The Bold Approach Of Transformational Companies
At age 27, I was the youngest director elected to Vancity Credit Union, the largest community-based credit union in the world. It was the late 1980s. I ran a seniors’ agency, was chair of a provincial social planning group and had been a recent board member of the local United Way. In two and a half words, I was a “social do-gooder.”
My first board-management strategy session was spent discussing mergers, declining margins, capital adequacy and potential staff lay-offs. We were in a bad business cycle.
An hour before the meeting was scheduled to end, we reached the final agenda item: “Other Business.”
Assured no one else had any other business to bring to the table, I raised my hand: “What about philanthropy?” I ventured.
The room fell silent. The CEO’s face reddened. “We run a business. This is not a sock-hop,” he growled. Nothing more was said and the chair adjourned the meeting.
Back then it (and I) was out of order to speak of the social purpose of business. Mascots, balloons and free coffee were the extent of Vancity’s social role. Thirty years ago we didn’t have the business case, the language or the vision to talk about the social role of business in society.
Now much has changed for the better — like the shoulder pads. Today Vancity is a thriving social purpose, mission driven business, with over $18 billion in assets fuelled by customers attracted to their community agenda.
These days, many companies like Vancity represent a new breed of business with a vision, a blueprint and a business case. They are transformational companies.
The transformational company recognizes that global forces such as accelerating climate change, rising inequality, growing resource scarcity and changing customer expectations are affecting the context in which it can succeed and thrive. To build its social license to grow, it future-proofs its operations and supply chains by tackling social problems through its core business model. These companies “do good” as part of their profit-making strategy. They adopt bold, visionary goals even where the solutions don’t yet exist and unleash capital, innovation and human ingenuity to get ahead of the curve and help set the world on a positive course.
While some companies assume “business as usual” growth will continue indefinitely, transformational companies anticipate how global trends will affect their operating environment. They adjust their business practices to decouple growth from resource consumption and ecological degradation and link their growth to social benefit creation.
After I retired from Vancity in 2000, I began advising companies on how they, too, can become both purposeful and profitable. This led to a project with Canadian Business for Social Responsibility (a non-profit dedicated to helping Canadian business and society transition to a sustainable future) to capture the “Qualities of a Transformational Company“. Their members were asking for it and society demanded it.
Sustainable purpose. Beneficial products. Customer and public engagement on sustainable lifestyles. Carbon neutral. Net positive. Lobbying for good. Enlightened leadership. These are some of the qualities of a transformational company — altogether there are 19 of these ground-breaking practices. My Transformational Company guide profiles more than 50 organizations demonstrating one or more of these qualities — companies that are pivoting their business models before it is too late.
One Canadian example is IKEA Canada. The parent company has adopted a sustainable purpose “to enable millions of people to live a more sustainable life at home.” As of this past fall, IKEA became the first retailer in Canada to convert its entire lighting range to LED, a significant move from LED as a niche product line. This transformational climate action initiative is but one of the many ways IKEA demonstrates its commitment to making the most sustainable products possible. They source sustainable cotton and wood and use recyclable and recycled materials for their home furnishings, including packaging. Through its products and social marketing, the company encourages its customers to save and generate energy, use less water and reduce waste — helping to further accelerate the low-carbon shift.
As a sustainability leader, IKEA is also committed to becoming energy independent through renewable energy investments and to go even further to become a net positive generator of renewable energy. Last year, through a combination of wind energy from its newly operational 46 mega-watt wind farm in Alberta, solar power panels on store roofs, geothermal heating systems and more energy efficient stores, the company’s Canadian operations produced more than twice the energy they consumed.
Transformational companies lobby governments to set legislative agendas that enable the transition to a sustainable society. IKEA was an official sponsor of COP21 (the climate change talks in Paris) last December where the Group’s President and CEO, Peter Agnefjäll, urged leaders to commit to bold measures to tackle climate change.
Just as significantly, these leading companies are constructing a new paradigm in which business is a force for good. They are transforming their business and operating context towards the sustainable future we all want, creating solutions for society’s challenges so that their growth can positively impact people and the planet. Like Vancity before them, transformational companies are redefining the role of business in society.
Back in 1987 the board didn’t lay off staff but we fired the CEO. Fast-forward to 2014, Pope Francis invited Vancity’s current CEO, Tamara Vrooman, to participate in a Vatican Summit with 70 world leaders to develop strategies to create an inclusive economy. Like Vancity and IKEA, businesses can be both purposeful and profitable. Now’s the time to engage.