Interview with Peter Lacy Interviewer: Toby Thompson PL So to give you an example, at the moment in Accenture we have probably got about eighty clients globally across various different geographies and various different sustainability projects – ranging from small strategy projects to quite big transformations. And the things that we see, that I see, coming through again and again in terms of the difference between successful transformation – transformation is a big word – successful change or, not failure, but sort of mediocre implementation are four things. One those companies who get this right, right from the very top of the organisation, have clear leadership buy in and understanding of the way that sustainability relates to value creation in their business. And without that, and if that is lip service, then almost without exception at some point the sustainability drive will just fall by the wayside because it is just not embedded and therefore it is not on the top table. And it can come in different forms. It can be about revenue growth from new markets and products, new services, differentiated products and services. It can come through cost reduction strategies – so resource efficiency, driving productivity in the business. It can come through better risk management. So a better understanding of regulatory risk, understanding of physical risks – we had a lot about weather patterns, we had a lot about operation risk in terms of doing business in countries with governance and so on. And finally, the whole plan and reputations of the driver of intangible assets. So that’s the first things: you must have top leadership buy in to this as an issue that is closely linked to that ability to create value. That is number one. Number two is that they set up clear governance of the change process itself and clear governance from programme management and performance metrics of the change process itself. Rather than setting a strategy, cascading it down and kind of allowing a thousand flowers to bloom. It seems like a very appealing – and it can be made to sound like a very appealing change strategy. And almost without exception, that fails. So even if it is a case of having time bound change programme that is an essential component, I think, of successful transition. The third piece that I think that companies who do this well get right, is that they – moving away from the change process, but moving into the actual business – they effectively baseline and measure and strive for quantifiable performance. And I think that it doesn’t always have to be quantifiable performance that necessarily and accountant would be happy with, but they try to come up with metrics that are meaningful that allow you to measure progress over time. And it is not just about Peter Lacy
sustainability metrics, it comes at three levels. The first level is that it is about sustainability and key performance indicators and it is clear; the second level is understanding the relationship and mapping the relationships and tracking the relationships between sustainability key points indicators and your core business metrics. And understanding, even as a CFO, understanding what that relationship is. And then the third level is really around performance from the perspective of performance contracts with the individual manager. So actually that becomes an embedded part of the way in which you are assessed and your performance is rewarded and incentivised. And the businesses who do this really well certainly get one or two of those areas of those right. And the businesses that really nail this are starting to move into getting all three right. And then I think the final piece – the fourth piece that businesses would either define or failure in this, is the extent to which they drive the leadership development and learning agenda. And it is the piece of the jigsaw that businesses most often miss and actually it is very interesting because if you take a step back, it’s actually one of the reasons that the European Academy of Business in Society was established, and it is that those companies that have embarked on a sustainability journey, start off by focusing on strategy and process and technology and a lot of the harder business edge topics and after a period of time they reach a plateau. So they drive strong performance in the early phase of when they set off on this journey and then they reach a plateau and that plateau is the point at which they don’t have the people and they haven’t got the capabilities that are a product of having the knowledge and the skills and the attitudes of top leadership and also middle level management to be able to make the link between sustainability and core business. So those companies that do this well find a way to develop some form of organisational curriculum or some form of organisational culture that actually develops leaders capable of making those links. And that I think is the Achilles heel. It’s the last thing the majority of companies on this journey think about and actually they come up against this barrier after two or three years, maybe four years, maybe five years and it is the same plateau every time. Page 2