Sunday, March 29, 2015

Social Enterprise, Corporate Sustainability and the New Capitalism

Companies are changing. They are recognizing more and more that the future requires them to develop a different business model – one that focuses on multiple bottom lines, not just profit. Companies which relentlessly focus on profit at the expense of their customers, employers, the environment, communities in which they work and the impact their actions have on other organizations will increasingly find themselves subject to challenge, regulation and change. The game of business is changing.

Just take manufacturing. In the next 25-50 years we need to quadruple the output of manufacturing systems so as to meet the needs of the worlds growing middle class. Whether it is cars, technology, health care products, food or clothes – more will be needed. But at the same time, minerals, water and other raw materials needed for manufacture will be under pressure. As one manufacturer of cars has said, we need to produce four times more cars with 70% less steel, 50% less water and 60% less plastic.

The idea of an enterprise which has a social conscience and acts accordingly – the social enterprise  – is not new. Sir Titus Salt, founding what was then one of the largest woolen mills in the world just outside Bradford (West Yorkshire), built a model village to house his workers, provided free education for all of their children before education was compulsory, funded churches, sports teams and made sure that the water used in his mill was recycled. This was in the 19th century – the mill was built in 1853 and Sir Titus Salt died in 1876. 

We now think of this in terms of the sustainable corporation – corporations, like Marks and Spenser (a major UK retailer) – which seek to become the companies among the world’s most sustainable corporations (see here and here for the Marks and Spenser commitment).

They are being helped by organizations like the Dame Ellen McArthur Foundation and their thinking, research and support for what they refer to as the “circular economy”. Universities are also helping – through places like the Institute for Sustainable Manufacturing at the University of Kentucky  or the Centre for Sustainable Chemical Technologies at the University of Bath and their work on Closed Loop Emotionally Valuable E-waste Recovery. But the key is a shift in business practice.

At the heart of these shifts are these new approaches to business:

  •           Business process redesign – as with all corporations, most innovation comes from rethinking core business processes in systematic ways with targets for improvements set by benchmarking. The CPA report makes clear that this is what most companies are focused on.
  •           The development of new materials which will significantly reduce environmental impact and costs – the invention of graphene is an example. See a summary of the potential of this specific material here.
  •           The development of new manufacturing processes – robotics has changed the face of certain manufacturing and supply chain processes, as you will have seen on the tour of the BMW plant at Cowley. 3D printing will also be a significant component of new manufacturing systems. 3D printing is already having in impact in ways not imagined just a few years ago, for example in the manufacture of custom prosthetics (see here).
  •           Local manufacture – shifting from mass manufacturing to on-demand and local manufacturing. One example of this is Local Motors and the idea of the microfactory. Local Motors is the first company in the world to print a car using 3D printing.
  •           Systematic use of lean manufacturing – it is still the case that many manufacturing operations are not as efficient or lean as they could be, especially in emerging economies. The systematic practice of lean manufacturing can make a significant difference to costs, supply chain management and environmental impact.
  •          Using carbon budgets – The Government of the UK uses a carbon budget to assess progress on emissions management and climate change mitigation. Firms generally support this and are encouraging the UK government to “stay the course” (see here, for example).  Companies see such targets as set in these budgets as creating a level playing field for emissions management and the shift to a low carbon economy.
  •           Recycling - The Materials Recovery Facility (MRF) is an almost 6,000 square metre (64,000 square feet) recycling plant at the Edmonton Waste Management Centre. Capable of processing 40,000 tonnes per year, the MRF is one of the most advanced plants in North America for recycling mixed materials. It  is an example of innovative recycling. Another is the reuse of water in oil sands production in Alberta – a strong focus for Water Smart Alberta .
  •           Reshoring – returning manufacturing to being nearer to the customer base, thus significantly lowering transport costs, can have a significant impact on the quality of goods, supply chains and environmental impact. Look at a report from Ernst & Young on what reshoring could mean for manufacturing in the UK here.
  •           Upskilling – A highly skilled workforce who are engaged in the continuous redesign of manufacturing processes presents a major opportunity for improving productivity and performance. The Managing Director of Siemens UK takes this view – see here.

Corporations think of their work in terms of sustaining the work over the long-haul by thinking through the social, environmental and personal impacts of their work – they are genuine, social enterprises with a commitment to profit, reinvestment and sustainable living. They are led by a new generation of imagineers.

Key to all this work is learning. Learning not just how, but “so what” – understanding the world in terms of systems, consequences, impacts and risk. Rather than behaving like mindless bankers seeking to maximize profit at all costs, irrespective of the damage such a relentless pursuit of capital does to communities, people and the environment, these leaders are renaissance pathfinders – committed to a new future. They engage in future focused learning, leading across their supply chains and communities and managing within so as to create powerful new kind of social enterprise that will transform how we think of work, business, community and opportunity. Its no longer business as usual, but its unusual business.

Lets develop a conversation about what this opportunity to rethink capitalism looks like. Lets commit to an expedition of imagining a different future for the corporate social enterprise.

1 comment:

Sunita Gandhi said...

Its very informative and i am sure it will help many other people like the way it helps me. Thanks for the information.
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