Sustainability of Service Sector Organizations

Dr. Sreenivas Rajan

Why Service Sector• Service sector organizations such as Walmart have shown sustainable

heart. The organization has to increase the absorptive capacity and use sustainable trends to increase the profitability of the service sector(Zahra and George,2002; Bansal and Roth 2000).

• Sustainable cities will harness the next wave of entrepreneurship to start sustainable service sector organizations that will grow the sustainable economy(Campbell, 1996).

• The true value of natural services is in trillions of dollars (Hart and Donell, 2011).

• I argue that the best way for sustainable service sector organizations to get there is to raise cognitive resources, strategies that enable differentiation through sustainable value creation and cost leadership strategies that reduce total cost including cost to nature and the development of competencies in the sustainable economy

Nature Sensitive Governance

• E governance will reduce costs and increase the number of services but natural governance will increase the strength and quality of government. Sustainable governments such as California can impose their sustainable policy by dictate but service sector organizations out of self interest can become the sustainable stars of the sustainable economy (Shrivastava, 1995).

• While nature consists of fragile eco systems, nature is also big and consists of stars and galaxies that are far bigger than anything the humans will make. No military force can protect us from disease, floods, earthquakes or corrosion

Sustainability in Real Estate

• The real estate industry is worth trillions of dollars. • The market consists of residential and commercial

property. • The land that we have been allotted rises in price,

as we become more productive. • Since nature affects us through our genes and

weather, our productivity is dependent on nature. Ultimately, the price of the land is determined by what we get from nature.

Sustainability in Real Estate• Social capital is increased due to land which bring together people of the

same neighborhood and region and this regional social capital is crucial for the success of the green economy.

• Institutions do work on increasing the potential of the land and by developing sustainable enterprise.

• For example, Centre for global sustainable enterprise at Cornell University contributes to the sustainability of the planet using cutting edge methods such as innovation and sustainability in emerging markets. This leads us to the following hypothesis,

• Hypothesis 1: The greater the power of nature is harnessed through solar energy and conservation, the greater is the value of the land and greater the performance of sustainable real estate companies

Sustainable Cities

• Sustainable cities will be more profitable for companies. By harnessing the synergy with nature, customers will be richer and more able to afford the products of companies. Green cities will harness the next wave of entrepreneurship to start sustainable companies that will grow the green economy(Campbell, 1996).

• The explosive growth of China should be channeled along sustainable lines and environmental discipline should be instilled early on in China. By 2020, many of us in the planet will live in cities and there will be thousands of cities.

Sustainable Cities

• Clean technologies that underlie green cities have received support from institutions such as Japan’s Research Institute for Innovative Technology for the Earth (Hoffman, 2005). Long term planning is required to lift the environmental standards of sustainable cities.

• China is investing billions of dollars in environmental technologies and such investment are played for job creating opportunities. Chinese officials are rewarded on their ability to conserve nature. This leads us to following hypothesis

• Hypothesis 2 : The greater the spread of sustainable cities, the greater will be the rise of sustainable companies

Sustainability in the Energy Industry

• Solar energy transferred to a country measures in trillions of dollars. This is free energy that subsidizes natural and agricultural resources.

• Dr Rajendra Pachauri, Nobel prize winner, has emphasize that the global family is a single family and the family cant avoid that some of it members would be affected by global warming. Dr Pachauri has argued that climate change is for real and the sooner we take steps the better.

• Stewardship of this energy is important and since accounting systems don't capture the value of this energy, capitalism might fail without the benign support of nature. Many governments give subsidies on oil, instead subsidies should be given to solar energy and bio fuels. In India, the oil subsidy bill comes to billions of dollars, money that should be allocated for green energy and stimulation of green companies.

Sustainability in Energy Industry

• Companies such as Nanosolar are pushing the limits on efficiency, low cost and longevity of solar cells by using a printing technology rather than a film deposition process. Nanosolar’s solar cells are guaranteed to last for 25 years and are a good sell for bottom of the pyramid markets.

• Solar energy is also about persuasion of customer of fossil fuels to switch to green fuels. The green marketing efforts should emphasize the dual benefits to the customer of a good product and product good for the planet (Hoffman and Bazerman, 2007). This leads us to the following hypothesis,

• Hypothesis 3: The greater the capability to harness solar energy, the greater is the performance of sustainable companies.

Sustainability in Finance Industry• Currency used to based on gold standard. Capital accumulated from gold worth

more than 1 trillion dollars was used to finance the industrial revolution which led to the founding of banking. Most of the assets that corporate own is land and that substantiates the stock market wealth. By debasing the currency of nature, we are risking the natural assets that underpin the financial economy. On one side by debasing nature, we increase the risk to economy through global warming and tsunamis that destroy human and natural basis of the economy.

• On the other by conserving land and natural resources, we increase the value of assets that underlie the stockmarket and provide stability to the financial world (Costanza, 1997). Shareholder activism has increased and the true return on capital allocating for green risk should be calculated in order to convince shareholders of corporate ethics and quality of governance. According to the World Economic Forum, the greatest issue that companies face is climate change and it is high time that Wall Street paid notice to green stocks.

Sustainability in Finance Industry• Return on capital doesn’t include the cost of nature and there is a natural

subsidy of financial markets. Nature affects the economy through monsoon, weather and solar energy and the performance of the economy The idea of a triple bottom line that reflects environmental risk and returns should be supported to give a true account of environmental aspect of finance.

• Trust and social capital are required to face risk and increase the returns of green companies (Adler and Kwon, 2002). The price of the land is to be influenced not only in this generation but also for coming generations. By only long term tending of the natural asset, can we increase the price of the asset in coming generations. This leads us to the following hypothesis

• Hypothesis 4: The greater the conservation of land assets and avoidance of natural risks, the better is the performance of sustainable companies on the stock market

Sustainability as a Brand• IT Brands such as Sun and Apple are derived from natural brands that

have a great economic value. The goodwill for nature is a huge resource which underpins the goodwill for technologies and man made constructs. The genuine concern of people for natural resources such as rivers and lakes reflects the goodwill of nature.

• Nature has a much longer time perspective in billions of years. Our corporates have merely lasted hundreds of years and it is required to be more sustainable in the coming years. The goodwill of companies needs to be sustainable and that is enabled by a connection to nature (Mayer, Davis and Schoorhaven, 1996).

• The companies should emphasis the connection that they have to environment and support environmental causes. The closer the companies are to environment, the greater the likelihood of natural upside to their brand values.

Sustainability as a brand

• The social concerns of Sustainable companies should be addressed and green companies should address the varying talent of different socioeconomic groups and promote social relations to develop social capital to address the green issues (Fukyama, 1995).

• By addressing sustainable issues in this social manner, the company also develops the brand of the company. This leads us to the following hypothesis

• Hypothesis 5: The greater the connect to nature, the greater will be the value of natural brands such as Tiger brand and Lion brand

Sustainability in Health Industry• Nature is seen as a benefactor and it is man that exploits nature. But

through disease, nature controls human population and is a threat to humans. The AIDS virus originated among monkeys in Africa. The absence of sunlight affects mental health.

• Nature also provides remedies to the diseases. Traditional medicine systems such as Ayurveda acknowledge the vast contribution of nature to medicine.

• Life expectancy has increased and older age patients prefer to live in sunnier states such as Arizona in the West as they expect better health in such states.

• More than 50 diseases such as Hanta Virus, West Nile and the plague came from animals in the nature. Environmental effects such as deforestation and climate change have contribute to the spread of diseases from animals.

Sustainability in Health Industry• In order to fight these diseases, healthcare companies have to make

networks with traditional medicine communities and discover new herbs and formulations that can fight these diseases.

• Health companies not only have to take care of the health of their current patients but also the children of these patients. By using natural knowledge, it is possible to take care of the health of future generations in a holistic way.

• Many Hazardous substances cause health effects on customers. By preventing waste and management of hazardous substances, companies can take care of the health of customers. This leads us to following hypothesis.

• Hypothesis 6: The greater the connect to nature, the greater is the discovery of natural medicines and greater is the profitability of health care industry

Sustainability and Cognition

• Cognitive aspects such as memory, attention and schema should be used to raise cognitive resources on the green economy. The memory devoted to nature is significant. Memories of nature dominate the collective unconscious of the people. The more the memory allocated to such issues as climate change and global warming, the greater the sensitivity of companies to these issues ( Walsh and Ungson, 1991).

• Memory will stimulate the affection of people to green products and increase the profitability of green companies. The organization has to increase the absorptive capacity and use green trends to increase the profitability of the companies(Zahra and George,2002).

Sustainability and Cognition• Many of the memories of the use and application of nature are in our

traditions and are overlooked in the scientific approach to problems. Memories of the degradation of nature are overlooked and cut off from the main stream. By 2020, oil might run out or the climate could degrade substantially (Grey and Walters, 1993).

• Companies have selective memory of their impact on environment and the overall image of the company. If a true account is called and the memories of local people included, a more balanced view of the success of the company in the context of capitalism arises.

• Few companies remember the huge damage to forests and rivers. Companies choose to remember the quality of their products and not the total cost of their products This leads us to following hypothesis

• Hypothesis 7: The greater the devotion of memory to sustainable issues, the greater is the performance of sustainable companies

Sustainability and Attention

• Attention is required to what is the bottom of the pyramid and their facts which are centered around survival. It is difficult to understand population growth among the underprivileged and deforestation leads to draining of the poor peoples way of living.

• The environmental limits and tradeoffs that dominate the poor people require much more attention and resources so that they are tackled before they become a major problem in nature

• The Chinese bureaucracy gives importance to harmony with nature and companies in China should increase attention to green issues by 2020.

Sustainability and Attention

• Attention to green companies increases as their centrality in the network increases. As their performance increase, their centrality increase in the network.

• The network is a good way of directing attention and learning about sustainable competencies (Argyris, 1991). Top management should pay attention to green issues and many green issues are diffused through ties between boards. This leads us to following hypothesis

• Hypothesis 8: The greater the attention to sustainable issues, the greater is the performance of sustainable companies

Sustainability and Schema

• In the future, there will be a great demand for cars in countries such as China and India. By diffusing the schema of green cars, the load on the environment can be reduced. The schema for green cars is probably currently formed in developed countries but has to be diffused to developing countries.

• These schema have to adopted to demands of local countries for example in China, green schema should be argued on the basis of harmony with nature. The fight for nature should be done using karate and local martial arts. There is a lot of investment in emerging markets but the need for knowledge and schema is more important than the transfer of money.

Sustainability and Schema• Similarly indigenous schema that use ancient patterns of living

and yoga to improve sustainability should be diffused in the western world. The legitimacy of green schema should be increased by improving the performance of the companies using sustainable technology.

• The ties to nature should be increased and that would legitimize the green schema in companies. The companies should benchmark and audit their schema to get the latest schema about green services. This leads us to following hypothesis.

• Hypothesis 9: The greater the generation of sustainable schemas, the greater the performance of sustainable companies

Sustainability and Differentiation

• Companies can differentiate their product by using ecologically friendly parts or innovating to reduce the environmental footprint of their products (Hart, 1997). Companies like General Electric have started an ecoimagination initiative to provide their products the benefit of green imagination.

• Key polluters such as aircraft engines and locomotives are being upgraded to environmental standards. Chinese government body National Development and Reform Commission actively encourage companies to use green inspiration in their products. Companies have to create value not only for their customers but also the children of these customers. The value must be sustainable for generations.

Sustainability and Differentiation

• The service sector should develop products such as microfinance for the poor and encourage the poor to use these loans in an environmentally friendly way. Service that address social justice and environmental concerns will be in demand by 2020.

• Green companies can follow a strategy of differentiation that will use the natural benefits to differentiate their products and company position in an increasingly crowded competitive environment. This leads us to the following hypothesis:

• Hypothesis 10: The greater the differentiation along the green dimension, the greater is the performance of the green companies

Conclusion

• This is the knowledge economy, and companies should raise their cognitive resources such as memory, attention and schema to the green issues.

• The era of green manufacturing has transitioned to service companies such as Walmart which are at the forefront of green revolution. Service sector industries such as real estate, finance, marketing and health benefit from the connect to nature, the incoming of natural resources, green brands and land assets that underlie the stock market.

Conclusion

• Service sector companies can differentiate their products along green lines and reduce total costs including cost to nature. At the same time service sector companies should develop sustainable competencies by 2020.

• Thus a lot can be expected from eco conscious green companies by 2020 which will lead to the growth of the sustainable economy