This paper discusses sustainable development and the leadership characteristics that initiate organizational change towards sustainability. In the increasingly competitive environment, leaders find themselves under constant challenges, which require them to embrace change and to steer their organization towards sustainability. Sustainable development, however, does not only pertain to economic sustainability, but it also pertains to environmental and social sustainability. Also known as the triple-bottom-line, this paper discusses the importance of achieving sustainable development through economic, environmental and social sustainability and the role of the leader in achieving this goal. Using real-life business scenarios, this paper provides contemporary examples of how businesses today apply the concept of sustainable development in achieving success.
The concept of sustainable development is not a new thing. In fact, as early as the 20th century, industries and business organizations have shown growing concern about the scarcity of the world’s resources. As observed by scholars, “global populations, rates of resource use and environmental degradation were all increasing so rapidly that these increases would soon encounter the limits imposed by the finite productivity of the global ecosphere and the geological availability of mineral and fossil fuel resources” (Bartlett, 2012, p.1). In the contemporary society, sustainable development has become even more significant because of globalization, which forces business organizations to compete extensively with each other. Today, businesses are struggling to compete for material, financial and human resources and success is often measured in the acquisition and retention of these resources. The contemporary leader is, thereby, increasingly challenged on how to steer his organization towards sustainable development. Two major challenges arise in developing sustainability within the organization. One of which is the development of sustainable initiatives and the other is the implementation of such initiatives. In steering the organization towards sustainable development, the leader could not help but experience obstacles as he initiates changes within the organization. In addressing these challenges, the leader should be able to create a practical and doable sustainable development initiative.
What is Sustainable Development?
Understanding the concept of sustainable development is crucial in developing leadership initiatives that would guide the organization in its organizational change towards sustainability. But what is sustainable development, by the way, and how it should be understood? According to scholars, “Sustainable development is development that does not compromise the ability of future generations to meet their own needs” (Bartlett, 2012, p.4). It should be noted that this definition does not put a limit on the extent of development that an organization can attain as long as it does not negatively impact its future ability to obtain resources. In the past, business entities does not concern themselves with sustainable development as compared today. Mining and energy company’s for instance, indiscriminately conduct their operations with little concern for the environment. Most of their processes create irreversible damage towards the environment causing long-term environmental impacts. The indiscriminate coal mining in the Appalachians, for instance, has left the mountain peaks devastated impacting the biodiversity and the hydrologic cycle in the area. Without considering sustainable development, the time will come that mining companies in the Appalachians would cease to operate as coal deposits becomes depleted and they will leave a vast area of wasteland in their wake. However, the recent awareness towards the importance of sustainable development encouraged policy makers and organizations to rehabilitate the environment while conducting business operations. In the Appalachians, for instance, new sustainability initiatives include reforestation and utilization of stripped mountain peaks for industrial purposes. So even if coal could not be recreated in its natural environment after it has been extracted, with the application of sustainable development concepts, the environmental impact will be greatly reduced.
Sustainable Development Dilemma
There are two conflicting views regarding the role of business organizations towards sustainable development that has created a dilemma on how leaders would conduct themselves and on how they would position their organization in terms of social responsibility. Economic expert, Milton Friedman, for instance, believes that the burden of sustainable development should not rest on business entities. According to Friedman, business organizations are not charitable or philantrophic institutions. Businesses, for Friedman, were created primarily to generate profit and so the primary responsibility of the leader of a business institution is to generate profit for its shareholders while playing within legal restrictions. The leader or the manager, answers to shareholders and not to the community since he was hired not to perform philantropic activities, but to further the interest of the business entity. Some people, however, do not share Friedman’s point of view. The American activist, Ralph Nader, for instance, argues that businesses and corporations are just legal fictions. Although they benefit several members of the community, business entities, for Nader, must be held accountable for the improvement of human existence .
The Triple Bottom Line
Milton Friedman’s view towards social responsibility may have its merits, but it fails to appeal to stakeholders and ethical consumers. In studying consumer behavior, scholars identified that there is an increasing number of consumers whose buying tendency is influenced by certain brands and their ethical practices. Some consumers prefer and are even willing to pay for higher priced products for as long as they are produced through fair trade practices that promotes sustainability. A study conducted in China, for instance, found that “consumers are willing to show their appreciation of fair trade coffee” with 89% of respondents saying that they are willing to pay a higher priced cup of fair trade coffee than the regular coffee (Yang, Hu, Mupandawana, & Liu, 2012, p.32). Similar studies were also conducted in Europe, which revealed similar results (De Pelsmacker, Driesen, & Rayp, 2005). With the advent of globalization and new communication technologies such as the satellite platforms and the internet, businesses could not afford to lose a certain percentage of their market due to bad publicity. For the same reason, sustainable development becomes a logical component of a company’s marketing strategy. Leaders should promote sustainable development not only because they are forced to do so, but because it is necessary for the image of the organization. Over the years, businesses have come to understand that making profits is not the only goal of the organization, but most importantly, the long-term goal would be staying in business for an indefinite period of time (Doane, & MacGillivray, 2001, p.301). According to scholars, sustainability has three components that overlap and interact with each other and these are economic, social and environmental component (Doane, & MacGillivray, 2001, p.301). To become sustainable, an organization does not only focus on profits, but also considers their social and environmental responsibilities. Also known as the ‘triple-bottom-line,’ the new management goal today is to achieve success in these three components. Accordingly, “a corporation’s ultimate success or health can and should be measured not just by the traditional financial bottom line, but also by its social/ethical and environmental performance” (Wayne, & MacDonald, 2003, p.1). Today, it is commonly understood that it is good business practice to acknowledge that the environment, the stakeholders and the shareholders are equally important. In fact, there is a consensus among scholars that “firms cannot be successful in the long run if they consistently disregard the interests of key stakeholders” (Wayne, & MacDonald, 2003, p.1).
Sustainable Development Leadership
There are striking differences between traditional leadership and contemporary leadership that leads to sustainable development. Traditional management, for instance, focus their efforts on maximizing profits while minimizing costs while contemporary management makes their business sustainable by focusing on profitable customer service (Found, & Rich, 2006, p.4). Southwest Airlines and Ryanair are two examples of attaining sustainability through customer service. These airline companies revolutionized the airline industry by introducing low-cost flying . But despite their low cost fare, both airlines were able to sustain their development in the highly competitive airline industry environment. According to studies, one of the major sources of income of the two companies is through their ancillary incomes. As observed by Ryanair’s CEO, the company generates revenues by offering their consumers with ancillary products and services . Accordingly, these extras are the key to Ryanair’s sustainable future . Contemporary leadership is also process-focused and more vertically leveled (Found, & Rich, 2006, p.4). Most modern organizations change towards a less hierarchical structure to allow easy interaction between management and low-key employees. Apple Inc. is one example of a hybrid organizational structure. Apple’s founder, Steve Jobs, for instance, would like to have a hand with all the key departments within the company that he structured departmental interaction with the CEO in the middle . One particular advantage of this organizational structure is that it enables Jobs and later CEOs to initiate changes and communicate rapidly within the organization. Another significant difference between traditional leadership and sustainable leadership is the former’s reliance to “top-down dictation of change and use of rules” while the latter facilitates change and identifies himself as a member of the group (Found, & Rich, 2006, p.4). The Lean Management system developed by Toyota was one good example of the advantage of leaders as facilitators of change rather than imposing change themselves. In a Lean production system, for instance, ordinary employees may play a key role in changing processes whenever they find anomalies in the system . Harley Davidson also benefited from the Lean Management System. By empowering their production employees, the company was able to identify and eliminate defects in their production line before they are mass produced . By implementing such methods, the company was able to make a dramatic comeback.
Sustainable development is needed primarily because resources may deplete rapidly. Under such circumstances, a business may cease to exist. In order to create sustainable development, the leader should not only focus on the economic side of the business as most leaders do, but should balance economy with environmental and social sustainability. In many instances, the concept behind sustainable development has been proven correct. Several CEOs of multinational companies, for instance, have found themselves in trouble because some of them ignored the environmental and social impact of their operation while those who embrace sustainable development find themselves achieving even greater success.
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