Technology, Sustainability and Profitability
| date: November 27th, 2017
In business, technology has no doubt had a tremendous impact, revolutionizing business concepts and models and birthing new and better approaches to doing business. Technology can now also not only enable organization gain insight into their current business sustainability performance, but contribute to the effective achievement of organizational sustainability goals.
Sustainability is commonly defined as the ability to meet the needs of the present without compromising the ability of future generations to meet their needs. When narrowed to an organizational level, sustainability then simply points towards a business’ efforts towards responding to the challenges of making profits, growing as a business and delivering value to clients while reducing the negative impact of your business’ products and operations to the society and environment.
There is a lot of rhetoric around the subject of sustainability, with numerous suggestions on the best approaches, models and programs a business can embark on to get onto the sustainability bandwagon. And while some business executives might understand the importance of sustainability, many see the efforts involved as burdensome and costly or subordinate to their profit making goals and thus are unwilling to make the commitment required.
McKinsey Global Sustainability Survey 2012
According to a 2016 McKinsey Global Sustainability survey, executives at all levels believe sustainability to be “increasingly important to their company’s strategy” and that it is “becoming a more strategic and integral part of their businesses.” In a past survey(2012), cost cutting or reputation management had been cited by the same executives as a reason for pursuing sustainability, but in the 2016 survey 43 percent of respondents said their organizations wished to “align sustainability with their overall business goals, missions, or values”.
The 2016 McKinsey Global Sustainability survey also uncovered various challenges that organizations are facing in their quest to pursuing sustainability. According to the executives interviewed some of the challenges include;
• Difficulty in capturing the full value of sustainability;
• Execution – the absence of performance incentives and the presence of short-term earnings pressure that are at odds with the longer-term nature of these issues;
• Accountability – with too few people being accountable for sustainability; and,
• Lack of leadership prioritization
Investors looking beyond financials to sustainability Performance
Given the increasing importance of organizational sustainability, including brand differentiation, cost savings, innovation, long-term thinking, customer engagement and employee engagement, organizations will need to devise creative ways of achieving organizational sustainability. In addition, stakeholders, regulators and investors are now alert to the impact of economic activities, with investors looking beyond the financial statements of a company to include its sustainability performance and agenda.
For those who are willing and ready to commit to organizational sustainability, they need to first realize that running a sustainable business requires the adoption of a broader view and a different set of values beyond the usual principles of profits and growth that many businesses operate under. It is imperative for businesses that aspire to achieve sustainability to first integrate sustainability issues into their core strategies.
Technology to Boost Business Sustainability Performance
Historically, technological innovations have always resulted in efficiency gains and subsequent reduction in resources consumption. For example, modern cars use fuel more efficiently than cars from 20 – 30 years ago, thus a reduction in demand for fossil fuel and reduction in pollution to the environment.
In business, technology has no doubt had a tremendous impact, revolutionizing business concepts and models and birthing new and better approaches to doing business. It has streamlined almost all business processes from product development, sales and marketing, customer service, supply chain management, financial accounting and controls, and personnel management. Through integration of enterprise processes, data and information flows, technology has facilitated data transparency, accuracy, visibility and accountability. But there still remains the question of how these and other emerging technologies can contribute most effectively to organizational sustainability.
With technology, an organization can now gain insight into their current business sustainability performance. They can gauge the impact of a company’s actions against organizational sustainability goals and key performance indicators to flush out key areas that need attention. It is also a great enabler providing the necessary tools to help track, measure, monitor and analyze sustainability indicators regularly thus helping the organization towards achieving its sustainability goals and targets. Augmented by emerging technologies like big data and analytics it is now possible to gather and analyze large sets of data within a short time for real-time insights to aid in decision-making.
Technology to Improve Communication, Connectivity and Collaboration
Technology also enhances communication and sharing of knowledge within the organization encouraging employee engagement and stakeholder participation. Collaboration can be done remotely through tele/video conferencing and web applications powered by high bandwidth and modern IT infrastructure that enables real-time connectivity and data access anywhere anytime. For example, IT-enabled collaboration can help substitute business travel and employee commuting saving on travel expenses and reducing greenhouse emissions.
The ubiquitous nature of technologies like mobile and internet facilitates the spread of best practices as they are established. Through these technologies, corporates especially those in the developed world, can share what they have learnt and what they are doing about it with others; and thus ensure that the best practices are easily replicated to impact even their smaller counterparts in the developing and third world.
With access to such knowledge, it is possible for organizations in the developing world to leapfrog over the ‘mistakes’ others have made in the past. For example, just as most African homes never got to experience the traditional landline telephone going straight to mobile phones, the same scenario can play out in sustainability with those in the developing world skipping pollution mitigation efforts of the 90s and leapfrogging to more advanced tactics like clean and green technology.
Accountability and execution of sustainability strategies are already getting a boost from tools and application now available that can map people, processes and technology with sustainability goals and subsequently produce ad hoc or periodic reports on performance against milestones. However, achieving sustainability and profitability simultaneously requires more than innovation and strong execution; it requires institutional and cultural change; it requires taking a long term approach to value generation; it involves working with others as well as ensuring that all stakeholders including employees, customers, suppliers, communities, government are on the same page and striving toward a common goal.
This article was first published in the African Insurance Organization Magazine 2017