I strongly believe that business has a significant role to play in the advancement of sustainable practices during the mounting challenges facing the planet today and that through better strategic planning, more accurate measurement of outcomes, and encouragement of innovation, many of the world’s issues can more directly be addressed. People, planet, profits: There is a direct connection between the quality of life of people in companies and the community with the quality and condition of the environment and the economic stability and growth potential for that company and community. This interdependent relationship is a critical success factor for you in understanding the system of sustainability.

Consider every person and every organization to reside on a spectrum of sustainability and you are either at level 1, the lowest level—doing nothing, or at some other point along the spectrum. To survive and thrive, you must move from one point on that spectrum to the next based on the push and pull of stakeholder expectations and regulations. Moreover, you need to create a process for going beyond compliance and continually improving from any starting point along that spectrum to maximize the opportunities of an emerging green market.

Try something new: Rather than deploying your green initiatives in a spray and pray method, hoping something sticks with stakeholders and reclaim some of your cost, consider reflecting on a few questions and take a few baby steps first to prevent losing time, money, and possibly respect from employees, customers, buyers, and other stakeholders:

• Reflect on the implications of sustainability. Take the time to explore the meaning and implications of what sustainability will signify in your sector and the region you are in, especially in terms of availability of products and value to customers.
• Plan ahead. Consider the budget and time of yourself and others to ensure you don’t run out of either funds or energy before you’ve had a chance to complete your project. Take the time to reflect, plan, and ask advice from stakeholders to avoid an embarrassing or costly mistake and deploy green projects with confidence.
• Implement at the level of your ability. Instead of taking on all 100 things to go green—choose the right project, at the right time, and with the right outcomes. Whether it’s a company of one or thousands of employees, going green is fast becoming a competitive factor in strategic planning and it’s easy to fall into the trap of spray and pray—try everything and hope something sticks.

The commitment to community and its economic, social, and environmental well-being is evolving: It’s not just talk now but a critical success factor for sustainability to be part of the DNA of company. Each sustainability initiative has measurable financial value and contributes above the bottom line.

Therefore, for any company thinking about improving their carbon footprint or implementing green initiatives across their enterprise, serious consideration needs to be made to ensure the bottom line does not interfere with the triple bottom-line to the degree that nobody wins. Below are three steps you can consider for realigning your business relationships:

1. Choose your green project according the value of your key stakeholders: The buyers. Understanding your customers is the first lesson in business and it continues to be the lesson learned for sustainability projects. Don’t fall into the trap of choosing projects that may look good to customers without providing them real value. A landscaping company may choose to offer a non-toxic fertilizer alternative at twice the price rather than switching their trucks to bio-diesel. It may look good to have an bio-diesel fleet, but the real value is in eliminating toxic chemicals from customers’ lawns.
2. Choose your new supplier according to their ability to follow through. Compare your supply chain with all of the participants with the current business relationships and carefully research alternatives that have authentic results and can provide adequate supply and service. Too often the new green businesses have difficulty scaling up when suddenly demand increases before they are ready to grow. A restaurant may want to source local eggs that are from free-range chickens but the price and supply may fluctuate if the new supplier can’t scale their operation for greater volume.
3. Make your change to a new supplier incrementally to ensure customer value and supplier growth. Decide on the period of payback your enterprise needs to meet through a supplier change without too much disruption in quality or cost. Initially, it may be necessary to offer alternatives to customers to ease the greater majority to the alternative source of products into a slightly higher price. The greater benefits realized for environmental and social impact can then be more effectively communicated as you make the transition.

Understanding the importance of managing your sustainability plans is increasingly becoming a business imperative, and knowing how to effectively choose, implement, and sustain new green suppliers is becoming a competitive advantage. Within a short period of time, it’s possible to see new growth and new relationships emerge from one decision you make as a business leader. As a result, not only does your carbon footprint get reduced, you could also inspire a chain reaction throughout your product lifecycle, and inspire change in your competition as well. And that’s a good thing!

In a US Climate Change Program report from December 2008, scientists have had to reset the clock for expected impacts from climate change. Many of the original projections expected to occur decades from now are now occurring, and climate changes are accelerating at an exponential rate. More regulation is in the pipeline, and many companies are not prepared to comply with the new requirements. Meanwhile, consumers, buyers, and other stakeholders in the market supply chain are beginning to demand more accountability from their business relationships. Some questions being asked are: Where were the components made? How were the workers compensated? How were the raw materials extracted? How far was the product shipped? What happens to the product when it’s no longer usable?

So how do you respond? I have found there to be several types of reactions to climate change and the opportunities presented with becoming more sustainable:

The first response is like an ostrich whose head is in the sand—hear nothing and so do nothing. These companies may be neither immediately nor directly affected by the push and pull of regulations and consumer demand, so they choose to ignore any calls for changes that don’t directly impact their business today.

A second response is treating sustainability like a fad. The direction and culture of the organization remains the same but it runs a few green projects up the flagpole to see if it attracts attention.

A third response is considering sustainability like a trend. For a short period of time, an organization adopts language, strategies, and methodologies that appear to be sustainable but the basic mission and organizational goals remain the same—style over substance.

A fourth response is when an organization decides to make incremental changes over time for real and lasting change towards a sustainable model. This organization may take years to make a change but like the tortoise against the hare, eventually wins.

A final response could be a paradigm shift when an organization stops its practices altogether and recreates itself in a completely sustainable model, like a caterpillar to a butterfly, with many of its original methods, mission, and culture are indistinguishable from its original form.

Whatever the response to climate change, we certainly need to make conscious decisions about our impact in order to survive these challenging times.

The concept was born out of the realization that at this stage of our global history, whether we realize it or not, we are all on the spectrum of response to how we create a more sustainable world.  On a scale of 1 to 10, there are many people, organizations, and governments at level one, while others are much further along.  It is important to realize where your organization is on the spectrum – determine your own Level of Greenth – but also the Level of your community and region.

For example, I had interviewed many companies that provide green building services in and around the Triangle area of North Carolina.  Most of them indicated that not until 2006 – with a groundswell in interest from buyers, other developers, suppliers, and state government in the form of incentives – was it possible to consider being profitable.  Many of these same companies had tried to introduce green building concepts 10 and 15 years ago without success. “There was no interest, no market.”  Now there are green building supply stores and recycling centers cropping up, new demand for solar water heaters, rain catchment systems, and alternatives for sustainable landscaping with enough consumer interest to be profitable.  As an expression of the region’s Level of Greenth, Bon Appetit recently designated Durham-Chapel Hill, NC as “America’s Foodiest Small Town” where restaurants source more local and organic products for their menus than any other.

The concept of the Level of Greenth simply means discovering where you and your community are at on the spectrum of sustainability awareness and choosing practical, achievable goals to steadily move up the spectrum to ensure stability and the ability to follow through with increasing changes year to year.  Don’t be daunted by the advances being made in other regions or compare the levels of change from one state to another.  Find the strength of your community or region, plan for actionable goals and capitalize on them – such as the collection of methane from the poultry, dairy, beef, and pork industries in North Carolina which could position the state as a major biofuels producer.

Think about it: Why is installing a solar array in the same category as recycling cans? One can cost tens of thousands of dollars while the other is virtually free. In the rush to go green because of the pull of customer demand and the push of new compliance rules, many organizations leap before they think and spend energy, money, and valuable time for green initiatives that may have nothing to do with your business, your customers could care less, and the outcomes are not visible because they aren’t measurable.

Try something else: Rather than deploying your green initiatives in a spray and pray method, hoping something sticks with your stakeholders and you can reclaim some of your cost, consider reflecting on a few questions and take a few baby steps first to prevent losing time, money, and possibly respect from your employees, customers, buyers, and other stakeholders.

Question 1: How do you define green?
It’s a simple question, but take the time to explore the meaning of going green and the implications it will signify in your business sector and the region you are in, especially in terms of availability of products and value to your customer. Ask your customers or your buyers. You’ll be surprised by some of the answers and suggestions for your business.

Question 2: What time and resources do I have available for green initiatives?
Again, another simple question but you must consider the budget and time of yourself and others to ensure you don’t run out of either funds or energy before you’ve had a chance to complete your project. Consider also how you will sustain the effort after the first attempt.

Once you have reflected on these questions, consider the following steps:

1. Choose no more than two green projects that you know you can support and maintain. It doesn’t have to be an expensive project but choose a project that makes sense for your business that may not be something as visible as a grove of windmills on your property.
2. Keep an accounting of time, resources, and outcomes in terms of customer responses, stakeholder buy-in, and employee opinion. Were there any cost savings? Increase in sales? Positive changes in employee morale?
3. After deployment of your initiative, revisit the questions of how you define green for your business and what resources do you have to maintain your current project and possibly add another. Keep in mind that your customers and buyers could be your best source of new ideas and support.

So instead of taking on all 100 things you can do to go green – choose the right project, right time, and with the right outcomes. Whether your company is just you or you have thousands of employees, going green is fast becoming a competitive factor in your strategic planning. Take the time to reflect, plan, and ask advice from stakeholders to avoid an embarrassing or costly mistakes – and deploy your green projects with confidence.

A recent energy audit for a manufacturing firm proudly displayed a tangible payback period for 11 sustainability initiatives after 2.5 years—not a bad turnaround for most industries. The catch is, the company has to shell out nearly three quarter of a million dollars during the first year to reach that carrot. So this is a no go, right? Wrong. We often consider each sustainability initiative on the same financial level: A recycling program is just as good as a new roofing system which is just as good as a new waste water treatment system. In fact, there are hundreds of things to go green but that doesn’t mean you implement the first five. That’s random and doesn’t make business sense. In my industry, we called it “spray and pray” which spells disaster. What you need is a plan for the right project at the right price.

Your sustainability initiatives are too important to freeze, especially when the expectations for greater compliance are increasing daily from consumers, buyers, investors, employees, and other stakeholders. Take another look at your Energy Audit. Where $780K may be a no-go investment in this down economy, consider instead investing $100K on those projects producing the greater return first. As illustrated in the graphic below, rather than folding cost savings back into the budget soup, never to be seen again, convince the CFO to reinvest the savings into strategically-selected projects that produce the greatest returns. Finally, relevant criteria to use when faced with a hundred things you can do to go green!

I call this “Sustainability Cash Flow Calibration.” It’s critical to understand and yes, you have to speak to the CFO or corporate accountant to get their buy-in for this process. They’ve been trained for this so they will understand. Now in the first year, you have $80K to work with which can be reinvested for the next couple of projects. Repeat for several years and your goals are achieved. Some of your projects will include reducing carbon, streamlining your supply chain, reducing fresh water use and reclaiming waste water. Each has financial value that can contribute above the bottom line. Plus you have time to learn, reflect, and make changes to your strategies as they evolve. It takes longer to implement but the investments are able to be made which is better than a no-go proposition. Stay competitive, save money, re-invest your sustainability savings, and grow your company successfully while making a difference for the planet.

Measuring the business impact of strategy alignment interventions is based on understanding business value and its implications, which is always financial. Business value can be defined as: “The financial contribution of an individual or team that is measured as a return on investment and that achieves the strategic goals of the organization.” For a strategy alignment intervention, there is only one reason the investment is made: The value of the benefits the intervention produces for the organization exceeds the cost to the organization of having the team produce those benefits. Defining the formula for the business value of strategy alignment is deceptively simple:

Direct cost of intervention

However, calculating the benefits produced is difficult to obtain because there are often intangible outputs, it’s hard to measure in dollars, costs more apparent than revenues. But the implications of not measuring the business impact are greater than the difficulties and with the advent of new analytics software tools available on the market, statistically isolating the business impact of soft interventions such as strategy alignment is becoming easier and more economical.

Many employees don’t believe that their leaders truly want them to act strategically-to view their organization from the third position. Whenever a choice needs to be made between strategy and short-term cash-and it always does-most people feel irresistible pressure from management to go for the cash. They settle for a “savings on investment” definition of themselves because usually the message from leadership is clear: strategy can wait for tomorrow. Rather than leaders encouraging strategy perspectives among employees, they are often the biggest obstacles to the implementation of strategy. They need to realize that short-term paybacks, if not aligned to a long-term strategic value, will be short-lived. In The Balance Scorecard by Kaplan and Norton, they emphasize organizations needing to link their investments to long-term strategic priorities rather than tying them to narrow financial measures such as payback and discounted cash flows. Though senior executives deny it, most organizations allocate financial resources using incremental, tactical, capital-budgeting mechanisms that stress easily quantified financial measures of near term cash flows. A lot of this has to do with not being able to measure the impact of strategic initiatives, including the strategy alignment process itself. The metrics tend to be elusive, vague, broad, or inaccessible. These excuses are not longer valid as the need for demonstrating and maximizing business impact has become the new factor in determining competitive advantage.

What are the metrics to be used for measuring the business impact of Strategy Alignment Interventions?

Measuring intangible assets such as strategy alignment and their relationship to the overall strategy of a firm will inherently transform traditional accounting procedures that are bases on tangible assets. Most of the impacts of the strategy alignment process will be linked to financial goals of workforce performance and behaviors of the firm. Strategy alignment can’t help but be held accountable to the performance outcomes of the participants of the process. In fact, true strategy alignment implies that leaders must identify and be involved with those strategic implementation elements that create those results and the measurement system should provide a clear view of how each employee contributes to success and express those measures in terms everyone understands.

Data for these outcomes are usually stored in corporate legacy systems. Productivity data may be stored in one system that includes product output, error rates, and cycle time. Sales data may be stored in a financial software package that includes sales volume, time to close, and numbers of calls made per day. The human resources database stores all of the necessary employee information to help isolate those who received an intervention and those who didn’t in order to statistically isolate the business impact of those interventions. Firm must move from measuring only lagging indicators that tell what happened in the past such as previous performance metrics to including leading indicators that assess the status of success factors such as R&D cycle time and customer satisfaction.

The ideal metrics for Strategy Alignment Initiatives include four themes cutting across any or all of the core areas of the firm including Mission and Vision, Customers and Markets, Products and Services, Unique Competencies, and Values & Cultures. The four themes include: Identifying the Strategy Alignment deliverables, identifying and measuring the processes and interventions that generate those deliverables, developing a validated competency model that will focus on outcomes, and identifying Strategy Alignment efficiency measures that link costs and benefits.

Possible metrics to be collected:

1. Survey of those whose behaviors the intervention is designed to influence. Performance data of participating members in the intervention that could include:
   • Productivity
   • Satisfaction
   • Morale
   • Error Rates
   • Absentee Rates
   • Fewer Complaints
   • Retention
   • Innovation
   • etc.
2. Changes in value of specific processes that are directly impacted by the intervention.
3. Explore employees’ perceptions of alignment by identifying the key strategic drivers, identify the key elements that enhance the strategy implementation, and a paired alignment evaluation for all elements in the first two steps.

A new vision is required to demonstrate the business value of strategy alignment to move from a “line item”, cost containment, and “service provider” mentality towards being more strategically aware, involved, and focused on contributing to the overall success of the company, not merely their function or department. The main outcome of such a vision is to empower leaders and staff to become aware of their role as “Business Value Analysts”, learning how their unit’s business impact is proposed, delivered, measured, and reported more effectively to their clients and to management.

Business Value

In this cost savings economy where the CFO reigns, demonstrating the value of any business initiative in financial terms is imperative. Individual employees, teams, and departments all must demonstrate the business value of their work or lose their jobs, lose their budget, or get dissolved and outsourced. Most units can’t define their value beyond cost savings and pull together data that makes a compelling business case to justify their team and their work towards a true return on investment. The metrics have traditionally been considered intangible, out of reach, or too expensive to measure. But the alternative doesn’t contribute to business impact either. Regardless of how much is saved year to year or quarter to quarter, there is always a diminishing return. This “Savings on Investment” approach, or SOI, falls short of demonstrating true business value. The focus needs to rather be on demonstrating a return on investment and maximizing business impact. The goal in this new “Delivering Business Value” environment is to become a high-performance, high-value contributor to the corporate strategies that can show decisively how its work is driving higher revenue, improved client satisfaction and greater operating efficiencies. To meet these needs, managers need a common understanding of value and how it’s created in the context of their business unit in relation to the rest of the organization; an accessible tool to communicate business value in financial terms; and a means to measure and monitor their success effectively.

Strategy Alignment

If “strategy” is defined as “a framework within which the choices about the nature and direction of an organization are made,” then strategy alignment is the complete integration of every organizational component to the mission, strategic vision, planning processes, day-to-day decision making, and human performance systems. As a dynamic process, strategy alignment facilitates continuous monitoring, review, and updating of the strategy, crucial in today’s environment of constant change.

The process of strategy alignment is often divided into five phases that are each linked with feedback loops for validation and adaptation to changes. These five include:

Phase 1: Strategy intelligence gathering and analysis which ensures quality, up-to-date information by which to make decisions;

Phase 2: Strategy formulation which includes exploring fundamental beliefs and assumptions to create a strategic vision, products and services offered, profile of targeted consumers, geographic scope, competitive advantage, needed capabilities, and financial goals;

Phase 3: Strategic master planning which encompasses the development of the implementation plan, prioritizing, defining steps and roles in detail, sequencing, scheduling, researching, executing, and monitoring strategic projects;

Phase 4: Strategy implementation which involves taking planned actions, monitoring implementation, and modifying the strategic master project plan as circumstances change. In this phase, the more strongly employees feel ownership of the strategy, the more they will committed to the strategies’ success. And,

Phase 5: Strategy monitoring, review, and updating which is a key input to regular review that evaluate the effectiveness of the ongoing implementation as well as examine the validity of underlying assumptions of the strategy.

To make this process successful, there is a necessary need for creating a “strategic culture” (the combined effect of behaviors, norms, beliefs, values, heritage, thinking, and relationships and the way they manifest themselves in an organization and its strategic performance) which is often the primary function of strategy alignment initiatives. When these align with, and support, an organization’s strategy efforts, strategic success is likely assured. This strategic culture concept is further validated by Per Christiansen and Jon Lund Hansen in “Organisational Ecology and Strategic Leadership, Christensen & Lund Hansen 1993 where they describe a third view or systems approach of systemic thinking as follows:

It is easy to see the world from one’s own point of view, or first position as we refer to it here. It is more difficult to see it from the other’s – second position. Seeing relationships between one’s self and others is the most difficult of all – from the third position. This perspective: to see processes and patterns from an outside viewpoint, is also called system-perspective, or systemic thinking.

High performing organizations manage their workforce to create breakthrough results using four key aspects:

1. Align their workforce with the top-level business strategy
2. Actively engage the workforce in all phases of strategy implementation
3. Measure the business impact of the contributions of the workforce
4. Provide constructive feedback to the workforce on their results compared to the measurements.

For strategy alignment to achieve the greatest business impact, it’s vital to involve as many people as possible in the process of implementing, if not actually setting strategy. Energizing and motivating people to action is easier when they feel involved, rather than being imposed on from above.

Conference speakers and articles in industry journals are replete with calls for demonstrating ROI among a variety of interventions including IT, training, and facilities management, as well as strategy alignment consulting services. Harder to find, however, are case studies that describe specific examples and metrics in the context of measurable organizational outcomes for strategy alignment interventions. A new model is required that breaks away from standard forms of planning and that incorporates the business value concepts with those of strategy alignment as follows:

Strategy alignment with a business value focus is a key element in creating and sustaining value in business. Yet there is still no standard for recognizing, developing, managing, or measuring this intangible asset. It’s not enough for OD professionals to be able to explain why and how they implement their approach. They need to be able to transcend the SOI mentality, measure performance, and link Strategy Alignment contributions to the mission of the organization and define its impact in financial terms.