A Lighthouse approach to guide your organization’s Sustainability Transition
<div class="insights_cta-component">This is the second article in our new series covering Sustainability Transformation. See the full series below.</div>
Introduction – your own unique tutorial
In the age of transition, wouldn't everyone appreciate a clear guide on transforming their business to become more sustainable? Yet to temper your expectations: this is not a “5 Simple Hacks to Turbocharge Your Sustainability” kind of article. Simply because that does not exist. For every geography, every industry and every company – there is an individual path which leads towards sustainability transition.
While this article won't hand you a ready-to-apply tutorial, it will equip you with a practical approach to shape and navigate that aforementioned individual path toward your sustainability transition. The key is to create your own unique tutorial – by dedicating a ringfenced part of your business to becoming the place where you can test and learn. Doing this in a ringfenced part of the business lowers the cost of experimentation and avoids to jeopardize the running business – while proven use cases and methodologies can be scaled rapidly to the rest of the business.
Done effectively, this ‘Business Lab’ will evolve into a guiding lighthouse, illuminating the way towards sustainability for your entire company. So, let’s get you started on your own journey towards sustainability transition.
Start with defining your vision towards sustainability &translate it into specific use-cases
Before you can start to test and learn, you need to define what you want to test in the first place. The starting point for this transition will typically be the Double Materiality Assessment. With this assessment, you have determine the areas where the greatest impact for the sustainability transition can be achieved. From there, you can establish the company’s further vision and ambition towards sustainability, and address questions such as: Where do we see our biggest areas of contribution towards sustainability? Where do our core capabilities lie to unlock the transition? What are potential trade-offs we may face by approaching our sustainability transition? And so on.
Defining your vision and ambition is comparable to laying the foundation for a skyscraper - it requires careful planning, a solid framework, and a clear desired outcome. Just as architects meticulously plan the structure of a building, you must take the time to introspect and identify your passions, values, and long-term goals. This self-discovery process serves as the bedrock for cultivating a personal ambition that aligns with your beliefs as a company. At the end of this phase, you should have a clear idea of what you want to test – with tangible sustainability use cases such as on products or processes.
This is where the ‘Business Lab’ comes into play. And note, this Business Lab is a highly effective infrastructure not only for testing Sustainability use cases, but also for other (transformational) use cases that benefit from cross-functional collaboration such as on digital, GenAI or process improvement use cases.
Identify the right place for your sustainability lighthouse
Once the vision is conceptualized, the next step is to establish the Business Lab - a space where your ideas (use-cases)can be explored, refined, and tested for your transition towards sustainability. This testing ground is not just a physical or metaphorical space, it is a mindset that embraces experimentation and learning. Sustainable use cases require iterative testing and adaptation. Just as a building undergoes stress tests to ensure its resilience, new use cases must be tested and proven in various scenarios to learn from successes and failures. In this testing environment, the seeds of innovation are sown, and the resilience needed for sustainable growth begins to take root.
Selecting the right place to build your sustainability lighthouse is a critical step in your journey and it requires thoughtful consideration. When choosing any ringfenced environment of your business to build your lighthouse, we advise you to think of the following criteria:
• Select an MD/MT (Managing Director/Management Team) that wants to move at speed: The first and most important requirement for selecting your lighthouse is the willingness of the Managing Director/Management Team of that business unit. Setting up new use cases and scaling new ways of working takes time and energy, and it is crucial to address this with a team that is excited to invest that time & energy.
• Be representative for the company: Ensure that this business- environment closely resembles the rest of your business, enabling easy knowledge transfer and integration with the broader company and allowing for effective scaling of proven uses cases.
• Have ESG growth potential: Select a business- environment with large opportunities for ESG(Environmental, Social, and Governance) improvements, maximizing its sustainability impact.
• Be flexible and adaptable: Ensure the business- environment is flexible in adapting to change and innovation, fostering a culture of continuous improvement.
The ideal choice for your company will depend on various business-specific factors. However, keeping these criteria at the forefront of your decision-making process will help you identify a fitting environment for your lighthouse.
Set up your cross-functional lighthouse team & align with key stakeholders on your measurement of success and a step-by-step plan
Once you've identified the business unit to focus on, the next step is to start building your Business Lab. To do this, setup your own cross-functional Business Lab team with clear roles and responsibilities including explicit ownership. As a common team-setup, your team should consist of both functional experts, such as on finance, R&D and sustainability, and a dedicated team members focused on the experimentation and change management itself. This team will be your engine for steering the whole Lab – so set it up thoughtfully.
During the preparation phase, make sure your lighthouse team aligns with key stakeholders on the measurement of success– an envisioned state of the selected BU (Business Unit) in the future. You need to dream big in this game! Instead of settling for minor tweaks, set your sights on achieving a flawless synergy between your business and sustainability. Envision a scenario where your company is not just a good fit for sustainability, but envision a scenario where it is a game-changer that redefines the rules for the whole industry and beyond ! To give you an example of how radical such change can be - DSM, once established as Dutch State Mines to originally mine coal reserves, is currently a sustainable front-runner in the field of biochemistry.
Once you have envisioned the future-state of your BU with clear measurements of success, you need to come up with a step-by-step plan for the BU in 5-10 years – again, make sure you align with every single stakeholder you think is relevant in your own lighthouse context. Changing operations without a shared plan is likely to cause disagreement and frustration.
Execute your ideas – start to test and learn
In this step, the practical work begins –you make the Business Lab work and execute first use cases. This involves strong cooperation within the Lab-team on development processes, fostering innovation as the norm, testing & learning from your envisioned products, and strategically investing in the areas where capability gaps have been identified.
In practice, you need to run initiatives, or use-cases, that start small & low-tech and grow iterative towards clear business objectives. Next to testing the use cases, ideas can further be explored, refined, and continuously further developed towards your sustainability transition. You will be surprised how many ideas and use cases the collective team will be able to ideate within the first few days, growing as you learn and test. It truly is typically a domino-effect of self-exploration and you will even need to prioritize the most relevant ideas.
The phase of executing the testing &learning is of course very extensive in terms of how you can approach it. Make sure you enable low-cost ideation, testing and scaling of new business ideas and get early proof-of-value. Also, allow for active on-the-ground guidance to the testing team along the whole test & learn process – this also entails spotting and fixing issues right away during this phase. Make sure you document the whole testing & learning process you go through. First, it makes it easier for yourself to look back at what you have achieved - losing oversight happens quicker than you think. Second, it helps anyone else to follow the process, both within and outside the cross-functional lighthouse-team. Also, it is highly recommended to iterate on tangible measurements such as KPIs which can help you track your testing in a meaningful way. By the way, dashboards area great tool to monitor your key KPIs.
Scale and guide your boats towards the sustainability lighthouse
Now that you have your Business Lab, and it’s gradually evolving to a Sustainability Lighthouse, the next step is to chart the course for your entire fleet towards this sustainability beacon. This voyage will demand leadership, collaboration, and regular assessment to stay on course.
A big part of steering during the test& learn phases will be taken up by your dedicated Lab team. But especially in the scaling phase, leaders must ensure the entire company grasps the "why", “what” and "how" behind the journey towards the sustainable lighthouse. This means crafting a compelling narrative that underlines the significance of sustainability for the company. By making this narrative relatable, leaders inspire and mobilize their workforce, building a strong foundation for the sustainability journey.
While facilitating the free flow of knowledge from your lighthouse to the broader organization is essential, fostering genuine collaboration is even more crucial. This can be achieved through cross-departmental innovation teams or by deploying lighthouse team members to different departments. Finally, you need to perform regular assessments to keep your boats on course toward the lighthouse. These routine check-ins will not only help in tracking progress but also in making necessary adjustments, ensuring your sustainability journey remains on the right trajectory.
Conclusion – start shaping your own tutorial
As we mentioned at the beginning of this article, no one can provide you with a ready-to-implement guide to your sustainability transition. Yet we did provide you with a practical method to create your own, individual guiding light in your sustainability journey. Start with thinking big on where you envision your sustainable impact as a business, continue with testing tangible use-case small in a well-selected business environment and effectively scale it to a proposition for your whole business. And here you go – this is your unique answer on how to become more sustainable.
The secret of successfully implementing your own tutorial starts, as always, with people. So, make sure you have a dedicated Business Lab-team in place with clear roles and responsibilities, defined measurements of success and a step-by-step plan towards your vision. Remember that when choosing your business-environment, the most critical requirement is the willingness of the Management Team. Finally, to scale the rest of your company towards your guiding light, make sure your Lab-team closely collaborates with business leaders and key stakeholders.
So, if someone asks you how to drive a sustainable core business transformation, you will say: "Build a Business Lab!" (or, if at this point you are tired of this metaphor: To change big, start small!)
THE FULL ARTICLE SERIES
• A Lighthouse approach to guide your organization’s Sustainability Transition
• Sustainable product launch: Bridging consumer's ‘say-do gap’
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