It does not seem so long ago that companies formulated sky-high ambitions for the magical year of 2020. A year that resonates so well when asked for inspiring views and great plans. But guess what, 2019 is already here and in the blink of an eye 2020 will be at your doorstep. Hopefully 2019 will be a year of realising the big ambitions set for 2020 which is no longer a dot on the horizon, but rather it is approaching all too quickly.
About time to formulate firm ambitions that go beyond 2020
All too quickly because many societal challenges have not been resolved. In the Netherlands the CO2 emissions for 2020 are estimated to be much higher than agreed upon, according to this report by Kalavasta, Berenschot and CE Delft. This means that in order to realise the national reduction target of at least 49% for 2030, a lot still needs to be done.
On global level there is also reason for concern: the Sustainable Development Goals (SDG) progress report shows the number of people with hunger has increased to 38 million, nine out of ten inhabitants of cities breathed polluted air and the livelihoods of more than 1 billion people are threatened by soil degradation. Luckily we also see positive developments. More and more people have access to electricity and the number of people working for less than a living wage in return is decreasing. Above all, it is certain from the growing number of public and private initiatives that sustainability is here to stay.
At Sustainalize we see that companies have an important role to play in reducing their negative impact on the environment and accelerating positive impact via innovative products and services. The question is how to stay relevant as an organisation in an ever changing world. After all, without clear positioning and bright goals for the future, an organisation is unable to steer on positive change.
Sustainability as a key strategic concept is becoming widely embraced by companies. Yet the tangible results are still to come. Because, as far as we are concerned, sustainable change does not go far enough. And with 2020 just around the corner, the time has come for firm ambitions ‘beyond 2020’.
How to develop a sustainable strategy as a company…
Among our customers, mainly companies with a global impact, we see great motivation and efforts to contribute to the global 2030 agenda for sustainable development, the SDGs. But what are the right ‘Big and Hairy Audacious Goals’ to guide an organisation and enable them to steer towards more a more sustainable future?
We are lucky enough to support a growing number of companies with these questions and are happy to share our experiences. We believe there is no ‘one-size-fits-all’ approach. We look at the strategic direction of the company through an integrated lens, and often use the ‘strategy backbone’ as a guide. Strategy development is a complex process, and our approach helps to ensure we all speak the same language. Let us start by explaining how concepts like purpose, vision and ambitions are linked to one another.
…and for what point in time?
In our ‘strategy dictionary’, the purpose of a company describes the positive impact it wants to make on the world and/or lives of its stakeholders. It is the fundamental ‘why’ of an organisation. A good example is the chemical company DSM who wants to ‘create better lives for everyone, now and in the future’. Because a purpose touches the core of a company, it is often timeless. A vision does, however, have a clear element of time. With a vision you tell what you want to achieve as a company at a certain moment in time. This could be formulated as a ‘Big Hairy Audacious Goal (BHAG)’, a business management concept that was introduced in the nineties by Jim Collins and Jerry Porras to describe goals that are more strategic and motivating in nature. For example, Randstad wants to touch the work lives of 500 million people by 2030. Via this statement, the human resources company shows that it wants to go beyond the current core activities, and tackle societal challenges around youth employment, diversity and inclusion.
With 2020 at your doorstep, the time has come to devise your own inspiring vision for the future. Since the SDGs are formulated for 2030, it would make perfect sense to set this year as the goalpost for your vision. Yet there may be good reasons to choose another year, like 2025 for example, because the business you operate in is transforming so rapidly that 2030 is simply too far away to formulate a meaningful vision. Another option is to look further beyond the horizon towards 2050 to align with the Vision2050 set by World Business Council for Sustainable Development (WBCSD).
From an inspiring vision towards tangible ambitions
A purpose and vision alone will not bring you anywhere unless it is accompanied by a (medium) long-term vision consisting of different ambitions. Starting from a thorough insight into the current situation of the business, ambitions are developed with a shorter timeline than a vision. They usually answer the question: ‘where do we want to go in the next 3 to 5 years?’. DSM translated its purpose into a vision and strategy with different goals. In 2020, the group wants to realise 65% of its turnover through sustainable products (‘Brighter Living Solutions’). A ‘good’ ambition is measurable, and is therefore accompanied by an output Key Performance Indicator (KPI). The output KPI with a ‘target’ helps to assess whether the ambition is actually being achieved.
And, then what?
This is just the start. A long-term vision with corresponding ambitions does not yet answer the question: ‘how do we realise our vision and ambitions?’. For this purpose, you need to define which activities you have to undertake as a company and/or what you need to focus on in order to achieve your goals. You could call these your drivers, or critical success factors. In other words: activities that you are able to steer on. This process comes with dilemmas. Take the example of a company that wants to be 80% circular in 2025. That means that within the procurement process the desire for circular raw materials must resonate in the purchasing process. Then, you need to base your procurement decision on this, even though it most likely involves a fundamentally different way of working with your suppliers. Drivers are the key for a company to successfully realise its sustainable strategy. Together with our clients, we develop a ‘strategy map’ that will guide the successful execution of the sustainable strategy.
Is it easy to define and implement a meaningful vision with ambitions beyond 2020? No, unfortunately not. But, is it necessary? Yes, it is essential! The world asks for companies with courage and ambition, and we’re more than happy to support companies to meet this growing demand. Want to know more about our approach? Please drop us a line! Let’s work together to kick start a busy year in which many of the 2020 ambitions will be realised, and meaningful visions and ambitions will be developed for beyond 2020. With the best wishes!
Author: Anne-Marie Slaa, consultant Sustainalize