Whenever we speak to executives about sustainability, they often express a sense of frustration around the lack of clarity. Many ask for more tangible markers as with those around health and safety, for example.
Their confusion stems from the dual definitions of sustainability; because the topic does have two faces. First, sustainability is about business longevity. Secondly, sustainability is about how companies create combined business strategies that serve people, profit and planet.
When we took a close look at business longevity, our research offered up some interesting lessons on how to ensure long-term success. We investigated 50 global companies that had managed to remain among the 50 most valuable traded companies over a period of 50 years; some had even enjoyed a 100-year horizon.
We found they all managed to achieve a balance between exploration and exploitation. Exploration refers to their ability to look into future trends that they innovated around to maintain their market relevance. Exploitation refers to their precision in maintaining an internal focus on productivity, clarity of direction and discipline.
The most durable companies seemed to be able to be outside–driven even when they were successful. They didn’t become introverted; instead they learned, they developed new capabilities and they quickly sought the next frontier.
Sustainability is also about the ability of firms to find positive trade-offs between economic, environmental and social issues, to balance profit, people and planet. Often, companies do this by taking a long-term perspective on their businesses, for example, by moving on megatrends that are fully predictable. Umicore, for example, reoriented itself from an extraction to a recycling business. DSM moved from mining and chemistry to sustainable life sciences.
Seeing that sustainability is the way to go in business success terms, the real question now is no longer why?, but how?