Can We Leverage the SDGs to Improve the Value of Reporting?

By Andrew Budsock and Sebastian Richter

Originally posted on TriplePundit 

We all operate in a dynamic, fast-paced environment shaped daily by changing policies, standards and management tools. With the adoption of the 17 Sustainable Development Goals (SDGs), we entered Jeffrey Sachs’s age of sustainable development where every organization, regardless of geography, industry or size, takes on a shared responsibility. Some fear that this may add to the reporting burden since we all grapple with the process of identifying material topics, others see potential benefits from latching onto the SDGs. With an estimated $12 trillion USD resulting from revenue and saving associated with achieving the SDGs by 2030, realizing the vision for sustainable development could also make for a great business case. The SDGs explicitly recognize reporting: SDG target 12.6encourages companies to integrate sustainability disclosure in their reporting cycles.

A practitioner’s perspective

Let us dispel some of the common myths in sustainability reporting.

GRI-based reporting is not a simple checklist exercise. Buy-in at the management level is a main success factor, yet often a struggle to leverage. Determining materiality and obtaining/managing accurate sustainability-related data needed for obtaining larger goals, take teamwork. Yet, internal barriers prevail, such as working in silos and lack of an available budget. In one of the ISOS Group-led GRI trainings last September, a participant – representing a multinational corporation – openly stated that they look at their GRI Report as a data-driven document from a compliance perspective; a rather symptomatic mindset for our field.

Taking sustainability reporting seriously means a change of management – a break from business-as-usual. It allows us to tackle sustainability issues in a managerial manner, whereas SDGs prompt us to rethink what and how to establish an organization’s sustainability roadmap.

Not everyone inside, or outside, the organization can take the time to understand the technical parameters of developing a GRI-based report. Whereas, the SDGs can be more easily spoon-fed to a busy C-Suite, communications teams looking for that next big story, investors wanting to see demonstrated traction against a global agenda or individuals hungry for issues to get behind. In that sense, both, GRI reporting and alignment to the SDGs, go hand-in-hand.

A researcher’s perspective

Another view on this subject matter does research provide the interface of evidence-based decision making. However, one of the limitations with this angle is that sustainability itself is a highly fragmented young transdisciplinary field with many interdisciplinary links and ongoing discourses. For example, scholars like Starik & Kanashiro argue that none of the conventional management theories seem to capture the comprehensive nature of sustainability and its implications; and therefore, do not sufficiently provide guidance for practitioners on individual, organizational or societal levels. A respective theory of sustainability management for instance is still in its infancy and far from mainstream organizational practices. According to a PwC survey from 2015, the majority of companies are aware of the SDGs, and almost three quarters of them are planning to respond to the goals. However, less than 15 percent of them identified the tools they need. Interestingly and despite the potential of the SDGs to help set corporate performance targets, the 2017 BSR/GlobeScan survey also found that there are companies which categorically do not intend to use the SDGs, but remain silent about possible reasonings.

So what do we as professionals do with such insights?

Possible answers

  1. Yes, the SDGs are global and provide a guiding framework of 169 targets and 230 indicators, yet not every goal and target is relevant to your organization. Pick the one most relevant for you. GRI can help with that by infusing the SDGs into the materiality process upfront and then again on the back end when setting goals.
  2. Follow an incremental step-by-step approach to sketching out your roadmap instead of aiming too high. Nobody expects you to jump start with a comprehensive GRI report that covers all SDGs. Like other traditional management practices, it is a process of continuous improvement.
  3. Use the SDGs as a common language and engine for institutionalizing sustainability agendas, especially in the context of international operations and its workforce. GRI complements the managerial component.

In sum, harnessing the inherent synergies of the SDGs with GRI generates a win-win situation for all of us; organizations, people and the planet – and it is doable!

Andrew Budsock is a Communications and Social Media Consultant at ISOS Group. His thought leadership is well recognized, particularly at IMPAKTER as a Columnist and Editor, through his role as a Board Member at the Global Sourcing Council and in building momentum for the SDGs in the U.S.

Sebastian Richter is a Sustainability Consultant for Strategy & Development at ISOS Group. His multi-disciplinary and international expertise stems from years of advisory services and project management, building institutional capacities toward sustainable development on the ground in developing and developed countries.

SDG 1: WHERE POLICY MEETS POVERTY WITH THE MCSILVER INSTITUTE

Note: This piece was cross-posted from Impakter. by Andrew Budsock

Dr. Mary McKay is the current director of the McSilver Institute for Poverty Policy and Research at New York University, where she has served for 5 years. Prior to becoming director of McSilver, she served as the head of the Division of Mental Health Services Research at Mount Sinai in New York. The McSilver Institute is an award-winning research center dedicated to creating new knowledge about the root causes of poverty, developing evidence-based interventions to address its consequences, and rapidly translating research findings into action through policy and practice.

McSilver aims to create a platform for policy makers, funders, service providers, and community members where poverty is spoken about, the intersection between poverty and race, the focus on structures and systematic barriers that oppress people. Key to McSilver’s platform and in-line with SDG 1, End poverty in all its forms everywhere, is the rapid translation of knowledge into action-actionable policy recommendations and actionable service delivery options. Their work is implemented through community-based multi-stakeholder strategy in an aim at bringing more people to the table to talk about poverty and develop relevant solutions.

EDITOR’S NOTE: THIS INTERVIEW HAS BEEN EDITED AND SHORTENED FOR PUBLICATION

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Impakter: How would you define poverty? Why does it happen?

M.M: In the narrowest sense, poverty can be defined as not having the material resources to take care of your basic needs. So not having enough income to feed yourself and your family, to have some kind of stable housing that lets you sleep out of the elements. That’s the basic definition, but it does not go far enough, in terms of the burdens that poverty overlays on an individual’s and a family’s experience.

Poverty can also be simultaneously coupled with isolation. Doors close in terms of access to information or quality services or healthcare. It’s not that you don’t have enough purchase power, but you have a set of schools that are substandard or don’t provide quality education. Or you have a set of healthcare resources that don’t provide quality care. This closing of doors that goes along with poverty makes not having enough resources even worse—and then there’s also a kind of stigma.

We did some work on a project that we call “Poverty and Shame.” What do we do with populations that struggle with poverty? We stigmatize them. We say, “It’s your fault.” We attribute individual responsibility to a kind of social struggle, and then for many young people that we work with and families, they can’t help but also wonder, “What is it about me that I can’t do the same that we talk about?”

Our group went to a conference where they had all the members sit on the floor. They said, “Now pull yourself up by your bootstraps.” You can’t do that. Even the youngest, most nimblest of us, could not get up off the floor. So this notion that we attribute individual responsibilities to a set of structures and inequities that exist is really very blaming, and it underrides your sense of power and worthiness. I think that that’s intentional. The structures are meant to both close doors, but in lay terms, make you feel bad about your situation. That’s not material. That’s structural. That’s social. That makes a very stressful situation where you are trying to make ends meet even worse.

In a broader context, if you think of this stigma, with respect to policy making, we essentially discount the poor. 

M.M: If you really look back at the history of the U.S: our social welfare policies are grounded in something called “Elizabethan poor laws.” Essentially what those poor laws were, were either we lock you up because you’re poor, or it takes a more supportive extent. Those laws and those early policies were around subsistence support, which is not enough really for you to get out of poverty, because in a twisted way, it was thought that it would diminish your work ethic.

You can trace those strands of judgment around poorness and motivation or lack thereof to this day. If you look at financial benefits called “SNAP,” which is the food support program if you experience hunger and food insecurity in the U.S., it’s not enough to feed a family. It’s just enough to take the edge off. Those strands, those laws came from Europe. And, because we’re the U.S, we model things after us, policies get reenacted in countries that really need to give real serious legs up out of poverty. You’ll see all this worry about cash grants—will it disempower the population, make them less motivated to work? The reality is, it’s almost universal. People want to make meaning, and be productive, and contribute. Cash grants don’t make people lazy, but they do feed them while they’re struggling.


Related article: “SDGSTORIES: LAUNCH OF OUR SUSTAINABLE DEVELOPMENT GOALS SERIES


Let me take us in a direction that looks at the intersection of race and poverty, because that’s a critically important mission for McSilver. You can’t really talk about stigma, closing of doors to opportunity without understanding that those experiences are completely unevenly distributed in the U.S. and that racism and structural racism are serious issues. You can’t look in any system that serves poverty-impacted people–child welfare, criminal justice, housing and homelessness—and not see disproportionately, people of color in those systems, even though, the disproportionality has nothing to do with the percentage of those actual people in the population. Why is that? Because there are structural blocks to having the same access to both economic opportunities, but also all the things I just talked about: education and healthcare.

There are segments of populations in this country that are truly being marginalized and need additional support and need removal of structures that block them having an equal opportunity to a host of things. Does the concept of race translate to all the places that we are in across the globe? To some extent, yes. The situation on the continent of Africa that I know the best translates to a continent that really within my lifetime, many of the countries were ruled by white, elite, rich people. That righted itself over the course of decades, but the lasting effects, those histories of exploitation, the kind of real systematic holding populations of color down, the legacy of that continues to play into the countries of Africa. There is a heroic effort to try and right those wrongs, but history really matters.

That’s why we are deeply committed to both the work here in New York City with populations of color but also work in country contexts where the history of oppression really existed, and there needs to be some real serious progress addressing that.

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PHOTO CREDIT: MCSILVER INSTITUTE 

In regards to how the McSilver Institute operates and how you are getting stakeholders together, including NGOs, local community members, researchers—this aspect is considered key to achieving to achieving the SDGs. By contrast, regarding the pitfalls of the Millennium Development Goals (MDGs) that preceded the SDGs, often times the lines of communication between different stakeholders were inadequate. How did you develop this framework, how did you get everyone talking together?

M.M: This is an intentional approach. The kind of value commitment and intentionality around who are the key stakeholders that need to be our full partners in this process—that is a process baked  into McSilver now. We have written a lot of academically-oriented articles to guide investigators to be intentional about who sits at the table as you begin to scope out a new initiative or a new project. There’s also a lot of challenges that you refer to in this process because these stakeholders are not used to being in the same room.

They often don’t communicate well—academics can be full of jargon, but so can program developers, funders, and community members. Your ability to facilitate real communication across groups is really important. The other piece that I think deters a lot of people from bringing groups together is because people have different perspectives based on their different social location. Inevitably, it brings up a set of misunderstandings and in many cases, real serious conflict.

Partnership and collaboration take time and effort. We find that in our research the extra effort is worth it. Why? If we develop a program in collaboration with youth, young people come to that program. Adolescents are terribly challenging to involve in programs and services. The last thing they want to do is to get supported within their high school, but a program designed by young people, aligned with their needs and interests, you’ll see participation rates in droves. The same is true for our global work, and it’s probably even more important with those partnerships.

What you do not need are U.S-based investigators and academics coming out and telling other investigators, or worse yet, community members, what they need or don’t need. You have no preparation for what is likely to be aligned with the perspectives of young people, families, and communities. If you think you do, you would be wrong. What you do as the academics, as those who know the science, what you know has worked within your own context, but how to align or reject that knowledge is really up to the stakeholders in each one of the places that we are going to go.

Do you have any examples of areas that you’ve seen, where communities start to break down the structures of injustice and start to rebuild a structure that works for everyone?

M.M: I think in South Africa, which I know the best, the dismantling of an apartheid system was huge. Nelson Mandela the first President really attempted to create a South African society where people can live together, I think that has been nothing short of heroic in terms of what’s been happening in South Africa.

Having said that, social inequities continue to exist — the residuals of unequal school systems continue to exist. The inability of a country held down by poverty—they were very slow to address the HIV epidemic, and that has everything to do with both resources and but also stigma—the stigma of apartheid and now here’s another kind of epidemic that’s impacting the country. You see countries like Uganda trying to leave behind an oppressive government and put together more voices within a government and represent the people. I think there are legacies of poverty in countries and oppressive government regimes that sometimes fuels corruption, sometimes scarcity mentalities, and I think that it’s very complicated, and you have to be careful how you write about that, because that can sound blaming.

You have to be really careful about corruption in Africa—assigning individual responsibility as opposed to looking historically and structurally around how people are set up. In the West and many other countries, we intentionally or unintentionally contributed to some of the inequities. It gets very complicated when you’re setting millennium goals to figure out how we all contribute positively, but also how to figure out if self-interest is guiding some of these decisions and what those are.

That’s why partnership, communication and collaboration is so important because single voices and single solutions are often guided by a combination of good intent, but may not always think about the consequences and could be guided by self-interest. The partnerships are trying to protect from that, listening to different voices are one protection for that.

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IN THE PHOTO: STEP UP PARTICIPANT PRESENTS HIS PHOTOGRAPHY. STEP UP’S PHOTOVOICE PROJECT USES PHOTOGRAPHS TO MONITOR AND IDENTIFY ISSUES IN YOUNG PEOPLE’S COMMUNITIES. PHOTO CREDIT:KATY LITTWIN PHOTOGRAPHY 

What challenges are unique to poverty in urban settings in comparison to rural settings in your experience? What kind of issues are at play in both?

M.M: What you are seeing across the globe is this push towards economic opportunities that exist in urban centers. What is that all about? For example, we have a new study that we are working on with our colleagues in Ghana, we work in a number of countries that have very high rates of child labor. Young kids, even as young as nine or ten, traveling to urban centers by themselves trying to eat, make a living, and help support their families. This kind of rural to urban migration particularly around children but also other populations is a worldwide phenomenon.

It’s not only that there’s not access to basic material needs but also opportunity for less. What might have existed generations ago around farming and an agriculturally-based economy, with population growth and climate change, those become less and less viable options to be able to exist in rural areas. The kind of pull to a city to be able to take advantage of what looks like a powerful economic set of opportunities is pretty great except the populations traveling to cities find the city is a pretty harsh life too but in different ways. Your ability to afford housing and goods and communities is less, not more because it’s more expensive in cities.

For example, young women who go from the rural parts of Africa to the bigger cities find economic opportunities, such as a group of girls that carry loaves of bread on their head and sell small items on the street, but they also live and sleep on the street and then are incredibly vulnerable to victimization. They are unaccompanied as children without adult protection, making complicated choices, so their safety is compromised. I think they’re both pretty harsh, I think some context matters with consequences of poverty that vary from rural to urban centers, but it’s all pretty harsh, and I think that you’ll see more and more proportions of our population exposed to the harshness of urban centers as we go forward.

Can you talk about the intersection of poverty and health? I know that’s a lot of research you have some experience in. 

M.M: I’ll broaden it to both physical health and behavioral health-Poverty sets up a set of conditions where it is harder to maintain your physical health and your behavioral wellness, and your emotional and behavioral health. What are those conditions? High levels of stress, lack of access to healthy and nutritious food, lack of access to safe and secure communities, all undermine your physical wellness, what you put in your body completely defines your biology in some ways, what you breathe in terms of toxins define the biology of your physical wellness.

But also exposure to multiple traumas and chronic stress undermine your emotional well being and so the conditions that poverty creates undermines kids and their families’ physical health and emotional wellness. But it also goes the other way. If you have a vulnerability, a chronic health condition, a more serious mental issue, your ability to access good quality care that helps you manage that chronic condition whether that be serious diabetes or more serious mental issue is key. Your ability to access quality care will make or break your ability to make a living.

If I have a mental health issue and I don’t get the right treatment, then I’m much less likely to be able to maintain my job and maintain my active involvement in the work. If I have a health condition and my employer can’t flex my hours and provide additional support so I can go to my doctor’s appointment, I’m much more likely to lose my job and end up in poverty, and so I think that bi-directional set of relationships that go along with poverty and health and behavioral health or emotional wellness is really important for us to pay attention to.

I think we have very little understanding that if we don’t attend to kids’ behavioral health issues, they will be economically more challenged. For kids, anywhere from 1 in 5  in the U.S and up to 40% across the world are struggling right now with a serious behavioral health challenge. Not meeting those challenges puts them on a trajectory where seeking employment that will bring them out of poverty and achieving all the milestones needed to get employment like doing well in school,  takes those kids out of the game. I think more and more you’re seeing nationally and for sure locally where we are in New York City. A reinvestment in behavioral health but also around the globe is needed; understanding those issues are not a nicety, those issues are critical to the economic survival and thriving of the whole population.

Maung

Maung’s article

As companies have started to internalise (and for that matter, practice) the triple bottom line concept of sustainability, the focus now has shifted to issues beyond their walls of operations and manufacturing. In the world of outsourcing, globalisation and interdependence of suppliers, companies must look into making their supply chains more sustainable.

UN Global Compact (UNGC) and Business for Social Responsibility (BSR) define Supply Chain Sustainability as “the management of environmental, social and economic impacts, and the encouragement of good governance practices, throughout the lifecycles of goods and services. The objective of supply chain sustainability is to create, protect, and grow long-term environmental, social and economic value for all stakeholders involved in bringing products and services to market.”

What’s in it for my organisation?

Whether a company leans towards Freeman’s stakeholder approach or Friedman’s camp to maximise profits for shareholders the choice is clear. No matter the route one takes, grudging or proactive, there are clear benefits to be had. Companies simply need to get on the bus and reap the benefits!

There are different ways to slice the benefits – one could categorise these in three ways.

Business Risk Management: Avoid risk to image associated with bad

social /environmental practices of suppliers. Manage business risks associated with climate change.

Unsound practices (e.g., non-compliance) of suppliers could result in major supply chain disruption and cause delays in production. Labour challenges could create havoc to on-time delivery; safety and poor environmental management practices could result in production stoppage and poor productivity. These issues are realistic especially with increased sourcing from low–cost countries. In addition, companies are now partnering with fewer suppliers than before. Having a close partnership with these suppliers, ensuring a robust management system and its governance can help parent company mitigate these risks.

The climate change debate better be over by now. Thailand, in 2011, was devastated by one of the worst floods in its history. The economic damages were estimated at over $45 billion. Most of the loss came from the manufacturing sector with floods inundating seven major industrial zones. This resulted in major supply chain disruptions. Regional automobile production was affected. Flooding also caused a global shortage of hard disk drives. Disruptions to manufacturing supply chains affected regional automobile production and caused a global shortage of hard disk drives which lasted throughout 2012. These risks have to be taken into consideration and redundancy built into supply chain strategy.

Operations Excellence: Reduce supply costs, environmental footprint of its supply chain.

Responsible management of operational inputs, such as energy, water, natural and synthetic materials can greatly reduce companies’ procurement costs. Using operations excellence tools, such as lean sigma, companies can reduce cost of these operational inputs. In many cases, the carbon footprint sustainability goals of companies are indeed achieved by employing these tools and teams. By becoming more efficient (e.g., using less electricity and water, and creating less waste) companies can lower their COPS (cost of products sold), thereby improving profit margins.

Leading companies have also extended their best practices to key supplier partners in helping them reduce their footprint through collaborative initiatives. A leading pharma company extended its energy management and reduction know-how by partnering with a key supplier and helped it reduce its carbon footprint. Financial savings form the initiative more than off-set the cost incurred by the pharma company expenses in supporting this initiative.

Innovative Products: Build successful businesses by developing differentiated products with sustainability attributes.

A sizable number of consumers prefer eco-friendly offerings, and even those that do not or are at best neutral would switch to these products if these products provide price advantage.

Under the Unilever Sustainable Living Plan the company has integrated sustainability aspects into a number of their products. These include Dove, Lifebuoy, Ben & Jerry’s and Comfort. These products have contributed to Unilever’s growth, while reducing waste, water use in manufacturing, and CO2 from energy use has created cost efficiencies. Unilever now sources more than 55% of its agricultural raw materials sustainably, which reduces risk to its supply chain while benefiting producers and the environment.

Dutch giant Philips established its green products line in 2004 with a goal to reach 50% of overall sales by 2015. The goals was met (and exceeded) in 2014, contributing to over €11bn in sales. These products have improved environmental performance often supported by a recognised eco-performance label, developed through their EcoDesign process.

In order to make supply chain sustainability stick senior management buy-in is an absolute must. Without their drive and accountability sustainability can become just another short-term corporate initiative, a “flavour of the month” that quickly fades into oblivion. Change happens quickly when the C-suite decides to focus on sustainability.

However, a company also needs the right people to embrace the sustainability journey. So, recruiting and retaining the right kind of people becomes very important. Various researches suggest in the US that a majority of not just millennials but employees of all ages regard social responsibility and environmental commitment as important criteria in selecting employers. Companies that try to become sustainable may well find it easier to hire, retain talent as well as “sustain” their sustainability programs and culture.

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About the Author

Dr. Maung K. Min is a Board Member of Global Sourcing Council. The GSC is a non-profit organisation focused on sustainable, socially responsible sourcing practices. Dr. Min is an experienced management executive with over 25 years of track record of leading functions and initiatives in the areas of Sustainability, EHS and Supplier Management, IM, Manufacturing, and Quality Systems (including Operations Excellence/Continuous Improvement). He has led initiatives in the Americas, Europe and Asia. Dr. Min has held roles in Italy as well as in Puerto Rico and is passionate working in a global and multi-cultural setting.

Karen

Karen’s Article

Almost twenty years ago, my son responded to the ubiquitous inquiry “What do you want to be when you grow up?” His interlocutor was his Italian godfather (the Milanese not the Sopranos variety). There were certain implicit cultural expectations about the response, the godfather being both a lawyer, an aristocrat and an exceptionally cultured Renaissance-man: doctor, lawyer at one end of the spectrum, bookended by painter, composer at the other with the (yes, stereotypical) accommodation to age and gender of train driver somewhere in-between.

Henry’s reply was immediate and authoritative. “Je deviendrai un fabricant de nuages.” (“I am going to be a cloud-maker.”)

We might have, literally, in that moment imputed to our progeny a prodigious early interest in the wonders of nephology, or at a minimum, Henri as the future TV meteorologist on France ‘s equivalent to CNN.

With anachronistic hindsight, we might have imagined a stellar career with Alphabet, Google or others as an innovator in externally sourcing data storage.

Our hypotheses would have been wrong. Our kindergartener was indeed fascinated by the process of using a remote network of servers. Impressed? I hope so. However, the servers in question, as Henry painstakingly elaborated at our prompting, comprised a cloud team of four ladies and two men. (No issue with diversity.) They wore white coats, gloves and hats (reassuringly clinical) and black wellington boots. (Safety-conscious). These cloud-servers toiled by night, gathering up the leftover white things from the day: tissues, paper, candyfloss, feathers, blossoms, meringues and such. They heaved this harvest into the Great Machine for transformation. (Enlightened cradle-to-cradle thinking.) While the Great Machine processed its inputs into nebulous outputs, the “team” hit the drawing board co-designing the cloud architecture. (That, in case you wondered, explains why clouds’ forms vary. Their shapes are inclusively and collaboratively crowd-sourced and then, once set free can change themselves. Because, and I quote in rough translation, “It is beautiful to make a thing that always changes.”)

When the auroral moment came, whoever’s turn it was (nice distribution of decision rights in this team) would press the release button and out they would float: “Rows and flows of angel hair, and ice-cream castles in the air, and feather canyons everywhere.” We can surmise Henry would have subscribed to a Joni Mitchellesque rather than a prescriptive World Meteorological Organisation (WMO) view of his cloud classifications. We might jettison the dire tired expression “thinking outside the box” if we were a little more thoughtful about choosing our boxes in the first place.

Self-evidently, this cloud-sourcing career, outside of my child’s imagination, did not exist but neither then did Chief Officers of Cloud, Data, Digital, Diversity, Customer Experience, and Innovation amongst others that now, and for now, do. Even CTOs and CIOs were barely emergent two decades ago in non-technology sectors. So before we smile with kindly condescension on the fertile fictions of the child’s mind, let’s be mindful that – recent, controversial studies on doomed professions notwithstanding – we can still only imagine what’s next. In business, innovation and imagination are not the same thing but they coalesce inevitably because innovating demands of us that we imagine that which does not exist yet.

Of course, in the context of innovation as a management science, “imagining” constitutes informed extrapolation from data, trends and, without doubt, some mind-expanding “what if?” intuitive thinking. Henry was not entirely wrong about the Big Machine and clouds, literally. Anthropogenic clouds, most of them noxious or malevolent, have been continuously created since the last Industrial Revolution. He could not have known that Russia began cloud-seeding the year his mother was conceived and I am guessing that even now he may be unaware that China created 55 billion tons of artificial rain last year. (His cloud phase passed as quickly as a SKUD in a thunderstorm). Henry’s methodology of making up the future will not translate unmodified into effective commercial innovation practice. But there is a lesson in it. What is and what might be are not bounded by what we know – a truth that our commonest management practices and our defensible but all too prevalent cult of expertise and experience-worship obscure to our cost.

“Dally” is not a word much used in business except by me. As an antidote to treacherous “Yes, but” thinking I often invite executives to dally, suspend disbelief, pause and play around with ridiculous ideas for a moment. Microsoft, Airbnb, Post-it Notes, Netflix were all at one point silly ideas measured against received knowledge. Until very recently, the notion of a proliferation of robots, autonomous vehicles and the likes of Siri resided in the realm of imagination. How quick is the leap from mind to market. Henry the four-year-old aspiring cloud-maker alighted presciently if inadvertently upon an insight now quite concrete for maturing Millennials. The “Great Machine” will indeed shape the future of work and remove an ever-increasing tranche of it from human hands. The partly flawed but frequently flung-around mantra of innovation’s purpose as “better, faster, cheaper” will irresistibly find fruition in the machine age of colossal computing power, big data, advanced analytics and AI.

A lot of us, over the last 30 years, have looked at sourcing, to borrow from Joni Mitchell again “from both sides now, from up and down” across a panoply of economic, social and political perspectives. A decade ago, I co-founded the Global Sourcing Council as a forum to debate and evaluate these myriad perspectives. Some of outsourcing’s promises in the global north and south have proved “life’s illusions”, others not. The debate on the seemingly binary question of exporting jobs or importing competitive advantage still obtains and is whipped into a violent tornado of rhetoric during cycles both electoral and economic. Contributors to this magazine have offered more informative and illuminating content on this multi-faceted dimension of our hyper-connected, globalised world than I ever could. But, the “Big Machine” will have a thunderous voice in this conversation as work moves inexorably not from continent to continent but from man to machine. In her cloud lyrics, Mitchell looks at life from “win and lose”. The adults in Henry’s story assumed almost two decades ago that jobs would exist that do not. Eventually, we resigned ourselves to the depletion of manufacturing and business process jobs but we did not see our jobs as underwriters, lawyers, analysts and writers going away. It seems that the future, like it or loath it, is becoming more evenly distributed (to remodel William Gibson’s aphorism).

My preoccupation in all this is innovation. Innovations got us here. Outsourcing qualifies as commercial innovation – at least in the narrow context of the 20th century notion of the firm organising its resources and processes to maximise shareholder return. Our 21st century challenges place a stratospheric level of importance on innovation. Every organisation, process and system is perfectly designed to do what it does, so if we want a different, better outcome it is a design question. Good design begins with questions – as all human progress does – and the process of invention requires us to percolate those questions through our imaginations. The exhortation to innovate in business is often as amorphous as a shifting cloud. It is remarkably childish to wish for what we want. We must deliberately and attentively build it as a corporate competence. Strategic innovation is the science and art of creating commercial value which did not exist before, sustainably and scaleably. Innovation as a management practice is a discipline that will be nourished or starved by organisational design.

I have researched and studied strategic and tactical innovation for a very long time.

One insight is that the celebrated 20th century management practices that we still retain utility for managing – counting, controlling and predicting things – are often the enemies of innovation. This is problematic since we promote good managers to leaders in whom then the innovation responsibility is concentrated. Similarly our race to answers vigorously instilled in us educationally, and by organisational norms, can dangerously propel us either to increasingly elegant answers to the wrong question or to receptivity only to those responses within our preconceptions: doctor, lawyer, train-driver. In corporate environments, consciously and unconsciously, we self-edit. We constrain the one competence that the machine, however big, has not: imagination. Creative thinking is a limitless resource and a vibrant source of competitive advantage squandered every day by conformist cultures where daring and difference are dangerous.

I compared an imaginative view of clouds with the strict and rigid taxonomy of the WMO. Its International Cloud Atlas serves a specific purpose for meteorologists and restricts itself to clouds of “operational significance” in disclosing atmospheric conditions. This is scientifically apposite for the WMO and what it needs to get done. Management, however, is both art and science. A company is more than incorporation documents and share certificates. The science of innovation is not fluffy stuff but does need to heed Thoreau’s “What kind of science …is that which enriches the understanding but robs the imagination?” Answer: not the right kind for what modern executives need to get done.

I could perhaps have avoided decades of study had I more carefully contemplated the organisational attributes implicit in little Henry’s business: diverse and inclusive, appropriately clinical, shared identity, safety conscious (i.e. impact aware), enlightened by cradle-to-cradle sustainability, team- centric not ego-centric, co-creative and collaborative, purposeful and finding beauty in change. Oh, and impossibly aspirational… But as the change master and consummate leader Nelson Mandela observed: “Everything is impossible until it is done.”

Those of us who have been children are, without exception, innovative. All we need is an environment in which to innovate. We need to imagine and make a workplace where the release button on our uniquely human qualities is pressed every morning and sets them free. I hear Wellington boots and white hats are a good start.

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About the Author

Karen A. Morris is a Board Member, a co-founder and director of The Global Sourcing Council, a not-for-profit committed to economic and sustainable best practice in global sourcing. She is a strategy consultant, specialising in innovation and growth, and has designed unique methodologies and metrics for all aspects of commercial innovation; these have benefited diverse organisations around the world. Karen was AIG’s first Chief Innovation Officer and has supported businesses, not-for-profits and governments with their innovation agenda. An English barrister, Karen has over 25 years’ experience in law, management, underwriting and multinational business. This diverse international background inspires her insight on product, service and business model innovation. She is a frequent speaker and writer on Innovation, Sustainability, Leadership, and Ethics. Karen has served as an adjunct professor on the MBA program at Fordham University in New York teaching Innovation and customer-centricity. She has been a visiting lecturer at universities in France and Spain. She served on the Advisory Board of The Howe School of Business at The Stevens Institute of Technology and of The World BPO Forum. She is also an advisory council member of The University of Colorado’s RMI School, and a Senior Fellow of The Institute for Innovation in Large Organisations.

Q&A with Bobby Varanasi

Q&A with Bobby Varanasi

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A PUBLISHED author, sought-after-speaker and commentator, Bobby Varanasi (pic above), Matryzel Consulting Inc chairman and chief executive officer, is also one of the world’s leading consultants on global business services (GBS) as a business model.

He is also the latest speaker to join the stellar cast at Digital News Asia’s (DNA) What’s Next conference, where he will join a panel discussion on Disruptive Technology: What’s Going To Hit/Boost Your Business with Red Dot Ventures managing director Leslie Loh.

While he is familiar with the latest technologies adopted in business, describing the next wave of human labour substitution by machines and software as a “capital deepening,” Varanasi has always urged organisations to focus on revenue growth, building resilience, and strengthening their sustainability.

Technologies, whatever form and shape they take, however sexy or mundane they may be, must always play a supporting role and not lead the business goals of an organisation.

In the following Q&A, Varanasi shares what’s disruptive, including the shift from transactional to intelligent workflows with not just technology playing a role but governance as well.

DNA: You are an interesting mix for a panel that talks about disruptive technology, as the GBS space is all about the interlink between people, process and technology. What’s so disruptive in your space?

Varanasi: Well, the corporate world has come a long way over the past five decades, particularly in its quest to leverage competencies and practices.

While the outsourcing world itself morphed into the GBS world we see today, this increasing maturity has not been as much a function of input factors (people, process, technologies) as much as the inability to deal with uncertain futures and ever-changing marketplace conditions.

This ‘disruption,’ as one would like to term it, isn’t about or because of technology. Today’s complex relationships amongst organisations are typically built around collaboration, mutuality, and co-creation. End goals may be many and distinct between partnering entities.

However, the common thread binding them cohesively is an agreed objective to build value for the future.

Outcome-centric collaborative endeavours have, and continue to deliver, substantial (and at times unimaginable) value to customers, employees and shareholders.

To remain now at the forefront of such gains, organisations look continually toward enhancing their own view to the marketplace, while remaining cognisant of competition, changing consumer preferences, and inherent dependencies that may manifest as hidden opportunities from within their supply chains.

The principal disruption is happening with the entire premise of moving from being a ‘competitive organisation’ to a ‘cognitive organisation.’

Intelligence, information, workflows and integrated management of functions within and outside the organisation are the key pivots. Technologies may be seen as one key set of inputs to enable such fundamental shifts.

To that extent, the GBS industry is clear in its understanding of the applicability of such technologies.

DNA: The business model has moved from being described as Shared Services to Shared Services and Outsourcing (SSO) to now being called Global Business Services (GBS). Is this the sign of a sector still trying to find its niche and relevancy, or is there sound basis for the changing descriptions?

Varanasi: Twenty years of rigorous adoption of sourcing has seen progressive creation of new service lines and delivery models, alongside rigour and discipline across the entire life-cycle.

However the primary premise – of leveraging human resources as capital and inputs – remained unchanged.

Was value created or eroded? This is a question that is beginning to gain traction, both in terms of defining what value actually meant, and what it doesn’t.

Progressive pursuits, from discrete to integrated services, have opened up a plethora of opportunities for organisations to transform their rigid command-n-control models.

Consequently, many organisations that were at the cutting edge of adopting sourcing began to see the limitations the traditional models (SSO) continued to pose, particularly in the face of an increasingly complex marketplace where consumer needs changed quickly.

Three distinct trends (among many) are pivotal to appreciate the nature of the GBS world:

1) Aggressive commoditisation

Of (hitherto) innovative services allowed organisations to transcend borders and fuel growth in many nations. Of course, a price needed to be paid and that took the form of de-leverage. Control, ownership and predictability gave way to interoperability, open standards and ubiquity that transcended experience or size. The consequential discrete nature of provisioning imposed inherent limitations that providers couldn’t do much about, while customers saw through the limitations.

2) Replacing labour as key input

A resource revolution has been waiting to happen to satisfy the needs of over 2.5 billion new middle-class people worldwide. Meanwhile, smart machines have become increasingly able to perform advanced pattern-recognition tasks (that hitherto required human intelligence).

The evidence of ‘capital deepening’ is undeniable, where robots, computers and software (as capital) are increasingly substituting human labour. The contributing factors for such capital deepening have been increasingly cheap processing power, sophisticated software, cheap and ubiquitous sensors, and a much better understanding of human intelligence (in the form of cognitive sciences).

On the flip side, input factors have equalised to the point that any sophistication among them is nothing more than marginal value. This facet is precisely the reason for the increasing irrelevance of traditional sourcing models.

3) Pursuing cognition and predictability

Fundamental shifts are noticeable across all layers within organisations. The biggest shifts are observed in the operational and tactical layers.

The former is seeing a shift from transactional to intelligent workflows, where technologies and other innovations across data science, artificial intelligence and other trends with governance and collaborative partnering are influencing traditional resource-heavy delivery.

Intelligence is being created continuously instead of keeping the lights up. The fallouts are the irrelevance of job-centric and transactional models.

Meanwhile at the tactical layer, traditional service delivery that guaranteed efficiency-based endeavours within functions began to be replaced by an integrated multi-functional and cross-organisational view.

The endeavour isn’t as much about enhancing efficiencies of operational inputs through structure and rigour. Rather, the emphasis is co-creation and predictive approaches that aim to build resilience within the larger organisation.

DNA: Is there any single technology that you feel is disrupting large businesses? What can or is being done by early adopters to deal with its impact?

Varanasi: No, I firmly believe that there is no silver bullet. I don’t even subscribe to the fact that technologies are disrupting businesses.

Growing networks and globalisation have helped organisations build resilience through collaborative partnering, for a variety of reasons, spread across the entire gamut of activities within.

Today’s technologies continue to surprise many, not just because they are new, but because they are helping us – finally – find answers to vexing questions that have been around for too long.

I would therefore be quite sanguine in pronouncing adverse absolutes for companies which aren’t perceived as early adopters. Relevance and utility value supersede the modernity of any technology.

Hence ‘backcasting’ the business model, starting with outcomes in mind and then tracing back into the organization, would enable the identification of the right combination of input-factors (labour, capital, technologies, tools, systems, infrastructure, policies, operating models, workflows, etc.).

Eventually, the strategic pursuits of an organisation are about revenue growth, resilience and sustainability. To that end, any and all inputs have to pass the test in being able to contribute directly to these goals.

What’s Next

You can hear more from Varanasi and other speakers at What’s Next: The Business Impact of Disruptive Technology on July 28 at the Sime Darby Convention Centre in Kuala Lumpur.

Register directly at http://digitalnewsasia.com/whats-next-2016 or call Suraini Sarip at 6013 295-3498 for details.