Business 2.0, Sustainability

TBL wagging the dog?

On Friday morning (before I had to dash to Melbourne) I was lucky enough to attend an excellent session organised by ASIX with Charles LeadbeaterCollaboration by Design – on design and social innovation.

I hope to document some thoughts and notes from the workshop proper soon, but I just quickly wanted to note an insight born of the conversation with some of the folks I was lucky enough to share a table with. I was able to put my finger on something I’ve been thinking on for a while, and wanted to put “pen to paper”, as it were, for future reflection.

In thinking about EMSs (for my recent Masters assignment) and the trajectory that Zumio is on, the idea of Triple Bottom Line (TBL) has come up as a potential path forward. While I appreciate the importance and value of TBL approaches, it hasn’t had the same resonance as some other ideas (such as Cradle to Cradle) and I think I’ve worked out why.

My perception of TBL is that it is a method of accounting for financial, social and environmental activities. While this is important, and in the context of environmental reporting can uncover specific opportunities for waste reduction and cost savings (among other things), ultimately it in principle isn’t aimed at driving business value.

I say this for a few reasons: firstly, the concept of 3 bottom lines implies a segregation of concerns. While I concede that some practitioners likely take a more holistic approach, the underlying framing, or lense, does not lend itself to such an approach.

By considering each in isolation there is a risk that opportunities will be considered only in relation to each pillar, missing opportunities that cross 2 or more pillars.

The second is that TBL seems primarily concerned with measurement, whereas I see the value in a sustainability as a means of creating “thick” value.

If you use your financials as the lense by which to view your business to create value, you are going to focus primarily on cost cutting and methods of incrementing revenue (i.e. raising prices for small improvements or using emotional/branding drivers to create a premium, without necessarily increasing real value to customers).

In a similar way, using such a lense on social and environmental factors alone is likely to lead to similar outcomes – primarily internally and operationally focused, rather than achieving innovation outcomes.

In this sense, a TBL approach feels a little bit like the tail wagging the dog.

It is clear that operational considerations are essential to successful service delivery and can sometimes result in innovation, but I think a conception of sustainability that is embedded within a deeper consideration of value creation is a more constructive frame of reference.