Business-sandcastles washing away

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Dominika Czyz reports from the oikos FutureLab 2011, 14-15 November, St Gallen Switzerland.

Business today is like a castle made of sand, said Joanna Hafenmayer, Sustainability Officer at Microsoft Switzerland during oikos FutureLab workshops. The old business model of ever greater consumption, with growth at any price may fall apart easily. It is only the companies that reduce environmental impact while increasing social and economic impacts that will survive tomorrow. Business may succeed only by accelerating the transition to a sustainable future. The transition may only be achieved by defining a new sustainable business model. Let’s try to do it.

Since each economic model is a simplified representation of reality, we should eliminate irrelevant details to focus on the essential relation we are attempting to understand. Here we are interested in how sustainability determines business performance. That is the reason why the particular example we want to consider is a market on which 30% of employees are ethically-motivated, 30% of activities – information-driven and 30% of consumers – sustainable-oriented.

Firstly, we should define endogenous variables to create a business model that is competitive, commercially successful and future ready, so that it will respond to the future challenges and succeed in a world of resource scarcity, rising, volatile energy and commodity prices and ever-increasing consumer demand for transparency. We should not resign from profit maximization, but attempt to make the right thing be profitable instead of doing the right thing only when is profitable.

Secondly, we should embed sustainable model thoughtfully and appropriately in the business to facilitate and create awareness. Sustainability solutions must be implemented in every single stage of business process to enrich company culture core working practices and procedures. We should provide employees with the tools and knowledge to deliver sustainable solutions giving the business renewed purpose and enthusiasm, create energy and engagement.

Thirdly, we should define exogenous variables and actively shape external conditions. Instead of asking: how can we use society and the environment to be sustainable? we should say the opposite – how can we contribute to the society and the environment to be sustainable? We should recognize specific interdependence of a business and economic system: it is not possible to be a sustainable business in an unsustainable economy.

We must accept that no business is an island – in an increasingly complex, and resource-constrained world, leading businesses need to be willing to collaborate much more willingly and create new networks to deliver new solutions to old problems. We should influence and engage suppliers, consumers and legislators to create the conditions where a sustainable consumer goods industry is possible.

What is more, we should observe both short and long-term effects of economic performance within the model. We should act in the in the short-run and think in the long-run. Short-term approach should be based on pushing sustainability out to consumers and creating the supply instead of waiting for the pull and growing demand for sustainable products and services. Nevertheless, since short-termism means missing out on an opportunity to build resilience into the business, long-term approach should secure long-term success in sustainable environment and deliver value creation.

That is the sustainable business model to achieve commercial success by delivering social value within natural limits. A model going beyond innovating products and services. A model that can be implemented successfully in the future if we simply stop building castles in the air and start incorporating sustainability into business. What we need is a wave of change that will wash away business-sandcastles from the past.

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