Linking Sustainability to Corporate Strategy

 

https://tinyurl.com/385ww2ec

RoundMap® : Framework 12 Principles

 

Unveiling the Twelve Cornerstones of RoundMap: Pioneering Principles for Transformative Business Success

 

Welcome to our guide on the Core Principles of RoundMap®—your compass to conquering business complexities and propelling sustainable growth. RoundMap®, not just a framework but a holistic ecosystem, fortifies modern organizations with crucial insights and strategies sculpted around its foundational principles.

At the heart of RoundMap® lie twelve robust principles (in alphabetical order):

1.                All-Encompassing Integration – Merges various business facets into a unified, holistic framework, ensuring a seamless interplay between different operational areas.

2.              Applied Systems Thinking – A holistic approach that views an organization as interconnected, emphasizing understanding complex interdependencies and long-term impacts.

3.              Augmented Execution – Harnesses the power of technology and advanced intelligence to enhance strategic planning and execution, pushing the boundaries of traditional business practices.

4.             Consentric Alignment – Facilitates consent-driven decision-making, distributed from the center to the constellation of teams, thereby enhancing resilience, adaptability, and accountability.

5.             Cyclical Evolution – Advocates for continuous improvement through cyclical processes, fostering an environment of perpetual growth and adaptation.

6.             Empowered Action – Promotes a leadership style that is collaborative and empowering, distributing responsibilities across the organization to encourage innovation and engagement at all levels.

7.              Integrative Diversity – Balances specialized expertise with a broad, holistic understanding, embracing diverse perspectives for comprehensive problem-solving and innovation.

8.             Impact-Focused Approach – Prioritizes actions and strategies that yield sustainable and positive impacts within the organization and the wider community.

9.             Human-Centric Orientation – Puts people at the forefront, focusing on human needs and experiences to drive organizational success and employee satisfaction.

10.           Skillful Mastery – Highlights the importance of skill development and effective utilization, ensuring team members are equipped to contribute their best.

11.             Story-Driven Communication – Utilizes the power of storytelling to convey the organization’s values, vision, and mission, creating a compelling and relatable narrative.

12.           Whole System Engagement – Concentrates on nurturing the overall health and dynamism of businesses, engaging every aspect of the organization in the journey toward excellence.

Our guide will delve into understanding each of these principles, exploring how they drive the effectiveness of RoundMap® across diverse business contexts. Beyond theoretical knowledge, you’ll gain invaluable insights into implementing these principles, propelling your organization toward sustainable prosperity.

Whether you’re a seasoned leader, a start-up entrepreneur, or an aspiring business professional, gaining insights into these principles will empower you to navigate the intricate corridors of the business landscape confidently. Prepare to embark on a profound learning journey that fundamentally redefines how you perceive and act within the business world.

Unravel the RoundMap® framework, derived from its eight core principles, to illuminate your pathway toward sustained relevance and prosperity. Dig in, and let your journey toward business excellence commence.

Navigating the Twelve Principles of RoundMap

 

 

1. All-encompassing Integration

RoundMap® is an all-encompassing framework meticulously designed to integrate every facet of organizational dynamics. Whether addressing strategy, operations, marketing, or stakeholder engagement, RoundMap® offers a holistic view, ensuring that no element is viewed in isolation. It recognizes the interconnectedness of all organizational components and promotes a cohesive approach to decision-making and value delivery.

By providing a comprehensive roadmap transcending departmental silos and industry-specific challenges, RoundMap® empowers organizations to achieve optimal coherence, drive alignment, and ensure that every action contributes harmoniously to the overarching objectives.

2. Applied Systems Thinking

Systems Thinking, as a principle within the RoundMap framework, is an approach that views an organization not just as a collection of independent components but as a cohesive, interconnected whole. This perspective emphasizes understanding how different parts of the organization interact and influence one another, creating a network of relationships that defines the overall system. In Systems Thinking, the focus shifts from isolated issues or challenges to the broader patterns and structures that drive behaviors and outcomes. This holistic view encourages looking beyond immediate causes and effects, considering the longer-term implications and the dynamic interplay of various elements within the system.

Applied Systems Thinking in an organizational context involves recognizing the complex and often subtle interdependencies within and beyond the organization’s boundaries. It prompts leaders and team members to consider how decisions and actions in one area can ripple through the entire system, impacting other areas in ways that may not be immediately obvious. This approach fosters a deeper understanding of the organization’s functioning, enabling more strategic and effective decision-making. By adopting Systems Thinking, organizations can anticipate unintended consequences, identify leverage points for change, and develop solutions that address root causes rather than symptoms, leading to more sustainable and resilient outcomes.

3. Augmented Execution

RoundMap’s augmentative ability is a testament to the integration of expansive thought and cutting-edge technology in business intelligence. Its 48 Thinking Caps gives executives a comprehensive panoptic view of business operations. This multi-faceted perspective allows decision-makers to dive deep into every nook and cranny of their organization, from its strategies and structures to its underlying culture and purpose. 

Furthermore, leveraging the power of augmented intelligence with an interactive chat agent, RoundMap® systematically maps out the current business dynamics—highlighting strengths, pinpointing opportunities, identifying challenges, and laying out visions, missions, plans, and more. In an era where business complexities continue escalating, making it increasingly challenging to account for every variable, RoundMap® is an invaluable compass, guiding executives to make informed and strategically sound decisions for their journey.

4. Consentric Alignment

Consentric Alignment, as envisioned in the Consentricity™ model, marks a significant departure from the traditional top-down command-and-control structures still prevalent in many organizations. This innovative approach to organizational design is inspired by the concept of concentric circles, where each circle represents different roles and functions, yet all are interconnected and harmoniously aligned. At its core lies the Circle of Confluence, a pivotal forum where collaborative governance and equitable decision-making occur. Embodying the organization’s highest values, this central circle sets the tone for decision-making, ethical conduct, and cultural resonance, ensuring that these core principles permeate every layer of the organization.

Around the central Circle of Confluence are various concentric circles – including Councilors, Catalysts, Coordinators, and the Constellation of Teams – each with distinct roles but working in an integrated fashion. This structure fosters a consent-based decision-making process, where decisions are not imposed from the top but are reached through collective agreement, respecting and valuing the input of each circle. Such an arrangement promotes inclusivity and ensures that every decision aligns with the organization’s core values and objectives. The Consentricity™ model, therefore, creates a cohesive and harmonious system where the traditional hierarchies are replaced with a more fluid, dynamic, and inclusive form of governance, reflecting a deep commitment to collective success and ethical standards

5. Cyclical Evolution

At its essence, a market participant is driven by the ethos of efficient value creation and optimization, always aiming for the cost of value production to be lower than the value retrieved upon its delivery to the market. However, in the VUCA (Volatility, Uncertainty, Complexity, and Ambiguity) world, organizations might confront scenarios where the expense of realizing value temporarily surpasses its creation. This deviation doesn’t detract from the ultimate goal of profitability but underscores the imperative of adaptability and building resilience for the future. 

Herein lies the significance of cyclical leadership—a leadership style that recognizes the inherent ebb and flow of business cycles, adapting strategies and tactics in response to the changing rhythms of the market. Rather than being linear and fixed in approach, cyclical leaders iterate, pivot, and evolve, ensuring their organization’s long-term viability and competitiveness in perpetually evolving market terrains. This agility and cyclical perspective position organizations to weather challenges and capitalize on emerging opportunities.

6. Empowered Action

RoundMap champions Empowered Action and Distributed Leadership, moving away from traditional leadership models where authority is concentrated at the top. This paradigm shift recognizes that every team member, with their unique blend of skills, knowledge, and experience, plays a vital role in guiding the organization. By empowering individuals at all levels, this approach fosters a culture where responsibility, engagement, and ownership are not just top-down mandates but are ingrained in every aspect of the organization.

Empowered Action offers numerous advantages. It significantly bolsters employee engagement and commitment by giving all members a direct role in decision-making and leadership. This empowerment leads to a surge in innovation as diverse perspectives contribute to creative problem-solving and strategic thinking. Team morale and motivation also soar, driven by collective responsibility and shared achievement. This approach adeptly spreads decision-making and leadership tasks in an era of organizational complexity, ensuring agility and adaptability. Moreover, dispersing authority provides a robust foundation for resilience during change, maintaining continuity and stability. This focus on Empowered Action is not just about distributing tasks; it’s about instilling a sense of leadership at every level, turning the entire organization into a dynamic, responsive, and cohesive entity.

7. Integrative Diversity

Balancing individuals with deep expertise and polymaths – deep and broad knowledge – is crucial for fostering creativity, innovation, complex problem-solving, and synthesis in organizations. Specialists bring focused, in-depth insights, while polymaths contribute wide-ranging perspectives that can bridge diverse areas of knowledge. 

This blend enhances the organization’s ability to generate novel ideas, tackle complex issues, and integrate different viewpoints for more comprehensive solutions. It creates a dynamic environment where diverse skills and perspectives coalesce, driving forward-thinking and innovative outcomes.

8. Impact-Focused Approach

The impact-driven core principle of RoundMap® emphasizes driving meaningful change within and beyond an organization. It involves a comprehensive approach to analyzing, formulating, implementing, and evaluating operations based on their impact. 

This four-step recursive process integrates impact assessment into the strategic framework, ensuring business objectives align with positive outcomes. An impact-driven organization continuously refines its approach, like maintaining a well-oiled machine, striving to create beneficial changes, differentiate itself, and improve long-term performance while contributing positively to the global landscape.

9. Human-Centric Orientation

Human-centric organizing, anchored in virtuous cycle leadership, revolutionizes organizational culture by emphasizing human value. It fosters environments of psychological safety, enabling open communication and innovation. This approach cultivates resilience and adaptability, enhancing stakeholder satisfaction and aligning internal and external success. 

The virtuous cycle principle underlines the reciprocal benefits of caring for employees and customers, reinforcing that valuing individuals drives transformative growth. Integrating this theory encourages organizations to focus on their people, creating a thriving internal ecosystem that promotes sustained growth and shared prosperity.

10. Skillful Mastery

Skills-First, a pioneering principle in modern talent acquisition, revolutionizes traditional hiring paradigms by prioritizing the development of essential competencies over static qualifications. This strategic approach recognizes that an individual’s skill set, practical abilities, and aptitudes indicate their potential success in a role more than conventional markers such as degrees or certifications. It represents a departure from the one-size-fits-all mentality, fostering an environment where diverse skills contribute to a dynamic and enriched workplace. Embracing Skills-First ensures real-world relevance, promotes diversity and inclusion, and positions organizations to adapt swiftly to evolving industry landscapes.

This transformative philosophy enhances recruitment strategies and unlocks the full potential of individuals within an organization. By valuing and cultivating diverse skills, Skills-First allows for tailored development paths, fostering a meritocratic environment where advancement is based on demonstrated abilities. This approach enhances employee engagement and satisfaction and acts as a proactive strategy for future-proofing talent, ensuring organizations are equipped with the capabilities needed to stay competitive in an ever-evolving business landscape.

11. Story-Driven Communication

Storytelling, an age-old art, plays an invaluable role in the intricate dance of value signaling. Whether illuminating a compelling need or showcasing an abundant surplus, a well-crafted story built upon a riveting plot can evoke emotions, drive action, and foster connections. Enter the realm of StoryCasting™, a dynamic fusion of storytelling and casting a line, much like an angler aiming to attract fish. Storycasting is a strategic lure in business, drawing customers into a brand’s narrative. 

At its heart, every potent story pivots on its plot—a series of interconnected events or moments that lay the foundation for the narrative. Through this plotted journey, brands can effectively communicate their value propositions, resonating with the desires and aspirations of their audience. As such, a masterfully told story informs and beckons, guiding listeners toward the intended value, be it a call to action or an invitation to partake in a surplus offering.

12. Whole System Engagement

Whole System Engagement, as a key principle of RoundMap®, is a transformative approach that integrates the entire human system of an organization into the process of change and development. Rooted in the principles of Appreciative Inquiry, this method centers on discovering and amplifying the existing strengths of an organization – its team, management, systems, and processes. Rather than focusing solely on fixing problems, it encourages exploring and building upon what already works well. This positive focus creates a fertile ground for innovation and growth.

In this approach, every individual in the organization is invited to participate in shaping its future. This inclusive, collaborative process not only ensures a deeper understanding and alignment with the organization’s mission but also fosters a sense of ownership and commitment among all stakeholders. By empowering individuals to contribute their insights and ideas, Whole System Engagement leads to more robust, sustainable changes. It’s a shift from traditional top-down decision-making to a more democratic, bottom-up approach, where change is co-created, reflecting the collective aspirations and strengths of the entire organization.

How to Sustain Your Strategic Management System

 

Managing strategy and sustaining a strategic management system is a multi-faceted effort and includes elements as diverse as: a) how well the organization is maintaining its focus on its strategic vision, plans and initiatives; b) whether or not people, systems, and communication activities are in place to maintain the momentum of desired change; c) establishing a sense of urgency in the workforce; d) aligning reward and recognition systems with strategy to motivate employees to do the right things; e) properly defining roles and responsibilities for “champions” to keep the workforce informed about the strategic priorities and desired levels of performance; f) organizing an office of strategic management or dispersing those responsibilities elsewhere for the deployment of strategy and performance reporting; and g) instilling a culture in the organization where “strategy is everyone’s job”.1   

While one would think that after investing the resources needed to effectively formulate strategy leaders would do the same to effectively implement strategy, often that is just not the case. And many times, strategy execution failure is the result of a simple lack of discipline and common business sense.  

Figure 1 illustrates simple routinely scheduled strategy progress and review sessions throughout the business year that can provide organizations with intelligence to act to sustain strategic management.

 Figure 1: Different Types of Review Meetings Needed to Sustain Strategy  

This simple meeting schedule might look like common sense, but it is surprising how many organizations lack this simple discipline. Nohria, Joyce and Robertson (2003) remind us that new management ideas heat up and fizzle out. So how can you tell which ones are critical for outperforming your competitors and sustaining your strategy? Nohria, Joyce and Robertson (2003) research revealed that most techniques have no direct impact on superior business performance. But what did was mastery of business basics! Hopefully maintaining this basic schedule will keep your team on track.  

Nohria, Joyce and Robertson (2003) also posit that to sustain superior (strategy) performance, you must excel at four primary management practices—strategy, execution, culture, and structure—and any two of four secondary practices—talent, leadership, innovation, and mergers and partnerships. The key to this “4 + 2 formula” is not which technique you choose within each practice, but how well and consistently you stick with it. There’s no recipe to follow.2 But maintaining a regular dialog organized around these topics will help your organization continue to strive for excellence.  

Sources

1. Balanced Scorecard Institute (2018). The Strategic Management Maturity Model™. Cary, NC.
2. Nohria, Nitin; Joyce, William and Robertson, Bruce. (2003, July). Adapted from: What Really Works? – Harvard Business Review.

Joe DeCarlo

https://balancedscorecard.org/

Investors Want to Know Your Sustainability Business Case

 

By Alexis Colombo, Gerry Hansell, Jesper Nielsen, and Sam Farley

With so many companies investing behind their net-zero commitments—and half of all assets under management held by investors committed to sustainable investing—why do so few business leaders feel that investors are giving them credit for their
sustainability investments?

We set out to answer that question and, in fact, found no correlation between the environmental component of a company’s overall ESG score and how much the market rewarded its sustainability efforts. At the same time, we knew that many companies were rewarded by investors for smart sustainability strategies. Maximizing your ESG score is important, but in our experience, the best sustainability strategies go beyond just checking all the boxes. Rather, they check some boxes—those that enhance competitive advantage—more than others. After all, with attractive and growing green profit pools across nearly all sectors, it should be possible to chart a value creation strategy that’s green in more ways than one.

Given that starting point, our hypothesis was that investors favor sustainability moves with a compelling business case over ones with a less clear economic rationale. Using this lens, we evaluated a rich dataset of sustainability-related initiatives announced between 2015 and 2022 by the world’s largest public companies, seeking to identify which elements of a thoughtful, verifiable business case were part of each one. We then looked at the market’s reaction—and confirmed that initiatives with a more robust business case created more value. (For more on our methodology see “About the Research.”)

ABOUT THE RESEARCH

We also found that greenwashing doesn’t work. Companies that issued a lot of announcements mentioning few business case elements were punished. Investors reward a compelling narrative grounded in a smart sustainability strategy that focuses on the material moves that drive competitive advantage. Companies that are clearer about the intersection of their sustainability and value creation agendas may even help bridge the “great disconnect” highlighted in our previous research between institutional commitments at investment firms and the actual investment criteria used by portfolio managers.

Elements of a Sustainability Business Case

Between 2015 and 2022, only 20% of companies saw a positive market reaction to 75% or more of their sustainability-related announcements—and nearly a third saw half or more of their announcements destroy value. (See Exhibit 1.) Moreover, after three days, the aggregate of announcements we studied didn’t deliver a shareholder return distinct from that of the overall market. But when we applied the business case lens, our hypothesis was confirmed. Those sustainability-related announcements that included some or all of the following seven elements associated with a strong business case did create value:

• Material to the Company. The effort is big enough to make a difference given the scale of the company.
• Material to the Sector. The investment area is seen by the Sustainability Accounting Standards Board as a material environmentally related disclosure topic. For example, in automotive, SASB calls out fuel economy and use phase emissions, material sourcing, and materials recycling as the critical disclosure topics.
• Connected to the Core. The initiative is tied to the company’s core strategy.
• Clear on Funding. The announcement discusses the investment’s magnitude and sources.
• Tangible Goals. The company offers a way for investors to monitor progress, such as a revenue target or deadline.
• Third-Party Verified. Progress will be audited by a trusted external entity such as the Science-Based Targets Initiative, which can attest to member companies’ progress toward their net-zero goals.
• Drives Value Creation. The announcement describes the move’s potential financial upside for the company.

We found that the presence of any of these business case elements on its own in an announcement creates value. (See Exhibit 2.) What’s more, articulating the potential value creation upside of a sustainability move delivers twice the positive impact of any of the other six elements.

It shouldn’t be hard to find sustainability investment opportunities in nearly every sector that are a win-win for both the planet and investors. In auto and mobility, it’s being on the right side of the transition from internal combustion to vehicles powered by electricity or hydrogen. In mining and materials, it’s capturing an advantaged position in critical minerals like the rare earths essential to the battery technology that supports the electrification of everything. (BCG’s 2021 Value Creators Report, “Value Creation in a Decarbonizing Economy,” offers additional perspectives.)

Better Business Cases Create More Value

Obviously, no single one of the seven elements on its own constitutes a real business case. But in combination they do. The best companies are saying, We’re doing something sustainability-related that addresses a big issue facing our industry. And not only that: the move is consistent with our strategy, is related to our core business, has the potential to deliver a material financial upside—and here’s how to track our progress. That’s five business case elements that tell a compelling investor story.

Our deep dive into three sectors—mining, auto, and consumer goods—demonstrated the impact of this approach. We selected mining and auto because their traditional business models are threatened by the climate transition—and both have potentially attractive future profit pools. We selected consumer goods to see if our findings in mining and auto would hold true in a sector less existentially challenged by climate and sustainability megatrends.

For example, the best-performing announcement for Stellantis (formed from the merger of Fiat Chrysler and PSA Group) concerned a $223 million investment in three Indiana-based plants that would support the company’s goal to have low-emission vehicles account for 40% of its US sales by 2030. And that announcement included six out of seven of our essential business case elements.

Across all three sectors, announcements that incorporated five or more of the business case elements outperformed those that included two or fewer by 2.1 percentage points. (See Exhibit 3.) And the outperformance was even greater when one of the elements was a discussion of how the move would drive future value creation.

In consumer goods, the business case effect was less pronounced but still observable, suggesting that all companies can benefit from applying this lens when setting and communicating their sustainability priorities.

Among mining companies, for example, Fortescue stood out with 41% of its announcements citing five or more business case elements. Of those, 86% created value—the sole exception announced a possible $8 billion investment with no mention of its potential value creation impact. The company’s best-performing announcements all related to initiatives driven by Fortescue Future Industries, a new division established in 2018 to produce green hydrogen using energy from 100% renewable sources. One of FFI’s best performers was a 2022 announcement (citing five business case elements) of a partnership with European energy leader E.On to explore the feasibility of shipping 5 million tonnes of green hydrogen to Europe by 2030—enough to replace one-third of the natural gas Germany imported from Russia each year until recently.

Quality and Consistency Are Rewarded

Our research also revealed that companies with a track record of consistently communicating strong sustainability business cases are disproportionately rewarded. Companies generally outperformed when about one-fifth or more of their sustainability announcements included five or more of the seven business case elements. (See Exhibit 4.)

And up to a point, those that issued more best-practice announcements got better results. Our analysis suggests that for sustainability-related announcements featuring a clear business case, the sweet spot is between one and two per quarter (the green area in Exhibit 4); companies issuing more than that saw lower returns. We also found that greenwashing doesn’t pay. Companies that made a lot of low-quality announcements (the orange area in Exhibit 4) actually destroyed value.

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Strategy is about making choices. Ultimately, the best way to create value with sustainability is to concentrate on the things that make a difference for both the planet and your competitive advantage. Well-articulated moves that position a company to win in a decarbonized world are rewarded. Our research necessarily focused on what companies announce, but the findings are about more than the words you use. You can’t articulate a compelling business case if you don’t already have a thoughtful sustainability strategy guiding your investment priorities. In the final analysis, that’s what investors want.

https://www.bcg.com/publications/2023/investors-want-to-know-your-sustainability-business-case