today’s agenda a number of organizing concepts that can impact your thinking about organizations...
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Today’s agendaA number of organizing concepts that can impact your
thinking about organizations within your project scope—like farms, processors, consumers, policy-makers. Not all concepts may have a direct impact, but all have at least some indirect impact(s).
Not necessarily a bunch of insights, but some ways to structure thinking about the actors and behaviors of actors in your project
Individual firmsHow do firms behave? How do firms engage with sustainability initiatives?
Groups of firmsSupply and value chainsBusiness clusters
Corporate social accountability—reporting and verifying
Some management ‘theories’ for understanding firm behavior
Institutional—individual firms, but generally thought of at the industry level
Legitimacy—individual firm levelStakeholder—individual firm level
These are not mutually exclusive, there is overlap
Institutional forces
Forces that drive one unit of a population to resemble other units1. coercive2. normative3. mimetic
Grocery storesOil companiesUniversity academic departments Pulp mills
Responses to institutional pressures
Tied to how much is firm success influenced by the actors applying the force
Compromise—balance constituents, negotiateAcquiescence—habit imitation, complianceDefiance—ignore, attack, challengeManipulation—co-opt, control, influenceAvoidance—conceal, escape
In your project—what forces exist, how do the actors behave?
Legitimacy
License to practice
Congruence between society’s perceptions of an organization’s behaviors and society’s expectations of the organization
How to assess:MarketplacePerceptions of stakeholdersCongruence with norms
Examples of legitimationChange organizationChange societyIdentify with symbols of legitimacy
Stakeholder theory
Identify potential stakeholdersBy typeBy “importance”
Power—ability to influence behaviorLegitimacy—socially expected and acceptedUrgency—time sensitivity or criticality of claim
Determine salience to the organization
Then deal with the stakeholdersNegotiation, balancing (traditional view)Conversation (alternate view)
Matrix for interpreting firm strategic focus
Operations—relationships and processes within
the firm
Market—relationships
within the firm’s consumer market
Society—relationships
within the society-at-large
Legitimacy—maintain standing and preserve license to practice
Competitive advantage—improve market position
Enlightened management—achieve sustainability
Matrix for interpreting firm actions
Innovation Compensation
Internal
Supply chain (vertical)
Beyond supply chain (horizontal)
Use this as an example, a structuring concept...not necessarily as an inviolate rule...use it to open your thoughts not guide your thoughts
Firm Sustainability Behaviors
Motivating factors—these are fundamental reasons for sustainability behaviorsLegitimacyMarket opportunitiesEnlightened management (my values, not Friedman’s)
Beyond (compliance) activities—these are philosophical strategies:Win-win—get help with achieving goalsMargin of safety—look at risk and uncertaintyAnticipatory (compliance) measuresGood citizenship (means good business)
Accelerate firm progress toward competitive (environmental) approach—these are tactical :Measure direct and indirect (environmental) impactsRecognize opportunity cost of underutilized resourcesCreate a bias toward innovative, productivity-enhancing solutionsBecome proactive in dealing with regulators and activists (stakeholders).
Firm strategies to be CSR competitive1
Timing needs to be strategic—not too soon, not too lateAn appropriate level of commitment needs to be made—be a
leader, but stay relevantCompanies need to influence policy—earn a seat at the
policy tableCompanies need to create business opportunities—shift from
risk management to innovation
--Strategies cannot be an add-on to business as usual; the core business must change. The ultimate goal is a game-changing strategy; building a complete business to alter the competitive environment
1 adapted from the Pew Center on Global Climate Change, Oct 18, 2006
Today’s (2/1/07) Financial Times
in an article on Exxon’s engagement with climate change issues---
John Llewellyn, senior economic adviser at Lehman Brothers, says: “Companies that see climate change coming, recognise it for what it is, do the relevant R&D and inculcate a positive attitude to change on the part of their management stand to do very well. A company that doesn't believe it and doesn't encourage its managers to take it seriously is going to get rolled over.”
Take-aways from the articles
Management style is important
Regulation and competitiveness are synergisticThe market will not work without regulation
-to achieve certain efficiencies...those not well priced-to recognize values rather than value
Managers can choose among different strategiesInnovation v. compensationAn organization can influence behaviors in its stakeholders
Some inter-organization concepts
Supply chainValue chainBusiness clusters
Supply chain
A supply chain is a coordinated system of organizations, people, activities, information and resources involved in moving a product or service in physical or virtual manner from supplier to customer.
Supply chain and Supply chain management
Value chain
Internal—Processes within the organization that convert materials and labor into a product
Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. The insight is that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systemic processes it will become possible to produce an output that customers value more than the inputs.
Value chain example
Business clusters
A business cluster is a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field.
Business clustersIncrease productivity of firmsDrive the direction and pace of innovationStimulate the formation of new businesses
Members of a cluster benefitAs if they were largerAs if they had collaborations with others
Reporting and verifying
Big question—does reporting matter?
Some websites
Wessex 05 Sustainability indicatorsNike
FLA reportFLA Independent External MonitoringSustainability chartsFLA WatchSoccer ball manufacturer
Environmental Cost Statement—pg 9
Reporting G250
0% 10% 20% 30% 40% 50% 60%
1999
2002
2005
Reporting N100
0% 5% 10% 15% 20% 25% 30% 35%
1993
1996
1999
2002
2005
Reporters verified (G250 dark, N100 light)
0% 5% 10% 15% 20% 25% 30% 35%
1999
2002
2005
By country for F250
0% 20% 40% 60% 80% 100% 120%
Total
South Korea
USA
France
Germany
Japan
UK
Italy
Netherlands
Switzerland
200520021999
By country, for N100
0% 10% 20% 30% 40% 50% 60% 70% 80%
Total
France
Australia
Finland
Belgium
The Netherlands
Denmark
USA
Norway
UK
Sweden
Germany
200520021996
By country, for N100 (percent verified)
0% 10% 20% 30% 40% 50% 60%
France
Australia
Finland
The Netherlands
Denmark
USA
Norway
UK
Sweden
Germany
20052002
Verifying parties GFT250 and Top 100 (2002)
Information matrix
Information matrix—Environmentally enabled accounting information system
What gets measured gets managed… (somebody, some date)Traditional view supposes only (primarily) economic information
needsWe recognize risks, opportunities, imperatives driven by cultural,
social, and business demandsHow to create an information system (AIS) that addresses these
(other) needs
Develop a matrix to relate strategy, scope, and information
Information matrix—examples
Interior cells contain examples of changes
from a typical AIS
Operations—relationships and
processes within the firm
Market—relationships within the firm’s consumer market
Society—relationships within the society-at-
large
Legitimacy—maintain standing and preserve license to practice
Full cost of dealing with waste; segregating cost components
Types and costs of certifications; market share of certified products
Costs of public meetings; permitting costs; avoided costs due to green permits
Competitive advantage—improve market position
Costs of green activities; relative energy costs; costs of alternatives
Salary differentials of DfE and other engineers; consumer price elasticity for green
Availability and cost of trading permits; cost of auditing suppliers; incremental cost of educating suppliers
Enlightened management—achieve environmental sustainability
Employee commute miles; GHG from travel/logistics; building waste; water consumption
Cost of take-back; percentage of product recycled; cradle to grave (cradle) data
Co-location data; local, regional, etc environmental data
Information matrixOperations—
relationships and processes within
the firm
Market—relationships
within the firm’s consumer market
Society—relationships
within the society-at-large
Legitimacy—maintain standing and preserve license to practice
Competitive advantage—improve market position
Enlightened management—achieve environmental sustainability
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