This month HBR publishes an article by the global head of the consulting firm McKinsey & Company on “Capitalism for the Long Term.” [http://hbr.org/2011/03/capitalism-for-the-long-term/ar/pr] In it we learn that companies need to adopt a long term perspective, which is defined as five to seven years. What? Business leaders should address environmental and social issues for stakeholders, in order to create shareholder value, using a five to seven year timeframe? To quote Bill McDonough, such near-term thinking could in fact be pernicious, as it only leads to shoring up a failing system.
Setting five-to-seven year targets to incrementally reduce CO2 emissions may not be enough for an energy intensive business to stay competitive and meet new societal expectations. Water use, waste, chemical toxicity, and biodiversity loss demand paradigm changes in how business is conducted. So does global poverty. Tweaking existing business models and product designs – by making them only a little less harmful – will only delay needed change and, equally importantly, forego business advantage to companies who are willing to pursue game change. The challenge is for businesses to succeed in the short term with sustainability objectives that make sense in a 150-year perspective. One key, as we show in our new book, is what our colleague Andrew Winston has called heretical innovation.
A floor cleaning company that uses only ionized tap water with no chemicals, a cement company that captures CO2 instead of emitting it, buildings that are net generators of energy, fingerprint-enabled phones that act as bank branches in Africa,… the possibilities are endless for managers who know how to look.
What if sustainability was embedded into the DNA of your organization?