[MUSIC] This is Mike Rosenberg with Strategy and Sustainability. This is segment four of the sixth session. The sixth session is about developing the strategy. And in this segment, I really want to talk about the role of the board, and how important I believe that is. If you remember, we've already looked at kind of the difference between the board and the vice presidents, and who has to worry about strategic issues, and who has to worry about operational issues. because I feel very strongly that things that have a material impact on the firm, on its future, the medium and long term of the company itself, the scope of how many things it does in the world. Where is it on the planet, the size of, all these are for me board issues. Whereas many of the day-to-day work in sustainability, compliance, energy use, waste management, etc., can be delegated. But what not can be delegated is the strategic approach to the whole topic. Which then guides how people behave and how people engage on these very specific other issues. So when we think about this whole question, the fundamental choice is about engaging with the natural environment, and then going towards show-and-tell, or doing even more than that. Taking a more wait-and-see or a low road approach, or kind of hoping the whole thing goes away. And if there's one thing I feel strongly is these things come in waves. And over time there will more, not less, interest on the part of civil society, consumers, partners, and the regulators. So I do not recommend anybody ignoring the whole issue and pretending it's going to go away. When you think about how to involve people though, there's at least two different approaches. This is an image of Don Draper from the series Mad Men explaining an advertising campaign, selling somebody on something, so that they buy into it. And buying into an idea means that you've developed an idea, and you're going to try to convince people that it's a good one. And this was developed very well by Iris Firstenberg. Iris is a professor at the Anderson School of Management at the University of California in Los Angeles. In her book, The Minding Organization, she explains build-in as a better approach to buy-in. And here's an image from the movie Apollo 13, when they had all the engineers in Houston kind of working together to try to figure out a solution to how to get the astronauts back safely to Earth. And the idea of build-in is rather than wait till you're finished and then try to get someone to agree to do something, get them involved in it in the beginning, so that then they believe it's theirs. My recommendation, in terms of how to work with the board of directors, if you can get on their schedule, [LAUGH] Is to get them involved in the beginning. Building requires participation. It builds understanding, because when people are part of something, they already understand it. And eventually, it can generate tremendous commitment. If you go back to the earlier segment, when we talked about costs, which are pretty for sure, and benefits, which might not be sure, not being quantitative. If you go back to the last segment, where we had costs which can be quantified and can be fairly certain of, and some benefits which are difficult to quantify and very difficult to be certain of, and a very difficult business case. You go to the board of directors with a business case which is not very clear, it's unlikely they're going to support it easily. However, if they themselves are involved in creating that business case, and they know the uncertainties themselves, and they've made the assumptions about what those benefits can be. This, I believe, gives you a much better chance of keeping the board on board. Because without the board, none of this will fly. The challenge is, of course, in dealing with board members is sometimes their time horizon is too short for these things to really come to fruition. Now there is a movement, the long-term planning movement. McKinsey's involved, Paul Polman's involved. A lot of people are involved in this to try to get boards to make a longer time frame. To look at ten years out, to look at even longer, rather than to focus on quarterly results. And this is a very important trend, if you like, in business management. The agenda of the board meeting is very complicated. I don't know if any of you have tried to get your point onto the next quarter's board meeting. These meetings are packed, and they're often packed with a very slight, very tight schedule. And they're not as long as you'd like them to be. And to get the board to spend a few hours on environmental sustainability might be very, very challenging. Training of board members sometimes is not really appropriate. They tend to come from business, sometimes from civil society. I even looked at the training courses that different business schools around the world offer for members of boards and there's very little, if anything, on environmental sustainability. So for many people on the board, what they'll have picked up is what they've picked up. And they won't really be trained in this kind of stuff as well as they're trained, say, in financial analysts. As well as they're trained in financial analysis, which is what many of them do for a living. And also the focus of these meetings tends to be a little bit financial. Sarbanes-Oxley and other legislation has made the board liable for the decisions they make, and to make sure the books are correct. Which means that increasingly, that's what they're focus on. And the last point, and this goes all the way back to first session one, the values and assumptions of people in business tend not to be the same as people committed to the ecological movement. So if you're going to get them to move, if you're going to get them to agree on a strategy, then you have to give them time, and an opportunity to engage and to learn. And to really maybe move their values, or at least get an understanding of the strategic issues in place, so that they can make a move on the environmental front based upon business reasons, not based upon emotion, or some ethical conviction. So finally it gets down to accountability, because when you're making decisions for the next 5, 10 or 20 years in an environment where we don't know for sure how customer behavior will evolve. We don't know for sure how legislation will evolve, we don't know for sure what the competitors will do. To some degree, it's like making a bet. These are images from Casablanca where Rick is helping the young man win some money in roulette. But where are you going to place your bets? On red, on black, on twenty-two, yeah? Then the danger, of course, is that the board might do too much, too fast. Spend a lot of money on changing things for a world which doesn't really value it. In which case, the business case is less than compelling. Or perhaps even more dangerous is doing too little, too late. And finding a company kind of caught by changing circumstances, and taken by surprise by increasing environmental scrutiny, without having enough time to react. So for this reason, and mainly for this reason, I think it's absolutely critical that the board of directors be involved. Because in the end, they are responsible for the medium and long-term development of the firm, and they should be making these risks. [MUSIC]
