People, Planet, Profits & Projects

This is a post about reporting.  In particular, it's about how reporting on sustainability - which seems like a drag - has actually demonstrated benefits in a recent detailed study by Harvard Business School.  The authors would like to acknowledge Tarja Mottram of Action For Results for pointing us to these reports.

In this post, we'll point you to the studies and let you in on how the studies were done.  Our main point, though, is one we've made since we started our journey at the intersection of sustainability (or green thinking) and project management: doing the right thing helps the project manager do things right.  This assertion we've made seems to be proven over and over in every reputable study we see.

This is no exception.

There are actually two particular/related articles we'll refer to here.

• Corporate Sustainability Reporting: It's Effective
• Leading and Lagging Countries in Contributing to a Sustainable Society

Both come from Harvard Business School's excellent "Working Knowledge" series, which we recommend you check out as a great resource, not just for sustainbility issues but for general management - and project management - wisdom.

Corporate Sustainability Reporting: It's Effective

The executive summary of this report is basically this:

"new research from Harvard Business School and London Business School demonstrates the first real evidence that mandatory CSR reporting works, and could give policymakers and companies themselves added impetus to increase transparency around environmental, social, and governance (ESG) performance."

"After the data were analyzed, a clear pattern emerged: Countries requiring corporate sustainability reporting experienced a significant improvement in most categories. For social responsibility, for example, those countries improved their ranking by 8 percent relative to countries that lacked mandatory reporting."

The study compared 16 countries that require sustainability reporting to 42 that didn't.  It noted improvements as stated above, but also noted that the imporovements would have been even more significant, if like South Africa and France, companies were required to report their financial and ESG performance in a single integrated annual report.  This makes sense to us because we have always insisted that these measures are often stated in an integrated mission and vision, and so should - if at all possible - be measured that way.

Doing this would also stengthen the connection to project management, because Key Performance Indicators (KPIs) that project managers use could be tied to corporate (or organiazational) KPIs - so that project charters could gain 'strength' from corporate mission and vision statements.

Leading and Lagging Countries in Contributing to a Sustainable Society

This report is really the basis for the first report - where the "meat" of the research is located.  The process started by identifying 4 categories of countries:

 In Sustainable countries—such as Germany and the United Kingdom—there was a high degree of integrated reporting by companies and a high level of investor interest in the respective nonfinancial performance metric. Companies and investors in these countries are on the vanguard of integrated reporting and should continue to exercise leadership in order to help create a more sustainable global society.

In Unsustainable countries—including China, Hong Kong, and South Korea—there was very little integrated reporting by companies and very little interest by investors in nonfinancial performance metrics. These countries need a regulatory shock in order to break out of the equilibrium they are in. Because neither investors nor companies are paying much attention to ESG issues, it is unlikely that market forces will be sufficient to generate a change in behavior.

In Sustainable Companies countries—such as Brazil, South Africa, and Sweden—there is a high degree of integrated reporting by companies but very little interest by investors in nonfinancial performance metrics. Companies in these countries need to educate investors on the importance of nonfinancial metrics in evaluating company performance and making investment decisions. Investors can leverage experiences from investors in other countries and learn emerging practices on ESG integration and engagement.

In Sustainable Investors countries—such as India, Japan, and the United States—there is very little integrated reporting by companies but a high level of interest by investors in nonfinancial performance metrics. Investors in these countries need to demand more integrated reporting by the companies they invest in. Companies need to actively engage with various stakeholders and identify and report in an integrated way the material ESG topics for their business.

For those of you who have read Green Project Management by the authors of this blog, you may notice a striking similarity to the Spectrum of Green Projects that we introduced (proudly, we can say before this survey began).

The research goes on to use these categories to analyze (in detail) investor interest, corporate reporting in social and environmental issues, and the relationship that this all has with their performance.

We'd highly suggest that you read through the reports - they're not that long - from a project management perspective.  If you wish, there is also a forum at the end of the articles for passing along your comments.

As we said earlier, all of this seems to continue to provide evidence for our ideas that sustainability thinking in orgnanizations, and in particular in its projects, is (although an up-front investment) a strong benefit.

And it's really, really nice to see Harvard Business School reports echoing those thoughts! 

At EarthPM, we've been harping for the last few months about the connection (or lack thereof) between Stragegy and Operations - or Strategy and Execution.

We've most recently blogged about this based on an a great article in the most recent PM Network magazine by Roberto Toledo, PMP.  His article was entitled Bridging the Gap between Strategy and Execution.

In this post, we'll connect that even more strongly to sustainability.

A recent UN report, A New Era of Sustainability, is the focuses on the view from the CEO perspective.  Sixty CEOs from 27 countries were interviewed.  The full report, created by the UN with Accenture, is located here - we encourage you to read it.

Here, for your convenience we provide an excerpt which speaks directly to the gap that is filled by YOU, the project manager.  That is, the gap from strategy to execution.  We like to call this the gap between the rubber and the road.  We - the PM - are that touchpoint where the rubber (strategy) meets the road (execution).

Challenges to overcome: From strategy to execution

CEOs believe that execution is now the real challenge to bringing about the new era of sustainability. Confidence among business leaders about their progress toward this new era is strong, and their companies are taking concrete steps toward embedded sustainability.

Eighty-one percent of CEOs—compared to just 50 percent in 2007—stated that sustainability issues are now fully embedded into the strategy and operations of their company. For example, we saw cases of companies beginning to integrate sustainability issues into their executive compensation packages, as well as design and innovation functions, more than in 2007.

However, our conversations suggest that while sustainability has clearly become part and parcel of how many businesses operate, it has yet to permeate all elements of core business—that is, into capabilities, processes and systems. In particular, the difficulty of implementation, especially across supply chains and subsidiaries, is seen by CEOs as the top barrier to the full integration of sustainability. Our research finds a significant performance gap between those CEOs who agree that sustainability should be embedded throughout their subsidiaries (91 percent) and supply chain (88 percent), and those who report their company is already doing so (59 percent and 54 percent, respectively).

Furthermore, full integration of sustainability into performance management frameworks and approaches to training and development remains some way off.

We think you can tell from this exceprt that the Big Boss (CEO) is absolutely thinking about sustainability.  If anything, she or he is wondering why it is NOT being deployed in projects.  So, when you create a project charter, are you checking to see what statements your CEO is making about sustainability?  Are you linking your project objective to those of the business (in general, and about sustainability in particular)?

Your CEO thinks you should...

A very interesting (and sustained!) discussion on LinkedIn is also very much in line with the philosophy of sustainability thinking in project management.

This discussion also keys off of Dave Shirley's excellent post here at Projects At Work, using the Survivor show as an analogy.

 Like many interesting questions in life, the question is very simple but has very deep implications.

 Robert Lewis, the original poster, asked – in December of 2009 (!) - for people’s reaction to this statement:

 "Project managers should take responsibility for project success, not just the magic triangle of schedule, scope and budget. Success - achievement of the planned business benefits - takes much more."

 The conversation has been lively, already collecting well over 250 comments, and a conversation which has been going on for a year and a half.  Some are taking an environmental angle, which is appropriate here, in our opinion, but the broader – triple bottom line – aspect applies as well, and that’s what’s generating a lot of the interest.  In fact, we chose today’s blog post image carefully.  It’s about your impression.  And it’s about – to paraphrase Tom Cruise’s character in Jerry Magure, “Show me the Monet!”.

Can we, should, we, must we, as project managers, be connected to the long-term success of the product of the project?  Or are we bound to respect the triple (and with the 4^th Edition PMBOK® Guide, now multi-faceted) constraints of scope, schedule, resources, risk, and quality of the project itself?

This, in turn, forces a few very provocative and productive thought processes in which we should definitely engage ourselves and our teams as project managers, forgetting (for the moment) the ‘green’ aspects of the project.

What does success look like for our project?

• How will our project’s product really be used in its steady state?
• What are the risks (both threats and opportunities) of the project’s product’s steady state use that should be fed back into the project planning itself?

 By asking these questions we:

•  Gain buy-in from stakeholders (because we are more inclusive of real project success
• Gain connectivity to the operations people
• Gain a broader collection of risks (threats and opportunities).  We cannot respond to risks we don’t even identify
• Gain a better understanding of our enterprise and how the project fits into the enterprise’s overall goals and objectives
• Understand end-users’ concerns earlier and more crisply

So we’d like to thank Robert Lewis for posing his original question and the 200+ people who have energized it.

We invite you to participate in that LinkedIn conversation or to contribute here with your comments. 

This is not trivial.  This debate over whether (or from our view, request that) project managers take on a longer-term view, is fundamental to project managers increasing their value to their enterprises and to projects having a greater chance at true (lasting) success.

Feel free to jump in the discussion – here and/or on LinkedIn.

So let’s look at some specific differences.  Frank believes that his role begins when the project charter is delivered.  In that charter is the project’s purpose, a high-level project description, some initial risks, summary milestones, acceptance criteria, and the authorization of his power.  It is typically prepared by the project sponsor. The project charter is considered outside of the project boundaries, boundaries that traditional project manager color within.  On the other end of that boundary is delivery of the product of the project and the collection of artifacts, etc, better known as the closing processes.

Beth doesn’t believe in coloring within the lines. She believes that a project manager has significant input into the project charter, not because that is where the project manager is often appointed and given the power to plan, organize, and control the project, but because previous project experience can help steer the business.  Additionally, she believes that she can help not only with connecting the organizations “business mission”, but also connecting its environmental or sustainability mission.  And if there isn’t either or both, then she believes that her project management experience can help her craft them.  Project managers are the “business end of business”.  Projects are where the rubber meets the road, where ideas turn into reality.  Projects are how companies survive.  Whether organizations are repairing or replacing internal processes, procedures, or equipment, or producing new products, projects oil the mechanism. 

Further, Beth believes that once a project is operationalized, it is still not over.  There are long term considerations that the project manager can see, because of the global view project managers have.  Those long term issues, or as McDonough and Braungart put it “Cradle to Cradle”, should be part of the project manager’s plan, at the least, a consideration of same. 

Frank, however, thinks that by pushing the boundaries of traditional project management, that a true project focus will be lost. The triangle of cost, time, and quality will be compromised.  After all, it should be enough to successfully complete a project within those boundaries.

It comes down to America’s vote.  Which way do you think that project management is headed, continuing to fine tune traditional project management functions or expanding the role of project managers to “the board room?”  At the next “tribal council” someone will get voted off the island.  Or, will they both get voted off in favor of a yet to be determined survivor?

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