Academy of Management Professional Development Workshop
Sustainable Enterprise Models
Innova4on
Organizers: Carmelo Cennamo, Maurizio Zollo, Bocconi U.
KersEn Neumann, WU Vienna Speakers:
Ioannis Ioannou, London Business School Tim Devinney, U. of Technology, Sidney Andrew Van de Ven, U. of Minnesota 1
Understanding the firm’s evolu4on towards sustainable
enterprise models
Maurizio Zollo Dean’s Professor of Strategy and Sustainability, Bocconi University
VisiEng Professor, WU Vienna and MIT Sloan School Director, Center for Research in OrganizaEon and Management (CROMA)
President, European Academy of Management (EURAM) 2
The Core Research Ques4on
How do firms evolve towards a sustainable enterprise model?
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Underlying Ques4ons
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What explains the ability of managers and of organizaEons to understand sustainability issues and stakeholder interests?
Sensing Capacity
Change Capacity
Change Effec4veness
Change Factors
Learning Capacity
GOLDEN ©
What disEnguishes firms that can successfully design, introduce and diffuse strategies, pracEces and cultural traits aligned with sustainable models?
What impacts can be expected from different types of change interven1ons and why?
How do insEtuEonal, organizaEonal, group and individual factors influence the relaEve effecEveness of these change intervenEons? How do individual and organizaEons learn to change their idenEty and behavior in line with ideal models of the sustainable enterprise?
Expanding the Organiza4onal Evolu4on Model
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Change in individuals’ psychological disposi4ons
Learning rou4nes
Change in purpose, frames & strategies
Change rou4nes
Change of mo4va4onal levels & levers
Change of oper. rou4nes
Change of emo4onal disposi4ons
SUSTAINABILIY STRATEGY PROCESS
SENSING and SENSE MAKING
SEARCH and SELECTION
EXPERIMENTATION and SCALING UP LEARNING
Economic, social and environmental
sustainability outcomes
INNOVATION AND ADAPTATION CAPACITY
STRATEGIZING CAPABILITIES
ORGANIZING RELATIONAL QUALITY
CONTEXT
INDIVIDUAL AND ORGANIZATIONAL IDENTITY
INDIVIDUAL TRAITS ORGANIZATIONAL
TRAITS
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HOW Engines of change
WHY Sources of change
RelaEonal quality
Change ini4a4ves § Depth of change § IntenEonality § Formality
Change (dynamic) capabiliEes
Learning capabiliEes
External sources § CompeEtors § Stakeholders § Policy-‐makers § Broader society
Internal sources § Sensing § Strategizing § Control § Leadership
PERFORMANCE • Economic • Environmental • Social
CONTEXT • Sectoral • InsEtuEonal • Cultural
A Framework of Enterprise Model Innova4on
WHAT Objects of change
Firm-‐wide traits § Purpose § Strategy § Structure
FuncEonal acEviEes § ObjecEves § Processes § Systems
Individual traits § EmoEons § MoEvaEon § IdenEty/Values § CogniEon/Belief
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ü A program to monitor, experiment with, and enhance evoluEon of the enterprise towards sustainable models
ü A business-‐academia-‐insEtuEons partnership co-‐creaEng insight and acEon on how to guide these evoluEonary processes
ü A global network of 80+ scholars in 40 research insEtuEons
ü Supported by some leading ins1tu1ons and businesses
ü Co-‐developing a common data collecEon design, backed by cross-‐level simulaEon and modeling efforts
What is GOLDEN?
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Who Is GOLDEN: Thought Leaders • CSR: Freeman, Grayson, Post, Waddock, Zadek • Enviro. Sustainability: Correa, Frey, Marcus, Russo, Smith • Strategy: Devinney, McGahan, Ricart, Zollo, Zok • Learning, Change, Innova4on: Brusoni, Lekl, Van de Ven,
Zollo • HRM, Corporate Governance and Organiza4on: Bagdadli,
Berrone, Camuffo, Ricart, Van de Ven • Opera4ons and Supply Chain: Borgonovo, Locke • Marke4ng and Sales: Rao, Shainesh • Accoun4ng and Control: Epstein, Songini, Speckbacher • Poli4cal science: Locke, Zadek • Neuroscience: Cappa, Golosheykin
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NORTH AMERICA Arizona State U. Boston College Boston University Harvard U. MIT U. of Minnesota U. Oregon Rutgers U. U. of Toronto U. of Virginia U. of Western Ontario William Paterson U.
EUROPE Bocconi U. City U. London Copenhagen BS Cranfield U. Dublin City U. Erasmus U. ESADE ESSEC U. of Granada
IESE LBS Sant’ Anna, Pisa WU Vienna, Wageningen U. HWZ Zurich ETH Zurich
SOUTH AMERICA Centrum (Lima) Fundação Getulio Vargas Fundação Dom Cabral University Sao Paulo
SOUTH AFRICA: U. of Cape Town
AUSTRALIA: Griffith U. U. Techn. Sydney
INDIA: Tata Ins4tute of Social Sciences IIM Bangalore
CHINA: Tsinghua U.
CORPORATIONS
AngloGold Ashan4 Balbo Group, Corepla, Enel,
Endesa, Microso`, OMV, Telecom Italia, Unicredit Woolworths SA
INSTITUTIONS
Aspen Inst. EABIS, GRLI, Great Place to
Work, Italian Min. of Ec. Development, UN Global
Compact Country Networks
RUSSIA: St. Petersburg U.
SE Asia Asian Ins4tute of Technology ESSEC Singapore
The Global Network Organiza4ons
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Mul4-‐Level Simula4ons
The Observatory
Tests of Impact Es4mates
Es4mates of Change Impact The Labs
Ecosystem
Framing and Scope of Research Ac4vi4es
A System of Interdependent
Ac4vi4es
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Enterprise Decision Maker
The Observatory Data Collec4on Logic
Kers4n Neumann WU Vienna
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Global Observatory on the Evolu4on of the Sustainable Enterprise
A data placorm, based on archival and clinical data, on: ü CharacterisEcs of the
insEtuEonal and cultural context ü Firm level evoluEon in purpose,
leadership, growth strategies, structures and sustainability performance
ü The evoluEon of past sustainability iniEaEves and pracEces with stakeholder and impact assessments
ü Individual percepEons of sustainability, organizaEonal climate, psychological profile (values, emoEons), cogniEve reasoning and decision-‐making
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Sample Selec4on: Matched Pair Design
Each “cell” of the matrix, minimum two companies, similar size and profit in mid-‐90s, but highly diverse social-‐environmental performance
Sustainability leaders and followers matched in each cell of a matrix of regions and sectors. 8x5x2=80 firms
1. North America 2. La4n America
3. Northern Europe 4. Southern Europe 5. Southern Africa,
Middle East
6. China 7. India 8. Australia
1. Financial services 2. Food and retail 3. Pharmaceu4cals
4. Informa4on-‐Communica4on Technologies 5. Natural resources/energy
14 GOLDEN ©
Mapping Strategic Issues
1 2 3 4 5 6
Select Strategic Issues Requiring Deep Internal Change 1 2
Iden4fy Change Ini4a4ves to Respond to Selected Strategic Issues
A B C D E
Implementa4on Within Func4ons
Head of STRATEGY
HR CONTROL R&D SALES OPERATIONS SUPPLY CHAIN
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Archival Data 1
Stakeholder Interviews
Execu4ve Interviews
Survey to Middle Managers and Employees
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STRATEGY
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SUSTAINABILITY/CR
Data Collec4on Process
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Mapping Strategic Sustainability Issues
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Y
X Z A
C
B
Strategy department CSR/Sust. department
V ✔
✔
✔✔
✔
Func4on Specific Fact Finding Complete the knowledge on how the ini4a4ves were carried out within the
different func4ons to tackle the strategic sustainability issues For e
ach iniEaE
ve
Probe key funcEonal issues and how they were tackled with
change iniEaEves
FuncEonal iniEaEves for change Change towards sustainability?
Func4on specific interview Strategy Organiza4on/HR Management accoun4ng/Finance Environmental R&D/Innova4on Supply chain Marke4ng/Sales
How is sustainability understood in the funcEon (open quesEon)
Object of change Mo4va4on Origin Selec4on Implementa4on and Diffusion Investment Results Explana4on of Results
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Manager‘s Survey
DescripEon of strategy and assessment of compe44ve advantages
Decision scenarios, leadership style, personal values (Schwartz) psychological scales (STAI)
Cogni4ve representa4on of sustainability -‐ Meaning of a sustainable company -‐ Sustainable management principles
Priori4zing of auen4on, PercepEon of stakeholder sa4sfac4on
Main sustainability issues and connected ini4a4ves, resource alloca4on
Knowledge management and evolu4on of new ideas: generaEon , selecEon, replicaEon and retenEon
IntegraEon of sustainability in working prac4ces, incen4ve systems and resource alloca4on decisions
Percep4ons of the organizaEonal milieu, how decisions are made and conflicts are solved, trust levels)
Strategy
Sustainability awareness
Sustainability issues & ini4a4ves
Stakeholder salience and sa4sfac4on
Knowledge development
Organiza4onal architecture and resource alloca4on
Organiza4onal climate
Individual traits
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Carmelo Cennamo, Bocconi University
An Agent-‐Based Model of Sustainability-‐Driven Innova4on
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Agent-‐Based Simula4on Model • SimulaEng dynamic interacEon of autonomous agents
• Assessing their effects on the system as whole
The Study’s Approach
Learn about ideas implementa4on (#, quality, speed…)
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Sustainability (economic, social, environmental)
Context (industry dynamics, insEtuEonal, cultural, macro-‐economic)
Individual Traits (cogniEve frame,
emoEons/moEvaEon, values, leadership)
Rela4onal Quality (org. climate, stakeholder collaboraEon
Organizing (governance,
structure, HR systems, control/MIS)
Capabili4es (sensing, learning,
change)
Strategizing (growth, compeEEve,
collaboraEve)
Organiza4onal Adap4ve Capacity
Key Actors in the Model
Authority of agent unit
Key Blocks
SensiEvity towards sustainability of agent unit
Probability of idea(s) generaEon of agent unit
Matrix describing probability of assessing right ambiEon of ideas
Viscosity coeff. (external factors) affecEng the speed ideas communicaEon + budget constraint
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Defini4on of Idea
Key Blocks
• AmbiEon • Quality • Time of development • Cost • Energy = quality *
authority of generator
Quality FuncEon:
𝑓(x) = xα * (1 – x)β 23
All units generate ideas!
Model Func4oning
“Mature” ideas communicated first to strategizing unit
Once communicated, all units stop exploraEon of ideas to focus on the proposed idea at stance
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Model Func4oning
Assessment of idea:
• New energy = perceived energy + authority*sensiEvity • If assessment posiEve, idea communicated to next
funcEon
The idea needs approval by all units before being implemented
Once approved, the idea is assigned resources and implemented. (Units go back to generaEng ideas)
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Model Func4oning
Three Org. Scenarios:
• Hierarchical organizaEon • Highly hierarchical organizaEon • Flat organizaEon
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Key Findings – wrap-‐up
Highly hierarchical structures have more ideas implemented, though process not opEmal (higher variance in quality)
ALL units have similar probability of seeing their ideas implemented
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Key Findings – wrap-‐up
Higher sustainability-‐based capability leads to larger number of ideas implemented
More favorable environments (external pressure) lead to higher engagement in sustainability acEviEes (but lower ambi4on)
Key Findings – wrap-‐up
Flat organiza4ons have lower rate of ideas implemented (and idea ambiEon) -‐ ‘VETO POWER’ effect!
Limita4ons
Early stage. Fine-‐tuning of the model needed!
E.g. sensiEvity towards sustainability of agents is independent of corporate culture, HR policies may affect it
No specific account for learning (besides capability)
Need to tease out # of ideas implemented and quality of ideas (higher/lower ambiEon)…
More fine-‐grained analysis by modeling scenarios