In my last post, which you can access here, I examined the throughput of energy and materials that is at the heart of every business (the dark blue horizontal arrow) and the flows from, and to, the environment that must be sustained if the business is to achieve the strategic objective of sustaining “economically viable throughput indefinitely”. In this post, I will look at social dependencies and impacts, and how they fit into the Sustainability System Map.
The environmental dependencies and impacts (addressed in the previous post) are depicted by the small green and light blue diagonal arrows respectively that connect the business to the natural environment (Fig. 1 below). But there are an additional two small diagonal arrows that highlight the business’s connection to Society – these arrows, and their implications for the business, are the focus of this post.
The processes within a business that transform raw materials and energy into finished products and/or services do not happen spontaneously – at a minimum, human effort, expertise and knowledge are required to conceptualize, design and implement them. While these capabilities may ultimately build within the business itself, they all originate from outside the boundary of the business and need to continue to flow into the business if the required transformations are to be achieved and sustained. So, as with the environment, the business has clear dependencies on in-flows from Society in order for it to sustain its throughput and to achieve its strategic objective. As already highlighted, human resources of the required quantity, skill, expertise and experience are one of these key in-flows. So too are particular technologies, technical solutions, accumulated knowledge and innovations. It is not difficult to see how, should the availability of these become constrained, the business’s ability to sustain its throughput and its output of goods and services becomes compromised.
Other critical in-flows – or attributes within Society – that impact the business are perhaps a little less obvious. For example, the regulatory context within which the business operates – which is defined beyond the boundary of the business – can either enhance or retard the business’s ability to operate. Similarly, the availability of market demand of sufficient scale and value, is critical to the business’s ongoing viability.
Needless to say, it is a strategic imperative for every business seeking to sustain economically viable throughput indefinitely to look beyond its boundary to understand these societal in-flows upon which it depends and to exert its managerial influence as effectively as it can to ensure their ongoing availability and/or suitability. Investment in bursary schemes and education schemes to build human capital, lobbying of industry bodies to ensure a favorable regulatory environment and marketing campaigns to build market awareness and demand, are all examples of business initiatives aimed at safeguarding these societal in-flows.
The out-flows to Society, depicted by the small light-blue diagonal arrow, represent the impacts of the business on Society. These impacts, together with the goods and/or services offered, determine, to a great extent, the acceptance of the business within society and the value Society places on the business. A business that does not behave, have the impacts or generate the outputs that Society expects, needs and values, will soon enough find its access to markets becoming impaired, face mounting societal opposition and ultimately run the risk of losing its “license to operate”. These factors include but also go way beyond product “quality and price” – they speak more broadly to the role of business as a “corporate citizen”. These factors would include its impacts on the communities within which it operates, its respect for and compliance with regulations and the impacts of its products on consumers. It also includes the business’s behavior with regard to its employees; the business’s respect for human-rights, provision of fair and ethical conditions of employment, ensuring a healthy and safe working environment and the development of employees’ skills and socio-economic potential.
As with the environmental flows discussed in the previous post, as soon as these societal flows are acknowledged, the “societal capital” that generates the in-flows and which is either built or eroded by the out-flows, enter the strategic frame of the business. And, in so doing, the business’s strategic links with society are made explicit. The perspective shifts from a narrow interpretation of “social responsibility” as a nice-to-have and “the right thing to do” that is delegated to a CSR function, to a strategic imperative that seeks to understand and proactively manage the business’s societal dependencies and impacts critical to its commercial well-being.
In the next post in this series looking at our system map for sustainability, I will pull it all together and discuss the Societal and Environmental principles that have to be respected by the business in its pursuit of true sustainability.
Read more about the Concepts that Guide Blue North’s thinking: HERE.