© 2008, Milstein

Business and Sustainability: Catalyst or Irritant?

Mark MilsteinDirector, Center for Sustainable Global Enterprise

© 2008, Milstein

Will you work in the private sector?

A. Definitely

B. Probably

C. Maybe

D. Never

© 2008, Milstein

How do you view business vs. sustainability?

A. The root of the problem

B. The source of the solution

© 2008, Milstein

Are big companies inherently bad?

A. Definitely

B. Well, maybe not inherently

C. No

© 2008, Milstein

Will you work in the private sector?

A. Definitely

B. Probably

C. Maybe

D. Never

© 2008, Milstein

EnvironmentalManagement

Voluntary Regulations

ISO 14001

Design for Environment

Life Cycle

Pollution Prevention

Environmental Reporting

Risk Management

CorporateSocial

Responsibility

Social Audits

SA 8000

Worker Safety

Philanthropy

Community Relations

CSR Reporting

SustainableEnterprise

Entrepreneurship

Innovation

Organizational Change

New Business Development

Business & SustainabilityS

usta

inab

le D

evel

opm

ent

Law

Environmental Policy

Environmental, Health &

Safety

Operations

Public Relations

Human Resources

Corporate Foundations

Research & Development

Strategic Management

Finance & Investment

© 2008, Milstein

Sustainability: A Tower of Babel

• Environmental Management• Corporate Social

Responsibility• Greening• Industrial Ecology• Stakeholder Management• Life-Cycle Management• Pollution Prevention (P2)• Sustainable Development• Design for Environment

(DfE)• Green Design• Urban Reinvestment• Brownfield Redevelopment• ISO 14001• Waste Reduction• Closed Loops• Resource Productivity• Sustainable Technology• Systems Thinking• Corporate Governance

• Clean Technology• Eco-Efficiency• Eco-Effectiveness• Biomimicry• Triple Bottom Line• Inclusive Capitalism• Base of the Pyramid• Community Capitalism• Corporate Citizenship• Voluntary Regulation• Civic Entrepreneurship• Full Cost Accounting• EMS• Risk Management• Leapfrog Technology• Cradle to Cradle• Restorative Technology• Take-Back• Transparency

© 2008, Milstein

Tomorrow

Today

ExternalInternal

Innovateand

Reposition

Set Shared Vision of

the Future

ReduceCosts & Risk

EstablishReputation

and the Rightto Operate

Org.Value

Source: Hart & Milstein (2003), “Creating Sustainable Value”

Understanding Value Creation

© 2008, Milstein

•Clean Technology•Eco-Effectiveness•Biomimicry•Leapfrog Technology•Sustainable Technology•Knowledge & Service Intensity•Cradle to Cradle•Closed Loops•Restorative Technology•Systems Thinking

•Sustainable Development•Base of the Pyramid•Urban Reinvestment•Brownfield Redevelopment•Inclusive Capitalism•Community Capitalism•Civic Entrepreneurship•Radical Transactiveness•B24B (Business to 4 Billion)

•Corporate Social Responsibility•Industrial Ecology•Stakeholder Management•Life-Cycle Management•Design for Environment (DfE)•Green Design•Corporate Citizenship•Full Cost Accounting•Take-back•Transparency•Corporate Governance

•EMS•Greening•Pollution Prevention (P2)•Eco-Efficiency•Risk Management•Environmental Management•ISO 14001•Waste Reduction•Resource Productivity

Tomorrow

Today

ExternalInternal

Innovateand

Reposition

Set Shared Vision of

the Future

ReduceCosts & Risk

EstablishReputation

and the Rightto Operate

Org.Value

Framing Sustainability

Source: Hart & Milstein (2003), “Creating Sustainable Value”

Environmental M

anagementCorporate Social Responsibility

© 2008, Milstein

•Clean Technology•Eco-Effectiveness•Biomimicry•Leapfrog Technology•Sustainable Technology•Knowledge & Service Intensity•Cradle to Cradle•Closed Loops•Restorative Technology•Systems Thinking

•Sustainable Development•Base of the Pyramid•Urban Reinvestment•Brownfield Redevelopment•Inclusive Capitalism•Community Capitalism•Civic Entrepreneurship•Radical Transactiveness•B24B (Business to 4 Billion)

•Corporate Social Responsibility•Industrial Ecology•Stakeholder Management•Life-Cycle Management•Design for Environment (DfE)•Green Design•Corporate Citizenship•Full Cost Accounting•Take-back•Transparency•Corporate Governance

•EMS•Greening•Pollution Prevention (P2)•Eco-Efficiency•Risk Management•Environmental Management•ISO 14001•Waste Reduction•Resource Productivity

Tomorrow

Today

ExternalInternal

Innovateand

Reposition

Set Shared Vision of

the Future

ReduceCosts & Risk

EstablishReputation

and the Rightto Operate

Org.Value

Managerial Challenge: A Balanced Portfolio

ExploitationIncremental Change

Continuous Improvement

Increase ProductivityConvergent Thinking

TransparencyStakeholder Management In

form

ation

Diss

emin

ation

ExplorationDisruptive Innovation

Self Destruction

Divergent ThinkingDiverse Perspectives

Stakeholder Leadership

Information SharingIn

crea

se D

iscov

ery

Source: Hart & Milstein (2003), “Creating Sustainable Value”

© 2008, Milstein

Establish an Innovation Cycle

Seek Variety

Cultivate New Skills

Incubate Disruptive Innovations

Change Product-Market Portfolio

Source: Milstein, London, & Hart (2007), “Revolutionary Routines”

• Work with Unconventional Partners

• Cross Organizational and Technical Boundaries

• Scrutinize Novel Perspectives

• Conduct Non-Linear Pilot Programs

• Nurture Local Economic Capacity

• Facilitate Generation of New Knowledge

• Commercialize Imaginative Technologies

• Grow New Markets

• Shed Obsolete Businesses

• Invest in Small Scale Experiments

• Test Hybrid Ownership Structures

• Analyze Distributed Control Mechanisms

© 2008, Milstein

Base of the Pyramid Protocol Project

An inclusive process through which the

private sector and local communities

build economic, social, and environmental value

© 2008, Milstein

Some Suggested Readings

• Hart, S. L. and Milstein, M. B. 2003 “Creating Sustainable Value,” Academy of Management Executive, 17(2): 56-67.

• Hart, S. L. and Milstein, M. B. 1999. “Global Sustainability and the Creative Destruction of Industries,” Sloan Management Review, 41(1): 23-33.

• Lovins, A. B., Lovins, L. H. and Hawken, P. 1999. “A Road Map for Natural Capitalism,” Harvard Business Review, 77(3): 145-158.

• Milstein, M. B., T. London, and S. L. Hart. 2007. “Revolutionary Routines: Capturing the Opportunity for Creating a More Inclusive Capitalism,” In S. Pederit, R. Fry, and D. Cooperrider (eds.) Handbook of Transformative Cooperation: New Designs and Dynamics; Palo Alto, CA: Stanford University Press, forthcoming.

• Hart, S. 2007. Capitalism at the Crossroads: The Unlimited Business Opportunities in Solving the World’s Most Difficult Problems, 2nd Ed. Upper Saddle River, NJ: Wharton School Publishing.