Running Lean and Green
Continued
A Comprehensive Plan
A further consideration is the set of intangible assets such as market valuations and relations with all kinds of stakeholders, such as employees, unions, suppliers, regulators, customers, and the media. If an executive tries to frame policies toward each group independently, complications can multiply as actions in one field unexpectedly affect others. What often works is integrating all values to develop a single strategy that can guide and coordinate action across all fields. The stock price of one retail giant provides a clear example: Sales were up strongly at the end of 2005, yet the stock was down, largely as a result of investor reluctance to bet on the company's future based on some of its policies toward stakeholders and communities.
Most successful companies take time to develop an effective blanket statement of policy for quality and integrity against which all company decisions can be weighed. That statement would be empty if it did not specify both environmental and social standards.
Rethinking Old Practices
The surprise is really how long it took for companies to discover that incorporating sustainability makes business sense. After all, financing, insuring, attracting employees, and maintaining markets are vitally important. These reasons are as compelling as simple humanitarian concerns or compliance with tightening government regulations. In the last year, of course, they have become more pressing than ever, as a combination of hurricanes, fuel prices, air and water pollution reports, chemical spills, and class action suits have aroused public concern for both social conditions and the environment as never before. The issues will not go away, for the conditions that draw increasing attention to them will persist and increase in importance.
Financial companies now must anticipate global warming and its effects. Besides the energy crunch, pollution and health have become issues for more companies, especially since the revolution in communications has enabled ordinary people all over the world to create photographs and transmit them instantly across continents, and this has created a whole new sensitivity to social as well as environmental effects.
A corporate decision to develop a set of sustainability goals or an environmental responsibility statement is not a simple decision. To ensure uniform application of the principles, successful companies have reorganized within; cross-functional teams under the guidance of the core executive group meet and select potential improvements, explore the ways and costs of implementing them, and assess the effects of any given change on other parts of the organization. The process resembles the Lean organizational practices already familiar to many people. Perhaps it is more than coincidence that two major innovations in management in the last few decades, first Total Qualtiy Management-Lean and now sustainability, require the same reorganization of company policy-making, devolving major decisions to teams working day-to-day for improvements far from—but coordinated by—central management. In fact, the initiative for adopting sustainability sometimes originates from work teams or even individuals outside of central management.
