Making Sustainability a Core Operating Principle
by Kris Gorrepati
I have to admit that making sustainability a core operating principle of my own personal life has been inconvenient. It's like getting up every day at 6 AM for the morning jog. It's great for the health, but making it part of the daily regimen has been like asking a . Just like the morning jog, the benefits of making sustainability go just beyond the feel good nature of the actions. I have been able to reduce my electricity, gasoline and water bill by more than 20%. Those are some real savings, people.
A similar storyline emerges for companies, large and small. Nevertheless, making sustainability a core operating principle remains challenging. But for companies that take on the challenge and make it a reality, the savings pile up and in most cases improves their market advantage. With so many demonstrable benefits and an easy financial case there is no reason for companies not to formally adopt sustainability as a core operating principle.
In this paper we will analyze management principles and processes that can be borrowed from Six Sigma methodology to make it a reality.
Sustainability as the core operating principle
For some industry segments I would argue that sustainability should be the core business strategy. For businesses that operate in food, retail and consumer products segments the future relies on how deeply they embed sustainability into every thing they make and do. Many consumers that have become aware of environmental effects of products and services they consume have begun to make choices based on sustainability performance of the products/services and the company. It's highly unlikely that the likes of Lee Scott of Walmart and Jeffrey Immelt got up one morning to find sustainability religion. As consummate corporate chieftains of the Milton Friedman strain, I believe they saw the direct link between competitive advantage and sustainability.
Even for companies that consider sustainability as a peripheral topic, adopting sustainability as a core operating principle has benefits. It certainly saves costs, but it also works as a magnet for attracting talent, improves standing in the market and binds the company to a cause beyond mere profits.
Walking the talk
Commitment to sustainability begins at the top; from the CEO to the board. I am not saying that the CEO should trade his/her Mercedes Maybach for a Toyota Prius, although it would be nice, but he/she should communicate commitment to sustainability through the pocket book by rewarding improvement, allocating personal time to the topic and concrete actions. Even the board could step in and show its commitment by establishing a sustainability committee. Jeffrey Immelt has shown his commitment by creating Ecomagination as an overlay organization over all GE business units with considerable influence over strategy and day-to-day business. Similar commitment from the top has been shown by a range of businesses, including Google, Starbucks, Chez Panisse restaurant, Burts' Bees and Whole Foods.
From vision to action - Challenges
Despite stated commitment for sustainability, making it a core operating principle faces considerable challenges. First and foremost is the fact that sustainability has been sort of an informal subject. There are no formal methodologies, processes, tools and metrics that are readily available to drive sustainability into day-to-day operations and decision making. Second is the lack of linkages between sustainability performance and personal, team, divisional and company performance. Without a stated and clear understanding of personal benefits for adopting sustainability as a core operating principle, many people would be less motivated to move.
Six sigma and sustainability
Non-profits and non-governmental agencies such CERES, Carbon Trust and United National Environmental Program (UNEP) have provided guidance on how to incorporate sustainability and how to report sustainability performance. However, most of this guidance tends to be reporting oriented and is of little use for driving sustainability thinking into day-to-day operations and decision making.
On the other hand, management frameworks such as TQM and Six Sigma have had much higher level of success for making quality a core operating principle of the company. Numerous processes, tools and metrics have been developed to help companies permeate quality into every aspect of the company.
One of the most important innovations of Six Sigma is the professionalizing of quality management function. Key roles such as Champions, Master Black Belts, Black Belts, Green Belts and Yellow Belts have been developed and defined to successfully implement Six Sigma. Sustainability projects could also benefit by adopting these roles and the various responsibilities and recognition that comes with these roles.
I will make a case here that we should borrow and adopt processes, tools and metrics developed by the Six Sigma community to permeate sustainability throughout the company. We should ride of the coattails of the popularity and effectiveness of Six Sigma processes and tools instead of developing brand new methodologies and processes that usually take many decades to be widely known and adopted.
Adoption of Six Sigma Processes and Tools for Sustainability
DMAIC (Define, Measure, Analyze, Improve and Control) is the most common Six Sigma methodology used to improve existing processes that are not meeting customer specifications or not performing adequately. DMADV methodology is more apt for incorporating sustainability as it is new measure that has not been heretofore seen as a corporate, product or service performance metric. Roughly the DMADV methodology expands to following steps
Define – Define the project goals and deliverables
Measure – Measure and determine customer needs and specifications
Analyze – Analyze the process options to meet customer needs
Design – Design the process to meet customer needs
Verify – Verify that performance meets customer needs
We can take the above DMADV methodology and adopt it to support sustainability throughout the organization as show below
Define – Define corporate, product and service sustainability goals in baseline, absolute or relative terms
Measure – Measure and determine sustainability goals and requirements as specifically as possible (defined and allocated to the most actionable element/activity/group)
Analyze – Analyze the options (solutions) that can help meet sustainability goals and requirements for the most actionable element/activity/group
Design – Design the selected sustainability option into the process, product or service
Verify – Verify that the selected sustainability option is performing according to the design
In addition to the DMADV high level methodology, it would be helpful to adopt appropriate six sigma tools and methods that sustainability practitioners can use to introduce and make sustainability thinking pervade throughout the company. We may have to even create new tools that are better designed to support sustainability projects.
The tools that are the most appropriate during the Define phase of the corporate sustainability vision or product and service sustainability improvement include CTQ trees, process maps and
Building a bridge between sustainability and finance
If our whole movement is based on the argument that there is no need to make a choice between sustainability and profit, it would be beneficial to our cause to develop a direct link between sustainability and financial performance. Here we can borrow from the sales profession on how a case is made for project investments. The case for investment or doing something instead of status quo is based on cost reduction or revenue enhancement opportunity or both.
Recognition and Reward system
This paper makes an argument that there is no need to make a choice between pursuit or profit and sustainability. In fact, for certain industry segments sustainability should be a central business strategy and competitive advantage. In addition, commitment to sustainability should come from the very top through concrete signals, actions and reward systems. Finally, this paper also shows how six sigma is an excellent framework for making sustainability a core operating principle.
About the Author Kris Gorrepati
Kris leads business development and SAP alliance management for the Americas market at TechniData, a leading vendor of environmental compliance and sustainability solutions. Kris has several years of entrepreneurial product management experience in the software industry and new product development experience in automotive and high-tech industries. As the co-founder and VP of Product Management at Zesati he led the development and marketing of pioneering J2EE based business process management (BPM) products for the SAP infrastructure. His operational experience includes product development and new product introduction at Ford Motor Company, Caterpillar and Samsung. Kris was also part of the US Department of Energy's PNGV (Partnership for new generation vehicles) team that promoted commercialization of hybrid engine technology and energy efficiency technologies for the automotive industry. Kris holds a master's in Mechanical Engineering and an MBA from UCLA Anderson.