Peter Senge, The Necessary Revolution:Working Together to Create a Sustainable World (Random House/Broadway Books, 2008, 2010)

MIS 201 Introduction to MISFall 2010

Chapter 9Positioning for the Future and the Present

Martha GrabowskiLe Moyne College Rensselaer Polytechnic Institutegrabowsk@lemoyne.edu

17 September 2010 http://www.darden.virginia.edu/uploadedImages/News/Peter-Senge222.jpg, retrieved 29 Aug 2010

From Compliance to Innovation

http://4.bp.blogspot.com/_JsAU6pu5Yk4/RgAttssbxBI/AAAAAAAAAGs/neKhJvT48NE/s320/Willard%27s+5-stages.png

Four Elements of Shareholder Value

Innovation and Repositioning

Cost and Risk Reduction

Growth Path & Trajectory

Reputation and Legitimacy

ShareholderValue

Today

Tomorrow

Internal External

Stuart Hart & Mark Milstein. 2003. Creating Sustainable Value. Academy of Mgmt Executive, 17:2.

Companies that perform well in all 4 quadrants maximize shareholder value over time

Sustainability Also a Multidimensional Challenge

Innovation and Repositioning Strategy: Clean Technology

Today

Tomorrow

Internal External

Growth Path & Trajectory Strategy: Sustainability Growth Technology

Cost and Risk Reduction Strategy: Pollution Prevention

Reputation andLegitimacy

Strategy: Product Stewardship

SustainableValue

Sustainability Also a Multidimensional Challenge

Innovation and Repositioning

Strategy: Clean Technology

Today

Tomorrow

Internal External

Growth Path & Trajectory Strategy: Sustainability Growth Technology

Cost and Risk Reduction

Strategy: Pollution Prevention

Reputation andLegitimacy

Strategy: Product Stewardship

SustainableValue

Drivers:• Pollution

• Material Consumption

•Waste

Drivers:

• Disruption

• Clean Tech

• Footprint

Drivers:• Climate Change

• Resource Depletion

• Poverty

Drivers:• Civil Society

• Transparency

• Connecitivity

Cost and Risk Reduction: the Lower Left Quadrant

Today

Tomorrow

Internal External

Cost and Risk Reduction

Strategy: Pollution Prevention

SustainableValue

Drivers:• Pollution

• Material Consumption

•Waste

DuPont• Reducing risk, cutting costs• Cutting environmental footprint increases credibility• 2004—global air carcinogens down 90+%

• Footprint reduction $3B• 2015 goals

• reduce water consumption• reduce greenhouse gases

• In lower left quadrant, companies gain credibility in sustainability initiatives

http://www.greenpeace.org/raw/content/international/press/reports/making-a-difference.pdf

Reputation and Legitimacy:The Lower Right Quadrant

Today

Tomorrow

Internal External

Reputation andLegitimacy

Strategy: Product Stewardship

SustainableValue

Drivers:• Civil Society

• Transparency

• Connecitivity

DuPont• Reaching out beyond internal borders• Work with NGO’s, regulators, community groups• Engaged former Greenpeace director as consultant

• Sustainable innovation requires partnerships

• Real engagement with outsiders can be a cathartic experience for executives

• Chesapeake Farms• Wildlife Habitats

Innovation & Repositioning: The Upper Left Quadrant

Innovation and Repositioning

Strategy: Clean Technology

Today

Tomorrow

Internal External

Drivers:

• Disruption

• Clean Tech

• Footprint

DuPont• 1st shift: from explosives to petrochemicals• 2nd shift: from petrochemicals to biotech & chemistry• Fossil fuels to biofuels• Chemical feedstocks to natural materials

• Synthetic to natural systems• DuPont makes 8 products necessary to make solar panels• Biobutanol, gas substitute• Tyvek and Attic Wrap• Sorona, corn starch--carpet• Double investment in sustainable R&D

• 1802 Explosives Manufacturer• Black powder• Nitroglycerin• Dynamite• TNT

• Gel explosives

•Ceased production in 1990’s

SustainableValue

Growth Path & Trajectory: the Upper Right Quadrant

Today

Tomorrow

Internal External

Growth Path & Trajectory Strategy: Sustainability Growth Technology

Drivers:• Climate Change

• Resource Depletion

• Poverty

DuPont• Bold goals by 2015

•Annual revenues of at least $2B for energy efficiency•Double revenues from non-Depletable resources to At least $8B

•Reach out to underserved— 4B people living on $4/day

• Sustainable growth is a high-margin strategy

SustainableValue

Investing in the Future Venture capitalists looking for next generation

businesses

‘Cleantech’ VC Growing at annual rate +50%

Mainstream investment capital JPMorgan Chase CalPERS Swiss Re Goldman Sachs

http://http://3.bp.blogspot.com/_7ZYqYi4xigk/\S98N8Pf9ziI/AAAAAAAAF_4/UH15N4CBPv0/s400/ashtabula.jpg, retried 9 Sept 2010

Environment

http://media.swissre.com/images/logo_djsi.jpg

Big and Small Working Together-- GE

GE Energy Financial Services

Environment

• Raised 2010 renewable energy investing target +50% $6B

• Many projects don’t utilize GE wind turbines or GE equipment

• Solar, landfill gas, Electrical grid efficiency, lithium-ion batteries

• $300M wind investment – Texas, Minnesota, Illinois, Oregon

http://business-ethics.com/wp-content/uploads/2010/07/GE_Immelt_3.jpg, 9/10/10

http://www.gepower.com/businesses/ge_wind_energy/en/images/wind_main_img.jpg

The Business Rationale for Sustainability – GE Drivers

Customers were demandingsustainable products, processes

Scale, scope 300,000 employees 5 million shareholders Operations in 100 countries Annual revenues $156B

Renewing Responsibilities (July 2010) Corporate social responsibility report www.ge.com/citizenship

http://www.ge.com/citizenship/_files/images/content/homepage-header_healthy-planet.jpg,

9/10/10