A Project Manager's Primer on the Triple Bottom Line

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by Richard Maltzman, Dave Shirley

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Categories: triple bottom line

A primer...

Today we step back. Way, way back to some fundamentals – fundamentals which are important to ‘ground’ us in understanding the concept of sustainability and how it possibly could have anything to do with us as project managers – our projects – our organizations.

We’re really enthusiasts of vocabulary-building and common understanding of terms, so let’s start with the term ‘bottom line’ itself. It’s a phrase which is used often in today’s sound-byte, instant-gratification-oriented world.

How often have you heard (perhaps from your boss, spouse, or customer):

“just give me the bottom line”?

The expression “bottom line” has its origins in accounting, referring to that number at the bottom of a list (below a summary line) of positives and negatives that, when all is said and done, represents the net value, income or loss.

But it has also come to mean ‘a final result or statement’ or upshot, and also the ‘main or essential point’, as in a “Cliff Notes®” version of a long novel.

So let’s just say that the “bottom line” is the net effect, condensed version of something much bigger – how you would summarize a large effort in an encapsulated form.

As far as the Triple Bottom Line, that term was “first coined in 1994 by John Elkington, the founder of a British consultancy called SustainAbility. His argument was that companies should be preparing three different (and quite separate) bottom lines. One is the traditional measure of corporate profit—the “bottom line” of the profit and loss account. The second is the bottom line of a company’s “people account”—a measure in some shape or form of how socially responsible an organisation has been throughout its operations. The third is the bottom line of the company’s “planet” account—a measure of how environmentally responsible it has been. The triple bottom line (TBL) thus consists of three Ps: profit, people and planet. It aims to measure the financial, social and environmental performance of the corporation over a period of time. Only a company that produces a TBL is taking account of the full cost involved in doing business.”

We can derive the concept of sustainability from the three “legs” of the triple bottom line. These three legs support sustainability(per the figure below) – but also concepts like viability of interactions between economy and environment, equitability of arrangements between society and economy, and bearable interactions between society and the environment (i.e. what’s endurable by people as well as by nature over time). Only where the interactions between the three aspects themselves - viable, equitable and bearable, are all considered can we find actions, processes, materials, and industries acting in a way which can be considered sustainable.

So – as project managers – do we care about this? Do we have a connection?

Of course we do. And if you read the 200+ blog postings on earthpm.com you will get much more detail about how. Here we will just assert that we are already trained (or should be) to conserve a project’s resources, which normally we think of as human resources, raw materials, money (budget), time (schedule), and so on. So in a way, we already think in terms of a multiple bottom line.

Visually, the Triple Bottom Line can be represented in the nearby figure.

How can you apply it?

We always recommend one simple thing: go to your company’s (or organization’s) external website and find out what your leaders are saying to the world about their goals. We’re willing to wager that they’re saying things along the lines of People, Planet, Profit. Your project – it’s really a microcosm (or to use a less fancy word, a ‘core sample’ of your organization’s operations and behavior.

Then, use the messages your enterprise gives the world to make sure that your project is on the same “frequency”.

For example: what happens to the product of your project in the long term? Yes, you, the project manager can (and should, we assert) think beyond the handoff of your project’s product to its ongoing and steady-state use. As we said above, there are many blog posts on earthpm.com cover this angle so we won’t preach too much here.

So, let’s put the final coat on our primer.

There is a larger, more ‘holistic’ bottom-line that includes not only profit, but also environmental concerns as well as concerns for the human community.

And we think that by understanding at least the concept, but perhaps the vocabulary, and even better, the way your own organization interprets this, you position yourself to do a better job on your projects.

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References and further reading:

http://www.economist.com/node/14301663

http://www.ccl.org/leadership/pdf/research/tripleBottomLine.pdf

http://www.ey.com/Publication/vwLUAssets/7_questions_CEOs_should_ask/$FILE/7_questions_CEOs_should_ask.pdf

http://www.e4sw.org/papers/Hart_Milstein.pdf

Posted by Richard Maltzman on: May 30, 2011 10:09 AM | Permalink