Models for Transforming Businesses Toward Sustainability

Models for Transforming Businesses Toward Sustainability

Julia Dobreva VUZF University, Sofia, Bulgaria

The aim of this paper is to highlight the importance of modern day need for business transformation toward sustainability and the implications will have for the development of the economy. The theoretical base is focused on detailed analysis of a number of existing models for sustainable transformation of business, including the “blunders” that harm the efforts of the enterprises to become more sustainable and prevent new problems from emerging in the overall process and the sustainable maturity. The interventions which cause change toward sustainability are considered to be the solution that serves to fix flaws in organizational design and operations. Sustainability is considered as an on-going process and needs to be based on sound models which decision-makers should follow when transforming their organizations. A case study is provided as an example for the models’ applications.

Keywords: sustainability, business transformation, organizational design

A number of recent scientific studies have demonstrated the need for transforming business practices toward sustainability (Creamer & Amaria, 2012; Edelkraut, 2014). It has come not only as a result of the need to contribute to global initiatives for reducing environmental degradation, but also as a necessity to survive in today’s business climate and preserve competitive advantage on the market through transformative changes and innovative economics. The integration of environmental, social, and economic objectives into the corporate strategies is a key to the transformation of business operations toward sustainability. Moreover, modern day challenges comprise not only of the scarcity of resources and the social problems arising from income inequalities. Companies need to meet the expectations of the stakeholders of a company, like its clients, suppliers, investors, employees, or society in general and manage these challenges to benefit from the transformational power of the development and thus make sustainability a key success factors (Hahn & Scheermesser, 2006). At strategy level, several types of sustainability strategies exist (Baumgartner, 2005; Schaltegger, Herzig, Kleiber, & Muller, 2002). In addition, Baumgartner and Ebner (2010) distinguish inverted sustainability strategies (risk mitigation focusing on fulfilling legal and other external standards), extroverted sustainability strategies (legitimating approaches focusing on external relationships), conservative sustainability strategies (focusing on eco-efficiency), and visionary sustainability strategies (holistic approaches focusing on sustainability issues within all business activities). Also, a wide range of management tools have been developed for the implementation and measurement of corporate sustainability (Schaltegger et al., 2002).

The common trait, which most business operations share in the process of transformation, is the fact that change toward sustainability does not come as a linear process. It usually involves movement throughout the system—backwards, forward, up, and down. The solutions used to overcome the obstacles should be

Corresponding author: Julia Dobreva, Ph.D., senior assistant professor in economics, Department of Finance, VUZF University, Sofia, Bulgaria; research field: sustainable development. E-mail: jdobreva@city.academic.gr.

MODELS FOR TRANSFORMING BUSINESSES TOWARD SUSTAINABILITY

interconnected and form a coherent system; otherwise no intervention on its own can generate successful change. Each element of the system affects and is affected by the other solutions. Moreover, weak interventions may confine the entire change process and cause it to fail (Doppelt, 2010). The core of sustainability for most companies involves clean and efficient operations. This translates into enormous potential for companies to save money and boost performance through tighter supply chains as well as to grow revenues by designing products and services that help others to “reduce, reuse, and recycle”. The problem is that the road to sustainability traverses a broad range of issues, including strategy, organization, culture, technology, finance, and even law. The trick for the companies is to carve out a practical, manageable path to sustainability that produces ROI (return on investment) every step of the way. Companies are being pressured from many directions to become more sustainable. Consumers are asking for greener products; corporate consumers are requiring suppliers to adhere to green criteria; shareholders are demanding greater social and financial accountability; and governments are passing laws aimed at reducing waste and curbing CO2 emissions (Deloitte, 2015).

The most prominent sustainability measurement systems are the Sustainability Balanced Scorecard (SBS) as well as the sustainability maturity models. The implications for applying SBS are that for companies to contribute to sustainable development, it is desirable that corporate performance improves simultaneously in all three dimensions of sustainability—economic, environmental, and social (Figgie, Hahn, Schaltegger, & Wagner, 2002). On the other hand, the sustainability maturity models, which are based on the concept of following required stages of development, can be used to objectively evaluate a company’s state with regard to sustainability.

In this study, the author will make a general overview of a number of transformative models for implementing sustainability in business enterprises. Some decision models will be proposed, which follow a common matrix by aligning economic, social, and ecological objectives. Finally, to prove that the models are applicable and useful for obtaining valuable results, the analysis provides an example of how a specific company can change after being privatized and transform toward sustainability by improving at the same time its profit generating capacity.