Business written report around organizational change and sustainability

PLEASE SCROLL DOWN FOR ARTICLE

Full terms and conditions of use: http://www.informaworld.com/terms-and-conditions-of-access.pdf

This article may be used for research, teaching and private study purposes. Any substantial or systematic reproduction, re-distribution, re-selling, loan or sub-licensing, systematic supply or distribution in any form to anyone is expressly forbidden.

The publisher does not give any warranty express or implied or make any representation that the contents will be complete or accurate or up to date. The accuracy of any instructions, formulae and drug doses should be independently verified with primary sources. The publisher shall not be liable for any loss, actions, claims, proceedings, demand or costs or damages whatsoever or howsoever caused arising directly or indirectly in connection with or arising out of the use of this material.

Journal of Environmental Planning and Management, 46(2), 167–176, 2003

Sustainability-focused Organizational Learning: Recent Experiences and New Challenges

ELEONORA MOLNAR* & PETER R. MULVIHILL†

*Independent Consultant, specializing in sustainability and organizational learning, British Columbia, Canada †Faculty of Environmental Studies, York University, 4700 Keele Street, Toronto, Ontario M3J 1P3, Canada. Email: prm@yorku.ca

(Received September 2001; revised July 2002)

ABSTRACT To an increasing extent, corporations and smaller businesses are making explicit commitments to improved environmental and social performance. Some have embraced the goal of sustainability, and some prefer to use the term ‘triple bottom line’—a balance of financial, social and ecological performance—in their operations. Some companies are experimenting with organizational learning as a means to accelerate the transition to sustainability or the triple bottom line. This fledgling combination— sustainability and organizational learning—is the focus of this paper. The term ‘sustain- ability-focused organizational learning’ (SFOL) is proposed to describe the early experience of companies that are attempting to pursue sustainability or the triple bottom line while making substantial changes to their organizational cultures. In many instances, these changes involve the use of experimental or unconventional learning techniques. Some companies are combining their SFOL efforts with The Natural Step, a sustainability framework. The experience of five companies pursuing SFOL is summa- rized and analysed in a non-identifying way, and key preliminary lessons are discussed.

Introduction: Business, Sustainability and the Triple Bottom Line

The pursuit of sustainability is now an explicit concern of many businesses, ranging from small enterprises to major corporations (Hawken, 1993; Elkington, 1998; Frankel, 1998; Nattrass & Altomare, 1999; Senge & Carstedt, 2001). The business sector creates a far-reaching range of environmental, social and econ- omic impacts and has an undeniable responsibility to demonstrate leadership in the pursuit of sustainability. Among leading businesses in transition to more sustainable operations, there is considerable attention being given to the triple bottom line—a balance of financial, social and environmental performance (Elkington, 1998; Atkinson, 2000). Progressive corporations are attempting to reconcile the traditional contradiction between financial return on investment and environmental performance, lending credence to the claim that companies can ‘do well by doing good’. For a growing number of companies, annual sustainability reports have become the established successor to environmental reporting. In summary, there is increasing attention to the challenge of sustain- ability in the business sector, and a growing number of initiatives.

0964-0568 Print/1360-0559 Online/03/020167-10 ! 2003 University of Newcastle upon Tyne DOI: 10.1080/0964056032000070990

D o w n l o a d e d B y : [ V i c t o r i a U n i v e r s i t y ] A t : 0 4 : 4 8 2 8 S e p t e m b e r 2 0 1 0

168 E. Molnar & P. R. Mulvihill

Organizational learning is a parallel trend. There is an impressive and grow- ing body of literature on learning organizations (Kaufman & Senge, 1993; Braham, 1995; Handy, 1995; Frankel, 1998; Petts et al., 1998; Ellerman, 1999; Senge et al., 1999; Porter, 2001). Links between organizational learning and sustainability remain preliminary, but the two streams of activity show signs of increasing convergence. This paper explores the relationship between the two, proposes the term ‘sustainability-focused organizational learning’ (SFOL) along with criteria, and reviews (in a non-identifying manner) key lessons gathered to date by five companies. The purpose of the paper is to document, through their early experience, how sustainability-focused businesses are making progress through organizational learning. The SFOL initiatives of these businesses are unfolding to a great extent in a public and transparent fashion, and all were very co-operative in granting interviews and sharing information and experience. The non-identifying approach is chosen since most of the case study companies are still in early, highly experimental phases of SFOL.

SFOL

Many observers believe that the commercial sector is slowly experiencing a paradigm shift in how business is conducted. This shift is a transition to sustainability, or the explicit pursuit of it. Senge et al. (1999, p. 535) argues that sustainability can be fostered through the development of an organizational learning culture: “In the end, sustainable development can’t be achieved without innovation, and innovation is best achieved in a culture that embraces and fosters learning and change”.

To date, one of the most promising bridges connecting organizational learning and corporate sustainability activity has been The Natural Step (TNS), a sort of proxy for sustainability which is discussed later in this paper. Advocates of corporate sustainability and practitioners of organizational learning have launched collaborative ventures because they perceive an integral link between the two streams of activity. Indeed, both require a challenge to mental models, fostering fundamental change, engaging extensive collaborative activity and, in some cases, revisiting core assumptions about business and its purpose. In discussing the challenge of “innovating our way to the next industrial revol- ution”, Senge & Carstedt (2001, p. 1) make a profound link between the challenge of sustainability and “core learning competencies for building sustain- able enterprises”.

Nattrass & Altomare (1999, p. 5) also stress the importance of organizational learning in the pursuit of sustainability: “Our research has shown that for those business corporations that make the commitment to sustainable development, the understanding and practice of the organizational learning disciplines will be the indispensable prerequisite of a successful transformation to sustainability”. They elaborate further: “Through education and training, employees develop the conceptual framework, the shared mental model, that makes it possible to explore what is sustainable and unsustainable behaviour. Learning is also an integral part of the strategic visioning process. It is necessary to learn what is required for sustainability before a sustainable future can be realistically envi- sioned” (Nattrass & Altomare, 1999, p. 25).

Although an increasing number of leading organizations appear to be part of this significant trend, on a wider scale relatively few businesses are making

D o w n l o a d e d B y : [ V i c t o r i a U n i v e r s i t y ] A t : 0 4 : 4 8 2 8 S e p t e m b e r 2 0 1 0

Sustainability-focused Organizational Learning 169

explicit links between their sustainability efforts and organizational learning. SFOL has not been more widely implemented for at least three reasons:

• very little literature refers to the link between organizational learning and sustainability and the benefits of combining the two;

• few case studies have been documented; • the perceived difficulty of pursuing two daunting initiatives—sustainability

and organizational learning—at the same time.

Learning Organizations

There are many definitions of learning organizations and a growing body of theory and practice. Senge proposes essential criteria for learning organizations (Kaufman & Senge, 1993; Senge et al., 1999):

• building shared vision; • using a team approach to learning; • refining mental models (our structures for understanding the world); • supporting personal mastery: “formulating a coherent picture of the results

people most desire to gain as individuals, alongside a realistic assessment of their lives today” (Senge et al., 1999, p. 32);

• most importantly, employing the techniques of systems thinking.

Frankel (1998, p. 82) maintains that whole-system thinking is an important aspect of modern corporate environmentalism, and argues:

It is only at the holistic level that the challenge of sustainable develop- ment can effectively be addressed. Why? Because the global problema- tique is itself the quintessential system problem, one in which a set of once appropriate, now-outdated constructs keeps reinforcing each other in a web of mutually reinforcing, socially and environmentally destruc- tive feedback loops.

Braham (1995) has developed a learning organization checklist, which adds specificity and includes other common practices such as: measures to encourage learning and integrate it into work processes and meetings; the creation of mentoring programmes; and initiating cross-training and rewarding employees who learn a wider range of job skills. Diggins (1997) discusses what is required to become a learning organization:

Achieving a learning society demands commitment, determination and discipline. Commitment to ideals of inclusiveness and interconnected- ness on the one hand and autonomy and freedom on the other; determination not to distort or trivialize the deeper meaning that undergirds life and the discipline of seeing the wholeness of things, of constantly questioning assumptions that underpin our actions, of clari- fying our vision, of creating learning organizations where individuals are members not servants of teams of leaders.

Stoner (1996) describes the world-class learning organization as one that can experience remarkable rates of learning and performance improvement. These experiences can be facilitated by becoming skilled at creating, acquiring and

D o w n l o a d e d B y : [ V i c t o r i a U n i v e r s i t y ] A t : 0 4 : 4 8 2 8 S e p t e m b e r 2 0 1 0

170 E. Molnar & P. R. Mulvihill

transferring knowledge and by changing behaviour to reflect newly acquired information.

At this stage, the concept of a learning organization is still evolving. The literature, however, points to common practices, and, perhaps more importantly, explicit attention to detailed aspects of organizational learning:

• explicit commitment to being a learning organization; • fostering a sense of community and interconnectedness within the organiza-

tion; • encouraging openness, inclusiveness and empowerment; • supporting risk taking and experimentation; • creating a climate in which the questioning of basic assumptions is safe; • a focus on communication through meaningful dialogue; • engaging dialogue concerning different visions of the company’s future; • creating the capacity to embrace change and to be flexible, resilient and

inventive; • focusing on co-operation and teamwork (Braham, 1995).

Preliminary Criteria for SFOL Organizations

As discussed, the interrelated challenges of sustainability and organizational learning are both in evolution. Combining the two poses significant conceptual and practical difficulties. Acknowledging these limitations, criteria for selecting SFOL businesses were developed. The five case study businesses were selected according to these criteria:

• the business has a well articulated sustainability vision and mission, or at least a strongly implicit one;

• it is investing in sustainability education for its employees; • it is employing at least some of the organizational learning elements proposed

by Senge and others (shared vision, personal mastery, team building, mental models and systems thinking);

• there is leadership within the company in the pursuit of sustainability and the triple bottom line, from the top, middle and bottom levels (and ideally at all levels);

• the company is measuring its progress towards sustainability in a rigorous and systematic way that creates a sense of accountability with its stakeholders.

Case Study Design

Five businesses were studied to determine the nature and extent of their SFOL initiatives. The businesses range considerably in size, core business and prod- uct/service orientation. The five were selected from an initial group of 20. Notably, some of the companies are employing TNS criteria and frameworks as a means to define, measure and monitor progress towards sustainability (Robèrt, 1991; Hawken, 1995). Part of the TNS framework consists of four system conditions:

In a sustainable society, nature is not subject to systematically increas- ing:

(1) concentrations of substances extracted from the earth’s crust;

D o w n l o a d e d B y : [ V i c t o r i a U n i v e r s i t y ] A t : 0 4 : 4 8 2 8 S e p t e m b e r 2 0 1 0

Sustainability-focused Organizational Learning 171

(2) concentrations of substances produced by society; (3) degradation by physical means;

and, in that society …

(4) human needs are met worldwide. (TNS, 2002)

These system conditions, which are elaborated upon in TNS literature, provide a compass or set of indicators that companies can apply to their operations. The extent to which their activities are in violation of one or more of the conditions provides a rough measure of their progress towards sustainability at any given time. Some companies prefer to not use TNS or other popular frameworks, and have developed their own measurement and reporting systems. In either case, a commitment to continual improvement, a sufficient degree of transparency and accountability to stakeholders are perhaps the ultimate measures of progress towards sustainability for businesses. In terms of organizational learning, a company was determined to have an organizational learning programme if their activities in this regard were explicit, active and given resources on an ongoing basis (an investment of both human and financial capital).

Additional subjective criteria for selecting businesses were used to further narrow the field of candidate companies. The additional criteria focused on identifying true leaders in corporate sustainability:

• the business was seen to be truly pursuing sustainable business instead of ‘greenwashing’;

• the business appeared to have a commitment to sustainability that went beyond purely market reasons;

• the business was using the TNS four system conditions as a compass for sustainability or some other comparable rigorous measurement system, and was therefore accepting that it had to be publicly accountable.

Of the five case studies, some reflect a deeper and lengthier involvement with SFOL, while others are in developmental stages. Information for the case studies was acquired through personal communication and interviews with employees and consultants as well as through business literature. The case studies were analysed on the basis of:

• the company’s SFOL initiatives; • their impressions of the benefits derived to date from SFOL activities; • key lessons learned to date about SFOL; • barriers to change to strategies to overcome them.

Highlights of Case Studies

Sustainability Education

The case study businesses all practise some form of sustainability education. Many of Senge’s organizational learning disciplines are used. Creating a shared vision of sustainability seems to be a starting point for SFOL. Several of the businesses have done this by asking well-known environmental advocates to speak to employees about sustainability issues.

Sustainability education may not only apply to a company’s employees. For example, one company ensures that its entire supply chain benefits from

D o w n l o a d e d B y : [ V i c t o r i a U n i v e r s i t y ] A t : 0 4 : 4 8 2 8 S e p t e m b e r 2 0 1 0

172 E. Molnar & P. R. Mulvihill

sustainability education. Every year the company hosts an international confer- ence for companies that are involved in producing its products.

Personal Mastery

Personal mastery seems to be a discipline practised only by those businesses that have an exceptionally high commitment to sustainability. Those businesses that have made more progress towards sustainability recognize the need to challenge employees and invest in their mental, physical and spiritual potential.

At one company, in addition to sustainability education, most employees have taken a course focusing on team-based personal growth. It is believed that personal growth is both a precondition as well as a result of sustainability pursuits. Aside from this type of learning, employees are encouraged to enrol in classes that are empowering and stimulate the intellect. Motives for learning are to improve operational capacity and to create an environment that is flexible and adaptable to change. Another company has an internship programme that allows employees to take leave of their jobs and work for non-profit groups for up to two months. While employees are away, their salaries and benefits are still paid. Group internships also exist whereby the entire staff of a retail store are involved.

Team Learning and Mental Models

Team learning and sharing of mental models are well practised by all of the case study businesses. Team learning is a concerted effort to get all employees participating in sustainability issues. It allows groups of employees to grasp an understanding of sustainability concepts and to focus on specific problems. From a logistical point of view, in most large businesses, not all employees can engage in dialogue at once, so the process is phased.

One company promotes team learning and mental models through product development teams that set annual goals for environmental progress. Also, an annual international conference encourages team learning and shared mental models by rallying individuals around a common understanding and purpose.

Systems Thinking

All of the businesses exhibited an advanced understanding of systems thinking, which is described by Senge (1990, p. 7): “Systems thinking is a conceptual framework, a body of knowledge and tools that has been developed over the past fifty years, to make the full patterns clearer, and to help us see how to change them effectively.”

Systems thinking appears to be the central learning discipline for all SFOL initiatives. Using systems thinking, the entire operation of a business and its many interconnections become the focus, rather than its separate parts. The more advanced businesses have educated their supply chains with a view to expanding the influence of systems thinking. Finally, it helps facilitate a more rigorous life cycle analysis of impacts and therefore a more integrative view of sustainability. Examples of systems thinking might include recycling packaging, supporting organic production upstream in the supply chain and reducing truck emissions by increasing reliance on rail transport.

D o w n l o a d e d B y : [ V i c t o r i a U n i v e r s i t y ] A t : 0 4 : 4 8 2 8 S e p t e m b e r 2 0 1 0

Sustainability-focused Organizational Learning 173

Sustainability Frameworks

All of the businesses studied have similar mental models of sustainability and organizational learning, in part because they all use the TNS framework to some degree, although not necessarily wholesale. The businesses tend to use phrases such as ‘triple bottom line’ or ‘three-legged stool’ in their literature and commu- nications. The study suggests that a company’s commitment to sustainability or SFOL does not have to be explicit in order to be meaningful—indeed, some prefer not to use the language of sustainability and organizational learning. While it may be beneficial in terms of public perception to make an explicit commitment to sustainability, a business can be a leading-edge sustainable business without the ‘sustainability’ word in their mission or vision statements. One of the companies surveyed makes no explicit reference to sustainability and instead refers to the environmental crisis and social justice. Regardless, the company’s performance clearly and consistently demonstrates a commitment to sustainability.

Use of Internal/External Resources

Some organizations pursue SFOL on a primarily internal basis, while others tend to make more extensive use of outside consultants. The former approach has the advantage of developing and retaining knowledge within the organization, while the latter can be valuable in terms of introducing ideas from outside the culture. In practice, leading companies tend to find an appropriate balance of internal and external focus, and also develop and maintain extensive links beyond their sector or industry to remain attuned to best practices and emerging developments.

Finally, some companies engage renowned industry leaders or theorists to speak to employees about sustainability or organizational learning. These events often inspire new initiatives within the company.

Key Lessons to Date

Taken together, at a general level the case studies show a significant degree of commonality in approach, which could be expected given that all borrow to some extent from common frameworks. Importantly, however, each business is also fashioning its own distinctive ways of implementing SFOL and therefore each makes a particular contribution to the evolving understanding of its practice. They are all recognizably pursuing SFOL, even though their specific approaches and language differ considerably. A number of preliminary lessons, drawn from the case studies, interviews and observation and supported by the literature, are ventured about SFOL and the transition to sustainability for businesses.

Fundamental Change Needs to be Initiated Incrementally

By definition, a shift towards sustainability cannot be superficial—it must be fundamental. Although fundamental changes may be resisted initially, they are more likely to be accepted if they are implemented slowly rather than quickly. Employees need time to process and accept fundamental change. Businesses are

D o w n l o a d e d B y : [ V i c t o r i a U n i v e r s i t y ] A t : 0 4 : 4 8 2 8 S e p t e m b e r 2 0 1 0

174 E. Molnar & P. R. Mulvihill

allowing a ‘settling’ period to unfold after introducing sustainability concepts. In cases where there is significant resistance to the concept of sustainability, some companies are using other ways to present it, or are encouraging employees to develop their own definitions.

Questioning Core Business Values and Basic Assumptions

It is difficult to implement any initiative without substantial internal buy-in. Like any other concept, sustainability must be integrated into a business’s culture, mission and vision. One of the companies surveyed holds quarterly meetings to address core values and encourages employees to voice their concerns and opinions about the business and its vision. Giving employees this opportunity appears to be a critical part of SFOL.

Start Sustainability Initiatives in ‘Your Own Backyard’

For obvious reasons, sustainability initiatives resonate well when they are locally based, when a sense of ownership occurs and where results are visible. Individ- uals tend to have more incentive to participate when initiatives are closer to home. Employees take pride in changes that they created and that they can visibly see.

Inter-company Support

A substantial amount of inter-company support is occurring in terms of lesson sharing around SFOL. Typically, leading companies encourage others to build their own internal capacity for sustainability pursuits. They offer initial assist- ance, then leave others to initiate and manage their change processes. TNS has assumed a prominent role in bringing companies together to compare experi- ences and share strategies for change.

Soft-selling Sustainability, in Teams

The collective experience of the companies shows that sustainability is a concept best introduced by a team rather than by a single ‘visionary individual’. Several people need to introduce the concept to present a well-rounded view. Interest- ingly, although the pursuit of sustainability requires passion, it seems that the less emotionally attached the educator is to the audience ‘getting it’, the more likely it is that the audience will eventually embrace the message.

No One Will Listen to a Business that Is Not Profitable

Notwithstanding the compelling message of the triple bottom line, the tra- ditional financial performance of a company is critical to its credibility as an agent of change in the business community. Businesses must not sacrifice competitiveness and financial performance if they wish to maintain a leadership role in the collective enterprise of sustainability.

D o w n l o a d e d B y : [ V i c t o r i a U n i v e r s i t y ] A t : 0 4 : 4 8 2 8 S e p t e m b e r 2 0 1 0

Sustainability-focused Organizational Learning 175

Leadership from Bottom, Middle and Top

Building on the early lessons of the five companies engaged in SFOL and the related literature, some further essential elements of success emerge. First, leadership from the top of the company, while not essential initially, must happen at some point if the initiative is to have any chance of success. Obviously, this is less relevant in flatter, less hierarchical businesses. For most businesses, however, a critical ingredient of success for an SFOL initiative is a firm commitment to sustainability from upper management. Support from upper management and executives signals that an initiative is legitimate and worth pursuing.

Although support from the top is necessary, it is also important for employees to feel passionate about sustainability and to feel ready to act on the commit- ment. Without the support of employees, sustainability may not be pursued because of resistance to change. Middle managers can play an important role in creating sustainability momentum within a business. Thus it seems that support from all levels of a company is needed eventually, although in the early stages a sustainability initiative may come from anywhere within the company. Com- mitting resources to SFOL, an important milestone in the journey, requires substantial support from upper management. Finally, continuous funding of SFOL activities is required to maintain sustainability momentum. Without this, an SFOL initiative will not be able to function at a level needed to implement and sustain change.

Future Prospects

At this relatively early stage of experience, SFOL appears to be gathering momentum as a catalyst for change. The combination of the two challenges— sustainability and organizational learning—has created an interesting synergy and is contributing to new theory and practice. At present, there is relatively little available literature and information concerning SFOL. It is likely that this will change as experience accumulates. SFOL activity has increased measurably in the recent past, suggesting a significant and promising trend.

References

Atkinson, G. (2000) Measuring corporate sustainability, Journal of Environmental Planning and Manage- ment, 43(2), pp. 235–252.

Braham, B.J. (1995) Creating a Learning Organization: Promoting Excellence through Education (Menlo Park, CA, Crisp Publications).

Diggins, P.B. (1997) Reflections on leadership characteristics necessary to develop and sustain learning school communities, School Leadership and Management, 71, pp. 413–426 (electronic ver- sion).

Elkington, J. (1998) Cannibals with Forks: The Triple Bottom Line of 21st Century Business (Gabriola Island, BC, New Society Publishers).

Ellerman, D.P. (1999) Global institutions; transforming international development agencies into learning organizations, Academy of the Management Executive, 13, pp. 25–36 (electronic version).

Frankel, C. (1998) In Earth’s Company; Business, Environment and the Challenge of Sustainability (Gabriola Island, BC, New Society Publishers).

Handy, C. (1995) Managing the dream, in: S. Chawla & J. Renesch (Eds) Learning Organizations: Developing Cultures for Tomorrow’s Workplace (Portland, OR, Productivity Press).

D o w n l o a d e d B y : [ V i c t o r i a U n i v e r s i t y ] A t : 0 4 : 4 8 2 8 S e p t e m b e r 2 0 1 0

176 E. Molnar & P. R. Muluihill

Hawken, P. (1993) The Ecology of Commerce: A Declaration of Sustainability (New York, Harper Business).

Hawken, P. (1995) Taking the Natural Step (www.context.org/ICLIB/IC41/Hawken2.htm). Kaufman, F. & Senge, P.M. (1993) Communities of commitment: the heart of learning organizations,

Organizational Dynamics, 22, pp. 4–24 (electronic version). Nattrass, B. & Altomare, M. (1999) The Natural Step for Business; Wealth, Ecology, and the Evolutionary

Corporation (Gabriola Island, BC, New Society Publishers). Petts, J., Herd, A. & O’hEocha, M. (1998) Environmental responsiveness, individuals and organiza-

tional learning: SME experience, Journal of Environmental Planning and Management, 41(6), pp. 710– 730 (electronic version).

Porter, P.L. (2001) Organizational learning’s ten-year march, MIT Sloan Management Review, 42(2), pp. 30–31.

Robèrt, K.-H. (1991) Educating a Nation (www.context.org/ICLIB/IC28/Robert.htm). Senge, P. (1990) The Fifth Discipline: The Art and Practice of the Learning Organization (New York,

Doubleday). Senge, P. & Carstedt, G. (2001) Innovating our way to the next industrial revolution, MIT Sloan

Management Review, 42(2), pp. 24–38. Senge, P., Kliener, A., Roberts, C., Ross, R., Roth, G. & Smith, B. (1999) The Dance of Change: The

Challenges of Sustaining Momentum in Learning Organizations (New York, Doubleday). Stoner, J.A.F. (1996) Creating a world-class total learning organization, in: S. Cavaleri & D. Fearon

(Eds) Managing in Organizations that Learn (Oxford, Blackwell). The Natural Step (TNS) (2002) (http://www.naturalstep.org).

D o w n l o a d e d B y : [ V i c t o r i a U n i v e r s i t y ] A t : 0 4 : 4 8 2 8 S e p t e m b e r 2 0 1 0