To build a solid house you got to have a proper foundation. We all know that, but still, I see many companies spending time, energy, and money on sustainability without much consideration for the foundation. As you are part of my community, I want to make sure that is not happening to you!
As you know from the previous newsletter (https://www.linkedin.com/pulse/poor-roi-sustainability-jasper-steinhausen/) there is a recipe for how to turn your sustainability effort into a real competitive advantage – five principles to master. The first is foundational – Mindset.
In this newsletter, I will unfold the Mindset piece a bit for you so that you can see if your foundation is strong enough or if you would benefit from going back and strengthening it.
Mindset is where it all starts, as it controls how you approach it all. So, let’s have a look at the key components of the mindset behind successful sustainable business development.
The Fatal Five
Having worked with and encountered hundreds of business leaders in their attempt to turn sustainability and circular economy into a competitive advantage I have again and again met a handful of problems that is responsible for putting them off in the wrong direction. I call them the Fatal Five.
1. Thinking it is about sustainability
You might think it is a reasonable argument that sustainability would be about sustainability…. That is because we are so used to sustainability being seen as a mainly technical discipline. Consequently, it is often driven by people with a solid environmental or technical background. But if you think it is an environmental and technical discipline, you are missing the point.
“Sustainability is a core strategic business discipline that will make or break your business in tomorrow’s marketplace. Treat it accordingly!”
Working with circular economy can be used to solve a range of common business issues like cost reduction, increased sales, innovation, getting access to new markets, product development, building stronger investor relations, stimulating employer satisfaction, increasing productivity, and attracting and maintaining talent.
Circular Economy is actually an extra layer in your leadership toolbox. This is essential as it will shape how you address the whole theme, where you focus, and the level of commitment from everybody in the organization.
You can boil it down to this sentence:
“It is all about creating business with embedded environmental impact”
This sentence can even serve as a simple test to evaluate ideas. Just ask yourself if it creates some form of real business value AND environmental impact. The answer will guide you in deciding whether to go ahead or not.
A good starting point is to write down the top 5 problems you have in the business and the top five your ideal customers have and then view them through the circular economy lens to spot new solutions.
2. Minimizing your negative impact
The second fatal mistake is that people believe it is about minimizing the negative impact. This leads people to think too small and create solutions that don’t create raving fans.
“Circular economy is not about being less bad. It’s about being more good”.
We are so used to hearing about sustainability in terms of minimizing. Often the ultimate goal is zero. Zero waste. Zero carbon emissions. Zero pollution. Zero whatever. As a businessperson, you get up in the morning to create more! More turnover, more profit, more products, more growth, more jobs. No wonder most business leaders over the years have concluded that business and sustainability don’t go hand in hand. There really isn’t much energy in “zero”. The energy comes from creating something. It is our nature to create, grow and expand. This is how we have evolved as a species. A good circular business solution is one that creates a positive impact. Not just being less bad, but really having a positive impact.
I will give you two key reasons for this standpoint. One that is rooted in science and one that is rooted in business.
When people talk about sustainability there is often a reference to the definition that came out of the Brundtland report back in 1987. It says something along the lines of: “Meeting the needs of the present without compromising future generations’ abilities to the need to meet their needs”. But go to any news platform, and you will get a quick reminder of what science tells us; the coming generations – meaning your kids and my kids – have a completely different and in many ways significantly poorer set of opportunities and conditions for them to realize their potential and unfold their lives. Think of climate change, depleted resources, loss of biodiversity, access to clean drinking water, acidification, or the amount of chemicals in human and natural systems. Just to name a few.
Ask yourself “is it fair that ask my kids to pay for my party?”
In so many ways the generations to come have significantly reduced and poorer opportunities to fulfill their needs than we have. Yet we talk about sustainability as if it is about avoiding getting to that situation where future generation has poorer opportunities than we have. As if we still have some distance to that line and just need to stop the train before we cross that red line. But that is nowhere near the situation. The fact is we have to rebuild future generations’ opportunities to meet their needs(you can read more about this issue here if you like: https://www.linkedin.com/pulse/sustainability-problem-jasper-steinhausen).
That is why a good circular solution is one that is not less bad, but more good. It leaves the world a slightly better place in some form. It will move us back towards that situation where we crossed the red line. Reestablish a situation where future generations actually have kind of the same abilities to meet their needs as we have today.
As for the business reason it is about unleashing the power in the people around you. To take ownership and engage with your vision and be able to bring all their brilliance to the table and utilize it. This goes for staff members as well as partners outside of the organization. As stated earlier it is a lot more appealing for people to engage in a positive creative challenge than a minimization process. So, by reframing it you make it easier for people to fall in love with your mission and easier for them to see how they might apply their particular specialty. You will also find that the level of energy goes up in the team as we people love to be part of the solution – be part of something good and meaningful. This is perhaps the most consistent finding of my work in the field of circularity since 2008.
Aiming for a positive impact might sound daunting, but the good news is when you create a positive impact instead of “just” minimizing you create a great alignment between the traditional business approach and the circular economy business approach. And the world clearly needs positive impacts – this is what we must do for our kids and coming generations. By creating and being part of the solution, not the problem, you will experience a tailwind as the market starts to pull your products and solutions towards them.
3. Green products are more expensive
How many times have you experienced a “green” product being more expensive? I expect the number to be in the thousands. Just go to the supermarket and look at organic products versus conventional ones. All around we find products where the sustainable version has a premium to it. Consequential, most people believe that is how it must be. That creating a product that is better simply is more expensive.
Whit that as a starting point it is no wonder your brain comes up with ideas that in the end will be more expensive. What you look for is what you get!
But there are numerous examples of the greener producer that requires fewer materials, less energy, composes of leftover materials, and/or delivers higher value or value over a longer period of time. To name some of the results of smarter use of resources.
“Let your starting point be, that you will deliver a “green” solution that is equal in price or lower than the conventional alternative from a total cost perspective”.
Again, what you put your brain to work at, is what it will come up with solutions to. It is about setting the right expectations for the team and for yourself. You can also find lots of examples in the innovation literature about using such obstructions or challenges to foster creative thinking and how it leads to new results. “10X/moonshot thinking” and “Base of the pyramid” just to give you two that consistently have proven results.
Does it mean I say that a new and environmentally better solution will always be cheaper? No, it does not. Something will be more expensive either because it requires something more or simply because the consumer will actually be asked to be the price for the product and not allow part of the bill to be passed on to our children.
“Whether you believe the circular solution will be more or less expensive, you are most likely right”.
4. Good project management is the key to success
Embarking on this journey with your traditional backpack of project management tools is setting yourself up for failure. It is essential to incorporate an entrepreneurial approach into your mindset because in so many ways the transition from linear to a circular economy with the development of new products and solutions, new incentive structures, and perhaps even new business models is a lot more similar to creating a new business than it is to plan and develop something known as you are used to.
The typical project management – or business development approach works really well if you have a pretty good picture of where you’re going. But the more you are entering new space; the more you are developing new stuff; the more innovation that must occur; the less you can see where you are going. Here the traditional tools for managing projects and development are inadequate.
There will be a lot to gain if you adopt a modern entrepreneurial culture and the tools for modern entrepreneurship e.g., be more mission-driven, experiment and test in the marketplace, fail fast and forward, and build on the best already out there.
I like how Eric Ries puts it in his latest book “The Leaders Guide” Here he writes something like:
- Identify the problem or opportunity from the point of view of the customer
- Identify both commercial and technical leap of faith assumptions (those that if not true will break the project)
- Experiment and test the assumptions via Minimum Viable Products in the marketplace to validate them and give you the most learning in the minimum amount of time
- Transform the learnings into metrics for accounting for progress – avoid vanity metrics
- Keep a build-measure-learn approach and use the metrics to make decisions on whether to pivot or continue down the path in regularly scheduled pivot-or-persevere-meetings
When uncovering new land there are so many things that you won’t be able to foresee, so don’t try! It is literally impossible to foresee how the market will react to something they have most likely not seen before. Odds are high that you will waste your time and money and thereby perhaps ruin your chance of realizing that great idea that will make the world a slightly better place and your business more successful.
It might be harder than it sounds in the beginning. The problem is that then you have to unlearn a ton of stuff. Ever since you started school, you have been told that
· If you look at what your classmates are doing, it’s cheating
· Focus on knowing the right answers – not on asking the right questions.
· Improve on the areas you are weak in instead of becoming best in class in your strong areas
· If you are to get more of something – someone else has to get less.
Recognize this picture?
Most people have been trained for this approach all their life, so it’s not strange in any way if you clearly recognize yourself in this picture. The entrepreneurial approach is different. We find the best and add to it. We exercise our strengths and create a team to deal with our weak areas. And we create solutions that grow the pie, so there’s more for everybody.
By utilizing the entrepreneurial approach, you will move a lot faster and a lot further ahead of the competition and develop the kinds of solutions the world needs – and thus will love you for offering them.
5. Don’t mess with the core business
It is probably best and most safe to only adjust smaller parts of the portfolio. Not to mess with the core business. It will be too risky. This seems to be common thought amongst many business leaders. And it has worked for many years, but not today. It is high risk to continue business as usual and then conduct some “green” projects on minor areas of the business – even if what you do is really good and can serve as a lighthouse project.
This is not a project. Circular business is a way of doing!
Success comes from changing the way you do rather than just making changes to a product somewhere in your portfolio. And there are several things a play here, but just know that the bottom line is that by focusing on the core, you increase your odds for success, you increase your business opportunities, and you decrease the risk of being accused of greenwashing.
It might sound counterintuitive but bear in mind that one thing is the scope of your focus and the mission you embark on while the speed and the pathway of that journey are something else. Of course, you have to start where you are in terms of maturity, knowledge, other changes going on, business setup, and all the other things to consider when making your strategy. You can start small as long as it is the first step in a longer journey that will change how you operate and that will make you part of the solution.
So why will integrating circular business thinking into the core of your business improve your odds of success, increase your business opportunities, and lower the risk of being accused of greenwashing?
Yo are a businessman, so you know that the language of business is results! Results create credibility and trust. Results attract. Results talk. For your customers, for the media, for your investors, for your partners, and for your employees and potential employees. With that in mind, it is quite clear why you must focus on the core of your business to create the kind of results you want to be associated with you and your company.
Today people see through you if you just conduct a lighthouse project instead of a series of steps that leads to a change in the way you do business. Doing something somewhere in your business and then continuing with business as usual will be seen as window dressing. It will be hollow instead of trustworthy. And nobody wants to do business with, work with, or for a company that is not trustworthy.
There are literally millions of customers, partners, and talented people that conclude that they want to be part of changing the unsustainable course the world is on and they are all looking for trustworthy companies to lead the way and to support and join. This is the old saying put into practice: Birds of a feather flock together!
How did you do?
These are the Fatal Five. How well did you honestly score on them? Thus, how strong a foundation do you have for creating a successful impactful business?
If you want to score yourself on all five components in the recipe for creating a competitive advantage using circular economy, you can take this free test in a few minutes: https://cetest.scoreapp.com/
It will even give you suggestions for next steps for you depending on how you score.
I would also recommend you join one of my free workshops where I unpack the recipe for success with circular economy. You can book a seat here: https://calendly.com/jsteinhausen/an-introduction-to-creating-a-competitive-edge-using-sustainability
