A few highlights:

Walt led off saying that business must have a “broader purpose in life” – employees and other stakeholders become much more excited if there is more to it than making money.  This is a natural human desire, for meaning – and it’s surprising in a way that somehow the “common sense” of business tells us to ignore something so fundamental. According to Walt, making money is great and essential, but – has to be a by-product of something bigger. Purpose really has to come first.

Lisa made the point that leadership includes understanding the full impacts of one’s decisions and actions, evaluating and driving reductions in negative impacts, and constantly engaging and communicating.  Ellen and Kim supported this with some very concrete examples of how they do planning, budgeting, and impact measurement in their respective companies.

I posed the question to the panel “In order to be sustainable, is a fundamentally different leadership style required?”

The consensus was that the style was not different, but additional.  Instead of thinking one quarter ahead, it’s having a longer term vision of the business in the world. It’s respecting the need to get buy in throughout the organization, to advocate for sustainability throughout the supply chain, and to act consistently from a set of sustainable values.

These are not in any way something antithetical to good business practice.  This deeper appreciation of time and complexity translates into concrete business results, including financial savings, brand protection, the ability to shape or avoid regulation, protecting resources needed in the supply chain, anticipating and meeting customer requirements.

Another question:  “Doesn’t this all make executive decision making much more complex, and thus more difficult?” The answers surprised me. Everyone said that it wasn’t actually more difficult, and in fact had very positive results. Walt felt that this approach increased employee involvement and satisfaction. Kim said it was hard to quantify but undoubtedly profitable. Lisa said it resulted in more integrated, deeper solutions.

Ellen described it as taking the process of due diligence deeper into the organization, including thinking longer term about potential impacts and risks.  She used the term “greater mindfulness” to describe this way of seeing.

In the end, culture is huge, the major driver of sustainable corporate behavior.  It means basing hiring decisions, rewards and incentives on consistent values – which in New Belgium’s case, includes a commitment to FUN.  (A simple concept they never taught me in business school!).  And Walt spoke of the most important skills for new employees being not technical – he says we can teach that stuff – but more fundamental attributes of passion, integrity and character.

Sustainable leadership is perhaps best seen not as huge and disruptive paradigm shift, but rather a more gentle and ongoing deepening of perspective.

Values are a key link between the “inner” and the “outer”. Values matter in an organization or a community, because they provide a consistent guide to decision making, in particular when one value may conflict with another.

In business, values are, too often, a set of nice sounding words on a plaque in the lobby.

Perhaps this is because we confuse values with ideals. People tend to think that values must represent the best of who we are, and of course must be positive.  But what if you work in a company where, for example, secrecy is a hallowed principle of management decision making, but we can’t admit to that without – well – violating that value?  Even if it doesn’t sound warm and fuzzy, isn’t that truly a value?

How do we incorporate values into the practice of strategic planning, and performance management?  The first step is to be able to actually measure values.

My friend and colleague Kathryn Alexander has developed a values assessment tool that links values to business behavior and performance outcomes.  This tool is the basis for a certification program she has developed, called Forever Green™, that provides a “maturity model” for business and other organizations working to improve ethical and sustainable performance.

Kathryn’s work over the years has demonstrated that the values that support sustainability correlate well with an organization’s  capacity for innovation and resilience. On the other hand, there are competing sets of values that will actively undermine a firms ability to achieve sustainability. These values also undermine the resilience and creativity of the firm. In the emerging business paradigm, a commitment to sustainability is just plain good business.

Why?  In a nutshell, sustainability thinking is inherently long term, acknowledges complexity, and addresses what are becoming key risk areas in an age of unprecedented transparency.

This is why tools for measuring values are critical.  How can these metrics be integrated into an overall strategy, using the Balanced Scorecard?

Here’s an example of how a values-based sustainability theme can be expressed in a Strategy Map.  In the Balanced Scorecard, the most foundational level – what we call Organizational Capacity – is intimately linked to leadership, culture and values.  And, thanks to the work of people like Kathryn, we can now measure the evolution of values over time in an organization.

For an organization to develop a sustainable business model, the most basic ingredient is a declaration by leaders that this will be so. This declaration is the basis of a culture that attracts and reinforces like-minded employees.  This builds a culture of people who enter creatively into the collaborative design and implementation of more sustainable products and processes.

This process also has an impact on branding – telling the story of the product, and of the way the company does business, in a way that attracts the attention of consumers whose values match yours.   This in turn results in enhanced customer loyalty and positive revenue results.

For me, what’s missing is an understanding about how we got here in the first place.  How are our behavior and our economic systems rooted in more fundamental assumptions about reality – the way we see, and who we think we are?  Most of the sustainability conversations focus on the level of matter and energy – we take stuff from the earth, do something to it to add economic value, distribute it, use it, and throw it away.  This is the stuff of life cycle assessment. This view of reality is incredibly valuable, and necessary.  And it’s not the whole picture.

It’s great to reduce energy use and reduce packaging, but somehow I doubt that’s going to be enough to achieve change at the level we need.

I attended a fascinating presentation the other night called Integral Sustainability in Action by a group of graduates from Naropa University’s excellent Environmental Leadership program.

They have applied Integral Theory to questions of sustainability, drawing on the work of Barrett Brown in particular.   I won’t attempt to describe Integral Theory here -  Barrett does a great job of it on his site.

In a very comprehensive paper, Barrett did a sentence-by-sentence analysis of the most popular books about sustainability, and found that, by and large, the semantic focus is almost exclusively on the lower right quadrant – that is, the large scale systemic economic, political, and technological issues that enable or hinder progress. The beauty of Integral Theory is that it gives us a framework to understand that this is a necessary, but not sufficient, way to understand, diagnose, and prescribe actions to resolve the large scale problems we face.

Why? Because it only addresses one aspect of the problem, albeit an important one. Beneath all the talk about reducing energy use, creating green businesses and a green workforce, respecting biodiversity, and having healthy communities, there are fundamental assumptions about who we think we are – our consciousness, what we pay attention to, our values, our motivations.  This is the domain of cosmology.

This is not the stuff of science and engineering, but  of philosophy, spirituality or religion.  Increasingly, spiritual leaders from a number of traditions have begun to address this.  Sakyong Mipham Rinpoche summed up the Buddhist perspective:

“Our precious planet and the innumerable beings who dwell here face an unprecedented crisis. The escalating threat to the world’s environment and climate stem from a profound predicament that affects all humanity. We are ever more rapidly losing our connection with the sacred nature of our world. This tragedy affects us in so many ways, but at its heart, it is a crisis of the spirit. We are harming our planet and fellow beings because we are losing touch with the basic goodness of our own sacred being.”

In the Christian tradition, Fr. Thomas Berry has been a leader in what is termed the New Cosmology. This begins with an inquiry into how our spiritual estrangement from the earth is intimately tied into our technological culture.  Fr. Berry proposes a reunification of science and religion through what he terms Earth Spirituality. This is a doctrine of radical respect for the ourselves as well as the other beings of this earth, with very profound implications for science, technology and law

We have lived with a utilitarian assumption that others are here for our own benefit, whether it’s animals, ecosystems, or other people.  This is both a spiritual, and a practical problem. There’s just not enough to go around anymore.

Next post:  Bringing it down to earth: how do we incorporate this thinking into the realm of practical business planning, performance, and leadership?

Building a Balanced Scorecard begins with the collaborative creation of a Strategy Map. The Strategy Map is a highly visual, and easily communicated, way to illustrate how the strategy of the enterprise translates into measurable objectives in each of the four perspectives – finance, customer, process, and organization – that together create a holistic view of sustainable organizational performance.

Sustainability is NOT a single objective with its own metrics.  Rather, sustainability is a theme that is reflected in each of these perspectives.

• From a financial standpoint, sustainability means staying in business.
• From a customer standpoint, sustainability means satisfying, even delighting, the sustainability-conscious consumer.
• From a process standpoint, sustainability means we manage materials, energy, and waste in the most eco-efficient way possible.
• From an organizational standpoint, sustainability means creating a culture that values sustainability, reflected in the choices that employees make every day.

The Strategy Map tells a story about how we will collaborate to achieve all these objectives:

• We will build new sources of revenue by creating positive branding and customer experience connected with how we design and build our products, and how our customers use and dispose of them.  This will be supported by appealing to emerging shifts in consumer tastes by pro-actively communicating our values, and our value, to targeted customers.
• We will reduce operating costs by improving efficiencies in the way we manage materials, energy, and waste disposal, and by the way we identify and manage enterprise risk. This will be supported by improved eco-efficiency of our products, supported by innovative product design, reduced product life-cycle impacts, and strong stakeholder partnering.
• We will reduce risk through a better understanding of the our environmental and social impacts, and through better  relationships with stakeholders including NGO’s, lawmakers, regulators, and members of the communities we impact.
• Underlying all these activities is a commitment to build and reinforce a strong sustainability culture in our enterprise, supported by the right employee skills and knowledge, as well as information systems that give us the capability to measure both sustainability impacts and customer sentiment via social media analysis.

(This article by Dan originally appeared at www.lohas.com.  LOHAS is an acronym for a market segment characterized as Lifestyles of Health and Sustainability)

For the last 250 years, we have been living in what Peter Senge calls the “industrial age bubble”, based on a “take, make, waste” worldview. Behind this way of life has been a set of attitudes and beliefs about economics, wealth, and business. We tend to think of these beliefs as “common sense”, or even as objective natural law. But in fact, they are received knowledge, the inheritance of centuries of cultural, political, and philosophical tradition. Our way of business is based on learned behavior, not natural law.

With this worldview, we’ve created unprecedented wealth, knowledge and communication. And, we’ve created environmental toxicity, cheap throw away products, denatured industrially-produced food, and a culture of low self-esteem and spiritual poverty.

Since the 1960’s, there has been an increasing counter-cultural rejection of this worldview, and a declaration of the value of healthy food and lifestyles, social justice and environmental sustainability. New generations of LOHAS entrepreneurs have emerged – people who express those values with distinctly capitalist solutions for improving quality of life.

Is there a distinctively “LOHAS” business model?

Does having a healthy, sustainable product imply having a healthy, sustainable business culture to produce it? Are LOHAS businesses really run differently from “conventional” businesses? I believe the answer is YES.

I’ve been interviewing business leaders in the LOHAS sector for the last two years, and have more recently begun sharing these conversations on internet radio. There are common threads in these stories, threads very different from what I was taught in business school 25 years ago.

A New Metaphor – Business as a Living System

The models we use to visualize business, far from being abstract business school stuff, are actually critical. The metaphors we use to describe the world inform our sense of what is real, our ability to imagine possibilities, and the choices we make. If we think the world is a machine, a fundamentally meaningless bunch of stuff, we see and act accordingly.

“Common sense” in the modern world emphasizes the separation of the self from nature, and a linear notion of cause and effect. This shows up in business planning models that view markets and organizations as machines, to be “managed” via command and control.

The business metaphor is changing from that of a linear, mechanical system to a complex, biological one. Your business environment is more like a forest than a set of gears. As a result, today’s emerging business planning models imagine enterprises as interdependent networks of resilient, individual players. Processes of planning and change are not straight lines from A to B, but cycles involving action, learning and adaptation.

Valuing Multiple Stakeholders

If you see your business environment as a machine, you want to improve your ability to manipulate it. If you view your business environment as a forest, you see a variety of plants and animals that behave according to their own rules, rules that you need to understand and respect.

In the industrial age model, business exists solely to make a profit for shareholders. LOHAS strategies begin with the intention to respect the values and needs of all the stakeholders they touch. The forest is only healthy if all the plants and animals in it are healthy. The value of a business model is maximized when all the players – investors, suppliers, employees, consumers, communities – benefit from being a part of it. And in a surprising number of cases, returns to investors are just as good or better.

Collaboration and Trust

Industrial age systems get people to work together by command and control, carrots and sticks. Networked organizations require greater skill to enable people to collaborate. Why is this essential? In a complex world, no one person can see the whole picture. Wise leaders tap into the collective intelligence and motivation around them. This means building trust.

Effective collaboration requires trust in order to creatively innovate and solve problems, negotiate healthy win-win agreements, and manage performance based on agreement rather than on power.

Head, Heart and Hands

It’s striking how many LOHAS leaders benefit from practices like yoga and meditation. These practices develop personal resilience and creativity, integrate mind and body, and enable one to act confidently within that more complex view of reality. We often use the term “authenticity” to describe this way of being.

To be authentic is to know and act from the heart, as well as the head. In the language of the heart, having the right questions is more valuable than having all the answers. Authenticity is a confident, wholehearted state of being that puts all these ideas into practice – purpose, complexity, interconnectedness, respect, and collaboration.

Is LOHAS the business culture of the future? If evolution is about adapting to greater and greater levels of complexity and intelligence, I believe it will be.