This is the eighth blog in a weekly series on how sustainability can save business. It appears every Tuesday.
Last week we emphasized that culture trumps strategy every time, and that the key to unlocking the value of any strategy is to understand and harness the corporate culture within which the strategy is being implemented.
Implementing a sustainability strategy within any business is equal parts strategy and change management. And, to be successful, one should use the momentum of the forces that oppose change -- the cultural values, practices and inertia of the organization -- as the channel into the business and its operations, a sort of "cultural Judo" to embed sustainability values into the business and its culture.
Every Corporation has a Culture
Implementing a sustainability strategy into the business of a large U.S. retailer proved challenging because the "corporate culture possessed strong anti-bodies," noted Tyler to colleague -- who had only ever worked for the one company, for decades.
"What corporate culture?" replied his colleague looking slightly confused. "We don't have a culture."
Tyler's instant reply was: "Yeah right, and a fish doesn't know it's living in water."
Every corporation has a culture. Some are more "in your face" than others -- such as those that kick-off meetings with a corporate cheer -- and, if you've never really worked anywhere else, you might not even realize it's there.
Friendly and pragmatic... How very Canadian
Canadian Tire's corporate culture is strong yet subtle. Those who've worked within the company described it as "almost too nice," "relationship-based" and "risk-averse" if not a somewhat dry, analytical and pragmatic.
If you're a change agent within the company, you'll no-doubt encounter a common phrase: "I'm not comfortable with that." After working with U.S. corporations for years, Tyler describes it as "very Canadian."
At Canadian Tire, the business case is king, and sustainability's path into the corporate culture and business operations has been all about the business case, risk-management, innovation and, more recently, the creation of good will and brand equity. The sustainability team use the mantra "In the business, By the business, For the business" to ensure that the sustainability objectives are not only in line with business objectives, but that operations ("the business") are the drivers of the economic and environmental outcomes. After all, it is operations that make "sustainability" real and tangible, not the strategy function.
In the spring of 2008, Tyler was being interviewed as a potential leader for Canadian Tire's sustainability initiative. During one interview, a veteran retail executive asked him: "Why should I care?"
BLOG CONTINUES AFTER SLIDESHOW
"[My husband and I] thought about how we wanted it to be when we retired. How we wanted it to be 10-15 years from now. Do we still want to live in an apartment in New York? We decided we want a warm place to live, a place with a beach [and] a business where we can work from anywhere. So we bought land and built a house in Florida, and nobody knew. We did that a couple of years before I retired. That was done already so we wouldn't have to worry about it. When two people have a business and one is just starting out, you can't get a mortgage. I don't care how good your credit is! We needed to do all of those things before hand. It was thinking it out long-term, thinking big, but thinking long-term. Seeing where the gaps were and filling those gaps before I left."
"I talked to a lot of people who have been in business with themselves or have transitioned into doing something different, including coaches and teachers, to see what some of their problems were. I'm big on, you don't have to reinvent the wheel. Tell me what the problem is, let me avoid it, and I'll move on and find my own problems."
"I went through a budget of how much will I need, not how much do I want, but how much do I really need. I put a budget together and what I was able to do, unlike some people, is for the last year before I left the company I started putting my whole paycheck away like I didn't have it, just to see. If I really got real freaked out I could go get it or not quit or something, but I started putting it away. That meant no shopping. I started shopping in my own closet."
"I always had my own plan and my husband always had his own plan and we were both healthy. I went on his plan so I wouldn't have to worry about health care, but I also did something, because I knew it was going to change his cost. I started to find out what my benefits <em>really</em> cost. When you have benefits, you just know how much they take out of your paycheck, but you don't really know how much the mammogram is going to cost. Maybe [it's best to] pay for those yourself and just buy a major medical plan if you get hit by a bus, instead of trying to buy a complete plan that may cost three times as much. You might find all those times you go to the doctor they really average out to 800 bucks ... you buy a major medical plan that costs maybe $2,000, and now you're going to spend $2,800 a year vs. a whole package that costs $5,000 a year. It's being strategic and paying attention to the very specific things you need."
"I wasn't real technology savvy and I always had an assistant. The good thing was I always had an assistant, the bad thing was there was a whole lot of things I didn't know how to do that I was going to need. You have to get ready because [certain things] become very frustrating when you don't know how to do that and your business is going to count on them. You can't afford to hire an assistant right away. So you need to pay attention to what you know and what you don't know, and who can help you."
"When you don't have a comma after your name people aren't going to treat you the same. I was now Marsha Haygood of StepWise Associates and they were saying 'Who's that? She can't get me a job. She's not working there anymore.' You have to be ready for that and not let the emotion take over. There are people who I thought were my friends and had my back or who I thought were part of my circle, and I've never spoken to them again because they won't call back because they think I can't do anything for them. There are other people who I didn't pay any attention to that called me up and said 'Hey, I know someone that might be a good client for you,' so you just don't know. You have to be ready for it and you can't take it personally. Goodbye to some people is a good thing, you just don't know it yet."
Bypassing the expected "because it's the right thing to do" response, Tyler picked a product off of the executive's shelf and explained the economic and environmental value of package right-sizing. Leading with the business case of efficiency -- proved to be a very practical, analytical and familiar approach within the Canadian Tire culture.
Leading with a belief- or values-based argument would have set off alarm bells. Instead, the objective has been to incorporate the underlying values of business sustainability into the culture over time on a foundation of eco-efficiency and tens-of-millions in annual cost avoidance. Tyler jokes: "It may be the right thing to do, but if that's your only rationale for your sustainability strategy, you're either a non-profit, or soon to become one."
During the first two years of implementing the sustainability strategy, the business focused on eco-efficiency and later tackled more complex and values-based ideas such as sustainable design. The real estate team was already focused on efficiency, and in 2008 began implementing energy efficiency lighting retrofits at hundreds of stores. The initiative delivered excellent returns, recovering the more than $30-million capital investment during the third year of the project and delivering an internal rate of return (IRR) of 23 per cent -- all the while reducing the energy and carbon footprint of operations.
This was soon followed by the installation of central energy management systems to reduce energy use and the carbon footprint of the stores. This project recovered the initial capital investment during the second year of the project and delivered an IRR of 38 per cent!
Although this path of focusing on eco-efficiency and the business case before tackling more complex and abstract concepts such as sustainable design may be seen by some as overly pragmatic and perhaps comparatively dry to an evangelical call to action, the business case for sustainability formed the essential foundation for engaging business operations, executives and the Board.
After a couple of years of focusing on eco-efficiency, the scope of implementation expanded to include sustainable design of packaging and later products, with one buyer and a long-time strategic supplier producing an award-winning line of household storage and container products made from the recycled plastic collected from Ontario's curb-side Blue Box program. However, business sustainability may not have ever gained traction if the strategy had not first proven its worth via eco-efficiency.
The culture and its focus on the numbers and the business case is also why Canadian Tire placed so much emphasis on measurement and reporting of the economic and environmental benefits of the strategy. In Canadian Tire's culture, information, examples and data points enable the Business Sustainability team to have influential conversations with colleagues and give credit to those within the business for the economic and environmental benefits from their work. And accordingly, this has enabled and guided the implementation of the strategy as it expands its scope to additional operational functions and business units.
Today, Canadian Tire is a leader for its integration of sustainability with the business. We measure and communicate progress quarterly, with metrics and performance linked to operational plans, compensation and core financial documents. And while this may have made the company a leader in this field, it is really just a product of what was required for sustainability to be successful within the corporate culture.
And yes, while an emotive call to action on business sustainability among its employees is largely absent at Canadian Tire, it does not mean that that this cannot evolve over time; it simply means that it was not the best way to initially engage the business.
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