AXIS Performance Advisors

Demystifying sustainability

Develop a Business Case

Copyright 2002 AXIS Performance Advisors.

How to Develop a Business Case

Courtesy jannoon028, Freedigitalphotos.net

Courtesy jannoon028, Freedigitalphotos.net

Developing a business case for any new initiative can be a challenge. You need to develop a case on several levels, exploring short-term benefits as well as long-term opportunities. This article, adapted from our new Sustainability Series™ booklet, Developing a Business Case for Sustainability, provides a framework for thinking about the opportunities. While we use sustainability as the example, the same lessons and framework work in other situations. [See Sustainability Series booklets under Products.]

Why develop a business case?

If you are going to get others in your organization to support your interest in sustainability (or anything else, for that matter), you’ll need to provide them a compelling business case. Few organizations take on a new initiative just because it’s “the right thing to do.” You have to show people how pursuing your new initiative will help the organization and the individuals themselves. You need to think through both threats and opportunities so that you can give specific, tangible examples that develop a sense of urgency. If you lack a strong business case, you may still be able to make some progress, but your success will likely be limited. When times get tough, it may be hard to get funding or time commitments for your ideas without a credible argument.


Ten Ways to Get the Ear of Top Management

  1. Do a project on the side and show significant bottom-line benefits.
  2. Link sustainability to verbal or written commitments they have made in the past regarding their environmental policy, social responsibility, etc.
  3. Gather benchmarking or competitive data that shows you may be getting left behind.
  4. Ask an executive to give a presentation on their environmental policy or vision.
  5. Include sustainability as one trend to consider during strategic planning.
  6. Build a groundswell of interest in coworkers.
  7. Gather data on customer preferences and expectations.
  8. Introduce your executives to other executives who are pursuing sustainability.
  9. Give them a great article or book on the topic with a cover sheet explaining what you think the opportunities are for the organization.
  10. Appeal to their personal values and concerns.
    • What is the catalyst to get you moving?

      Organizations need a catalyst to initiate change, to overcome inertia.
      These catalysts often come in one of two kinds:

      Problem (angry customers, uncompetitive products, new regulations,
      etc.)
      Passion (a desire to act with integrity, a deep concern about social
      or environmental problems, etc.)In the best situation, you have a little bit of both.

      Business problems related to sustainability may come in many disguises:increasing raw material or disposal costs, customer pressure, new regulations,etc.

      Some organizations pursue sustainability because of a passion a key leader has for the idea. Perhaps the leader wants to leave a positive legacy or sees sustainability as the source of future competitive advantage.

      Your task will be to unearth and crystallize both the business and personal reasons your organization should change. Once you’ve identified the immediate, pressing catalyst driving you to want to change, the next step is to expand that energy into a more complete picture of how pursuing a new initiative could help your organization.

      Four views of a business case

      As you develop a business case, you’ll need to approach it from four different perspectives. The questions you’ll want to answer can be broken down into four quadrants: internal and external, short and long term.

       Internal

      External

      Long-Term DESIGN
      What is the breakthrough innovation that dramatically improves our sustainability?

      • Pursue product stewardship/ take-back
      • Dematerialize your product
      • Use biomimicry (designs mimicking nature)
      • Convert products to services
      VISION
      What inspiring role do we have in creating the new, sustainable economy?

      • Restore ecosystems
      • Develop synergies with other sectors to solve social/environmental problems
      • Transform your industry
      • Attract and retain key talent due to inspiring mission
      Short-Term EFFICIENCIES  Where can we save money, time, or resources?

      • Reduce waste; find markets for waste streams
      • Conserve energy
      • Substitute materials
      • Reduce regulatory burden
      • Reduce health and safety costs
       COMPETITIVENESS
      Where are the opportunities to improve our competitiveness?

      • Create new products/services
      • Improve corporate image
      • Attract new customers
      • Avoid new regulations or legal liabilities
      • Retain key talent

      If you’re interested in sustainability, the short-term/internal perspective begs the question: where can we find efficiencies to save money?Can we save energy, improve resource efficiencies, etc.? It’s important there to look beyond the obvious answers. Often the biggest financial gains show up under account codes you might not expect. It’s important to think of your organization as a whole system, not as individual departments. For example,

      • Daylighting (letting in natural daylight) not only saves energy; it’s been shown to improve productivity, quality, and absenteeism. In retail stores, it’s been shown to improve sales. In schools, it’s improved learning.
      • Spending more on insulation and windows can drastically reduce the size of HVAC system you need, saving on capital as well as operating expenses.
      • Sustainable forestry practices have reduced expenses associated with erosion, road building and tree planting, while improving the quality of the timber, earning higher prices in the marketplace.
      • Petroleum-based solvents may appear to be less expensive than water-based ones until you take into account the rate they evaporate. Manufacturers have found they can often save money overall by buying the water-based solvents because they can buy less.
      • Handling hazardous materials rings up expenses in lots of budget line items: permits, insurance, training, equipment, disposal, spill response, illness and turnover.
      • Recycled paper often costs more per ream, but if you implement paper reduction efforts like printing on both sides, you may be able to buy the more expensive paper and still save money overall. Total expenditures are usually more important than unit cost.

      But short-term cost savings won’t sustain a new initiative over the long haul (although they can be used to fund future projects). You’ll also want to investigate how sustainability might improve your competitiveness in the marketplace (short-term/external). How might pursuing your initiative help you attract new customers, improve your corporate image, etc.?

      A European oil company removed pollutants from its gasoline and then went to the legislators, asking them to tax gasoline based on how dirty it is.

      Then explore how new technologies might help you redesign your products or services to dramatically improve resource efficiency (long-term/internal).

      Rocky Mountain Institute designed the hypercar which uses a hydrogen fuel cell and carbonfiber body to create a safe, lightweight and non-polluting vehicle. Now all the major automakers are scrambling to create production models.

      You’ll also want to explore a long-term vision for what role your organization or industry could play in transforming our society (long-term/external).

      British Petroleum recently renamed themselves BP so they can be known as Beyond Petroleum. They want to preside over the end of the age of oil, becoming an energy company instead of an oil company. They are investing large sums in solar cell research.

      Different strokes for different folks

      Once you come up with preliminary answers for each of these quadrants,you’ll then have a compelling story to tell. Depending on the person or group you are talking to, you can emphasize certain quadrants over others.For example, bottom-line financial people will appreciate the short-term efficiencies. Marketing folks should get exited about the competitiveness opportunities. Engineers and researchers will be drawn to the design possibilities associated with applying new technologies. “Idea people” may be motivated by your vision for the future of the industry. Having preliminary examples of how sustainability can meet each of these priorities can help you connect with those you’ll need to engage.

      For more information about building a business case, please order our new Sustainability Series booklet, Developing a Business Case for Sustainability ($10 each). Click on Books below for more information.


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