Nobody wants one in their back yard

Who want a two by two kilometre and 100-meter open pit mine in their back yard or for that matter several square kilometres of land, plastered with 130-meter high windmills? Well the answer is simple nobody. Local communities together with special interest groups have been good at creating media stories on how the “little” man gets brushed aside by big business and sometimes with good reason. It could seem like that business in general and multinational companies especially have been struggling with getting on the same “wavelength” as the communities where they conduct their business.

Industries like mining and big renewable energy projects are especially exposed as they involve heavy machinery, removal of vast amounts of dirt, dangerous working conditions, damage to the environment, destruction of nature and farmland. And a lot of the time all these activities translate into a massive impact on the social life of the surrounding population. So it is not strange that the locals finds it difficult to accept they should be subjected to this kind of influence. Factors like these are all well known and the companies involved have created a wide range of systems and tools in order to cope with both the positive and negative side effects of their activities.

Teghut dumpster 3

There have been mining in the world in the last 5000 years and its effect on society is well documented. Companies who are active in the industry knows that local communities are confronted with uncertainty as to what the future brings and have put in-place management systems and organised in order to confront these challenges. Sometimes these systems are to the benefit of the local population and sometimes not. Even though social risks are well known and described in numerous cases it remains the principal reason why mining projects have to close down after start of operations. In practice this means that mining companies are left to experiment and relay on the knowledge they can get when things goes wrong, either in their own back yard or when one of their competitors get in trouble. However, we are now seeing companies in other industries being confronted by some of the same risks and having the same types of difficulties handling the risks that local communities present.

Most people agree that the renewable energy sector by their very nature is working for a common global good. They help us reduce CO2-emissions, limit the impact of global warming, makes us free from the geopolitical implications associated with fossil fuels and creates a healthier local climate. However, they are also confronted by local communities who are not too keen on them setting up shop in their neighbourhood. These companies are making the very same mistakes that mining companies did that historically have resulted in closed down projects. For windmills and other great alternative energy infrastructure projects the story is repeating itself as we place windmills in areas where people complain about noise or that protected forests are destroyed in order to make room for some of the extremely huge mills that we are now able to produce. While we continue to argue about the pros and cons of alternative energy the fact remains that we do not want these structures where we live and we can muster significant resistance against projects which are perceived to be destroying local communities. The result has been that all major windmill projects in Denmark are now being moved to the sea despite the fact that this will drive maintenance costs up and make green energy more expensive. This development could ultimately mean that green energy will not be competitive with fossil fuel and in the end destroy the sector, as a real energy alternative.

Companies faced with social risks have tried in different ways to mitigate issues with local communities. The most common approach that companies have taken when confronted with these types of risks is to implement a Corporate Social Responsibility (CSR) system that is designed to address stakeholder grievances in the local communities. These systems can take many and have different implications for the company that uses them. Evidence of this trend is clear if one takes a quick look at multinational companies and their websites where they routinely communicate they aren’t just in business to make a profit. A lot of companies actually goes as far as to communicate that their goals are equally focused on servicing the communities for a broader and bigger social purpose. It has been shown that CSR has been an effective way for companies to show that they are good corporate citizen with a conscience. And has been a way for them to communicate and convince local communities, nongovernmental and governmental organisations that they are working for a common good that will serve social, environmental and economic aims.

However, fieldwork shows that local communities might not be too keen on the sometime very fluffy speeches given by corporate executives. These communities do not only get their information from the company when trying to make sense of a proposed project but get insights from a wide variety of sources ranging from other community members to NGOs and government officials. This means that while the CSR systems might look good on paper they often miss the point that they are not the only way that communities get information and create an opinion about a given project. And by interviewing community members it actually shows that CSR systems are giving rise to even more risk as they provide ammunition in instances where companies say one thing but do another. Like for example when companies communicate a zero environmental impact on water sources but communities experience mud in their drinking water. Or when companies document that their windmills make no noise but people living close by creates headlines when telling the press about their sickness history.

Teghut tail 3

While research into social risk is still in an early stage it shows that companies have little control over how stakeholders sense making processes surrounding the projects that they propose. It also shows that CSR might not be the “miracle cure” that most of us would like it to be and could actually be counterproductive to the aims of the company and society at large. So called normal people will continue to make their own mind up around the world that they are part of and they will continue to change their mind when and if they get smarter. Even though companies would like to think that they can influence their surroundings by claiming that certain things are true such as green energy and windmill projects are for the good of everyone, it does not make the individuals affected by such project think that this is necessary true in their local community.

The language of of sustainability

The concept of sustainability is universal and at the same time have a unique national twist which gives it meaning beyond the words themselves.

Language Translation Meaning
Afrikaans volhoubaarheid
Albanian qëndrueshmëria
Arabian الاستدامة
Armenian Կայունություն
Azerbaijani Davamlılıq
Basque iraunkortasuna
Belarusian Устойлівасць
Bengali সাস্টেনিবিলিটি
Bosnian Održivost
Bulgarian устойчивост
Catalan sostenibilitat
Cebuano tayuyon
Chinese (simplified) 可持续发展
Chinese (traditional) 可持續發展
Croatian Održivost
Czech udržitelnost ability to continue with something infinitly
Danish bæredygtighed
Dutch duurzaamheid durability
English Sustainability
Esperanto daŭripovo
Estonian Jätkusuutlikkus
Filipino pagpapanatili
Finnish kestävä kehitys
French développement durable
Galician sostibilidade
Georgian მდგრადობა
German Nachhaltigkeit
Greek Αειφορία
Gujarati સસ્ટેઇનેબિલીટી
Haitian Creole dirab
Hausa dawamamme
Hebrew אחריות סביבתית
Hindi स्थिरता
Hungarian Fenntarthatóság
Icelandic sjálfbærni
Igbo nkwado
Indonesian Keberlanjutan
Irish Inbhuanaitheacht
Italian Sostenibilità
Japanese 持続可能性 likelihood of continuation
Javanese sokongan
Kannada ಸಂರಕ್ಷಣೆ
Khmer និរន្តរភាព
Korean 지속 가능성
Lao ຄວາມຍືນນານ
Latin Duis
Latvian ilgtspējība
Lithuanian tvarumas
Macedonian одржливост
Malay kelestarian
Maltese sostenibbiltà
Maori whakapūmautanga
Marathi टिकाव
Mongolian Тогтвортой байдал
Nepali स्थायित्व
Norwegian bærekraft
Persian توسعه پایدار
Polish Zrównoważony rozwój
Portuguese Sustentabilidade
Punjabi ਖਨਰੰਤਰਤਾ
Romanian durabilitatea
Russian устойчивость
Serbian Одрживост
Slovak udržateľnosť
Slovenian Trajnostni razvoj
Somali Sii jiritaanimadu
Spanish sustentabilidad
Swahali endelevu
Swedish Hållbarhet
Tamil சஸ்டெயினபிலிட்டி
Telegu జీవనాధారము
Thai การพัฒนาอย่างยั่งยืน
Turkish Sürdürülebilirlik
Ukranian стійкість
Urdu اترجیوتا
Vietnamese phát triển bền vững
Welsh Cynaliadwyedd
Yiddish סוסטאַינאַביליטי
Zulu ekuqhubekeni

Be glad that you are stupid

Are you stupid? In order to know what you do not know you need to be smart enough to understand that you do not know it all and that being stupid in the ways of the World really makes you smart. So here is to all the stupid smart people of the World

Looking at the people side of risk

I was reading the McKinsey article by Alexis Krivkovich and Cindy Levy called ”managing the people side of Risk” which promote the argument that a strong risk culture can mitigate risk and maximize opportunities for business development. The idea seems appealing, that with the right leadership it is possible to implement the right type of risk culture and thereby enabling companies to “[acquire] new businesses, entering new markets, and investing in organic growth”.  However, this functionalist, positivistic idea of culture and risk does leave a lot of questions unanswered and possible constitute a risk in itself. Their main arguments can be split into three headlines.

Culture as a static entity

Is a risk culture something you can implement? Well, I will let it be up to you but from my almost 20 years in private an public organisations I can’t come up with just one example where a risk culture or any other culture have been implemented by management. I have seen many attempts, but never a successful one. The reason is that a risk culture can only be identified retrospectively. You only know that you have a successful risk culture if risk does not materialize into issues and tangible threats, on the other hand it could be that no issues arise because that issues and threats are simply not there. So the question is then, who can identify the culture if you have a strong risk culture if it is impossible to measure? Maybe it takes a McKinsey consultant…

People is the problem not the solution

Management rule their organisations like kings who can choose how individuals think and act in the world around them, or at least this is the claim of McKinsey. In their paper it is the idea that management have in-depth insight and knowledge about all the actions of their employees and that successful companies are the ones that have as much (mind)-control over their employees as possible. However, while we might strive for improved control and efficiency of organisational processes it’s only a few (feebleminded) who will claim that they have total control of employee’s actions. I think that we should count ourselves lucky that we do not have this type of control as adversity fuels organisations ability to innovate and develop and that striving for increased control on the magnitude indicated by the authors will only lead to organisational demise. So instead of perceiving people as the problem organisations should look upon people as the solution to mitigation of risk, not the cause.

Risk is universal

The claim is that successful organisations are the ones that hold people accountable for mistakes made – “To make aspirations for the culture operational, managers must translate them into as many as 20 specific process changes around the organisation, deliberately intervening where it will make a difference in order to signal the right behaviour.” It is not my claim that individuals should not be held accountable for their actions, but it should only be the extent that they actually have control. As risk is universal (fuelled by human actions and decisions) it cannot be one role or person sole responsibility to identify and mitigate risk. It would be impossible for one person to process just a fraction of the information on possible outcomes that organisations produce every day. Rather organisations should empower and disperse decision making to all individuals and groups in the organisation and hold them accountable for their own decisions and its consequences. The role of management becomes one of encouragement and support rather than control and punishment. They are there to ensure that people with right type of training and personal competencies are invited to participate in the continued development of the organisation so that they are equipped to handle mitigate or take advantage of the operational risks that they are facade with.

Mckinsey_MoF46_Managing people risk_

Education and its role in emerging markets – Indonesia

I have just participated in the EHEF (European Higher Education Fair) in Indonesia where we presented graduate and undergraduate programs in Samarkand and Jakarta. It has been a hectic week with around 15’000 participating students and over 100 European universities and higher education institutions as well as representatives from embassies and the EU.

The success of the fair and the eager questions form the students reaffirm my belief in education as a key indication for how Indonesia is rapidly moving ahead.  With a GDP growth of 6,2% a drop in poverty and school enrolment exceeding 100% spurred by more and more overage students enrol in primary school. Indonesians have their eyes firmly targeted at education.

In the years to come I believe that Indonesia will benefit enormously from the education strategy in several key areas.

First, today Indonesia is a multicultural and multi-religious society blending its own unique history with Muslim, Christian, Hindu, Buddhist and many other religions together. However, as seen elsewhere economic development also have the backside of creating social tensions as some embrace and utilise the opportunities fully, while others feel left behind. What education can help with in this process is to ease the social tensions by providing a more even playing field (or at least as close to as possible) for young people who have talent. While there are differences in access to the best schools and especially for students access to education in Europe and the US it is significant it’s a significant contributor to mitigate the risk of social tensions.

Secondly, it will bring Indonesians in contact with the world in another way than business can. Through the social interaction between students from the countries they travel to and other international students networks are created which will benefit not only themselves, but also ensue long term social and economic sustainability as students become business and government professionals and need contacts that they trust around the world.

Thirdly, It brings knowledge to Indonesia, which is much needed in the years to come if the growth is to be supported and managed. One of the threats that the country is facing is that huge bubbles are created in the economy being in housing or specific sectors. Just taking a look from my one window at the hotel reveals five skyscrapers being build so it is definitely a risk that one have to take serious. And while bubbles is a natural part of a capitalist economy the impact can be cushioned though a economy which is build one more sectors and have more players. As students take business ideas back with them they create new businesses and thereby diversify the economy bringing a valued stabiliser into the equation.

While there are critical voices around the growing internationalisation of undergraduate and graduate education, as it is seen to some as a business rather than an “exchange” of ideas. It think that the benefits significantly and especially long-term far outweighs the downsides.

CSR is about focusing on the little things

It seems odd that when corporations show their commitment to society through CSR they get the most out of doing something about the little things. Companies that are successful looks at what they do well and tries to figures out how this impact communities that they are active in, in ways they could not imagine if they did not have the tools provided though CSR.

When reviewing the many definitions of CSR that is out there it gives little or no clue how actually to conduct social responsibility. It would seem that if one just followed conventional wisdom it would be hard if not impossible to satisfy even the simplest requirements given by all these different classifications.

“The Social Responsibility refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society.” Bowen, 1953 in Social Responsibilities of the Businessman, which commonly regarded as the first milestone in modern CSR research and practice.

Another more modern definition have been issued by the International Standards Organisation (ISO) through their guidance on social responsibility “Responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour that contributes to sustainable development, including health and the welfare of society; takes into account the expectations of stakeholders; is in compliance with applicable law and consistent with international norms of behaviour; and is integrated throughout the organization and practiced in its relationships.”

Both of these very fine definitions give little or no clue to what companies should actually do to both successful in terms of profit, development and continued competitive advantage, and at the same time being in tune with societies moral compass.

But some companies have actually done quite well trying to combine their CSR with their core business. Just to give a few examples.

Danish Novo Nordisk has committed themselves to the task of “Changing diabetes” and have successfully introduced new products like Victoza inline with their core mission statement

The Swedish fashion company, H&M have under the statement “Conscious” has with worked to create sustainable fashion through a comprehensive CSR system that reduce risks in their supply chain.

Vivendi, the French telecom company, have initiated a program that promotes the safe use of the Internet to youth.

All of these initiatives are small when it comes to the efforts that the company needs to put into them because it is embedded in the “what we do” part of their business, but even so that have a huge impact on their outreach to the communities they are active in.

So even though it would seem that these successful companies are focusing on the “little things” they do represent a significant societal impact exactly for that reason.