Sustainability leaders transcend their organization’s traditional boundaries to involve their wider business ecosystem, recognizing and analyzing their externalities with external stakeholders along their value chain, such as suppliers and startups. In these times of exponential change, organizations cannot build all the relevant knowledge, skills, technology and influence needed to transform on their own.
Sustainability leaders engage and mobilize their network in two ways: “Outside-in” by leveraging others’ knowledge, skills or technology to efficiently accelerate and de-risk their sustainability transformation; and “inside-out” by leveraging the influence of other, focal organizations in their network to effectively shape the strategies and actions of those around them. In this way organizations can foster a favorable policy and economic environment that enables their own sustainability transformation to succeed.
To address the most pressing sustainability issues in their respective industries and sectors, companies in some cases need to reframe how they think and cooperate with their direct competitors. Forming new alliances with their competitor will be required. Benefits from this cooperation include the sharing of risk and investments related to new and unproven technologies. Organizations in the same industry can complement each other in creating new markets but then compete on dividing up the newly created market. Therefore, if a focal organization benefits from sharing knowledge, skill or technology that creates new business opportunities, it will accept co-opetition if the return from its eventual share of market growth is attractive enough. To support this cooperation, the European Commission has added a new chapter on sustainability agreements to its draft revised Horizontal Guidelines of the European Commission.10
3. Strategy execution—mobilizing not only your own organization but the broader ecosystem
While the challenge to close the strategy-to-execution gap is nothing new,11 sustainability leaders attribute greater importance and display greater maturity in their ability to formulate a powerful narrative that mobilizes internal and external stakeholders and breaks down their strategy into actionable sustainability initiatives.
The special challenge in the context of sustainable business transformation is, as outlined above, that companies must not only mobilize their own organization but also their broader ecosystem. Therefore, the ability to execute in a coordinated way across multiple organizations is a key capability that sustainability leaders apply well.
The fourth key: choose your transformation mode based on your starting position
While 75% of organizations have nominated a CSO or equivalent head of sustainability,12 their respective mandate and execution varies greatly. In our survey we distinguished between four different execution archetypes: