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(5 of 5) Book Review “Sustainable Value: How the World’s Leading Companies Are Doing Well by Doing Good” by Chris Laszlo

Sustainable Value by Chris Laszlo 2

CONCLUSION

This book by Chris Laszlo is a useful addition to increasing number of “green-literatures” in the market. The author not only focuses on the ethical and emotional reasons for sustainability, but also makes compelling suggestions on how businesses can actually implement sustainability. The book provides a practical framework as well as suitable examples on why and how to integrate sustainability into the core activities of a business.  

This book has filled the gap by providing specific business tools and case studies to implement a dynamic sustainability strategy within an organization. This can play a major role in addressing complex environmental and social challenges faced by today’s businesses.

The essence of the book’s learning can be readily compared with the CSR/Sustainability movement which comprises of green product, lean manufacturing and safe environment for the employers and the employees as well as the customers and the communities. Although the roots of sustainability are embedded into the environmental issues, as described in the book, the concept of sustainability comes hand in hand with the CSR activities targeting the triple bottom line of businesses that is people, profit and planet.

CSR initiative emphasizes that business practices should be based on transparent communication, ethical values and respect for both community and environment. Our organizations’ environmental concerns can drive us towards the business opportunities which can be explored and eventually be used as competitive advantage and value creation. The understanding can thus help us broaden our perspective as an organization to include wellbeing of people and planet rather than just limiting ourselves within the profit strategy. (* * * *)

(1 of 5) INTRODUCTION

(2 of 5) PART I

(3 of 5) PART II

(4 of 5) PART III

Also Read:

(Part II) (2 of 2) Construction Focus Four: Struck-By Hazards

(Part II) (1 of 2) Construction Focus Four: Struck-By Hazards

(Part I) (1 of 2) Construction Focus Four: Fall Hazards

(Part I) (2 of 2) Construction Focus Four: Fall Hazards

Fire Prevention and Fire Protection – Air Pollution in Kathmandu – Construction PPE – Carbon Monoxide poisoning – Electrical Safety – Fall Protection in General Industry– Fearsome 4 of Construction Safety – Fall Restrain System Vs. Fall Arrest System – Respiratory Protection – Portable Ladder Safety – Confined Space Entry – Initiating First Aid/CPR – Are you too busy… – If you have $86,400 in your account… – Safety professionals have job prospects as Insurance Risk Surveyor or Loss Assessor

(4 of 5) Book Review “Sustainable Value: How the World’s Leading Companies Are Doing Well by Doing Good” by Chris Laszlo

Sustainable Value by Chris Laszlo 2

PART III

The third part of this book primarily targets the business managers who want to take advantage of this newly emerging sustainability-based competitive environment. It gives a step-by-step practical approach which can be followed to achieve sustainable value creation within a large and complex organization. The process and tools provided by the author can be used to achieve sustainability-driven innovation for competitive advantage. The author tries to help managers identify how and where they can create sustainable values to compete in the twenty first century business world, moving towards little explored “Blue Ocean”.

The book emphasizes on the sustainable value toolkit which, the author claims, have been implemented successfully in thousands of industries throughout the US, Europe and Asia. It talks about the core ingredients which have successfully worked in creating sustainable values within an organization. After introducing the sustainable value framework, the author then moves towards describing the eight disciplines which form the core competencies required to create sustainable value. Finally, the author tries to put them all together and embeds measurement and evaluation as well for result tracking and verification. Hence the life cycle of sustainability completes its full circle.

In today’s world, where over 70% of a company growth is based on intangible economics such as brand, goodwill, reputation and stakeholder relationships, businesses around the globe surely want to advance their business priorities, drive innovation and achieve competitive advantage. Sustainable value is exactly what the businesses need to achieve these goals by carefully considering the social and environmental dimensions of their business activities.

Stakeholder relationship is probably the most important and it can be the key to unlock the door to success. Profit is certainly for shareholders but business value is created with the wellbeing of stakeholders and vice versa. Within an organization, we should be able to view the business from the stakeholders’ perspective as well. The author argues that “delivering value to shareholders while destroying value for stakeholders” is fundamentally wrong business model. The sustainable value framework presented by the author is a “win-win” scenario for both shareholders as well as the stakeholders.

Although the book clearly identifies that the stakeholders play a pivotal role in sustainable value creation, most of the businesses today are struggling to provide strong leadership to manage the stakeholder values and align them with the organizational vision. This might be because of company’s lack of awareness, unrealized CSR culture within the organization or short-sighted line managers who prefers short-term shareholders’ value over the stakeholders’ dire socio-economic issues. Top management leaderships should thus understand and spread the fact that “the company versus stakeholders” (Us vs. Them) attitude does not fit in sustainability value chain and it should be replaced by “the company and stakeholder” (Us and Them) attitude.

The eight sustainability disciplines presented by the author can be broadly classified into two parts namely discovering value opportunities in society/environment and creating values for the shareholders & the stakeholders. Discovering value opportunities means understanding current social, economic and environmental issues along the value chain and identifying future business risks as well as opportunities. On the other hand, creating value means mitigating identified future risks and taking advantage of identified opportunities through innovation and product differentiation.

Finally, the measurement of the progress of stakeholder value and its return impact on shareholder value provides us with validated results and learning. It seems that the author has based the implementation of his eight sustainable value disciplines on the popular Deming Cycle (Plan-Do-Check-Act). This makes sense, as more and more companies are racing for ISO implementation which completely follows the plan, do, check and act sequence.

Describing the process of creating values for stakeholders and shareholders, the author tries to put three major entities of an organization together namely productivity, quality and safety. The tools such as Sig Sigma, Lean manufacturing/management, Total Quality Management (TQM), Supply Chain, Customer Relation Management (CRM) and Re-engineering are best used to capture the sustainability value within the framework of operational efficiency.

From the risk control perspective, we are looking at identifying, eliminating or reducing future losses while at the same time expanding the opportunities such as enhanced reputation, product differentiation, motivated employees and reduced cost. Risk control strategy can create significant value for both shareholders and stakeholders by avoiding penalties or legal fees. It helps lower insurance premium as well as probability of catastrophic loss events. Ultimately, companies end up making profit and reducing negative impacts on stakeholders. (To be continued….)

(1 of 5) INTRODUCTION

(2 of 5) PART I

(3 of 5) PART II

(5 of 5) CONCLUSION

Also Read:

(Part II) (2 of 2) Construction Focus Four: Struck-By Hazards

(Part II) (1 of 2) Construction Focus Four: Struck-By Hazards

(Part I) (1 of 2) Construction Focus Four: Fall Hazards

(Part I) (2 of 2) Construction Focus Four: Fall Hazards

Fire Prevention and Fire Protection – Air Pollution in Kathmandu – Construction PPE – Carbon Monoxide poisoning – Electrical Safety – Fall Protection in General Industry– Fearsome 4 of Construction Safety – Fall Restrain System Vs. Fall Arrest System – Respiratory Protection – Portable Ladder Safety – Confined Space Entry – Initiating First Aid/CPR – Are you too busy… – If you have $86,400 in your account… – Safety professionals have job prospects as Insurance Risk Surveyor or Loss Assessor

(3 of 5) Book Review “Sustainable Value: How the World’s Leading Companies Are Doing Well by Doing Good” by Chris Laszlo

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PART II

The second part describes some real life sustainability stories and how the world’s leading companies such as DuPont, Wal-Mart, Lafarge and NatureWorks are doing well by doing good. The book caters four excellent case studies and insights into the current business practices. The author provides with various examples showing that the societal and environmental challenges faced by the companies can also prove to be huge business opportunities for them to pursue. This part also explains how today’s leading companies are adding values and gaining competitive advantage by including sustainability into their core organizational activities.

To satisfy its arguments, the book includes a range of companies (with a variety of end products) which are consciously integrating the environmental and social dimensions into their core businesses. Each of the case studies is designed to provide the organizational journey of leadership efforts as well as decision making and execution of the planned strategy. The book makes a remarkable point that the companies which are delivering profits to shareholders, while destroying value for society, are incurring hidden liabilities which could be disastrous from the risk control standpoint.

DuPont

The case study of DuPont is best described by the Part-I scenarios faced by Deena in her struggle to align the company with sustainable values. The book presents that DuPont moves from lobbying government to slow down climate change regulations to encouraging such regulations. DuPont’s key success factors identified by the book are primarily the top management support and the integration of sustainability into the performance metrics as well as the company’s line management. The sustainable growth strategy also helped the company to move beyond the phase of mere cost avoidance, compliance and risk mitigation.

Wal-Mart

The case study of Wal-Mart is interesting although there are a couple of points which may not prove it to be the front runner example of an ideal sustainable company. At the time of the case study the sustainable strategy of the company was only four years old, therefore, it might had been too early to declare it a success example in the book. It should be noted that it takes a long time to adopt a CSR culture and takes even more to make the similar cultural shift within an organization.

Besides, the book only includes the environmental initiatives of Wal-Mart and largely stays away from many social problems for which the company had been widely criticized at the time. Thus the company probably does not meet the sustainability’s triple bottom line expectation namely people, planet and profit. “People” largely remains out of the equation, hence the readers might not find it a very good model candidate for the CSR culture and sustainability discussion.

Lafarge

The case study of Lafarge, a French global leader in building materials, is quite impressive in its thorough CSR approach towards environment as well as the community. The major environmental challenges faced by the company are energy efficiency and CO2 emission. The social issues are mostly related to community wellbeing, employee safety and human rights.

Lafarge has implement its CSR activities with impressive social initiatives in Bangladesh, Morocco and Zambia such as relocating employee families, providing primary-school education, employment solution for laid-off employees, and HIV/Aids awareness/prevention activities for the community. Hence, the company is able to demonstrate its alignment of CSR activities with the stakeholder’s value.

The business of Lafarge widely benefitted from the strong partnership with the local government & authorities, loyal manpower, better labor union relationship, improved reputation and professional status. Altogether, three key success factors can be drawn from this case study; Transparency and communication at every level, Partnership with local stakeholders and Adaptation to local culture. Despite being a French company, Lafarge has succeeded in demonstrating a good CSR/Sustainability culture as well as environment protection initiative, even in foreign soils. (To be continued….)

(1 of 5) INTRODUCTION

(2 of 5) PART I

(4 of 5) PART III

(5 of 5) CONCLUSION

Also Read:

(Part II) (2 of 2) Construction Focus Four: Struck-By Hazards

(Part II) (1 of 2) Construction Focus Four: Struck-By Hazards

(Part I) (1 of 2) Construction Focus Four: Fall Hazards

(Part I) (2 of 2) Construction Focus Four: Fall Hazards

Fire Prevention and Fire Protection – Air Pollution in Kathmandu – Construction PPE – Carbon Monoxide poisoning – Electrical Safety – Fall Protection in General Industry– Fearsome 4 of Construction Safety – Fall Restrain System Vs. Fall Arrest System – Respiratory Protection – Portable Ladder Safety – Confined Space Entry – Initiating First Aid/CPR – Are you too busy… – If you have $86,400 in your account… – Safety professionals have job prospects as Insurance Risk Surveyor or Loss Assessor