Tell me if this story sounds familiar…
An incoming CEO wants to make a difference, declares sustainability a top priority, launches a sustainability change program, hires top consultants and talent, invests millions of dollars and thousands of hours of management effort, then enthusiasm fades, targets are not met and then everyone settles for a mediocre result.
If this scenario sounds familiar to you then you are not alone with a study by Bain & Company revealing that 98 percent of sustainability programs fail and 81 percent settle for a dilution of value or mediocre results. The survey of 300 companies including big names like Coca-Cola, Nestle, and Novozymes cited lack of investment or resources, competing priorities, culture change challenges, and organisational obstacles as key barriers to their sustainability programs but if we think of our sustainability programs as a product or service we are providing to the organisation, what this study reveals is a failure to achieve product market fit.
Why Most Sustainability Programs Fail
If we consider the typical business lifecycle, most large organisations are operating somewhere between expansion and maturity where they have an established product or service, understand their customers deeply, and likely have well tested processes to manage and deliver those products. In this part of a companies lifecycle, strategy development usually involves some variation on the following sequence
Discover – assess the business context, establish a mission and vision.
Define – define the competitive advantage and establish your objectives.
Plan – Create your operating plan, financial plan, and establish KPI’s.
Execute – Put the plan into action and reap the rewards of your detailed planning process.
The above “ready, aim, fire” approach is the foundation of any MBA curriculum and therefore it is little wonder that sustainability professionals adopt similar waterfall methods in designing sustainability strategy as shown below.
The dilemma for the design of sustainability strategies is that this waterfall method assumes you know exactly what solution you need to implement, understand the problem it is solving for the organisation and that you have existing processes to put it all in place. However, in sustainability we are trying to create new scalable products or services that are often innovative or disruptive in an environment of extreme uncertainty.
When viewed through this lens, the development of sustainability strategy and sustainability programs has more in common with startups than established organisations and therefore the waterfall processes we use for creating our sustainability strategies simply don’t work.
The Startup Methodology
A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty. Eric Ries – Entrepreneur and author of the Lean Startup
Existing companies are in the business of executing business models whilst startups, like sustainability teams, are in the business of discovering business models. This distinction is at the heart of the lean startup method. The lean startup method has three key elements:
First, rather that write a detailed business plan based on what amounts to a series of best guesses, lean startup practitioners accept that all they have are a series of untested hypotheses. These hypotheses are organised using a tool called the business model canvas which describes the nine basic building blocks of a business model – in other words how your solution delivers value for you and your customers.
Second, lean startup practitioners then test these assumptions by soliciting customer feedback to test their hypotheses. They do this by talking to customers about all aspects of the business model with an emphasis on speed within a build, measure, and learn cycle. The feedback is used to adjust the assumptions and then repeat the cycle with minor adjustments to the offering (iterations) or changes in direction (pivots) where the idea is simply not working. In some case this phase also involves building a minimum viable product (MVP) to allow customers to provide feedback.
Third, the lean startup process uses agile development which is a methodology derived from the software industry. Rather than using the “ready, aim, fire” waterfall development process described above, agile development is based on developing a solution iteratively and in small measurable features with constant customer testing and feedback – a bit like building a home one brick at a time.
When the team at Fasal, an agritech group that are part of the global Monsanto Company, identified that farmers in India were not getting the best price possible for their produce they set out to help these farmers. They identified a number of possible solutions but eventually settled on an idea to provide farmers with access to market price information.
“We conducted about 11 experiments of which 3 were very successful. One of them was centered around providing information to farmers. Initially we were thinking about providing information like what to plant at what time, along with information about market price. However, the former would have required agricultural specialist, so we scrapped the idea.” Deepa Bachu, Fasal
The team then set about testing their assumptions on the idea by recruiting 15 farmers for a trial. They built a minimum viable product which involved one of the team members simply manually sending the farmers an SMS with the market prices once a day. With feedback from the farmers they then iterated the product by providing an automated voice message (one member would record a script with the days market prices) and sent this to the farmers. Of the 15 farmers, 12 went on to use the product extensively providing the team with enough confidence to build out a full solution. The team at Fasal have now helped over 2 million small farmers in India get a better price for their produce.
What assumptions have you made about your environmental or social initiative?