favor order and rules) I come to the conclusion that defining mission and values is the responsibility of the leadership of a company, and it is also their responsibility to communicate those decisions to all participants and employees. Lack of communication leads to detachment, resentment, and could lead to disintegration of an organization if people are misaligned in their purpose or direction for doing work.

So I ask, what is your option of how important that EVERY employee or participant (or client/customer for that matter?) can state verbatim the values and mission, or is it enough to have a rough idea and allow individual interpretation? Each of these states have implications for effort required by leadership, and can influence the organization’s culture to be viewed as overbearing or allowing for individual expression. They require different levels of leadership engagement, and possibly higher or lower expenditure of overhead to achieve message adoption. Also, what is the implication for an employee or individual that does not fit these values or mission? Is it their role to move on or speak up to change it?

I would love to hear your thoughts and experiences.

Stakeholder Engagement Primer 2: Engagement Planning

Key Elements of Stakeholder Engagement Plan Development

1. Intent

As introduced in my previous post, this series is an overview of high level best practices for successful stakeholder engagement.

Successful stakeholder engagement planning combines two phases: groundwork and execution. This guidance provides an overview of this second phase: key elements of a stakeholder engagement plan.  This plan should be used to engage with stakeholders identified in pre-engagement preparation, and should mirror the landscape that you are trying to engage with.  

2. Stakeholder Engagement Plan Development

As every engagement is unique, each should have a customized stakeholder engagement plan. The elements below outline the elements that you should consider in preparing an actionable plan. All elements should be addressed (or thought about and set aside if they are not relevant) prior to any stakeholder engagement to ensure a smooth process and desirable outcome for all parties. Poor planning can derail progress and so every effort should be made to develop a comprehensive plan. The stakeholder engagement plan will outline all relevant aspects of the stakeholder engagement process, giving you the tools for a successful execution. Well designed plans should include the following elements:

1.      Engagement Plan Summary

Develop an executive summary of the new venture and anticipated scope of engagement.

2.      Purpose and Objectives

Clearly define the intent of the stakeholder engagement for the proposed project. Develop specific objectives for the engagement process. (e.g., manage community expectations, increase support from community stakeholders, or solicit feedback and perspectives). These objectives should be measureable as they will be used to document progress and success of the stakeholder engagement process.

3.      Project Description and Context

Review relevant details about the project/organization’s presence, historical involvement in the area, as well as intent of the stakeholder engagement as it relates to the project, issue or business.

4.      Key Issues and Challenges

Provide details of known challenges and other background data that may play a role in stakeholder engagement. Include relevant findings from any relevant social impact assessments (including ESIAs) as appropriate.

5.      Key Messages

Develop or leverage communications collateral (the materials to share with stakeholders) and key messages to support engagement. Adapt or develop messages to address key issues or challenges specific to the local context. Define these key messages in your plan.

6.      Stakeholder Engagement Guiding Principles

State guiding principles of your company/organization/group as they relate you your specific project. Following these principals will ensure your plan is consistent with the corporate values and reputation your organization intends to uphold throughout this process, and will serve as a reminder and clear tool for communicating your values to involved parties.

7.      Stakeholder Engagement Strategies and Methods

Identify which engagement forums are available and make the most sense for the goal of the engagement. There will likely be a mix of approaches (meetings, open houses, town halls, collaborative committees, etc.) used to reach out to different stakeholder groups within the community and throughout various phases of engagement. Identifying strategies allows for resource planning to ensure resources, skills and personnel required are available for the project execution. The following table provides guidance on appropriate strategies, although there are many more that are not included on this chart.

8.      Engagement Tracking and Communication

Identify appropriate internal and external communication channels (stakeholders, media, event sponsorship, educational material development and delivery). This includes identifying key contacts for responsible for managing communications.

9.      Stakeholder Feedback Process

Define specific channels, timing and personnel to manage stakeholder feedback.

10.   Stakeholder Engagement Resources and Funding

State how the resource and funding needs associated with plan execution will be met. It is possible that this will be covered under existing budgets.

11.   Engagement Phases and Timing

Define timelines and phases for engagement as appropriate.

3. Execute

During execution of the Stakeholder Engagement Plan, refer back to the planning guidance develop, and provide updates as changes occur or additional elements evolve.  As you execute direct engagement elements, consider the following elements and logistics when planning for your stakeholder interactions. These considerations will influence the outcome of your engagement process.

1. Authority: in house vs. third party hosting, # reps vs. # of stakeholders present

2. Formality:  dress code, marketing and display materials, tone of information presented

3. Atmosphere: impact of venue lighting, comfort and ease of access

4. Facilitation: facilitation approach for each audience (engaged, listening, interactive, professional, hands on etc)

5. Participation: dynamics of stakeholders in the room, approach to disputes, logistics affecting participants (time of meetings, location and accessibility). Communicate clear expectations for stakeholder involvement. Develop respectful rules of engagement.

4. Report

Upon completion of the Stakeholder Engagement process, report results about successes and challenges in the process to inform continuous improvement of your Stakeholder Engagement processes. Execute any community communication strategies outlined in the plan and engage with participant feedback.

5. Resources

1.      BSR: http://www.bsr.org/reports/BSR_Five-Step_Guide_to_Stakeholder_Engagement.pdf

2.      Accountability Stakeholder Engagement Standard  http://www.accountability.org/standards/aa1000ses/index.html

3.      IFC: http://www.ifc.org/wps/wcm/connect/938f1a0048855805beacfe6a6515bb18/IFC_StakeholderEngagement.pdf?MOD=AJPERES

Stakeholder Engagement Primer 1: Pre Engagement Preparation

Key Elements of Stakeholder Pre-Engagement Preparation

1. Intent of Stakeholder Engagement

Stakeholder engagement activities are an integral part of sustainable development of new projects, new business ventures, and maintaining relationships with local communities. Strategies to pursue stakeholder engagement vary widely, and follow many frameworks developed by many different organizations. As I embarked on my graduate project focusing on pulling together the high level guidance and best practices, I had the idea of developing a short primer to share some of these learnings with the rest of the BGI community through my blog. I hope you find it useful as a high level summary pulling from the best resources I have identified in my work.

Every stakeholder plan and engagement process will vary according to the nature of the local community, goals for the project, and resources available to complete it. This being said, one common link for all is that a key factor in successful execution of stakeholder engagements is the groundwork and background preparation prior to actually starting.  This groundwork is critical for a successful engagement, and all best practices recommend not rushing or overlooking this important phase. This post (primer part 1) provides an overview of steps and factors to consider as you prepare for engagement, and will provide an introduction to some of the best tools that I have found to dive deeper. The identification of stakeholders and groundwork prior to actually starting a formal engagement process will ensure optimal results of the goal focused engagement itself.

2. Pre-Engagement Preparation

1.      Understanding Context

Strategies to fulfill stakeholder engagement will vary according to the nature of the project in each community. In dispersed communities, organizations typically identify key stakeholders and work with them one-on-one. When operations of impact or the project occur near concentrated populations (for example, in a city), the focus tends to be on forums that touch more people at once. Stakeholder engagement liaisons can join or create collaborative forums to connect with multiple stakeholders.​​​ Since every venture is different, is can be helpful to review case studies of engagement successes with similar situations to help plan for your approach.

2.      Defining Vision

Setting a vision clarifies the specific objectives you are trying to achieve by involving stakeholders. As you define your engagement, important considerations include: identifying the top priority(ies) in why engagement is needed, specific and granular scope of engagement, and who is responsible for engagement success.

3.      Setting Expectations

Clear definition of expectations around the level of engagement you anticipate ensures your stakeholders will understand their time commitment, role and level of interaction during the process. The following table details the various levels of engagement, and can help you appropriately determine the level targeted for your situation. Consideration should be taken to ensure appropriate resources to execute selected level are available (time, financial support, expertise, staff support). This table was created from a variety of sources, and is my interpretation of how to clearly communicate the differences of each.

4.      Stakeholder Mapping: Who should be engaged?

With a vision for engagement and expectations for level of engagement anticipated, mapping stakeholders will assist you in understanding who needs to be engaged, and to what extent in the process. Stakeholder mapping is a collaborative process from multiple perspectives to determine a key list of stakeholders representing the entire stakeholder spectrum. The IFC standard referenced in the resources section provided a very clear, and detailed process for this. This is a high level summary of how mapping can be broken down into four phases:

1. Identifying: listing relevant groups, organizations, and individuals

2. Analyzing: understanding stakeholder perspectives and relevance and their key issues or concerns

3. Mapping: visualizing relationships to objectives and other stakeholders

4. Prioritizing: ranking stakeholder relevance and identifying issues

There are many tools and approaches to support stakeholder mapping. Please reference additional recommended resources at the end of this post.

5.      Next step: Engagement

With these initial considerations and background preparation considered, you will have a general understanding that will serves as a strong foundation for the stakeholder engagement process. The next step is to formalize your approach in a stakeholder engagement plan, that will allow you to track success, communicate goals and manage resources for execution. Development of this plan requires rigor similar to that of the stakeholder identification and groundwork completed above. So stay tuned for primer #2 on stakeholder engagement planning!

3. Resources

1.      BSR: http://www.bsr.org/reports/BSR_Five-Step_Guide_to_Stakeholder_Engagement.pdf

2.      Accountability Stakeholder Engagement Standard  http://www.accountability.org/standards/aa1000ses/index.html

3.      IFC: http://www.ifc.org/wps/wcm/connect/938f1a0048855805beacfe6a6515bb18/IFC_StakeholderEngagement.pdf?MOD=AJPERES

Sustainability in the US: Does it = Net Global Sustainability?

As we rode one of Washington’s ferries this weekend, my husband turned to me and asked if I knew how old these boats were. Honestly, I am not sure, but they certainly are not new by any means. As we continued our conversation, it turned to a discussion about infrastructure, and how upgrades in efficiency (new equipment) is a way that organizations, businesses and countries tout their sustainability. Upgrading the fleet of carpool vehicles at your office to hybrids…or 100% electric vehicles. “Our emissions are lower! Our operations are carbon neutral!” is what their annual report reads, and the company shows improvement with a pat on the back.

But what really happens?

Back to the ferry discussion from the weekend.

When US ferries are deemed to be too old, too unsafe, too high emissions for our standards, we retire them. “Retire” in this case really meaning selling them to continue their lives elsewhere. My life in WA recently collided with my experience studying in East Africa when I learned of a ferry tragedy connecting two places I was intimately connected to. In June 2012, a ferry boat, purchased from a retired US fleet, had sunk on its crossing fromZanzibar to Dar es Salaam, killing over 150 onboard. I had been on that very same crossing in 2007, on a similarly overcrowded vessel. Where exactly was this ship from? The same route that we were riding this weekend…West Seattle to Vashon Island. The sinking was caused by weather conditions combined with severe overcrowding and mechanical problems. Regardless of the reason, this ship was one that we had taken off our books as a country, but for the world, it was still polluting, running and endangering lives.

This is not the only example of infrastructure that we write off in favor of our local sustainability. Fleets of city busses, and school busses, are routinely sold to developing countries once they are too unsafe, do not meet emissions standards, or are too aged to run here. These aged, less safe and more polluting vehicles are sent overseas where they are run for years beyond their first life in the US.

As we explore measurement of sustainability, and defining metrics around what and how to track it, it is critical that we do not just push the problem elsewhere. A popular acronym used in environmental issues is NIMBY…not in my backyard. Waste water treatment, factories, refineries, landfills, highways…all of these large, infrastructure projects are typically located in less affluent areas, leading to social justice and environmental justice issues. Even as a company evolves towards their internal sustainability goals, how often are they asking about how their actions impact these indirectly related issues.

The world is a complicated network of challenges as we discuss sustainability. My call to you, is to consider all the impacts of your actions, both upstream and downstream. What may look like sustainability gains to you, may just mean compounded negative implications to someone somewhere else. 

Crowdfunding Against Coal

It has been a while since I have shared any thoughts on the coal export/coal train debate that is looming over our PNW communities. As I wrote about last fall, one of these proposed coal export terminals is intended to replace my family’s current summer crabbing beach, and would impact train traffic all along our beautiful Washington coastline.

With our recent finance class discussions about raising capital, it seems the opportune time to have a relevant capital related event in the world of coal. On Thursday, May 9^th, a University of Washington professor’s goal to crowd source $18,000 for an investigation on air-quality related to coal trains, was reached. This is a perfect example of how people have the power to influence business, or causes they believe in, through non-traditional capital raising channels.

Professor Jaffe had previously found difficulty in getting his research proposal funded through typical channels. As we talk more about the importance of social factors in business, specifically stakeholder engagement, this is a prime example of how the “traditional” system leaves them out of the decision making process. If public option and concern had been criteria for funding, would Jaffe have received funding at his first request? Clearly there are other issues at play regarding funds for research, but it is an important angle to consider.

According to the press release in Friday’s Seattle Times, Jaffe plans to set up air monitors along the tracks, possibly north of Seattle, starting in July. The goal is to see if trains affect air quality, to help inform how building a new coal terminal might affect people up and down the tracks.

Example of crowdfunding are popping up all over, for every cause you can imagine. This trend speaks to the power that people have to shape the future of business, both for good and bad. Crowdsourcing, particularly with the ease of internet communication, allows for vast swaths of people to connect around an issue and put their dollars to work. Here is a great example: over 1 Million dollars raised to purchase the historic Tesla research site in New York for a future museum site. Who initiated it? An online cartoonist in Seattle, fondly known as The Oatmeal.

We see examples of crowdsourcing gone array as well. With recent political campaign donation caps removed, power and influence has been transferred to those with dollars to spare.

In addition to the strictly donation based capital fundraising, I have been inspired to see new forms of loans pop up, and two great examples are from BGI Alumni: Slice Finance and Community Sourced Capital. Both are helping to reshape the options business owners have when searching for capital, and bring the community stakeholders back to the table. My younger brother is searching for capital investors through a similar channel: Upstart.com. It is wonderful to see so many options beyond taking a bank loan or pursuing traditional routes to raise money for ideas. 

Does anyone have experience working with any alternative community sourced funding for their business ventures?

Beyond the Balance Sheets: The Other Side of an MBA

As the halfway point of my MBA rapidly approaches, I have been very reflective of how influential this experience has already been. Yes, there are the usual suspects: I know my way across a balance sheet and can understand how it relates to an income statement. I know how to apply tools and read information that have in the past just been part of the “noise” in life. I can read a business article or hear a report on NPR and truly understand the finer points of the conversation. These are all immensely valuable and why I thought I should get my MBA.

So it got me asking, when I started this journey, what did I expect from an MBA? I realized that I did not know. I just knew it was something I needed! (side note, now that we are analyzing risk, I realize that maybe committing to an MBA program without more concrete expectations was a pretty big risk! I wonder how Bert would calculate that!)

In a quest to retrospectively unpack my expectations for an MBA, I stumbled upon a very interesting article in Forbes: The 10 Most Under-Rated Reasons Why You Should Get an MBA. The article was exactly what I needed. As coursework unfolded over the first few quarters, I was frustrated, struggling, still hanging on to a different set of expectations carried over from a rigorous undergraduate program. I was challenged by the lack of “material” in my MBA, and questioned if I was getting enough out of it. Reading this list helped me to appreciate how much more there was to this education, and how much I truly was gaining from the experience. Here is the list, but the article is worth a read too.

1. The chance to stop and reflect on some big business issues.

2. The chance to make some lifelong friends who will accomplish great things over their careers in business.

3. The chance to realize how little you understand about the world.

4. The chance to learn about how to get a bunch of high-strung, Type-A personalities to work together as a team.

5. The chance to think about the global economy and not just your little world where you used to work.

6. The chance to interact with Professors who will really challenge you.

7. The chance to go listen to as many accomplished executives when they come to talk at your school.

8. The chance to refocus yourself.

9. The chance to learn about managing people.

10. The chance to learn how to get up and string a few sentences together.

But there is so much more.

BGI is a truly unique community, and the foundational structure that this institution brings to the world of business is truly striking. A classmate Emily wrote about it beautifully last week. As work and life and school collide, the path to going back to school has rocked each member of our cohort differently, but many of us have found solace in the fact that we are not in it alone. We are supported by an amazing network of people trying to make the world a better place through business.

The value of my MBA has come out in obvious and not so obvious places in daily life. I find myself surrounded with opportunity to take academic lessons and apply them directly work or personal life, but have also found a new sense of myself as I tackle decisions. My personal sense of responsibility and commitment to values in my work has been endorsed by BGI. I feel that the examples of real world thought leaders has legitimized my personal drive for doing things the right way, and gives me confidence, and now a language, to stand up for my beliefs. When I talk to clients or discuss business or sustainability or the future with friends, I feel confident in defending my perspective.

Now that is a bonus that I never expected from an MBA.

OlyKraut Kaizen

Kaizen: Japanese for "improvement", or "change for the better" refers to philosophy or practices that focus upon continuous improvement of processes in manufacturing, engineering, and business management.

Sauerkraut: directly translated: "sour cabbage", is finely cut cabbage that has been fermented by various lactic acid bacteria

OlyKraut: Awesome, locally owned sauerkraut business in Olympia, Washington owned by one of my BGI classmates

This was the extent of my kaizen and sauerkraut knowledge at the BGI benefit auction last fall. However, it did not stop me from joining forces with two other classmates and bidding on a “training day” to learn how kaizen works when applied to a real world business. After our day long analysis at OlyKraut, I can now confidently say I know much more than I did at the auction.

Before ever setting foot in the OlyKraut kitchen, we heard an in-depth presentation where the owner explained her process and workflow, and how she viewed the critical tasks. It was great to get her perspective on what the challenges and opportunities were, and also develop a mental picture of what we might find. By going into the operation with a rough understanding of the process, it was much easier to plug in and observe.

And boy did we observe! Our awesome coach Megan gave us some tips and best practices of how to effectively observe so that we would actually be able to derive value from our observations. Initially, we all walked the facility, drawing out the physical layout of equipment, people, storage, and well, EVERYTHING. We drew out things that were not even part of the OlyKraut process/materials, but since they were in the space, they indirectly impact the process that OlyKraut can use.

Our observations started when the sauerkraut process started. With 5-7 people working in the warehouse, we had our hands full with observation opportunities, so Megan split us up to divide and conquer. There were two main tasks associated with observation of the first full batch being made. First was movement tracking (where does a worker physically move in the space and when), and second was timing. Armed with stopwatches and sketches, we were ready to go. However, as we watched the workers, it became apparent that it would be impossible to individually time each movement and how long it took (time to weigh a box of cabbage, time to move the box from the cart to the scale etc), so Megan threw us a tip: just start the watch and record the time a new action takes place. This way the time runs for the entire process, and recording becomes your main priority. It also takes away the chance you will forget to start/stop the watch.

So off we went. As we timed and mapped movement, Megan circulated around asking us for observations. We discussed a few items here and there, during the observation, but then really worked through change suggestions after we all came back together. Our main focus was identifying waste.

Waste: Any action, process, or product that adds cost without adding value, as perceived by the customer.

Using this definition, few major recommendations were obvious:

·        Workers worked incredibly hard and non-stop, but the cabbage was just sitting there

·        A piece of critical equipment was being used for two jobs, one which was not adding any value to the process

·        Lots of movement, walking in the process (35 minutes of our hours long observation of one worker was walking!)

·        Inefficient use of space

·        Opportunity for batching

·        Timing all of these actions gave us concrete numbers to justify previously held design assumptions driving the timing and current process were incorrect

Observing the sitting cabbage was a great place to start our conversation with OlyKraut. It is also a great topic for company implementers to frame our feedback to workers to minimize discomfort that we are out to call out their inefficiency. By focusing on observable waste, and process oriented recommendations, it is clear that it was the workspace configuration and flow of work creating waste, not a lack of their hard work.

We left OlyKraut a short list of recommendations for implementation, and it will be exciting to see how they play out over the next few months, and if the team of workers on staff will come up with more efficiencies of their own.

In the end, we hope our help can give extra efficiency to OlyKraut and extra boost its profitability!

Publicly Traded vs. Private Companies

I have always been interested in learning more about fundamental difference between public and private companies. As second quarter of BGI rolled around, we were picking companies to investigate. Initially, my group selected a company that we thought was publicly held. It was not, which made our task of analyzing their financials nearly impossible. At the same time, I work for a company that is proud to be private. One of the first things I heard during new hire orientation was that “we do not have an exit strategy”…in other words, selling out was not on the table.

With public vs. private swirling in my head, I have been picking up on this difference in the news, and trying to figure out what role this distinction plays in how a company moves forward with sustainability.

This week, I heard a report on NPR regarding how a shareholder at Starbucks was outraged at the possible impact the company support of DOMA (the Defense of Marriage Act that supports same-sex marriage) had on it’s earnings. According to this shareholder, his profitability as an investor was tarnished by this “people” driven corporate value made public. Now, there is no conclusive evidence that this public support of homosexuality actually did have a direct impact on the stock price, but it made me think about the implications of other sustainability metrics, and how large (typically publicly held) companies can realistically move these items forward with shareholder opinion.

As we learned from Bob Willard, companies can be sorted into five stages of integrating sustainability into their daily operations. These range from the earliest and most reactive stage of pre-compliance, to the purpose driven sustainability companies that embody these values from the top-down and inside-out. I would say that Starbucks in relatively proactive in their sustainability goals, somewhere between stages 3 and 4 on Bob Willard’s diagram below.

As Starbucks (and other publicly traded companies) push towards more sustainable operations, they will be balancing the triple bottom line: people, planet and profit. In this delicate balance, where do owner/leader values fit in? We have learned from many examples (such as Ben & Jerry’s, Bob’s Red Mill) that when an owner founds a company with balancing these elements first, they are more likely to be in Stage 5, where these values permeate the company and all decisions. It seems possible that a company could move towards Stage 5 as they move up the ladder, but is it possible to achieve as a publicly traded company? I expect that this public vs. private ownership has much to do with a company’s ability to achieve top tier sustainable operations.

Why would this distinction be important? The example from Starbucks is a great one. Clearly the leadership values differ from some of those within their large group of shareholders. Since a key mechanism of publicly traded companies is responding to shareholder pressure, it sounds realistic that sustainability measures and values (of which “people issues” are a large part in the case of same-sex support) would be more likely to cave to shareholder values if they do not align with corporate values. This leaves an opening for influential decisions to be driven by outside people, potentially driving a company on a course different from it’s core values. I found it powerful that the Starbucks CEO responded to shareholders disapproval of company support for marriage equality can invest somewhere else. Schultz stated, “if you feel, respectfully, that you can get a higher return than the 38 percent you got last year, it’s a free country. You can sell your shares of Starbucks and buy shares in another company. Thank you very much.” It will take leaders with this personal drive to lead these publicly traded companies towards a value based, sustainable future.

I do make an assumption here, that companies will or do value sustainability, and are trying to push that agenda forward. For the purpose of this article, sustainability (people, planet and profit in balance) is the value proposition that I am hoping companies will protect. Clearly, not all companies value these things, but likely face challenges to whatever their value set when shareholders become involved once a public company.

In contrast to this is the company that I work for, which is privately held, and pursues direction based on the core values of our leadership team and CEO. These values have evolved over time, and are driving further and further to defining how we will embody sustainability in the future. Our mission has actually changed in the past two years to more specifically call out considerations for protecting the planet, a clause that had been missing in the past. 

We are not subject to shareholder input and responding to our values impacting profitability. Everyone with a stake in the company (as either an owner or employee) is reminded constantly that we answer to no one but ourselves and I believe that this will give us, and other private companies, more leverage to move the needle on a sustainable business future.

Over the course of the week, I considered the differences further, and came up with a possibility that perhaps the publicly traded companies may have an advantage as public perception continues to evolve. Public pressure can be incredibly powerful and could end up being the final push that move lagging companies to incorporate sustainable goals into their operations. Ultimately, I believe it is a societal value shift that needs to happen, and public and private companies will have their own paths to evolve with this shift. 

Lunchables: An Oscar Meyer Case Study

The past two weeks have been all about operations. Lean manufacturing, tracking KPIs, hitting targets, kaizen and the Toyota process…the choices and possible models to illustrate and define operations are staggering. A few themes have stood out to me however, the main being the need to define a clear vision for what a company or product needs to achieve, and then the thought, design, and operational processes that make it an actuality.

We were introduced to the idea of setting “target conditions”, not end result “targets” in a lecture by Tom Johnson (author of Profit Beyond Measure, 2008). This concept  really appealed to me. The idea of setting out with a vision of service, what problem a product or offering could solve, rather than designing something that did “X”. This concept is much more creative, and offers the ability to achieve greater impact because the confines of a pre-defined outcome are no longer there.

I was reading an article in the New York Times online discussing The Extraordinary Science of Addictive Junk Food. Within this monstrous and fascinating article included many mini case studies about the addition of sugar and other addictive substances to our food to make it more appealing. The Oscar Meyer case study in particular caught my eye, because I remember as a kid, loving the very rare treat (seriously, like only twice in my life did my mom buy them for us) of the pizza lunchables.

It was interesting to read through this case and apply concepts from our coursework that allowed me to name and identify business strategy processes happening as Oscar Meyer continued to evolve this offering.

Initial Company Problem (Oscar Meyer): not selling much processed lunch meat (ie bologna)

Customer Problem: time challenge for mothers to provide kids with easy, nutritious lunch

Target condition to satisfy: Create easy to serve lunch product featuring lunchmeat

Solution: Lunchables!

As with any new product line, Oscar Meyer experience some product evolution that included customer challenges and the need to pivot. 

Problem #1: expensive to make, no profits were to be had even though it was wildly popular

Solution #1: trim production costs, including using lower nutritional “cheese food”, merge with Kraft to help source this “cheese food” at cost rather than purchasing from Kraft as a vendor

Problem #2: Profits coming in, but facing challenges of how to continue growing

Solution #2: add sugar, promote product with customers that had become bored with product

Problem #3: health concerns with products (Maxed Out line)

Solution #3: reduced sugar, salt and fat content, began producing healthier lines featuring fruit

Problem #4: this did not help the criticism since

Solution #4: market research to unpack new concept: “that kids are in control — would become a key concept in the evolving marketing campaigns for the trays. In what would prove to be their greatest achievement of all, the Lunchables team would delve into adolescent psychology to discover that it wasn’t the food in the trays that excited the kids; it was the feeling of power it brought to their lives.” As the focus swung toward kids, Saturday-morning cartoons started carrying an ad that offered a different message: “All day, you gotta do what they say,” the ads said. “But lunchtime is all yours.”

This shift in marketing was key to the success of Lunchables. Profits boomed and competitors started offering similar pre-packaged lunch options for kids. However, since this market was kid-focused, healthfulness of the product no longer appeared as a focus for the target customer.

Now what if their focus from the beginning had been a “target condition” that put a higher value on healthfulness from the beginning? What if Lunchables would have been a product designed that served both the mother’s need to provide a quick, time efficient lunch, and one that would actually be nutritious? This visioning of a different product with a slightly larger goal could have alleviated some of the growing pains the product experienced when parents began to complain. To do this however, Oscar Meyer would have had to a much larger sweep of planning that would include supply chain (like the cheese…and if nutrition and/or quality had been a priority I would venture to guess that “cheese food” would not have made the cut).

Learning from SEED

I was inspired this week. Inspired by a local nonprofit that is taking on the challenge of education by combining lessons from nature with the physical space where children learn. The project is called the SEEDcollaborative.

I am rarely struck with the desire to follow an entrepreneurial path in my career. I prefer the safety and larger impact that working for a large company provides. I feel very fortunate to work in one where I feel I have that opportunity. This quarter, we have been investigating the differences between business philosophies of a start-up vs a mature company, and in every discussion I have felt much more comfortable with the mature company. My work style resonates with distinct roles and job descriptions, and the delivery focus rather than inventing and prototyping. I also prefer the established market since it (at least in theory) helps buffer the risk of failure.

However, this week I found a start-up that caught my interest. SEED is a Seattle based non-profit that is currently a side job/hobby for three local entrepreneurs that I have crossed paths with on various other professional projects. They are designing a living building classroom that could be put on practically any site in the world. It is self-contained, non-toxic, transportable, and totally functional for all energy and water. It is the ultimate classroom.

SEED is working with one of my school districts to have students design their own SEED classroom, and eventually propose it to the school board as an option for new portables in the district. I participated in the introduction day, where students were given the overview of their task, and introduced to the idea that they could market their idea to the district. These students were learning the same basics on marketing and sales that we have reviewed. The need to demonstrate and clearly explain the value and benefits of this unique classroom, and present it backed up with real data…both qualitative and quantitative.

After this introduction I talked with one of the leaders of the SEEDcollaborative, and learned more about their business approach to rolling out their product. Past prototyping but not quite to their first real product, I was interested to hear their approach to actually rolling it out. They are working with a school district in Colorado to have students design their own SEED classroom, and then using sponsored funds to build the project. This is where their marketing comes in, and a great lesson for the students I work with in the PNW. The school district in Colorado, even with the environmental/health/net zero/design engagement benefits and an attractive ROI analysis, did not want to install the classroom. No cost to them, with all the benefits that a living classroom could bring, and the typical public school bureaucratic challenges remained. On a more positive note, yes, they eventually received a green light, and will be installing the room this summer.

This is a great lesson for my students, on how critical your marketing strategy is when presenting a new idea or product. Their target audience will be not only the school board, but the community as a whole since the community is made up of school bond voters. They will have to sell the benefits of a new approach to the traditional classroom, and this will require a flawless understanding of the value it brings.

For me, learning about SEED inspires me to take another look at how start-ups may be more interesting than I first thought. It is important to remember that where I work was once a start-up, and the passion and energy that I so highly value is what helped it to grow. If I can find an opportunity to harness that passion in a new product, service or idea, maybe a startup wouldn’t be as far of a stretch as I imagine it to be. 

Organizational Structure

As the auto and financial mortgage crisis unfolded over the past few years one main task kept surfacing: restructure the company. In the world of an average citizen, I understood this to be a straightforward task…throw out bad apples, get new management in place, and voila: new organizational structure. I could not have been more naïve. This example from the auto bailout illustrates how challenging it is to shift a corporate structure that is well established, and sometimes not even defined. I particularly appreciated the acknowledgement that the structure being revamped at GM was not even formally written down. This seems to be common in companies that either have a long legacy, or have experienced rapid, diverse growth.

On paper and in textbooks, structure can be broken down into useful archetypes such as the matrix structured organization or the market structured organization. However, even as we unpacked these examples, real work experience showed our interpretation of our own companies as hybrids of these models. Each had little nuances that made it not quite as pretty as the textbook organizational structure. Even more often, it appears that a company structure on paper is as neat as a textbook structure, but in practice, this is not their reality. Just try googling images of orgaizational strucutre, and the massive variety appears. This was a personal favorite.

As we delve into understanding what organizational structure is, and how complicated it can become, I understand more and more how existing corporate structures are influencing my work life. Acknowledging that there are larger forces at play, and that those forces are determined by the architecture in which they were implemented gives clarity around what I need to do differently in order to make change.

I work in a large organization with diverse business offerings divided by business units. We operate with a strong overarching mission highlighting integrated delivery, but the reality of the corporate structure as designed is a heavily siloed approach to projects. Resources are shared vertically, not horizontally across departments, and goals of individual divisions can sometimes hinder the ability of others to perform. Recently I have run into roadblocks where communication does not seem to penetrate the organization, and major links are impossible to connect. With a new academic understanding of how to break down the structure, I feel more prepared to seek out specific leverage points where I can intervene and make those links appear.

Understanding the structure of my organization is only the first step. Now I am becoming aware of the challenges of organizational structure of my clients as well, and it gives me a whole new appreciation for the need to redesign our approach to delivering services to them. I often work with school districts (which will remain anonymous on this blog), working to bridge the gap between facilities and operations and the actual classrooms (curriculum and teachers). This seems like a straightforward task, as the whole district is aligned around the mission of serving students. With a major focus on authentic learning around science and math, building data and interaction with their immediate environment is a natural fit. Everyone is on board with the concept, but the actualization is hindered by the district’s corporate structure.

At the district, divisions are siloed, and no individuals from curriculum have reason to directly collaborate with someone from facilities. Not because they do not see value in it, but simply because their jobs have them reporting to and collaborating with people only from their own divisions. Working across these groups is beyond their job description.  A major hole in this structure is a result of budget cuts, where the mid level managers (who previously had more cross departmental meetings and collaboration) were removed from the structure. However, instead of readjusting the roles to help fill this void, the void just exists, hindering progress since it is no one’s “job” to address.

Interestingly, I learned the most about the inside organizational structure from an adjunct member of the school district bureaucracy. This individual works for an associated foundation, and is possibly the only person to truly have a working relationship with leaders of both departments. Identifying her as a key link in bridging this gap will not only assist her in being more effective (one person trying to bridge organization gaps is rough) but will give me the opportunity to start foraging relationships that can help meet common goals of both groups. The goal here is to eventually help drive long term organizational change to create a more integrated, collaborative culture at the district, which is something that both sides have identified as a goal.

Understanding organizational structure is a fantastic tool for framing problems and diagnosing solutions. Every organization, from a fortune 500 company to a 4 person family has some sort of structure whether it is formalized on paper or simply implied. Stepping back to assess the communication and decision making channels that this structure dictates is a fantastic first step in creating smoother operations and more effective collaboration on any scale.

A New Way to Measure

 

Measuring and reporting sustainability is not only a growing trend, but it is a critical part of ensuring that customers and competitors know what a company is doing to move to address today’s concerns about corporate sustainability values. There are tens if not hundreds of “standards” that are used for ranking and measuring company performance, or a subset of the company like how they operate buildings, treat employees etc. A few are well known such as the Global Reporting Initiative (GRI), LEED for buildings, Energy Star for Energy Performance, and dozens of “lists” of top performers. This week on GreenBiz, an article was exploring these lists from an energy company perspective.

Their analysis was focused on the 2013 Global 100 list, the Corporate Knights Inc. list identifying the top 100 most sustainable large-cap companies in the world. Their surprising find? Two of the top five companies on the 2013 Global 100 list are oil and gas companies. For their full explanation of how these ranking stack up, see the article here. 

I appreciated that the GreenBiz article called out the inconsistencies between these lists. Different lists get different media attention in different market sectors, and in different countries, and each one ranks companies differently.

“… just to show you how crazily inconsistent this list-making business has become, only one of the top 4 companies on Newsweek’s 2012 green global rankings -- Santander Brasil, Wipro, Bradesco and IBM -- made it onto Corporate Knights’ Global 100. And not one of the top 5 on the Corporate Knights’ list made the Newsweek rankings.”

It does not surprise me when I see well known product brands like Clorox on the list; their efforts to make more sustainable products go directly in line with their customer marketing. What really grabs my attention is when industrial businesses, like oil and gas companies, are called out.

It has long been my personal mission to work with and understand these large industrial companies, and how to pivot their business into more sustainable models. This is a huge task, when the core of their business proposition is grounded in something that is in-and-of-itself, not sustainable. The oil and gas companies alone make up 54 of the wealthiest 500 companies in the world, with a combined 2010 value of $4.17 Trillion.  That is a lot of value tied up in a business model founded on a finite resource.

We are learning about developing businesses that are flexible, sustainable, and designed to make the world a better place balancing people, planet and prosperity. Clearly, these non-renewable energy companies are doing fine on the profit side, but what is their long term strategy? Many of these companies are participating in the reporting game, appearing on sustainability lists and reporting to the GRI. Reducing emissions associated with operations, making extraction methods more efficient, highlighting community development and employee benefits. These elements point to a more sustainable company by definition, but do little to address the underlying shift that is needed to move these companies to a truly sustainable business model.

From Shell: “We began reporting voluntarily on our social and environmental performance with the first Shell Report that covered 1997. We do it to be open and honest, and to show how we are contributing to sustainable development.” 

The high tech oil and gas companies have the skill sets and resources to pour into alternative models, but there is little incentive to do that right now. Investment in renewable alternatives are simply side projects, while the core business direction is how to keep producing what we always have, but more efficiently, cleanly and safely. I do not want to downplay the importance of these efforts. They are critical as we do not have a working alternative model at this point and need to carefully use the current models as well as we can. However, making things “better” does not solve the problem.

Until the core business focus shifts, these companies are operating on an unsustainable trajectory. The current system of rankings and reports does not help force this shift. While they continue to appear on lists touting their “sustainable practices”, how are they publicly held accountable? I believe that these reports slow down public demand for urgency to change. I think it is time to add a new metric in sustainability rankings: how sustainable is the underlying business model of the company.