Is sustainability an important issue just for the environment, Earth Day, the tech world, or accounting? I agree that carefully watching over the environment is important. I live in a high altitude desert where almost every drop of water is accounted for. Our snow pack is low again this year. I know what this means to our local agriculture, the visual beauty of the neighborhoods, our everyday consumption and our way of life. But is sustainability important just for these things?
Sustainability in business is also a huge issue.
I found a Live Visualization Stats Board here: This board gives the most interesting information and is a must see if you are at all interested in business sustainability. It states that 90% of all startup businesses in the United States fail, and that $1,523 in venture capital money is invested every second. That equals a whopping $48.3 billion every year.
1-If $48.3 billion were miles, it would equal more than 12 million trips around the world. If a commercial jet could make the trip without refueling, it would take approximately 47 hours to circle the globe. Looking at it from a different perspective, 411 people would each have to travel 14,600 times around the world to equal 12 million miles. It would take each person 80 years to accomplish this.
2- If every person in the world were to share this money it would be approximately $6.78 per person. According to the World Bank Data that is more than a day’s wages for many people. So, the $6.78 could feed these families for an extra day.
3-Actually $48.3 billion is such a huge number, it is hard to visualize
The $48.3 billion is lost monies just in the United States. Yes, some of this money comes from the deep pockets of investors hoping for a large return. Most of it is from bank loans (personal and business), retirement and other savings, loans from relatives, and operating funds for the failed business. This is money lost forever and not to be regained.
Sustainability in startups is only part of the picture. Do the large corporations also need to worry about sustainability? David Hanna’s analysis of Fortune Magazine’s Global Top 100 companies reveals that 55 of them have fallen off the list in each of the past two decades. This same pattern has been consistent in every decade since the first Top 100 list was compiled by the Brookings Institution in 1909.
Fortune Magazine also listed the companies with the biggest layoffs in 2015.
1-The US Army 40,000
2-Hewlett-Packard 30,000
7-Microsoft 7,800
9- Haliburton 6,400
10-Procter & Gamble 6,000
15-American Express 4,000
These two Fortune lists pose an enormous dilemma for large companies. Their results are slipping and they turn to downsizing to reverse their fortunes. How much does downsizing actually cost these companies, especially in the intangible assets of morale, leadership, trust, communication, and engagement. In a company, these internal problems are often felt by its suppliers and eventually its customers in the form of broken/revised contracts, lack of innovation, slower responses to market dynamics, and finally quality of products/services. How these intangibles affect the bottom line is greatly misunderstood today because most organizations don’t know how to measure “intangibles” and they don’t want to take the time to do so. According to Bain & Company,
Small wonder that the sustainability of their organization keeps many leaders awake at night. To maintain sustainability is not a quick fix answer. Many quick fixes only exacerbate the problems which they are supposed to solve. One leader of a struggling organization told a consultant, “I just need to conduct an employee opinion survey. That will make them feel better so I can get my work done.”
Sustainability is a systems problem and can only be understood by viewing the whole system’s organizational dynamics. A common example of not understanding the system is seen in the many new IT change failures. The IT system needs an update. Everyone can agree that the change is necessary, but the inability of the end user to understand and use the new system causes more work, disruption in many unseen areas, and additional strain on the budget. I am confident that most of you reading this article can give examples from your own work experience of the IT change disruption.
Trying to solve a problem without understanding how all the parts will be affected is like prescribing glasses to a patient without first making a diagnosis. I was discussing a pending change with the organization VP. His company wanted to flatten its overextended top layer of management. “We are going to reorganize, then see where the problems occur and fix them one by one,” he said. This seemed to me like trying to take out a Tablespoon of salt from the cake batter after it already has been mixed up. It might not be that easy. Unfortunately, this company has dropped in the Fortune 100 ranking two decades in a row.
A company often goes to the new bag of tricks to find the new great fix all. Even more often it continues to do business as usual while expecting a different result. What worked in the past surely will be successful today.
So where are the answers?
Look for a methodology that is systemic. Questions when finding a systemic method/model:
- Is the model intuitive?
- Is it easy to understand/use?
- Can it be applied to many different situations?
- Does it lead the organization into a deeper understanding of why it is achieving its results?
- Does is include the discovery of intangible data and tangible data?
- Does it have a beginning and end or is it a dynamic roadmap, linking back to key causes and effects in the system?
- What does the research/data say about this methodology?
Finding the answers and then acting on them will take more time than money. But what is failure to act going to cost?
Here are several sources to start your search on whole systems looks at organizations.
A white paper for download on Organization Survival. https://hpoglobalalliance.com/research/dave-hanna-the-organizational-survival-code/
The HPO Center Framework and data validation. http://www.hpocenter.com/hpo-framework/