Fu­ture- Proof­ing Sus­tain­able Busi­ness

Thai-American Business (T-AB) Magazine - - Front Page - Writ­ten by: Richard Welford

The world is in flux. Chal­leng­ing eco­nomic times, volatile world events, a de­te­ri­o­rat­ing en­vi­ron­ment, a grow­ing so­cial di­vide, and fast- chang­ing tech­nol­ogy are leav­ing busi­nesses more vul­ner­a­ble than ever. There is an ur­gent need to adapt to risks that are in­evitable, such as those linked to cli­mate change, but it is harder to pre­dict where new risks may come from.

Fu­ture- proof­ing is the process of an­tic­i­pat­ing the fu­ture and de­vel­op­ing so­lu­tions to min­i­mize the neg­a­tive ef­fects, while tak­ing ad­van­tage of the pos­i­tive ef­fects of shocks and stresses due to fu­ture events. At the heart of any fu­ture- proof­ing strat­egy needs to be a com­mit­ment to con­tribut­ing to the sus­tain­able de­vel­op­ment of our planet.

We are of­ten asked to de­fine Cor­po­rate So­cial Re­spon­si­bil­ity ( CSR). For us, re­spon­si­bil­ity is about how you do busi­ness, not how you give away or uti­lize the prof­its you make from that busi­ness. In Thai­land, CSR is still un­der­stood as how you give away your prof­its and not how you make those prof­its be­cause “CSR is a nice thing to do or the right thing to do.”

By now, there is enough re­search ev­i­dence to sug­gest that CSR is good for busi­ness. Re­spon­si­ble busi­ness re­sults in pos­i­tive im­pact on the bot­tom line of the com­pany. For in­stance, across the globe, there is no com­pany do­ing as much for wa­ter con­ser­va­tion as Coca- Cola. It is a sim­ple cor­re­la­tion— no wa­ter means no Coke. The risk of di­min­ish­ing re­sources is partly driv­ing cor­po­rate ac­tion on is­sues like re­source scarcity and cli­mate change. We have seen more and more Thai com­pa­nies mov­ing to­wards a strate­gic think­ing. For ex­am­ple, in the hos­pi­tal­ity in­dus­try com­pa­nies like Soneva, the Onyx Hos­pi­tal­ity Group and MI­NOR Ho­tels have put in place innovative prac­tices and have made steps to­wards re­spon­si­bly man­ag­ing the so­cial and en­vi­ron­men­tal im­pacts of their oper­a­tions.

Many or­ga­ni­za­tions have el­e­ments of en­vi­ron­men­tal, so­cial and gov­er­nance ( ESG) risk man­age­ment in place. How­ever, they are of­ten not as ro­bust as they need to be to deal with un­pre­dictable risks. Too of­ten they fo­cus on the ex­trap­o­la­tion of past risks, rather than pre­dict­ing fu­ture pos­si­ble risks. There is a need for com­pa­nies to take a much broader per­spec­tive to risk, mov­ing from be­ing re­ac­tive and com­pli­ance- driven to be­ing proac­tive and pre­dic­tive.

Trans­parency and ac­count­abil­ity are the bases of CSR. In­vestors are in­creas­ingly look­ing into this when mak­ing de­ci­sions. For in­stance, the Hong Kong and Sin­ga­pore ex­change boards have man­dated that all com­pa­nies listed with them must ad­here to cer­tain prin­ci­ples of sus­tain­abil­ity and it will not be long be­fore other coun­tries, in­clud­ing Thai­land, will fol­low in their steps. Re­cently, we de­liv­ered a train­ing at the Stock Ex­change of Thai­land to about 20 Thai com­pa­nies who be­lieve that hav­ing strong sus­tain­abil­ity prac­tices in place will help them re­duce risk and at­tract cap­i­tal.

IN­NO­VA­TION SHOULD BE FUN­DA­MEN­TAL, NOT IN­CRE­MEN­TAL

The key to stay­ing in busi­ness in the long run is in­no­va­tion and risk man­age­ment. Yet, in many or­ga­ni­za­tions, in­no­va­tion of­ten re­mains in­cre­men­tal, rather than fun­da­men­tal and sys­temic. But as so­cial and en­vi­ron­men­tal is­sues con­tinue to in­crease in im­por­tance, in­cre­men­tal in­no­va­tion will be­come less ef­fec­tive in en­abling com­pa­nies, in­dus­tries and economies to suc­cess­fully adapt and sur­vive in the fu­ture.

Think­ing strate­gi­cally about risk and tak­ing a broader, deeper, more rig­or­ous ap­proach to it can cre­ate agility and fo­cus, both in the way you re­spond to risks and the way you in­no­vate to ex­ploit op­por­tu­ni­ties. This will bring com­pet­i­tive ad­van­tage and, with it, the abil­ity to plan ahead with more cer­tainty, hence fu­ture- proof­ing your busi­ness.

Com­pa­nies there­fore need an ap­proach that can an­tic­i­pate ESG risks and at the same time build in­no­va­tion struc­tures. This is the only way to fu­ture- proof sus­tain­able busi­ness. Busi­nesses need an ap­proach to man­age this process that will feed into a fu­ture- proof­ing strat­egy.

HOW TO FU­TURE- PROOF YOUR BUSI­NESS

Here is my top ten list for de­vel­op­ing a strat­egy to fu­ture- proof your busi­ness:

Es­tab­lish a so­cial pur­pose: Com­pa­nies that will sur­vive in the long run will have to do more than make prof­its. Stake­hold­ers want to see so­ci­etal con­tri­bu­tions and shared value. Em­bed a so­cial pur­pose into the com­pany’s com­pet­i­tive po­si­tion­ing. Align your as­sets and ex­per­tise to meet so­cial and en­vi­ron­men­tal needs. Make sure that you are known not only for the prod­ucts and ser­vices that you pro­vide but also for the con­tri­bu­tion you make to peo­ple, com­mu­ni­ties and the en­vi­ron­ment. 2. Zoom out and track the trends: Some of the trends that are shap­ing the fu­ture are not dif­fi­cult to see. Cli­mate change, wa­ter, la­bor is­sues, and hu­man rights have con­sis­tently ranked highly in the an­nual re­search “Track­ing the Trends” un­der­taken by CSR Asia. Stay on top of these big is­sues since they tend to have a huge in­flu­ence on reg­u­la­tion, con­sumer sen­ti­ment, and the cam­paigns of big NGOS. Pe­ri­od­i­cally zoom out from the run­ning of your busi­ness to look­ing at the is­sues shap­ing the fu­ture. 3. Track in­flu­enc­ing fac­tors and pre­dict fu­ture de­mands to­day: Be aware of the trig­gers and the stake­hold­ers that can im­pact chang­ing so­ci­etal ex­pec­ta­tions. So­cial me­dia has re­sulted in habits chang­ing dra­mat­i­cally and this has af­fected lots of dif­fer­ent busi­nesses. You need to watch out for such in­flu­enc­ing fac­tors and in­flu­enc­ing ac­tors that can in­di­rectly im­pact your busi­ness. Make your­self aware of the de­vel­op­ments un­fold­ing around you, even if those are not re­lated to your in­dus­try. Peo­ple will not al­ways tell you what they want; you have to an­tic­i­pate change. This needs some imag­i­na­tion and ex­pe­ri­ence with the trends in the in­dus­try you work in. 4. Lis­ten to your stake­hold­ers: On­go­ing stake­holder en­gage­ment is key to un­cov­er­ing the as­pi­ra­tions of peo­ple for the fu­ture. Take time to talk to younger

peo­ple in par­tic­u­lar. Al­ways take what your stake­hold­ers tell you se­ri­ously and re­spond to their as­pi­ra­tions, but don’t be­lieve them when it comes to pre­dict­ing the fu­ture. Get to know your stake­hold­ers well, with deep in­sight into how they think, and then try to imag­ine how they may be­have in a very dif­fer­ent kind of fu­ture world. 5. Eval­u­ate risk in the fu­ture: You won’t be able to pre­dict the prob­lems that might oc­cur in the fu­ture but you can cer­tainly take some steps to bet­ter pre­pare your­self. Find the risks or pos­si­ble points of fail­ure for your busi­ness. These risks could be in ar­eas like peo­ple, sys­tems, le­gal com­pli­ance, or gov­er­nance. But even more dif­fi­cult to pre­dict are the risks that arise be­cause of the chang­ing as­pi­ra­tions of young peo­ple, con­flicts over re­sources, ru­n­away cli­mate change, and hu­man rights abuses. De­velop sce­nario plan­ning tech­niques and try to be your own fu­tur­ol­o­gist. 6. Cre­ate a fa­vor­able place for in­no­va­tion to thrive: You can­not win by fol­low­ing the lead­ers, you have to in­no­vate. In­no­va­tion re­quires cre­ativ­ity and try­ing out new ideas for prod­ucts, ser­vices, pro­cesses, and busi­ness mod­els. That means en­cour­ag­ing new ways of meet­ing so­ci­etal needs and new ways of op­er­at­ing, and it means not pun­ish­ing mis­takes that oc­cur as the re­sult of much- needed ex­per­i­men­ta­tion. Cre­ate ag­ile man­age­ment teams that thrive on change. 7. De­velop strate­gic part­ner­ships for cocre­ation: Work with ex­ter­nal part­ners with par­tic­u­lar ex­per­tise where this can cre­ate syn­er­gies. Rec­og­nize that im­pact is most likely in­creased when peo­ple work col­lab­o­ra­tively rather than com­pet­i­tively. Iden­tify op­por­tu­ni­ties for col­lec­tive im­pact. Con­trib­ute to mul­ti­stake­holder ini­tia­tives that fo­cus on cre­at­ing sys­temic change that can cre­ate value for busi­nesses and so­ci­eties. 8. Bring in out­siders to chal­lenge your world view: The great­est risk to any busi­ness is in­sti­tu­tional blind­ness, be­com­ing se­duced by one’s own views and opin­ions. Seek out ad­vice from ex­perts, con­sul­tants, in­no­va­tors – peo­ple who think very dif­fer­ently from you and oth­ers in your com­pany. In­clude them in key strat­egy dis­cus­sions. Cre­ate fu­ture­ori­ented work­shops to make sure your busi­ness in­creases its chance of sur­viv­ing into the fu­ture. 9. Shape your own fu­ture: You do not have to stand by and watch the world change around you. There is a role for busi­ness in be­ing a change agent. This means fo­cus­ing on your so­cial pur­pose, de­vel­op­ing a the­ory of change, com­mu­ni­cat­ing through bold thought lead­er­ship and be­ing part of shap­ing those fu­ture trends. You too can be an in­flu­encer. 10. Move from the brand and back to the pur­pose: Just be­cause a brand has been around for decades it doesn’t mean that it is right for to­day’s mar­ket­place. Change has never been so fast. But you need to make a con­tri­bu­tion to sus­tain­able de­vel­op­ment by man­ag­ing ESG risks and cre­at­ing innovative, prof­itable so­lu­tions. Af­ter all, the best way to be­come a bil­lion­aire is to help a bil­lion peo­ple.

The 2017 CSR Asia Sum­mit, tak­ing place on Septem­ber 26 and 27 has as its theme “Fu­ture- Proof­ing Sus­tain­able Busi­ness”. You can hear about many of the is­sues raised in the ar­ti­cle from lead­ing prac­ti­tion­ers and thought lead­ers. You can find more in­for­ma­tion by vis­it­ing the Sum­mit web­site http:// www. csr- asia. com/ sum­mit2017/. AMCHAM mem­bers re­ceive a 15% dis­count when book­ing. See be­low for de­tails.

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