The Lifespan of an average company on the S&P 500 Index has reduced significantly from 67 years in 1920 to 15 years today. Over this period we have witnessed the rise and rise of some (Google) and the rise and fall of others as Enron, WorldCom, Compaq and Woolworth linger in the memory of folded businesses once glittering in lights. The need to apply sustainable practices to a business model simply cannot be ignored due to inherent changes to the global business landscape such as
- Shifting demographics and target market-(your niche market may grow extinct)
- Industrial competition-(Competitive advantage must be identified to stay ahead“)
- Access to information available to buyers/customers
- Corporate governance practices- Companies are increasingly faced with never ending duty to satisfy shareholders and implement best practice corporate governance compliance systems which helps improve transparency making the company investment worthy
Over the years as technology has grown into an integral part of daily lives, businesses have adopted new and improved ways of keeping their operations sustainable while maintaining profitability. Sustainability practices have varied from automated production in manufacturing, improved corporate cultural practices to drive employee performance and satisfaction to technological applications of daily business operations. One which has seen the growth of technology service providers and the outsourcing industry in general.
Business sustainability isn’t just a fancy consulting buzzword, (actually it is) it is a seamless integration of a company’s people, process and systems towards an alignment of strategic objectives which in turns aids growth year on year and improves stability. In other words it is a degree to which a competitive advantage is captured and sustained. Also, it is important to note that competitive advantage is not about being good at something but rather being better at that thing than others. In simple language companies have to keep oiling the machine in line with environmental changes and the technology boom for instance, has changed the way business sustainability is implemented by companies’ world over.
Benefits of Business sustainability
According to a Mckinsey and Company, more than 90% of chief executives are doing more now than they did five years ago to incorporate environmental, social and governance issues to their companies’ strategies and operations. In surface view sustainability is the implementation of various key enterprise initiatives (e.g. saving energy, utilizing green environmental friendly products, retaining and motivating employees towards creating value through growth and adequate return on capital. The concept of environmental sustainability and corporate social responsibility enhances the reputation of the company in more ways than none.
Speed to market- Sustainability plays a vital role in enhancing speed to market as well as market opportunity/advantage. It allows a company position itself as a good corporate citizen while creating a favorable license to operate in its niche market
Cost Reduction- Business sustainability enhances cost reduction and in some cases avoidance through effective logistical and supply chain management. In some cases (e.g. Toyota) lean manufacturing has proved to be a valuable business sustainability approach for companies operating in the automobile and manufacturing landscape. Cost reduction is one of the drivers of growth in a company’s bottom line
Employee engagement and retention- Sustainability among employees is a vital part of the puzzle. A positive workplace culture leads to less employee turnover, it provides smooth knowledge transfer among employees and also an effective succession planning process all of which are key to maintaining organizational virtues needed to keep passionate employees along the value chain
Business sustainability in Africa
Sustainability has been a widely prophesied word in emerging markets where a rise in businesses is taking place and the earlier the initiative is implemented in minds of business stakeholders the easier it is to implement at a rudimentary stage. According to a United Nations initiative titled “The Africa Sustainability barometer”, companies were evaluated based on their implementation of sustainability practices in various areas namely human rights, labor and employment, environmental management, corporate governance, corporate social responsibility and supply chain management.
In Nigeria, prominent industry players such as PZ cussons, Nestle, Access Bank, GSK among other listed companies showed positive results on their sustainability practices. Central to the realization of sustainability in Nigeria, is the recently launched “Africapitalism” initiative championed by the Tony Elumelu foundation with an objective of becoming a philosophy for sustainable businesses in Africa amongst this era of growing investment disposable income and foreign investments witnessed on the continent. According to Mr Elumelu, it “urges investment in strategic economic sectors including agriculture, infrastructure and power, financial services as well as healthcare” It represents a rallying cry to business stakeholders across the continent to take charge of the development of the economy as a whole by incorporating the concept of sustainability to daily business operations. The private sector therefore represents a vital piece of this puzzle in contributing to this development
So be it automating HR, to outsourcing customer care service, improving energy efficiency by doubling down on waste, or simply creating an enabling environment for employees to be part of the business growth and not just puns that produce deliverables 9-5, business sustainability is now a “must-do’ for businesses that want to stay alive for a considerable period of time as the paradigm shift in traditional business practices becomes very evident for all to see.
So the question every business owner should ask if “Is my business sustainable?”, will we be here in 5,10, years? If we continue this way and if not what do we need to do to ensure we continue to exist and exist profitably?
“When sustainability is viewed as being a matter of survival for your business, I believe you can create massive change” Cameron Sinclair.
By Demilade Adewumi, Business Analyst at Phillips Consulting Limited.