Social Enterprise, Corporate Sustainability and the New Capitalism

Companies are changing. They are recognizing more and more that the future requires them to develop a different business model – one that focuses on multiple bottom lines, not just profit. Companies which relentlessly focus on profit at the expense of their customers, employers, the environment, communities in which they work and the impact their actions have on other organizations will increasingly find themselves subject to challenge, regulation and change. The game of business is changing.

Just take manufacturing. In the next 25-50 years we need to quadruple the output of manufacturing systems so as to meet the needs of the worlds growing middle class. Whether it is cars, technology, health care products, food or clothes – more will be needed. But at the same time, minerals, water and other raw materials needed for manufacture will be under pressure. As one manufacturer of cars has said, we need to produce four times more cars with 70% less steel, 50% less water and 60% less plastic.

The idea of an enterprise which has a social conscience and acts accordingly – the social enterprise  – is not new. Sir Titus Salt, founding what was then one of the largest woolen mills in the world just outside Bradford (West Yorkshire), built a model village to house his workers, provided free education for all of their children before education was compulsory, funded churches, sports teams and made sure that the water used in his mill was recycled. This was in the 19^th century – the mill was built in 1853 and Sir Titus Salt died in 1876. 

We now think of this in terms of the sustainable corporation – corporations, like Marks and Spenser (a major UK retailer) – which seek to become the companies among the world’s most sustainable corporations (see here and here for the Marks and Spenser commitment).

They are being helped by organizations like the Dame Ellen McArthur Foundation and their thinking, research and support for what they refer to as the “circular economy”. Universities are also helping – through places like the Institute for Sustainable Manufacturing at the University of Kentucky  or the Centre for Sustainable Chemical Technologies at the University of Bath and their work on Closed Loop Emotionally Valuable E-waste Recovery. But the key is a shift in business practice.

At the heart of these shifts are these new approaches to business:

•           Business process redesign – as with all corporations, most innovation comes from rethinking core business processes in systematic ways with targets for improvements set by benchmarking. The CPA report makes clear that this is what most companies are focused on.
•           The development of new materials which will significantly reduce environmental impact and costs – the invention of graphene is an example. See a summary of the potential of this specific material here.
•           The development of new manufacturing processes – robotics has changed the face of certain manufacturing and supply chain processes, as you will have seen on the tour of the BMW plant at Cowley. 3D printing will also be a significant component of new manufacturing systems. 3D printing is already having in impact in ways not imagined just a few years ago, for example in the manufacture of custom prosthetics (see here).
•           Local manufacture – shifting from mass manufacturing to on-demand and local manufacturing. One example of this is Local Motors and the idea of the microfactory. Local Motors is the first company in the world to print a car using 3D printing.
•           Systematic use of lean manufacturing – it is still the case that many manufacturing operations are not as efficient or lean as they could be, especially in emerging economies. The systematic practice of lean manufacturing can make a significant difference to costs, supply chain management and environmental impact.
•          Using carbon budgets – The Government of the UK uses a carbon budget to assess progress on emissions management and climate change mitigation. Firms generally support this and are encouraging the UK government to “stay the course” (see here, for example).  Companies see such targets as set in these budgets as creating a level playing field for emissions management and the shift to a low carbon economy.
•           Recycling - The Materials Recovery Facility (MRF) is an almost 6,000 square metre (64,000 square feet) recycling plant at the Edmonton Waste Management Centre. Capable of processing 40,000 tonnes per year, the MRF is one of the most advanced plants in North America for recycling mixed materials. It  is an example of innovative recycling. Another is the reuse of water in oil sands production in Alberta – a strong focus for Water Smart Alberta .
•           Reshoring – returning manufacturing to being nearer to the customer base, thus significantly lowering transport costs, can have a significant impact on the quality of goods, supply chains and environmental impact. Look at a report from Ernst & Young on what reshoring could mean for manufacturing in the UK here.
•           Upskilling – A highly skilled workforce who are engaged in the continuous redesign of manufacturing processes presents a major opportunity for improving productivity and performance. The Managing Director of Siemens UK takes this view – see here.

Corporations think of their work in terms of sustaining the work over the long-haul by thinking through the social, environmental and personal impacts of their work – they are genuine, social enterprises with a commitment to profit, reinvestment and sustainable living. They are led by a new generation of imagineers.

Key to all this work is learning. Learning not just how, but “so what” – understanding the world in terms of systems, consequences, impacts and risk. Rather than behaving like mindless bankers seeking to maximize profit at all costs, irrespective of the damage such a relentless pursuit of capital does to communities, people and the environment, these leaders are renaissance pathfinders – committed to a new future. They engage in future focused learning, leading across their supply chains and communities and managing within so as to create powerful new kind of social enterprise that will transform how we think of work, business, community and opportunity. Its no longer business as usual, but its unusual business.

Lets develop a conversation about what this opportunity to rethink capitalism looks like. Lets commit to an expedition of imagining a different future for the corporate social enterprise.

Wicked and Tame Versions of Climate Change

Most complex problems are “wicked” problems. That is, the etiology of these problems is complex, not simple, involving multiple and layered interactions between different causal factors. For example, poverty is a wicked problem – there are a range of causal factors and layers of issues associated with why poverty exists and why it manifests itself in the way that it does. The solution to poverty is also complex – just giving people a living wage helps, but doesn't deal with all aspects of poverty.

Climate change is a wicked problem. We are unsure of all aspects of cause, the interaction between causal factors and what constitutes an impact of climate change versus natural variability.  For example, the role of water vapour, clouds, sun, CO2 and other factors are not fully understood and we have no really robust model of climate which has true predictive power.

Many like to think that problems like poverty, hunger, climate change are not wicked but “tame” problems which we fully understand and which have known causes and effects. Indeed, the whole narrative that “C02 is the primary cause of contemporary climate change” is a convenient, tame narrative since it enables solutions to be proposed which are (in theory at least) “do-able”. The inconvenient truth is that we do not fully understand climate change dynamics and that we are unsure of what causes what when it comes to impacts. We are pretty sure, for example, that extreme weather events are not due to climate change (at least according to the peer reviewed evidence and the IPCC).

The idea of “tame” problems depends on a very strange notion of “consensus science” and the marketing of the idea that “the scientific community is aligned”. In the case of climate science it is abundantly clear that this is not the case. No amount of name calling and labeling can disguise the fact that senior figures in the appropriate disciplines do not subscribe to the tame view of climate change. It is also clear that there has been process corruptions in the way in which science is both gathered and presented, especially by the media.

This is the topic discussed on what I regard to be by far the best blog to read about climate change – that managed by Judith Curry and known as Climate, etc. Judith is a climatologist, a scientist in search for truth, is not funded by fossil fuels and is a genuine scientist of the Popper school (with a deep understanding of the social construction of evidence and scientific practice). But her search is for truth and understanding, not influence and funding. She is a Professor at Georgia Tech.  She is also passionate about not just evidence, but the philosophy of science.

I strongly recommend you spend time exploring Judith’s mindful and insightful blog.

Alberta Universities - Challenging and Uncertain Futures

Two reports, both published in the last few days, should give our Government cause for pause as they think about reducing funding for post-secondary education in Alberta. We are not in good shape.

The first is the annual rankings of Universities around the world. Canada has just three in the top 100 – University of Toronto (16), McGill (35) and UBC (37). For engineering, we can add Waterloo (68).  No Alberta institution makes this grade. What is interesting is that the middle of this list is now increasingly featuring Asian and Latin American institutions. Sometime ago, the University of Alberta indicated its intention to be on this list. It is not.

The second report is from the Higher Education Quality Council of Ontario, which looked at the performance of Canadian institution in terms of key outcomes  - job qualifications and earnings; access to education based on levels of student aid and debt; research funding and reputation. Again, Alberta did not appear to be the shining star of Canada. Indeed, we had the second worst outcomes overall in Canada, slightly ahead of Saskatchewan. The report indicates we are a high cost, low outcome performer.

No doubt the Government of Alberta will seize on this point – “high cost, low outcome” – and blame those who lead and manage our Universities. In some cases, this may well be correct. But the reality is that the Government keeps changing the rules of the game. Making Mount Royal and McEwan Universities, expanding private Universities, permitting degree granting for Colleges, capping tuition, developing clear and focused research strategies which may be appropriate but don't match the skills and capacities of our institutions, changing the basis of funding – all lead to Presidents and their leadership teams working in an atmosphere of constant uncertainty. The high point of this was the difference between a planned addition of monies quickly followed by a budget reduction, all within 2.5 months during the brief tenure of one Minister.

What Alberta needs is a focused strategy for its post-secondary system that goes beyond the crude rhetoric of “skills” and “employability” (not that these are unimportant). Just what do we want our universities and colleges to contribute and what is a plan for enabling this to occur with a sense of stability and focus so that leaders can lead and managers can manage.

Something needs to happen in any case. We sit with our major Universities running deficits and one – Athabasca University – in deep and serious trouble. A bold decision has to be made – merge it with McEwan, close it (it's a jewel in Canada’s crown – our only open university), privatize it or create some kind of public:private partnership.

Making this decision will tell us a lot about the way the Wildrose Prentice Government sees universities.

When Janet Tully and I wrote our book Rethinking Post-Secondary Education we explored the changes which need to occur because the world of higher education is fast changing. We outlined a great many options and strategies which need to be considered, but the key is public commitment to public education. As funding per capita for higher education students declines in real terms, it gets more difficult to be strategic – Presidents and their teams are in “reaction” and “problem solving” mode more often than in planning and development mode. I know, I have been at the table. What they need now is long term, stable funding decisions and a Government that gets out of the way so that they can do the institution building and transformations they see as appropriate to their strategic intent.

Cutting them now at 10% and making no decisions about their future will increase the uncertainty and cause more harm than good. Money isn’t everything with respect to this challenge, as the HEQC of Ontario report makes clear. But it certainly helps.

Alberta: Never Let a Good Crisis Go to Waste!

There is an old saying in political circles – at least the ones I was involved in: “never let a good crisis go to waste!”

Yet in Alberta, squandering a crisis is what we are used to. In the great rollercoaster of the 1990’s and the present collapse of oil prices, our beloved and simply wonderful Government (sic) avoid tough choices and hope for a rainy day, while at the same time beating up the public service. Klein did it. Prentice is about to do it.

Yet a crisis is a great opportunity to engage, inform and change. As we saw with the GSA issue, if you want to truly engage Albertans they will get engaged. You may have to sort through a range of different issues, but this place is an engaged place, especially when it comes to social issues. It is also a place with a large number of knowledge workers – give us a bone to chew on (like what are the alternatives to running a government on oil and gas fumes?) and we will come up with creative and imaginative responses. If you ask us to change, we will – look at the transformation of our attitudes in just 25 years to LGBT issues. Klein opposed gay marriage and opposed giving equal rights to LBGT. Bill 10 reflects the will of the people and LBGT now have rights not just for GSA’s but under Alberta’s Bill of Rights. Citizens did this. Remember: governments don't start parades, they get in front of one that is moving.

So if the Government are about to miss an opportunity, loud voices are needed to ensure that there is a parade they need to get in front of. Public Interest Alberta has the knowledge and can provide thought leadership, the Alberta Party and NDP seems to have traction (no idea what is happening to either the Alberta Liberals or the Wilder We Are Still Here (We Hope) Wildrose) – but there is no parade. Time for coordinated, concerted action. Time for us to make something useful out of the crisis.

Alberta's Public Servants Deserve a Better Government to Work With

Wildrose Premier Prentice thinks if he says something often enough then Albertan’s will accept it as a truth. For example, if he says often enough that the biggest problem (other than the so-called deficit problem, which is in fact an ideological debt) is the cost of the public service, then this must be true. Trouble is, he is wrong.

First, the public service is the size it is because of decisions the Progressive Conservatives have made. We do realize that part of the Premiers fantasy world is that he represents “new management” (notice that this isn’t the same as new leadership), as if this means that he is the CEO of a completely different and totally new government. Clear nonsense, as we all know. He is leading almost the exact same group of people (with a few exceptions) who agreed to the current salary and pension arrangements, who headed Ministries which were allowed to grow and who gave themselves pay rises.

Second, his suggestion that there is a need for a coordinated approach to public sector pay is exactly what the Redford Government (remember that?) actually did. A group of Ministers who led the largest employers (Jeff Johnson, Fred Horne, Dave Hancock, Thomas Lukaszuk met weekly to coordinate their approach to public sector pay. Jeff Johnson repeated Dave Hancock’s feat of bargaining for teachers pay Provincially rather than via each of the school boards, which used to be their statutory duty. Thus the reason pay is what it is that cabinet and a coordinated group of Ministers made it so.

Third, the reason pensions are not reformed is that Dave Hanckock as Premier “killed” the pension reform bill the former Finance Minister Doug Horner insisted was needed and the Wildrose Premier Prentice has not reintroduced it.

Fourth, Alberta actually spends less per capita on its public services than many other Provinces in Canada. As of now, we rank 6^th in Canada in spending per capita on health, education and other public services. After the proposed budget cuts, we will likely by in 8^th place. According to figures published by the Royal Bank of Canada, Alberta currently spends about $9,786 per person on public services, slightly less than the average for other provinces. If the proposed cuts are enacted, this would be reduced to $8,905, ahead of only Ontario and Quebec, whose more urbanized populations allow them to deliver services more cheaply.

Fifth, the average teacher is Alberta (and there is a big difference in pay between a starting teacher and a Principal) earns $93,681 – up $9,414 since 2010. The average MLA earns $127,300 – up $49,162 since 2010. We can argue whether these salaries are high or low, but the reality is that the decisions to award them were all made by Government (in fact imposed by Government in the case of teachers – they were not bargained for, they were imposed).

Finally, Alberta’s debts (including debt guarantees, contingent liabilities and program obligations) are around $200,176,000 and rising, though our net debt position is positive. We do pay over $530 million a year in interest payments and we are incurring more debt as we rush to catch up on infrastructure not replenished during the Klein era and not strategically developed to match population growth. We are likely to find ourselves playing constant catch up on this file. Yet at the same time as we accelerate our building program for schools, we are looking likely to be reducing our expenditure on hiring teachers. These are all Government of Alberta decisions.

Attacking the public service and asking them to carry the can so that Government can continue to support those who can afford to pay more taxes and to support a Government that seems ideologically incapable of making sound economic decisions (as we shall soon see – budget on March 27^th) is lowering morale. Many of the smartest people in Government are looking to leave and will do so when the Government starts to reintroduce pension reform and roll back wages. We need to honour and respect smart public servants and encourage them to act not as supplicants to a lost and gone Government but as servants for the public good. High quality, strategically focused and capable public servants who are remunerated well for the work they do and act as representatives of the peoples interest is exactly what Alberta desperately needs right now. Attacking them and making them “scapegoats” undermines them. Not at all what Alberta needs.