Nathan/ You have been focused on ecological and social impact for most of your career, leading companies at a strategic level. What have you learned about communicating these concerns at that level?
Ephi/ Ecological and social impacts must be considered at the forefront versus after the fact. This is easier said than done if there is a lack of understanding about how this impact affects the business. It’s important to frame the conversations to start with- how do we impact what and who are around us, including the ecological context and people? In developing the business or product strategy, we have to understand not only what the customers are looking for and the inputs and outputs needed to be to achieve them, at the same time, we have to ensure that the ecological and social impacts and dependencies are embedded there as well.
Nathan/ You’ve worked in a variety of companies in your career and I imagine most of them weren’t led by people who automatically thought that they should be interleaving social and ecological impacts and benefits and strategies with their business. So how do you talk to leaders that don’t know how to do this or don’t even know that they should do this? What’s the conversation like to convince them why it’s important and that it is doable?
Ephi/ It takes many forms but what I do first is understand where they (those I have to influence) are and where they’re coming from. It’s part of a discovery process rather than just convincing them. I have to view them as my customer where I need to uncover what resonates with them and understand what terms they already use. For example, if I’m talking to someone who is in manufacturing, ecological and social impact considerations can manifest in terms of productivity or reduction of waste, which makes it easier to approach a conversation on how to increase profitability while ensuring all these impacts are considered.
The key has always been trying to approach it from their point of view, use language that’s already familiar, and not be too caught up with how I would normally talk about it with people who are already like-minded. This helped open-up perspectives and illuminate options.
Nathan/I have also found that framing ecological impacts, issues and benefits as risk mitigation or efficiency goes a long way with traditionally-minded businesspeople. Have you found other strategies or framing that work besides those two?
Ephi/ Yes. One, in particular. I’ve not seen this work in every situation, but it has worked in some: knowing that they do care about something, whether that’s in their family or community, helps them see this from a personal perspective. For example, in the manufacturing setting, people have kids that will be entering into the workforce. So, I frame it as: shouldn’t we be thinking about this as an organization that your children would want to work for? You can frame this as the workforce in general. Being able to retain or attract talent is another way of opening that conversation. If you can connect to something near and dear —that has meaning to them‑that helps in certain situations.
Nathan/ In helping others connect personally, you’re also moving past the ecological issues and into the social issues. There are a lot of them. How do you help people put their arms around this process in order to have impact?
Ephi/ I often recommend an assessment or inventory, because what could be salient or relevant to one organization doesn’t necessarily mean it’s the same for another and it also helps with prioritization. That could be a materiality assessment, a human rights impact assessment, or many others. The same inputs and outputs analysis that we would do for an ecological assessment, can work for the social issues. Instead of the environment, the focus is on people and communities. This works for businesspeople who really value rigor. These have been helpful in getting us to something concrete that we create strategy upon.
Other types of assessments I’ve found valuable look at what is legal, regulatory, voluntary, and what employees think and feel. Including questions in some of your employee surveys or pulse checks has been helpful in understanding what everyone in the organization care about. The same is true for customer evaluations. This is often where you hear social and environmental concerns as well.
Nathan/ Are there any specific frameworks that you find useful?
Ephi/ There is not one that covers everything or provides insight into all you need to consider. But, some of the newer ones, like Science Based Targets Network (SBTN) are good. I don’t particularly find the UN Sustainable Development Goals as helpful because of the way they are used. You can’t just match-up what you already do to the SDGs and be done. It might be helpful as a start but it’s not strategic because it focuses only on reporting and not how you’re going to reprioritize activities you need to change.
I have personally used a more simplified framework to make sense of all the frameworks out there. And, I follow more of a quality management system approach. It all starts with planning. That’s where all of the inputs and assessments are. This helps you devise the actual strategy, then tactics, and then putting into place monitoring and ways to verify. Lastly, of course, reporting, which is part of management review and reporting externally. All of these different standards can inform the business on the how and what needs to be unpacked. That’s where it’s really complex for a lot of companies. Anytime you can simplify the structure for execution, this helps. That’s where I tend to focus.
Nathan/ When you’re in conversations with more traditionally experienced leadership, do you find a set of common misunderstandings or common beliefs that you have to get them passed?
Ephi/ Well, that’s often just what you start with, right? They usually think of “environment” as carbon, or waste, or pollution. They usually look at these as something they simply “have to do,” now. On the social side, they think of these issues as “nice to have.” It might be, for them, a moral obligation. The misconception and confusion are often on how these translate back into profitability or how do these help with resiliency? I have to help them navigate past the idea of more “business as usual.”
Science-based targets with quantifiable numbers are a great way of getting them to understand how to operationalize these things into their business. Most traditional leaders still think this is about philanthropic activity. That’s how they view Corporate Social Responsibility (CSR). It’s not a bad start but then these factors get stuck in this category and the interest doesn’t last. I’ve used terms like triple bottom line, but that doesn’t seem to resonate much anymore. Now, I find that showing them their greater ecosystem and all of the different stakeholders is more effective at exposing the threads that touch on social and environmental factors. It then becomes more logical and a better starting point for many leaders. It’s better when you can put it side by side in business strategy.
For example, when I was doing responsible sourcing, and actually being part of sourcing management changed the dynamic altogether. Because, all of a sudden, you see more information that you would normally not be privy to and you can become a more trusted advisor. Otherwise, when you’re outside as a consultant or coming from a philanthropic organization, you’re not in a place where you can assure transformation as part the business strategy.
Nathan/ I think one of the most dangerous concepts that ever infected business was the idea of “the business of business of business.” Businesspeople consider all of these issues as nice but not “real business.” We always have to justify these issues as important. What approaches are most successful for getting people past that?
Ephi/ On one hand, getting the numbers to speak for themselves has been helpful, in my experience. In the case of responsible sourcing, strikes or fines can hurt you from a dollar perspective. With more cutting-edge topics like living wage, it’s a tougher sell, because there’s so many different considerations that must be broken down by different segments. When organizations start to see these more complex issues as just an additional consideration to the other things they already need to, then the uptake increases. What works best is when these concerns are integrated and embedded into the business units instead of separated into its own silo or a compliance unit.
The language and framing are incredibly important. Different terms work for different corporate cultures. Social is too big or vague for some organizations. Equity has become a big concern too, but it can be a loaded term. It can be intimidating. Sometimes, access is less intimidating. Sometimes it helps when you can tie to this to the organization’s core strengths. The framing can be “creating more equity and accessibility across different stakeholder groups.” That can resonate when you frame it that way. And helps focus people on actual results. But in reality, every term comes with its own baggage.
Nathan/ Existing companies, especially big ones, already have their cultures and policies. You have to work on turning that ship. But, what advice would you give someone starting their own or organization in order to set the right framing from the beginning?
Ephi/ Every new company should have these conversations and considerations from day one. When we were creating our current company, we started with discussions and decisions about social and ecological impacts and started setting up systems so that we were walking the talk. This is an ongoing process. I know it can sound like a luxury, but, I strongly believe no one should be starting any type of business without doing this upfront in the world, today. And, of course, every company should be very clear about their stakeholders. They need some kind of analysis about this, that goes beyond competitors. That’s critical to the conversation. It sounds like a really big undertaking, because it can be, but if you start early and just make it part of how you’re already building up your business, this can be managed better. I’m living that right now. We are setting up our principles and understanding concerns so we can put guardrails and mitigations in place. It allows us to stay truer to the mission that we’re embarking upon, especially as a public benefit corporation.
We decided that even that wasn’t enough for us. If we want to participate in regenerating the planet and communities meaningfully and actively, we need to make sure that a part of our company is owned by nature. I know that’s maybe more difficult for a lot of organizations to start off with, but setting the intention of how you will be making money, and who will profit from it, is important from day one. We also talked about not just compensation, but the importance of governance and participation in decision making. We don’t have all the answers, yet. For example, we don’t know how to put Nature on the board, yet—especially how this can be recognized legally. But we’re working on this. We’re supporting these efforts and leading discussions to help our clients to make this happen too.
It’s easy to talk about strategy and approaches, but I think it always boils down to the fact that there is just a lack of education and how to operationalize things. Simply reading a book or taking a class doesn’t substitute for experience in the day-to-day operations of an organization.
Nathan/ I think that’s true of all strategy. The path from strategy as a plan to a set of principles to tactics to action is always where strategy breaks down, even without layering the ecological and the social aspects of business into it.
Ephi/ Exactly. It lives in teams and people, and it can’t be separated into a one part of the organization like some businesspeople believe—especially in bigger corporations. Sometimes, these groups are under marketing or communications or legal and it’s too easy for all of this to be just for show instead of being a part of everyone’s decisions and job. There are procs and cons to both ways, but I always advocate for making these issues equal in the organization (to money and profit) regardless of the structure that does that. It can’t be a separate track. It must be both part of the culture and the structure. For example, one of my biggest issues with requiring diversity on the board, is that if it doesn’t trickle down to the person making critical decisions in the company and those decisions aren’t tied to compensation and accountability, it’s not going to have much impact.
One of the strategies most successful when I was at my previous company was to have expectations of social and ecological as metrics part of the reward structure for compensation. Once that was in place, all of a sudden you had more people converted to addressing these concerns. That’s what can really shift cultures. The resistance dropped as did the debate of whether it was good or bad. We can trust people to figure out how to make it work and how to integrate these into the day-to-day business. There was much less debate and more lasting change.
Nathan/ You’ve started a new venture with a few others. What’s your strategy now for having the most amount of impact?
Ephi/ In this new venture, a big part of our strategy is to set different rules on how we collaborate and partner to enable a more effective shared vision and execution. We’re thinking about how to incentivize partners in our ecosystem towards regenerating the planet and communities. This includes starting to put in place common objectives and remuneration for when we achieve those objectives. In theory, the scale can be much bigger and, hopefully, much faster because we’re creating a network effect where ecological and social equity is at the heart of it, not an afterthought. We’re on a mission to demonstrate that you can, indeed, be profitable by protecting the planet and the people around it.
This interview is from A Whole New Strategy: Everything You Need To Think And Act More Strategically