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Sustainability for Strategic Advantage

Chris Laszlo

February 3 5, 2012

Purpose Sustainability issues such as energy and food security, water, chemical toxicity, climate change and poverty are introducing greater levels of complexity into strategy decisionmaking and often have far-reaching implications in todays competitive environments. Pressing ecological and social challenges are becoming business opportunities. Stakeholder value is a rapidly growing source of competitive advantage. Taking advantage of this source, however, requires new management competencies. Case studies of leading mainstream companies are used to analyze how business value is created for a range of social, health and environmental initiatives. Participants will look at sustainability business strategies that reduce risks, drive down costs, create new revenue streams, serve new markets, and position companies to take advantage of changing societal expectations. Environmental issues such as climate change are covered along with social issues such as global poverty. Participants acquire the competencies required to make effective business decisions based on integrating sustainability into the core of a companys value added activities. This course connects the fields of sustainability, strategy, organizational development, and design. It is intended for students and managers who recognize the changed market reality in which caring for human health, social well-being, and ecological integrity is becoming a smarter way to do business.

Course Outline
5-9pm Friday What is Sustainability? Five key distinctions Nissan/Renault: green gamble or smart business? Under what conditions is sustainability performance relevant to strategic advantage? Sustainable Value: creating value for shareholders and stakeholders The six levels of value creation Life cycle value chain impacts Inquiry into the new business opportunities Discussion of insights from Peter F. Drucker 8 -5pm Sat Case studies of leading mainstream companies: Walmart, DuPont, Monsanto, Triodos Bank and small and mid-size companies Incremental change versus heretical innovation Doing less harm versus offering positive solutions Sustainable Cloud Set up for group projects lunch Base of the Pyramid (BoP) Serving the four billion people excluded from global markets Examples from India Groups work on their projects 8-5pm Sun Is Sustainability the flavor-of-the-day? Three BIG trends: Declining resources, radical transparency, and rising expectations Spirituality in business: inner transformation needed to drive deep sustainability Corporate governance and ethics working lunch Group projects are presented and discussed Debrief and close

Group work Beginning on Friday, participants brainstorm sustainability-related business opportunities in their organizations (or company of their choice). On Saturday, groups of 7 9 participants choose one opportunity among those proposed by their members. A product/service/business process for a sustainability project to work on in class Choose a product or service with significant environmental or social impacts Projects should have strategic business value The groups assess the business risks and opportunities associated with sustainability issues along the chosen value chain and, secondly, propose a redesign of the product/service/process in a way that elevates both business and societal value. A set of pre-assigned questions help guide the inquiry and proposal-making process. On Sunday, each group presents their findings. The oral presentations are assessed using the following criteria: the persuasiveness of the business case, the degree of stakeholder listening and stakeholder inclusiveness in the inquiry process, and the extent to which the proposed solution creates shareholder and stakeholder value.

Grading Twenty five percent (25%) of your course grade will be based on your inclass presentation. Criteria are persuasiveness of the business case, your ability to sell your project to top management, and fun & creativity. Twenty five percent (25%) of your course grade will be based on your PowerPoint document summarizing the project (submitted post-class). Twenty five percent (25%) of your course grade will be based on your personal lessons learned paper, 2 3 pages in length, containing your own individual reflections and takeaways from the class. Twenty five percent (25%) of your course grade will be based on the value added by the frequency, consistency and quality of your class contributions.

Resource Readings Books 1. Hart, Stuart (2010), Capitalism at the Crossroads (Third Edition): Next Generation Business Strategies for a Post-Crisis World, Wharton School Publishing. Chs 1 and 4 2. Laszlo, Chris and Nadya Zhexembayeva (2011), Embedded Sustainability: the Next BIG Competitive Advantage, Stanford University Press. Excerpt, Chs. 3-5 as PDF 3. Lovins, Amory. (2011) Reinventing Fire: Bold Business Solutions for the New Energy Era. Chelsea Green Publishing Company. Chs. 1, 2 and 4. Articles 4. Meyer, Christopher and Julia Kirby, Leadership in the Age of Transparency, Harvard Business Review, April 2010 5. Nidumolu, Ram, C.K. Prahalad, and M.R. Rangaswami, Why Sustainability Is Now the Key Driver of Innovation, Harvard Business Review, September 2009

Video 1. Michael Porter on shared value (16 min):