Written by Peter-Jan Roose
In a previous article, we painted a picture of our vision for 2030. It highlighted several big trends that will impact business reality in the next decade. Every single business will, to a certain degree, have to cope with trends such as transparency, climate crisis, or resource pressures.
Staying relevant in the long-term remains very difficult to accomplish, considering every decision made contributes to the chance of reaching this objective.
Decision-making is an essential management skill
A skill that can both drive and impede the growth and financial performance of a business. According to some research, businesses that make decisions quickly are twice as likely to make high-quality decisions, compared to slow decision-makers. Albeit, the vast majority of these decisions are based on short-term financial return and performance.
“Every project needs a payback less than 3 years”
In times of great disruptions, as with COVID-19, it can be difficult for business leaders to focus on the big picture. Making quick, data-driven decisions at the right moment is important, especially in these uncertain times. Nevertheless, it is essential to keep the big picture in mind, and thus set more aspirational goals for the long term.
Short-sighted decisions lead to destructive effects
Businesses that continue to focus on short-term financial return and performance will face the consequences in the future, despite being well aware of the business reality of tomorrow.
A relevant example of this is “greenwashing”. This is when companies spend more time and money on marketing themselves as being sustainable, than actually minimizing their environmental impact. It is a deceitful advertising method to gain favour with consumers, who are increasingly choosing to support businesses that care about improving the planet. Thus, these businesses deliberate misuse trends, such as transparency and climate crisis, in their favour.
Sadly enough, this practice reached pandemic proportions in 2021, as businesses and governments raced to tell the world how much they care about people and the planet. While COVID-19 has, rightfully so, increased the importance of sustainability in the minds of consumers… it also inspired many companies to say that sustainability is at the heart of everything they do. It almost sounds as if all these companies are reading from the same greenwashing manual.
Two recent outrageous examples: (source)
The packaging of a Korean cosmetics brand had “Hello, I’m paper bottle” written on the side. In reality, the paper bottle has a plastic lining on the inside. In the meantime, the company is being sued for this product’s greenwashed label.
Recently, a major Australian Bank has awarded a sustainable loan of ~€ 300M to the world’s largest coal export terminal in New South Wales. The loan came with incentives for hitting certain environmental and social targets, such as improving the terminal’s efficiency. However, these minor improvements in emissions efficiency at the port blissfully ignored the elephant in the room … 95% of the facility’s exports are coal.
Businesses have the right to remain relevant.
However, to deserve that right to play a part in the exciting future that is being reimagined around us, you have to start now.
Let’s start by shifting our focus from the short-term, and only thinking about what benefits today, to the long-term and bigger picture. In fact, many successful businessmen are only better at thinking, and thus planning, what they want their future to look like. For this, we need to urgently add two additional topics, besides financials, to consider within the decision-making process.
(1) Innovation; can we continue to reinvent ourselves,
(2) Corporate sustainability; Environmental, Social and Governance (ESG) factors
Innovation is often described as the ability to figure out what problems will be relevant in the future, and thus not necessarily being innovative at all. It’s simply the ability to think ahead. However, if thinking was enough, philosophers would be the richest people on the planet. At some point, you will have to execute today.
This is where goal-setting or planning comes in. This long-term thinking gives you the “why”. That “why” is the starting point, but it will not help you unless you start working on the “what” and the “how”, and for that, it’s all about immediate execution.
Once you have figured out the “why” for your organization, the long-term objectives, nearly everything in your business should be designed and executed according to that vision.
Earlier I mentioned “In times of great disruptions, it can be difficult for business leaders to focus on the big picture” … that is especially true when it concerns Corporate Sustainability. Corporate sustainability, or ESG, measures the societal impact of a company or a business. These goals allow businesses to meet their present needs without compromising the ability of future generations to meet their demands. Undermining these long-term goals in the service of the "here and now”, will undermine the future health of both your business and customers.
Today, sustainability should be front and centre within a business and treated as a key part of its mission. If this is not the case yet, it should be built into the core principles of your business and its strategy to ensure its resilience. Furthermore, you should acknowledge the risk of doing nothing, whether it is through supply chain disruptions, stranded assets, public perception, or lack of investment … all pose a critical risk to your business model.
BrightWolves supports you from strategy to implementation
So much more than a catchy sentence on our website … it is what we do, every single day. We support our clients in 4 concrete steps:
Increasing awareness at all levels of the organization A recent INSEAD study shows that the level of ESG expertise is alarmingly low at board level
Generate a profound diagnosis of the current situation A thorough understanding of your ESG footprint is a critical starting point
Support the integration of new elements in your full decision-making process Be transparent from the bottom up, from investment decisions until reporting publicly
Accelerate the actions that are needed to strengthen your business’s resilience. Improving each action needed to transition your business
Our two initial steps, awareness and diagnosis, will help you to shift your focus from the short-term towards the long-term and bigger picture.