Creating room for sustainable business to fail

Fear of failure risks stalling the momentum on progressing the sustainability agenda. Businesses should embrace a more honest and transparent approach to enable others to learn from their mistakes, writes Corporate Citizenship director Richard Hardyment.

Why do companies fear failure? Or rather, why do so few in the world of responsible business want to talk about it? We rarely hear of a brand with a purpose that flopped, of eco-innovations with a negative return, or supply chain transformations that proved too difficult. If we want a step change in sustainable business, it’s vital that we learn from what hasn’t worked as well as what has.

We work in an industry that prizes transparency. So why the silence? It’s all the more surprising because the truth is that progress is never linear. There are setbacks, trade-offs, trial and error and outright disasters. Creating a more sustainable corporation is neither straight-forward nor easy.

Behind the scenes, some sustainability ventures – particularly the forward-thinking ones that push the boundaries – often result in failure. Consumers don’t take to a new offer. A business case just can’t be made. In this situation, most companies batten down the hatches. They close the doors – shred the paperwork! – do anything but talk about it….

There is a cultural reason for this: we hate failure. In the corporate world, being a “winner” is supposedly valued. Failure is painted as humiliating. Who wants to head a team that presides over an expensive flop? Talking about what hasn’t worked stokes fears. What might shareholders think?

This is a great shame. We could learn so much from these setbacks. Progressive corporate sustainability needs companies to try and fail as much as it needs successes – and by sharing the information, we can all learn.

The Silence of success

There is another even more surprising field where silence reigns. As well as failures, big success stories are often amazingly thin on detail.

Case studies hail a fantastic innovation. Claims are made of cost savings of millions of dollars. But scratch beneath the surface, and hard numbers on sales volumes, cost profiles, business returns and even social impact are typically lacking.

The cause here is entirely different. It’s not embarrassment. It’s commercial confidentiality. As soon as an innovation is really successful, it becomes commercially sensitive. If a sustainable innovation becomes a runaway success, the sales data, price points, cost structure and marketing strategy become a gold mine.

Competitors might copy us! Money-saving technologies could be mimicked! The real stories behind successful innovations become a closely guarded secret.

Too few businesses take the opportunity of missing a target to really explain what they learnt from the process.

Creating room to succeed and fail

We need to create more space for companies can share their triumphs and shortcomings.

One way to facilitate more data sharing is to anonymise it. LBG, the global standard for measuring corporate community investment, was founded on a model of sharing inputs, outputs and impacts. Members have access to the detail, governed by a code of conduct as to how it can be used. In public documents, aggregating the data by industry keeps the most sensitive statistics confidential.

Secondly, we need to create an industry-wide culture that is receptive to business talking about trade-offs, partial successes, even outright flops.

Danske Bank used to have a wonderful section of the CR report focused on dilemmas (for example: “Who should pay for the cost of financial inclusion?”). This format presents two sides to an argument; it demonstrates the balance a firm has sought.

Back in 1998, Shell’s first sustainability report was entitled “Profit and Principles: Does there have to be a choice?”

Too few businesses take the opportunity of missing a target to really explain what they learnt from the process. They fear opening themselves up to criticism. Yet the truth is stakeholders don’t expect businesses to succeed all of the time. Ambition requires stretch. That means victory sometimes, and partial defeat at others. The important thing is to explain what’s been learnt along the way.

When it comes to success, no company wants competitors stealing their ideas. But more information on how accomplishments were designed and executed can raise the bar for all. A rising tide – say, more consumers embracing sustainable choices – can lift all the boats. Cross-sector learning – so-called pre-competitive collaboration – can also help to overcome competitive barriers.

Many sustainability challenges can only be solved by working together – companies, governments and civil society. That requires more space to celebrate and fail. Let’s share more detail on successes. Let’s celebrate those tricky trade-offs. Let’s really learn from flops. With all the huff and puff of sustainability reports, such tales could make for some fascinating reading.

 

Richard Hardyment is a Director at Corporate Citizenship. This article is republished from the Corporate Citizenship blog.

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