Sustainability Beyond The Hype

A catchword in search of a definition

Over the past twenty years, “sustainability” has become one of the most commonly used terms in the economic and business literature. Yet it has been such a fast-evolving term that there is no common definition for it. Those who first used it were urging industrial producers not to lay waste to the environment: sustaining was the simple opposite of depleting the earth’s bounty of natural resources. Today the term has stretched to include such diverse aims as erasing discrimination, ending hunger,?and ensuring access to healthcare—in other words, addressing societal as well as environmental ills.?

The rise of sustainability has been paralleled by an increasing focus on ‘ecosystems’ – not just natural ones but also evolving business and economic constellations. Note that Peter Drucker introduced?the term ‘social ecology’ alongside the natural variety as early as the 1960s and 1970s. For him the social ecology was the complex system of man-made organizations and institutions that connected?people and made society work. It is obviously tightly interwoven with the natural ecology; indeed?Drucker believed they should be thought of as a single entity.?

Recognizing the dynamic nature of ecosystems moves us far beyond the simple cause-and-effect?expectations that are still the basis for traditional management theory and practice. That familiar, linear thinking gave us today’s dominant machine paradigm for organizations, characterized by hierarchical control and extensive bureaucratic processes.?

Management for real-world complexity

The disconnect between real-world complexity and unpredictability and the simplistic methods we use?to achieve organizational and institutional results is widening every day. The time when we could expect?to extrapolate the future from the past and execute a meticulously designed plan to achieve a single desired outcome is well and truly past. We need to go out to meet the future, learning from each step?on the way. Innovative management approaches are beginning to do this, and are gradually becoming more widespread. Think about Agile, Design Thinking, Lean Startup, Business Model Canvas and Rendanheyi from Haier to name a few. Yet, when we look at major sustainability-focused initiatives?such as ESG and SDGs aiming to improve the world via systematic (management) approaches, we?quickly realize that they are firmly mired in industrial age management thinking.?

Rethinking Sustainability?

It is time to rethink how we think about managing sustainability: first we must get the notion of? sustainability right. I will not attempt an all-encompassing final definition here – if terms are used too? broadly in various contexts they lose their meaning, which is what has happened here. But we need to make one thing clear from the start: going far beyond preserving and nurturing the natural world,? sustainability must include the idea of long-term value creation and the vitality and viability of all key ecosystems, whether natural, social or economic.?

Contained in sustainability, then, is also the notion that management must ensure the long- term viability of the business – something that is too often left out of account when additional tasks are? heaped on business leaders. Peter Drucker abhorred the narrow pursuit of shareholder value because?of its obsession with short term results and the built-in incentives to ‘distribute and downsize’ rather? than ‘retain and reinvest’, to use William Lazonick’s characterization. Less well understood is Drucker’s?equally forthright rejection of the so-called stakeholder model, with its lack of clarity about business priorities. To prioritize all stakeholders effectively means having no priorities and no focus.?

Instead, the priority for Drucker was to nurture the long-term capacity of the business to create value?for society. Along with this comes responsibility of business leaders to keep raising the performance?of their organizations, operating profitably enough to keep thriving in competitive markets. A as Drucker? put it: “unless [a business] discharges its performance responsibility, it cannot discharge anything else.?A bankrupt business is not a desirable employer and is unlikely to be a good neighbor in a community.”?It was always crystal clear for Drucker that business viability comes from generating value for? customers. “Creating customers” is the ultimate purpose of businesses.?

Sustainability 2.0

What we have seen growing in the last decades is a culture of mistrust toward business, fanned by media and ideological groups, when it comes to sustainability. The temptation to micromanage the behaviour of business and others has led to the creation of a bureaucratic ‘compliance industry’ whose? purpose is to police implementation. The European Commission’s Corporate Sustainability Reporting?Directive is a striking example of this problematic mindset.?

Yet if we want to achieve progress toward a more sustainable world we must move beyond the?obsolete models of command-and control-management, with its focus on interdiction, precaution and? coercive approaches. We must finally abandon the illusion that we can achieve our noble ends—i.e., creating the material conditions for dignified lives without destroying our natural environment—with?ever more detailed micro-regulation and control. It can only be done with the distributed, bottom-up?approach, nurturing a true sustainability culture in which the entrepreneurial forces in our societies are?incentivized to find novel and unexpected solutions.?

The job of the state is then, first, to develop the conditions for entrepreneurship and innovation in?economic, social and natural sustainability to thrive; and second, to draw up a legal and regulatory framework setting out positive incentives and clear responsibilities and accountability for actual?negative impacts.?

This is a huge task. As ever, the devil is in the details. But the first essential is to get our mindset?straight: accepting that we cannot address the unpredictability of our complex world with the fake?certainties of Management 1.0. This means a change in paradigm that includes moving from top down to? bottom up, from bureaucratic regulation to commonly embraced goals, from the principle of precaution?to a balanced risk management, from command & control to empowerment, from technocratic hubris?to humility coupled with humanity. These, I would propose, are the essential principles of Management?2.0. Openness to continuous learning, experimentation and adaptation become natural ingredients of?management action.?

We have still a way to go to leave industrial age Management 1.0 behind. Yet now is the time to? rethink management, and with it to rethink sustainability. It is easy to envision that sustainability?powered by Management 2.0 will achieve superior results because it will liberate at scale the entrepreneurial energy and the creativity and innovation that we need to address the environmental,?social and economic issues that will shape our future. The need for renewal and reformation is? obvious and the calls for it shouldn’t go unheard. As Charles Handy famously challenged us in his? closing address at the Drucker Forum 2017: “If not us, who? And if not now, when?”?