Strategic Sustainability: Introducing the Value Web

By Jay Friedlander, College of the Atlantic

A perspective that matches your potential

We are surrounded by the constant churning of enterprises rising and being destroyed. In the midst of such competitive turmoil, a fresh perspective is critical to thriving and identifying new avenues of growth. Unfortunately, many of the strategic models used by businesses today fail to connect sustainability and strategy, putting blinders on management. This prevents enterprises from reaching their potential and opens them up to being eclipsed by their competitors. The context of business is ever changing and it is time for the models to catch up.

In over a decade of working in and with sustainable companies and teaching sustainable enterprise, I have found the need for a model that reveals a new perspective, one that makes sustainability strategic. Using such a model and gaining fresh insights uncovers opportunities and unlocks innovation. The model, called a Value Web, is a framework that examines business holistically. Applying it surrounds an enterprise with an interlocking and self-reinforcing web of value, generating wins for stakeholders across all of the activities of a business. In doing so, the Value Web™ offers companies a route to a continuously improving sustainable competitive advantage.

Creative destruction is changing the competitive context

The economy marches on evolving through the agricultural, industrial, as well as the information and service ages assigning the former titans of industry to the dustbin of history. Either change or fall prey to this cycle of creative destruction. This failure to adapt has meant that only one company listed in 1896, when the Dow Jones Industrial Average was conceived and when commodities and agriculture reigned supreme, has been forward-looking enough to survive – General Electric. This constant turnover has been ongoing and is only speeding up. For example, in the last five years nearly a third of the components, nine of 30 companies, have been replaced. While the Dow tracks what is happening amongst the largest companies in the United States, the pace of change is similar for businesses large and small.

We are entering an age where sustainable companies will reign supreme.  Reams of evidence from books like Conscious Capitalism to Harvard Business Review articles and academic studies tracking stock market performance exist to say that we are in an age where sustainably focused companies are outperforming their peers. They are finding new opportunities and unlocking innovation by asking new questions and approaching business from a different perspective.

Is your company operating with blinders on?

So, how do these phenomenally successful companies come undone? In a word: perspective. A slew of companies listed on the Dow followed the path of former Dow component Eastman Kodak and that of technology companies like Blackberry. They become entrenched in what made them successful without keeping an eye on the change coming down the road. By using the models and frameworks of the past, these companies were operating with a limited field of vision and as a result were blindsided by more forward-thinking competitors. This begs a personal question: is your company going to be passed by? How do you find new opportunities for the next economic age and avoid becoming irrelevant?

Making people, profits and planet strategic

Considering people, profits and planet (3P) and making prosperity for all stakeholders a priority is often quoted and used with varying degrees of success. Some efforts are intentional, others lip service and some happy accidents. Ideally, considering 3P drives managers and executives to create a virtuous cycle whereby each action reinforces the other. Some of the results sought by pursuing this goal are highlighted below in figure 1.

Figure 1: Benefits from pursuing 3P practices.

 However, as much as 3P is touted, its impact could be strengthened by applying it to all of the activities of a company, from materials acquisition and production to marketing and sales. This is key to making sustainability strategic. To maximize the impact for all stakeholders, each of these activities must be passed through the 3P screen. Explicitly making waste or, more accurately, unsold production part of analysis also assists companies in identifying new sources of value. Finally, companies should also reimagine their business by closing the loop and making unsold production an input. (Figure 2)

Figure 2: People, Profits and Planet at Every Activity

 

The Value Web offers a sustainable competitive advantage

This new model helps companies look at each aspect of their operation, uncovering latent value and spurring creativity. Furthermore, because the interwoven parts are more difficult to copy, the Value Web (Figure 3) creates competitive barriers. Since the expectations of each stakeholder group are constantly evolving, the Value Web is regenerative. It highlights potential opportunities to refresh and revive as the company seeks to satisfy new stakeholder desires. As a result, this creates an atmosphere of continuous improvement, which is key to avoiding obsolescence.

Figure 3: The Value Web

 Look no further than Triple Pundit to see copious examples of companies spinning their new web of value. As you read the stories and think about your own company, ask yourself which activities are changing and if this is a piecemeal or systemic approach. It’s a question that competition will answer soon enough.