Organizational Survival: Profitable Strategies for a Sustainable Future

Organizational Survival: Profitable Strategies for a Sustainable Future

by Gregory Balestrero, Nathalie Udo

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Product Details

ISBN-13: 9780071817189
Publisher: McGraw-Hill Education
Publication date: 11/08/2013
Sold by: Barnes & Noble
Format: NOOK Book
Pages: 352
File size: 4 MB

About the Author

GREGORY BALESTRERO has more than 40 years of management and executive experience in the for-profit and not-for-profit sectors. He is a Strategic Advisor for Leadership, Sustainability & Corporate Consciousness, International Institute for Learning, Inc. (IIL), a global leader in training, consulting, and course development, and is the former CEO of Project Management Institute (PMI). He serves on multiple advisory boards and has consulted in more than 60 countries around the world.

NATHALIE UDO is a senior consultant and executive coach with more than 15 years of consulting and executive coaching experience in program management, strategy execution, and process improvement design and implementation. Currently, she is a Strategic Advisor to IIL, founder and president of InDepth Strategies, and is the former president for the PMI San Francisco Bay Area chapter. Previously, she has worked in software development in the airline, software, insurance, healthcare, and manufacturing industries.

Read an Excerpt

Organizational Survival

Profitable Strategies for a Sustainable Future


By GREGORY BALESTRERO, NATHALIE UDO

McGraw-Hill Education

Copyright © 2014 International Institute for Learning, Inc.
All rights reserved.
ISBN: 978-0-07-181712-7



CHAPTER 1

The Double Meaning of Sustainability


Before you start some work, always ask yourself three questions: Why am I doing this? What might the results be? Will I be successful? Only when you think deeply and find satisfactory answers to these questions should you proceed.

—Chanakya, Indian Teacher, Philosopher, and Economist (370–283 BCE)


GREG—Waking at six o'clock in the morning on the last day of our trip into the Amazon River basin and the Peruvian rainforest was both exciting and sad. My wife and I jumped out of bed and ran to the board ramps for the skiffs to begin our last expedition of the trip. We didn't want it to end, but we knew we needed to drink in the world around us one last time. We had spent eight days aboard a small riverboat with 25 other passengers, searching out and witnessing life and biodiversity in this amazing place. Our expectations weren't just surpassed; they were blown out of the water.

The rainforest is an incredible place. I relished the scents, the sounds, the feeling—a remarkable experience. Each day we spent six to eight hours in small skiffs, riding through the estuaries and tributaries, walking through the rainforest, and watching for signs of prey and predator alike. My mind ran through the huge variety of experiences we'd had and what this rainforest and others like it represent to the world.

The rainforests of the Amazon River basin cover parts of seven countries: Venezuela, Peru, Brazil, Bolivia, Colombia, Ecuador, and Guyana—approximately 40 percent of the continent. Though the percentages vary according to the source, experts estimate that the Amazon rainforest produces between 15 and 40 percent of the world's supply of oxygen, second only to the oceans of the world.

Oh, and let's not forget the biodiversity. More than one-half of Earth's millions of species of plants, animals, and insects live in rainforests throughout the world. In the Amazon basin alone, more than 1,500 species of birds are found. A recent study identified 1,500 plant species, 750 species of trees, and 900 tons of living plants in one hectare (2.47 acres). Nearly 500 reptiles find a home in the rainforests of the Amazon River basin. The river itself supports over 2,500 species of fish. Can you imagine? I couldn't believe that I was there, witnessing this abundance and diversity of life.

And of course there is the Amazon River itself—nearly 6,500 kilometers (4,000 miles) long—stretching from its beginning just east of the Pacific Ocean in the Peruvian Andes to the massive estuary emptying into the Atlantic. The water passing through the Amazon in one day would meet the needs of the entire U.S. state of New York for a full year! Truly amazing.

But the marvels of the Amazon Basin aren't limited to wildlife. The river and forest people are wonderful. They are beautiful and friendly and very accepting of outsiders. They are extraordinarily resourceful, using the land, the water, and the wildlife to live, eat, and thrive. From the palm wood they use to build their homes, to the fish and animals they eat, these people owe their lives to Mother Earth, or Pachamama, as the Incas say.

The government of Peru invests in the education of its people, including the river and forest people. Every village, however small, has a state-funded school building to educate children through the eighth grade. Literacy among these river and forest communities is nearly 98 percent. To continue their education, children must travel to and stay in a city with a high school. Many children make this journey, seeking more education and more opportunities for prosperity. As their knowledge of the world grows, their own desires change, encouraging them to look for more opportunity. More than anything, the people of Peru are its greatest resource.


The Story of Our Future

Storytelling is a remarkable means of sharing important parts of our lives. It has formed the basis of passing on traditions and principles of life and society over the millennia. However, in the era of broadcast, cable, and social media, it is difficult to tell which story is the right one to listen to, especially when you're trying to make concrete decisions. When one tries to understand the implications of climate change, the reports disputing and supporting the science pile up on either side. Each report, whether by a newscaster or a scientist, tells a story that is embellished by a host of facts, analyses, conclusions, and more important, opinions. To those of us trying to make a decision about strategic change to address the impacts of climate change, this presents a great challenge: a very complex subject, not yet fully understood, contested and supported by thousands of opposing sources. It's tempting to tune them all out and just live day by day.

The story of Peru represents another set of observations, more points of reference that clarify the challenges facing us in the world today and well into the twenty-first century. It helped reinforce our thinking that there are indeed very complex challenges in the future, for which many of us—individuals and organizations—remain unprepared. If organizations don't embrace change, then in all likelihood, their very survival will be in question in a few short years. In other words, the sustainability of companies in the next 40 years is inextricably linked to the sustainability of communities and the planet.


A Precious Link in Global Supply Chains

Leading organizations today have expanded their view to include the complete value chain of their products and services. The value chain is often defined as the successive stages in which value is created when producing, distributing, or servicing a product. The supply chain, on the other hand, is part of the value chain and is often defined as the integrated list of suppliers that provide everything from raw materials to semifinished goods to cleaning services and paper towels. When organizations scrutinize their value and supply chains to ensure that they are robust, it can allow them to ramp up and deliver without surprises. These leading companies also look at the supply chains of the indirect resources that contribute to their overhead, such as headquarters facilities, administrative personnel, energy to power the administrative offices, and so forth.

Looking more closely at Peru provides a sense of how the rainforest is tapped to provide input to global supply chains. Beginning with its natural habitat, the biodiversity of the Amazon River basin has been under attack for many years. Climate change, deforestation, commercial farming, city growth and overcrowding, pharmaceutical harvesting, and commercial fishing are doing tremendous damage. Since 1970, the Brazilian rainforest alone has lost over 600,000 square kilometers (230,000 square miles) according to satellite surveys by the Brazilian National Institute for Space Research (INPE). This massive deforestation has stripped away countless species, some of which might have provided remedies for illnesses. Many prominent zoologists, such as Nigel Stork of Griffith University in Australia, warn that deforestation is responsible for the loss of thousands of plant, insect, and animal species per year. Some estimates place the rate of destruction at a staggering 50,000 species per year—an average of 137 species every day.

Globally, there are many coordinated efforts to move toward net zero deforestation. One prominent effort is the UN-REDD Programme, a United Nations Collaborative initiative on Reducing Emissions from Deforestation and forest Degradation (REDD) in developing countries. Launched in September 2008, this program assists developing countries, with the help of several other UN programs, in preparing and implementing national REDD+ strategies. (REDD+ extends beyond deforestation and degradation to address conservation, sustainable management of forests, and "enhancement of forest carbon stocks in reducing emissions.") The World Wildlife Federation is also working toward a goal of net zero deforestation for the Amazon rainforests by 2020. These programs and others like them are making a difference, but we are still a long way from reversing the destruction.

Why is so much effort expended to strip the forests in the Amazon River basin? We know this area represents a treasure trove of raw materials, food, medicines, and other supplies that can feed, cure, house, and clothe people throughout the region and the world. It is also the location of new cities and agricultural centers. And yet both the river basin and the forest have become exploited links in many supply chains, with insufficient attention paid to making these links sustainable. Recent efforts in Peru and Brazil have slowed this process, but a broad range of industries have been affected by these restrictions, since the Amazon River basin is the raw material link in hundreds of supply chains. This could result in a backlash of lobbying to remove restrictions.

In addition, the domestic transformation of the people of Peru provides a microcosm of the future workforces of the world. Peruvian villagers demonstrate a passion for improving themselves and building expectations of prosperity. Each of the villages has an odd thing in common: satellite TV. Yes, each of the villages has access to the world outside of the region and their country through TVs powered, not surprisingly, by diesel generators. It isn't hard for the villagers to see the numerous and exciting opportunities in the larger cities of Peru and in other developed nations. For them, local education is an answer, but it also provides motivation to move to the cities. They believe they need more education to become more prosperous, so they move to the cities, where they live with families and friends who are willing to house them. There in the cities, the bounty associated with educated middle-class people may very well be available to these relocated villagers.


The Race to the Cities

According to the UN Department of Economic and Social Affairs, 76 percent of Peru's 29 million residents live in cities, and the influx is growing, leaving small villages and agro-communities abandoned. By 2050, UN projections indicate that Peru will have a population of nearly 38 million, while the global population will have swelled to approximately 9.5 billion. If the percentage of Peruvian urbanites doesn't change, more than 33 million will be living in cities—nearly eight million more people than the current total population of Peru!

Globally, about 51 percent of the population lives in cities today, a first for humankind. Eduardo Lopez Moreno, in a recent report for UN-Habitat, calculated that there are more than 193,000 "city dwellers" added to urban areas across the globe each day—that's two every second. The needs to supply this massive urban population grow by the minute: food, building materials, automobiles, public transportation, sanitary facilities, clean water, foodstuffs, educational institutions, and more. The Amazon River basin and forest and others like it are among the primary supply chains for many of the basic and raw materials to meet these needs.


The Exploding Middle-Class Market

In the past, developing nations were considered a great source of inexpensive, high-quality labor. Companies throughout the developing world became the low-cost assembly providers for autos, cellular phones, computers, televisions, and more. Along with this burgeoning industry came greater prosperity and—as is the case in India, Africa, and China—a new emerging middle-class market for domestic goods.

So not only is the urbanization of countries like Peru creating more demand on supply chains; so is the growth of consumption of this new worldwide middle class. Throughout the developing world (Latin America, Africa, Asia, and India) there is a passion to move more people than ever before out of poverty and into the middle class.

The 2012 report of the United Nations Millennium Development Goals (UN MDG) for 2015 included preliminary estimates indicating that the global poverty rate has already fallen to less than half of the 1990 rate. If these results are confirmed, the first target of the UN MDGs—cutting the extreme poverty rate to half its 1990 level—will have been achieved well ahead of schedule. This was a massive collective effort by business, government, nongovernmental organizations (NGOs), church groups, and other not-for-profit institutions. It is a remarkable success.

However, this report defines the income threshold for emergence from extreme poverty to the lowest strata of the middle class at US$1.25 per day. This number may seem remarkably low, but it is a commonly accepted threshold. The economics of this new middle class in the developing world are very different than any in the developed nations. A special 2009 report by The Economist titled "Burgeoning Bourgeoisie" highlights these differences in the way the middle class is measured. In the early 2000s, global economists tended to measure middle-class economics by reflecting on the existing middle class. The result was a daily earning power range of US$12–$62. This traditional middle class definitely contributes greatly to the engine of consumption, buying the things they have come to expect as a result of their economic status. However, the growth of a middle class in that range of earning power is in the single digits.

The new global middle class—and its measure of growth—is dramatically larger than the traditional middle class. A study by India's National Council for Applied Economic Research found that from 1995–2005 there was a movement out of poverty, emerging into a new middle class. The new range was between US$2–$12 per day at 2005 purchasing power parity (PPP), and the percentage of the population that moved up from poverty into this range of earning potential grew from 18 percent to a jaw-dropping 41 percent!

As a result, the World Bank and the UN have formed a consensus to use a different figure to measure the daily earning potential of the class of people moving out of poverty: US$10.68 at 2005 PPP. With this number in mind, the new emerging middle class is massive. Today, India, Africa, and China are leading the world in middle-class expansion. Based on the revised statistics, Africa, India, and China each have a middle class in 2012 that numbers 300–500 million! Any one of those new middle classes represents a population rivaling that of Europe or the United States.

GREG—The dream of having a better life is not limited to the developing world of today. People have always dreamed of gaining affluence and prosperity. Both of my parents were Italian immigrants who moved to the United States as children immediately following World War I. My grandparents received education only to the third grade, while my parents ended their education at the eighth grade. They were brought to the United States to seize the opportunity, the "dream," of moving out of poverty and into the middle class.

My parents were union workers. They wanted a home, a car, freedom from want, and the opportunity for my generation to attend university. To them, these were the hallmarks of being in the middle class.

Those same beliefs exist today in the minds of low-income earners throughout the world, along with the passion to have readily available transportation, a cell phone, a TV, a computer, clothes for every occasion, and the middle-class luxury of spare time to invest in activities not related to pure survival.


This rapidly escalating middle-class demand is wonderful for the global marketer or for the domestic marketer in the affected countries. However, the unexpected consequence of this improvement is a growing consumption of all things "middle class" and growing expectations for more products at prices far lower than ever before. The growth in this desire is exponential in developing nations. Mario Pezzini of the Organization for Economic Cooperation and Development (OECD) calls the middle class "the motor of consumption." The African Development Bank calculated that while annual global population growth is down to 2.6 percent, the middle class continues to grow annually at 3.1 percent. In his article on the middle class, Pezzini noted that in Brazil, documented poverty has dropped from 40 percent of the population in 2001 to 25 percent in 2009, a shift with important consequences.

Regardless of your measuring stick, this new, emerging urban middle class represents a massive global engine of consumption, most of which is domestic to the respective countries. And with that market comes a series of expectations that will create a demand for goods and services unprecedented in our history:

• Sanitary facilities (including clean water)

• Clothing

• Readily available food supplies

• Connectivity for family and work (cell phones, Internet)

• Mobility for work and necessities (inexpensive cars, motorcycles, public transport)

• Healthcare for families (medicines)

• Homes, hospitals, and educational institutions (building and construction materials)

• Entertainment (TVs)


(Continues...)

Excerpted from Organizational Survival by GREGORY BALESTRERO, NATHALIE UDO. Copyright © 2014 International Institute for Learning, Inc.. Excerpted by permission of McGraw-Hill Education.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Table of Contents

Foreword vii

Preface xi

Introduction xvii

Part 1 The Case for Change

1 The Double Meaning of Sustainability 3

2 Dwindling Supplies and Growing Demand 25

3 Reluctant Caretakers of Public Trust 47

Part 2 The Awakening of Organizational Leadership

4 Sustainability as a Core Value 69

5 Social Innovation for Sustainability 83

6 Companies in Transition and the Need for Strategic Change 103

Part 3 Payback Is Real

7 Arguments for the Reluctant Majority 135

8 Does Corporate Sustainability Create Measurable Value? 153

9 Building a Strong and Long-Lasting Reputation 173

10 Common Traits of Sustainable Companies 191

Part 4 A Road Map for Changing Our Future

11 Creating the Road Map to a Sustainable Future 209

12 Adding Value and Profitability 235

13 The Conversation Continues 263

Appendix A Sustainability Leaders 275

Appendix B Sustainability Indexes and Rating Systems 281

Notes 285

Acknowledging the Power of Collaboration 303

Index 309

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