I am attending the Business as an Agent of World Benefit Online Conference 2007, hosted by the Center for Business as an Agent of World Benefit at Case Western Reserve University. One of this afternoon’s keynote presentations by given by Chris Laszlo, a partner in the firm Sustainable Value Partners. Once again, I heard the theme of how successful, socially responsible companies are relying on a deep understanding of their customers and customer environments (“deep listening” in Chris’s words) to establish innovative new businesses. It’s the same theme driven home to me at Green Festival Chicago and from research shared in this blog.

Chris walked us through the state of change occurring (at a global level) as companies begin to explore the meaning of “sustainable” business models. The sweet spot for sustainability is where an organization simultaneously creates high value for both shareholders and stakeholders. Anything outside of that sweet spot puts the organization at risk (i.e., a non-sustainable position). For example: A chemical goods company was providing shareholder value and was entirely compliant with current environmental regulations. But it did not foresee an upcoming backlash (by a corporate customer) against a byproduct produced by one of its products. Had the company been more vigilant in scanning the stakeholder environment, it may have reduced the impact of this situation by addressing it earlier.

Chris also hit on the theme of base-of-the-pyramid (BoP) markets as being an engine of innovation. Check out the company Wizzit, which is using cell phones to establish a new model for banking in South Africa — reaching those who had no access to banking services before.
From Chris’s experience working in this new sustainability space, there are several lessons for managers. Chris’s final slide from the presentation sums up these lessons [emphasis is mine]:

Sustainability provides new insights into business strategy and the competitive environment

• A “lens” through which managers can innovate along their extended supply chains
• Sustainability is not about trade-offs. Investments can have paybacks of < 2 years
• Moral responsibility remains the foundation but not the primary motivator for action

Sustainability solutions require collaboration with stakeholders

• Partnering with stakeholders can reduce opposition and bring new knowledge
• Effective stakeholder relationships take into account perceptions and emotions
• Managers must accept that they cannot please all stakeholders all the time

Sustainability solutions need new organizational competencies

• Skills include assessing and managing stakeholder impacts along the supply chain
• Many companies lack the organizational capacity for listening and empathy
• Supporting activities include social marketing, sales training and government lobbying