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Peter Senge, The Necessary Revolution:Working Together to Create a Sustainable World (Random House/Broadway Books, 2008, 2010)
MIS 201 Introduction to MISFall 2010
Chapter 9Positioning for the Future and the Present
Martha GrabowskiLe Moyne College Rensselaer Polytechnic [email protected]
17 September 2010 http://www.darden.virginia.edu/uploadedImages/News/Peter-Senge222.jpg, retrieved 29 Aug 2010
From Compliance to Innovation
http://4.bp.blogspot.com/_JsAU6pu5Yk4/RgAttssbxBI/AAAAAAAAAGs/neKhJvT48NE/s320/Willard%27s+5-stages.png
Four Elements of Shareholder Value
Innovation and Repositioning
Cost and Risk Reduction
Growth Path & Trajectory
Reputation and Legitimacy
ShareholderValue
Today
Tomorrow
Internal External
Stuart Hart & Mark Milstein. 2003. Creating Sustainable Value. Academy of Mgmt Executive, 17:2.
Companies that perform well in all 4 quadrants maximize shareholder value over time
Sustainability Also a Multidimensional Challenge
Innovation and Repositioning Strategy: Clean Technology
Today
Tomorrow
Internal External
Growth Path & Trajectory Strategy: Sustainability Growth Technology
Cost and Risk Reduction Strategy: Pollution Prevention
Reputation andLegitimacy
Strategy: Product Stewardship
SustainableValue
Sustainability Also a Multidimensional Challenge
Innovation and Repositioning
Strategy: Clean Technology
Today
Tomorrow
Internal External
Growth Path & Trajectory Strategy: Sustainability Growth Technology
Cost and Risk Reduction
Strategy: Pollution Prevention
Reputation andLegitimacy
Strategy: Product Stewardship
SustainableValue
Drivers:• Pollution
• Material Consumption
•Waste
Drivers:
• Disruption
• Clean Tech
• Footprint
Drivers:• Climate Change
• Resource Depletion
• Poverty
Drivers:• Civil Society
• Transparency
• Connecitivity
Cost and Risk Reduction: the Lower Left Quadrant
Today
Tomorrow
Internal External
Cost and Risk Reduction
Strategy: Pollution Prevention
SustainableValue
Drivers:• Pollution
• Material Consumption
•Waste
DuPont• Reducing risk, cutting costs• Cutting environmental footprint increases credibility• 2004—global air carcinogens down 90+%
• Footprint reduction $3B• 2015 goals
• reduce water consumption• reduce greenhouse gases
• In lower left quadrant, companies gain credibility in sustainability initiatives
http://www.greenpeace.org/raw/content/international/press/reports/making-a-difference.pdf
Reputation and Legitimacy:The Lower Right Quadrant
Today
Tomorrow
Internal External
Reputation andLegitimacy
Strategy: Product Stewardship
SustainableValue
Drivers:• Civil Society
• Transparency
• Connecitivity
DuPont• Reaching out beyond internal borders• Work with NGO’s, regulators, community groups• Engaged former Greenpeace director as consultant
• Sustainable innovation requires partnerships
• Real engagement with outsiders can be a cathartic experience for executives
• Chesapeake Farms• Wildlife Habitats
Innovation & Repositioning: The Upper Left Quadrant
Innovation and Repositioning
Strategy: Clean Technology
Today
Tomorrow
Internal External
Drivers:
• Disruption
• Clean Tech
• Footprint
DuPont• 1st shift: from explosives to petrochemicals• 2nd shift: from petrochemicals to biotech & chemistry• Fossil fuels to biofuels• Chemical feedstocks to natural materials
• Synthetic to natural systems• DuPont makes 8 products necessary to make solar panels• Biobutanol, gas substitute• Tyvek and Attic Wrap• Sorona, corn starch--carpet• Double investment in sustainable R&D
• 1802 Explosives Manufacturer• Black powder• Nitroglycerin• Dynamite• TNT
• Gel explosives
•Ceased production in 1990’s
SustainableValue
Growth Path & Trajectory: the Upper Right Quadrant
Today
Tomorrow
Internal External
Growth Path & Trajectory Strategy: Sustainability Growth Technology
Drivers:• Climate Change
• Resource Depletion
• Poverty
DuPont• Bold goals by 2015
•Annual revenues of at least $2B for energy efficiency•Double revenues from non-Depletable resources to At least $8B
•Reach out to underserved— 4B people living on $4/day
• Sustainable growth is a high-margin strategy
SustainableValue
Investing in the Future Venture capitalists looking for next generation
businesses
‘Cleantech’ VC Growing at annual rate +50%
Mainstream investment capital JPMorgan Chase CalPERS Swiss Re Goldman Sachs
http://http://3.bp.blogspot.com/_7ZYqYi4xigk/\S98N8Pf9ziI/AAAAAAAAF_4/UH15N4CBPv0/s400/ashtabula.jpg, retried 9 Sept 2010
Environment
http://media.swissre.com/images/logo_djsi.jpg
Big and Small Working Together-- GE
GE Energy Financial Services
Environment
• Raised 2010 renewable energy investing target +50% $6B
• Many projects don’t utilize GE wind turbines or GE equipment
• Solar, landfill gas, Electrical grid efficiency, lithium-ion batteries
• $300M wind investment – Texas, Minnesota, Illinois, Oregon
http://business-ethics.com/wp-content/uploads/2010/07/GE_Immelt_3.jpg, 9/10/10
http://www.gepower.com/businesses/ge_wind_energy/en/images/wind_main_img.jpg
The Business Rationale for Sustainability – GE Drivers
Customers were demandingsustainable products, processes
Scale, scope 300,000 employees 5 million shareholders Operations in 100 countries Annual revenues $156B
Renewing Responsibilities (July 2010) Corporate social responsibility report www.ge.com/citizenship
http://www.ge.com/citizenship/_files/images/content/homepage-header_healthy-planet.jpg,
9/10/10