Category Archives: Strategic Planning

Sustainable Capitalism: A Necessity – The Alternative is Self-Destruction

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From my associate Janice Giannini.

Sustainable CapitalismWhen we talk about sustainable capitalism today, the conversations frequently focus on the physical environment. While that is a critical element of sustainability, it is not the total picture. Sustainability needs to integrate the four legs of the stool: human, social, ecologic, and economic environments. They all go hand in hand to create the desired result long term.

The current business environment addresses this topic by focusing on ESG and DE&I. The challenge for all companies and individuals is recognizing the difference between initiatives and making real progress. The adage in the business world is that you get what you measure.

In Sustainable Capitalism, do we understand what we want and need and how to measure it effectively? The critical question is: do the metrics correlate with real progress?

Capitalism is a fantastic economic framework. It has created incredible prosperity across all aspects of our society, unleashing innovation at an unprecedented rate. That is its appeal and opportunity to just about anyone. But, in addition to its upsides and assets, it also has its downside and potential liabilities.

There are many challenges that capitalists face; among them being:

  • Danger to focus only on the economic leg driven by short-term only thinking
  • Potential to create monopolies
  • Possibility to cause environmental issues either at home or abroad
  • Likely to increase the wealth gap, thereby creating social tension and exploitation and leaving a significant percentage of the population behind economically, socially, and culturally

 

Creating a sustainably capitalistic society requires both individuals and companies to understand and implement practices that may negatively impact the short term. Unfortunately, the short-term impact may be the single most uncomfortable reality. However, other sustainability practices may enhance short-term results. As a result, there is a balance that needs consideration.

A few questions to consider:

  • Are the four legs of the stool understood as they apply in your company?
  • Are the boundaries around the sustainability of all four legs understood?
  • How do you determine the effective balance across short/mid/long-term returns and economics? How do you address that publicly and politically?
  • Are decisions made with intentionality? What are the consequences of these decisions?
  • Can you live with the consequences of those decisions? Short/Mid/Long term?
  • Are there metrics to indicate crossing the line that will disadvantage sustainability?

 

I offer that sustainability is simply a high-stakes risk assessment and management of the business. Both short-term only and long-term only thinking have a high probability of being unsustainable.

As neither extreme works well, sustainability requires a balance among Short/Mid/Long term practices and across many risk categories: financial, reputation, technical, strategic, social, supply chain, political, and perception.

If any of these is disproportionately driving the outcome, is that where you need to be?

How Do You Know If You Are On The Right Track Strategically?

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Right path strategicallyFrom my associate Janice Giannini.

When technology and societal priorities are rapidly changing, the conversation frequently arises “is our strategy relevant and successful?”

There isn’t a standard quiz that can give you a grade of A, B, C, or F to answer that question. Instead, there are several lenses to view the effectiveness and relevance of your strategy and execution.

Conversational lenses to consider:

  • Are your goals clear? Do you have a strategy? Do most voices understand it well enough to speak it and fully support it?
  • How well do you understand the risks of the changing conditions in the marketplace that influence a strategy and can pivot as necessary? What are the conditions under which you redirect? When do you wait it out?
  • Are your values clear, and fully represented in your strategy, and is your leadership style consistent and supportive of those values and plans? If ethics and game-plan don’t align, it can create chaos in an organization.
  • Under what conditions do you exhibit conflicting priorities and expect others to deal with them?
  • Is the senior leadership team as effective as it needs to be? Or are they good in their sphere, but lacking the insight and ability to cooperate fully in the company’s best interest? Are they rewarded for that cooperation?
  • How effective is coordination across the company/organization? Do people fully understand the current state and desired state? If you assume an individual makes ten decisions a day, if they don’t understand the strategic goals and plan, there is a significant probability they will make the wrong choice half the time. Is that ok?
  • Are you investing enough in leadership development? It has been argued for decades whether leadership is innate or developable. Some are innate. Many are teachable. Is this a fluff expense, or do you consider it an investment in your future? Can you achieve your stretch goals if the leadership team isn’t growing faster than your goals?
  • Is there enough vertical communication? If the leaders of an organization are not effectively communicating across and down the entire team, you are asking people to “defend something with one hand tied behind their back.” Why? That is hard to do! They will be hugely more effective if they have two hands!

 

I hear from some leaders that this all sounds great, but we are so busy, that we don’t have the time.

If you observe successful athletes, they set themselves up for success before even walking onto the field/stage. But, unfortunately, we don’t see that part.

I want to share a straightforward example. I take voice lessons. I sang whatever the coach instructed me to sing when I first started. He coached, and we stopped and started as necessary. In my mind, I was maximizing the amount of instruction and insight I was gaining in each lesson because I was singing most of the time. As I matured, I understood that my singing was so much better if I took the time to align my vocal instrument and my breathing. Am I singing a little less in each session? Yes, I am. But the quality of the result and my return on investment of my time is enormous.

Is your strategic instrument aligned? If it would be aligned, might your ROI be significantly higher? For example, consider that a slightly less robust, well-executed strategy may net higher results and ROI than a more aggressive plan not effectively implemented.

Early Warning Signs

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Peering forward into 2022. It may be the most challenging role for all organizational leaders.

Over the years, I’ve written many articles about the benefits of strategic thinking. I discussed that change in the business environment is inevitable. You will probably agree with this sentiment. Progress results in more change, usually leading to further progress.

I don’t often write about awareness and recognition of early warning signs.

Since this is winter in the northeastern US, temperature fluctuations around the freezing mark are common. Any standing water goes through its natural freezing and thawing cycle.

There is a phenomenon called black ice (or sometimes clear ice)—the thin coating of glazed ice on a road surface or sidewalk. The ice is not black but visually transparent, allowing the asphalt road below to appear. Often, it is almost but not totally invisible. It can be treacherous to drive or walk on – especially if you are surprised.

One key to handling this condition is consciously increasing our awareness and paying more attention to detail. Black ice usually gives us clues and indications that it is present. At night, for example, our headlights shine differently, and the bumpers of cars ahead of us seem to reflect on the road surface. As soon as we spot the signs, we can immediately execute a safer driving style.

Where are the examples of early warning signs or precursory symptoms in your industry?

We don’t have to predict the future-just better prepare to look for it.