Here’s the 2nd installment of my short summary of “The Big Pivot,” Andrew Winston’s latest book. Since every green business owner and corporate sustainability person I know is crazy-busy, I offer these posts as a shortcut to understanding the gist of it.
Yesterday we covered Winston’s 3 mega-challenges facing business. Today, we look at Winston’s “radically practical strategies” for addressing them. There are 3 major “pivots” – or changes in direction – that companies must make: a Vision pivot, a Valuation pivot, and a Partner pivot. Today we look at the Vision Pivot.
A Super-Condensed Summary: The Vision Pivot
If your eyes roll at anything to do with “Vision,” stay with me. Winston is very concrete. The “Vision Pivot” is about setting clear, science-based goals. Every journey requires a destination. With a journey as big as “addressing climate change”, it’s essential to know what we must achieve and by when. To do so successfully means:
- Fighting short-termism – Winston says, “Leaders need a much deeper concept than just earnings (which is one particular, warped and narrow view of business success.)” He points to Unilever as one company that has stopped providing quarterly guidance to Wall Street. This frees up management time to focus on the actual business – including longer term investments in sustainable initiatives – rather than yakking about the stock.
2 other ways to deal with “the Street” include educating analysts on how sustainability activities create value, or converting to B Corporation status, which balances profit maximization with goals around people and planet.
- Setting big, science-based goals – According to climate scientists, we need to keep the planet’s warming to 2 degrees Celsius (3.6 Fahrenheit) to avoid the worst effects of climate change. Winston says that most companies are not using this benchmark to figure out what to do. Instead, they plan their actions based on what they have done in the past.
He likens this situation to being on a ship that is filling up with water, and then asking people how much water they think they can bail. That’s not the relevant question. We need to know how fast we HAVE to bail to save the ship from sinking, and then plan from there.
One company that’s getting it right is Ford. Chairman Bill Ford – who knows that use of the company’s vehicles represents about 2% of global emissions – has long focused on how to reduce those impacts. The company pursues 3 core strategies: (1) improving fuel efficiency (2) exploring low carbon alternative fuels and (3) developing hybrid and electric vehicles. And they measure how well they are doing against specific, science-based numbers.
Is this profitable? According to Ford’s website, “Ford completed one of its best years ever in 2013. Led by record profits in North America and Asia Pacific Africa, we achieved our fifth year in a row of positive net income.”
- Pursuing “heretical innovation” – this means “exploring what we take for granted.” It requires “asking disruptive questions and challenging the conventional wisdom.” Winston tells the story of UPS, and how odd it was, initially, to consider re-mapping all their routes to avoid left turns. But that change saves UPS about 85 million miles and 8 million gallons of fuel annually.
Seeing the World Anew
Winston’s book is full of examples of companies who have dramatically cut emissions, saved water, and reduced waste. But much remains to be done. Once a company makes the “Vision Pivot”, it sees the world anew. And the smart ones will see, as Winston does, ” a multi-trillion dollar opportunity to reconceive how we design, manufacture and deliver buildings, transportation, energy and much more.”
Tomorrow: the Valuation Pivot