We are learning how to build a business case for sustainability in five (not easy at all) steps:
Know your audience
Construct the Case
Crunch the Numbers
Pitching the Case
If you missed the first two posts, go here to catch up. We started yesterday with a short review of Step 1: Prepare. We said that a business case simply (though it's not simple) is telling a compelling story about meeting a business need. And to do this effectively, you need to find out how and when decisions about proposals and business cases are really made.
But we aren't just creating a business case for an investment, a new product or project. We are creating a business case for sustainability. As we will see, like running a piece of software on an upgraded operating system, the business case on a Sustainability Platform is even more powerful and insightful.
Step 1: Preparing...on the Sustainability Platform
How do we "prepare" to develop a business case while considering environmental and social risks and opportunities? If a business case is a compelling story of meeting a business need...what about what society needs?
Before we answer those questions, a quick word on platforms. Considering sustainability as a "platform" is a new way of thinking about social and environmental innovation. It becomes a catalyst for fresh thinking.
Techopedia defines platform as "a group of technologies that are used as a base upon which other applications, processes or technologies are developed." A platform used to refer mainly to a computer's operating system. For example, you could say "Hey, my PC is running Windows XP" or, to sound cool, "My PC is running a Windows platform." Platform has recently exploded in the English language, as Silicon Valley start-up lingo seeps into the everyday and it has even become its own business model. The "platform model" is the business design for Facebook, LinkedIn, and iTunes and thousands of others.
Steven Johnson, author of Where Good Ideas Come From: The Natural History of Innovation, points to platforms as key springboards of creativity throughout history. Analogues can even be seen in nature. For example, he points to coral reefs as platforms as they give rise to increasingly complex and varied forms of life. In technology, Global Positioning System (GPS) is a platform that birthed a thousand applications and perhaps the ultimate platform is the mobile phone.
In sum, a platform is a base and springboard for innovation. And here's the point, thinking of sustainability as a platform for innovation unlocks opportunities that hide from those still suffering from the cost and compliance model.
Preparing to construct a business case on a sustainability platform invites us to reconsider:
Business needs (and the needs of society)
Business cases process (and the inclusion of social and environmental risk)
Stakeholder engagement (widening the circle)
Business needs and the needs of society
Traditional business case development ignores externalities of
social and environmental costs and risks. John Sylvan, inventor of the K-Cup, created a product with a strong conventional business case and disastrous results in waste generation (leading even to alien take-over according to this fun video). It is an invention he now regrets (The Atlantic, 2015).
Creativity must be tempered with responsibility. And a business case process is the perfect place to interject that kind of rigor before investments are made.
Business case stage gate process must ensure inclusion of all costs and risks
Don't hear what I am NOT saying: a business case needs to address a business need. But the process to identify the need and alternatives needs to reflect current best practice and accurate analysis of all costs and risks.
I am recommending a virtuous cycle of innovation around a business need:
I recommend the ESRO (environmental and social risk and opportunity) assessment worksheet I use with students and clients (pictured below). In one-page it includes visuals that allow consideration of the entire life-cycle (of a product or capital project) and surfaces key social and environmental risks and opportunities. Of course, if your company has completed a materiality assessment, this would be a good time to make use of it.
Environmental and social risk and opportunity assessment (ESRO)
Stakeholder Engagement and Widening the Circle
Finally, conventional business case development involves discussions with key decision-makers and subject matter experts. In practice, this means people you conveniently know and aren't too far from your desk or your contact list.
Running a business case on a sustainability platform opens up other opportunities. Since environmental and social risks take place up and down the value chain (and outside the walls of the department and even the business), you need to add some new names to your list of stakeholders to engage.
Imagine if John Sylvan, the inventor of K-cups, contacted the National Waste and Recycling Association or even his local municipal solid waste and recycling authority. Or what if he reached out to Cradle to Cradle Certification organization or TerraCycle.
But that didn't happen. Conventional business case development would encourage him to talk with:
consumers (who loved the convenience of the K-cup)
marketers (who quickly grasp the value proposition)
coffee suppliers (who loved the market opportunity)
suppliers (who could make the machines and cups)
In other words, the usual business case process doesn't have us speaking with anyone who is helping to identify the full costs, risks and opportunities. If you aren't running your business case on a sustainability platform, your calculation of risk, value and returns are, by definition, inaccurate.
In sum, the inclusion of sustainability leads to more accuracy. Greater accuracy in estimates of costs and benefits strengthens your business case.
On to Step 2: Know Your Audience tomorrow!
Know someone interested in making a great business case?
Invite them to sign up.