Viewing Posts by Dave Shirley
Sustainability Rising
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We’ve talked about the McKinsey surveys before. But to give you some brief background, we’ve been reporting on the McKinsey report since 2010. It is primarily an on-line survey sent to business executives to gauge the temperature of sustainability efforts within their respective companies; strategic alignment, priority, and importance of sustainability for example. According to McKinsey, the most recent survey was available to executives from February 11, 2014 to February 21, 2014 and 3,344 executives responded. So it is very current information. The executives were from a variety of “regions (of the world), industries, company sizes, functional specialists, and tenures.” The survey is a wealth of knowledge about what is going on in the mind of the corporate world with regard to sustainability. The purpose of this post is to explore one particular area of the survey results, alignment of sustainability with overall business goals, visions and values. The following is a chart from this public report.
(Note 3 states that the question asked between 2010 and 2012 was “align with business goals” and was expanded in 2014 to include mission or values.) As you can see, there has been about a 45% increase (from 30% to 43%) in alignment as a reason that companies are addressing sustainability. For those of you who follow this blog site and EarthPM.com know how much emphasis we are placing on integrating sustainability (rather than bolting it on as a separate entity) into project management. We are also advocating that the integration begin at the “top of the chain”, the portfolio level. For us, the portfolio level within an organization is the best place to fully integrate sustainability thinking into the culture. The organization's portfolio of projects sets the stage for the direction (vision/mission/values) of an organization because the profolio drives prgrams and projects. It is the top level. Integration into the culture at that top level of the organization will ensure (hopefully) that the thinking will follow down to programs and projects, the trifecta of project management. What we have seen over the years since we began researching our first book, through publication and up to date, is that there is a definite movement to integrate sustainability into the organizations core thinking (mission/vision/values). We all know that the more your key stakeholders are engaged in the process, the more likely the project will succeed. As project managers, we think about incorporating sustainability into the corporate culture as our project. This recent survey is very encouraging for our project’s success. While alignment is the most compelling reason there are several other reasons for companies to address sustainability according to this survey. I’ll explore those in a later blog posting. |
"Sustainability rising”, I really like that phrase. It happens to be one of the headings in the new McKinsey Global Survey Results
Plastics!
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Even before The Graduate, and Mr. McGuire’s one word advice to Benjamin, “plastics”, plastics were already becoming a material of choice for so many products. Like other “miracle” products, materials and solutions,at times there is little consideration for the long term effects. In the excitement of the miracle, lost is the question that we, in sustainability, are always asking; “to what degree are you considering the sustainability factors that affects these products (projects) during the entire project lifecycle and beyond” (its greenality). The problem is that the urgency to evaluate those long term effects (beyond the project life cycle when the product is in use) is overshadowed by the urgency to execute on the idea. The connection to projects is that projects are where those ideas become reality. The urgency became a reality in a recent report from one of our favorite sustainability websites, Green Biz, www.greenbiz.com, “Plastics cost the environment $75 billion each year” by Danny Bradbury. The report is about the cost to the environment from consumer goods companies through their use of plastics. The article is based a report "Valuing plastic". Vauling Plastic is a report from the Plastic Disclosure Project, a joint U.N. Environment Programme with natural capital analysts Trucost. It is an evaluation of the environmental and social impact of plastics used by businesses. The interesting piece, to me, is that It also assesses the financial cost to companies were they to be financially responsible for their plastics usage. In other words, if these companies truly considered the greenality of their products, projects and processes, perhaps an additional $75 billion could be added to the bottom line (profits). In effect, the reports shows, the food industry accounted for 23% of the financial cost with the soft drink industry a distant second with 12% of the costs. Further, environmental considerations include: toxicity of the plastics, fouling land usage, causing the death of some animals (6-pack holders straggling water fowl for instance), etc. According to Andrew Russell, the director of the Plastic Disclosure Project, "Avoiding plastic entering the environment at all will avoid a lot of them (the issues). Making sure there is a very high percentage of recycled content in the product or packaging, and making sure the plastic is recycled at the end of its life (my emphasis), all have enormous favorable impact." So, what can we do, as project managers, to help to alleviate or at least mitigate this problem and, by the way, add to your organization’s bottom line? We certainly can make recommendations, not only as PMs, but as members of the organization. One of the major issues we deal with is transparency. Real transparency comes from communications, and we are communicators. Making people aware of plastic content of products, recyclability, use of recyclable materials, facilitates transparency. According to the report, only about ½ of the companies assessed, report any quantitative data on plastics usage. That is not transparency. One of the obvious choices is that we should recommend that the plastics we use are recyclable, reusable and that the materials we use in the production have a significant content from recycled material. Plastics can be costly in natural capital, “the limited stock of Earth’s natural resources that humans depend on for our prosperity, security and well-being — including things such as clean air and water.” (http://www.greenbiz.com/blog/2013/09/09/who-are-leaders-natural-capital). To preserve both the natural capital and the organization’s bottom line, one word, plastics. |
Project Risk and Carbon Emissions
| We all know that there are external factors that affect our projects. Regulations are one of those factors that have to be considered by the project manager. Depending on what industry you are in, has a lot to do with what factors we need to consider. Because of their nature, some industries are more susceptible to risks from regulations than others. The U.S. energy industry (I am concentrating on the U.S. by it is more global than that) is one of those industries that seem to be at the whim of congress. Perhaps whim is too severe of a word to use, but it certainly seems appropriate when one considers that energy production and usage is a political hot potato. Tightly control it, loosen the controls, supplement and reward alternate energy use, expire alternate use incentives, all of these approaches make it difficult to access project risk when energy is a component. The most recent event to affect project risk is the new U.S. Environmental Protection Agency (EPA) limits on green-house gas production and the different ways to mitigate the effect. The elephant in the room, for energy production, here is coal. According to the U.S. Energy Information Administration, coal is used to generate 39% of our electrical needs. Natural gas is second with 27%, followed by nuclear (19%), renewable, including hydro-electric (13%) and petroleum (1%). The EPA is proposing a cap on carbon emissions; reducing 2005 levels by an average of 25% by 2020 and 30% by 2030. It also gives credits to those states and utilities already working to reduce carbon emissions. As with most of government regulations, the green-house reduction proposal is so complicated that it will take some time for utility companies to sort is all out. Talk about increasing risk. If stakeholder expectations (U.S. EPA in this instance) are not well understood, then what kind of risk management plan can be put into place? Let’s look at two possible mitigation strategies for this issue. Cap and Trade Policies
Cap and trade is a market-based policy tool for protecting human health and the environment by controlling large amounts of emissions from a group of sources. A cap and trade program first sets an aggressive cap, or maximum limit, on emissions. Sources covered by the program then receive authorizations to emit in the form of emissions allowances, with the total amount of allowances limited by the cap. Each source can design its own compliance strategy to meet the overall reduction requirement, including the sale or purchase of allowances, installation of pollution controls, and implementation of efficiency measures, among other options. Individual control requirements are not specified under a cap and trade program, but each emission source must surrender allowances equal to its actual emissions in order to comply. Sources must also completely and accurately measure and report all emissions in a timely manner to guarantee that the overall cap is achieved. A well-designed cap and trade program delivers:
To summarize the intent, cap and trade is not meant to allow a particular company to continue to emit significant levels of GHGs in perpetuity. It is temporary measure to allow companies to minimize the effects of their emissions by “averaging them out” while working to permanently to improve the quality of their emissions. Further information can be found at http://www.epa.gov/captrade/basic-info.html. Carbon Taxes For a comprehensive explanation of carbon taxes, I looked “down under” to Australia’s policy. From (http://www.carbontax.net.au/what-is-the-carbon-tax/), “At the centre of the government’s policy on climate change is pricing carbon. Many commentators and politicians have referred to this as a “carbon tax”. The idea is that polluters will pay per tonne of carbon they release into the atmosphere. This cost will initially be set at $23, and increase gradually until 2015, when we will shift to a trading scheme that will let the market set the cost. This is widely thought of as the most effective and least costly mechanism to reduce carbon output and reduce the level of climate change that is occurring. Right now, when you purchase a product that relies on carbon-intensive materials or manufacturing processes, the price you pay does not represent the cost incurred by the environment. The iron ore used to create the product could be sourced from the highest polluting mine in the world, the electricity used to power the manufacturing plant could be provided by the dirtiest coal mine in the world, and the trucks used to transport the product to its final destination in a supermarket could run on the dirtiest fuels in the world, and it would make no difference to the price. With a price on carbon, this equation would change. The amount of carbon pollution involved in producing a product would start to be factored into its final price. Products produced through dirty processes will become more expensive, thereby making it possible for other products produced through cleaner processes to compete on price. Yes, that’s right. The price of certain goods that are reliant on carbon pollution for their production will go up. However, the majority of Australians will be compensated for this cost, and this cost will be relatively small for most items. How will this drive a move towards a cleaner future you might wonder. Well, it’s not hard to see that if pollution-intensive processes make goods more expensive, companies will look to reduce their pollution footprint in order to lower their costs. That’s what businesses do – improve efficiency year on year. It’s one of the key drivers of growth. For this reason, it is actually not necessary for the consuming public to change their practices, although that would help drive you own costs down.” Project risk needs to consider sustainability to cover all their bases. One of our founding and guiding principles says it best. “Project Managers must first understand (all) the green (sustainability) aspects of their projects, knowing that this will better equip them to identify, manage, and respond to project risks.” |
Here is the best explanation I could find and it comes from the EPA.
Stakeholder Management and the Hugger-Hummer Scale
| Stakeholder management has always been important. The new PMBOK® has placed additional emphasis on it by creating an entire knowledge area “Project Stakeholder Management.” We’ve all seen the various power/interest grids, assessment matrices, and other tools, including analytical techniques, all to determine the influence of a stakeholder. How about a tool to determine the where stakeholders are along a sustainability continuum? As sustainability continuum, what is that? One of the more popular concepts we developed to help determine an individual’s greenality is The Hugger-Hummer (H-H) Scale. We’ve talked about this scale before in general terms, but never really defined or explained it. The H-H scale is configured with the two extremes, those who are tree huggers, or environmental fanatics, to Hummer drivers, or those who really don’t care how much fuel they consume. I’m not saying that every hummer driver disregards the environment; there are good reasons for some driving larger, less fuel efficient vehicles, like towing trailers, accessing rural areas in bad weather over questionable roads, etc. I’m also not saying that every hugger is an environmental fanatic that takes saving the environment to the extreme. It’s just that we needed a scale and those two terms seem to fit the extremes. As a matter of fact, most of us (if I can speak about most of us) hover around the middle, one side or the other from top dead center. For instance, I have a fuel efficient car as well as a powerful pickup truck. The car I use for commuting or daily travel, and the truck I use to tow a camping trailer and to tow a boat (separately) so I can enjoy the outdoors more.
This is what makes it a little difficult when you are assessing stakeholders. I am interested in the environment, and have a gas guzzler (for a reason). Your stakeholder may be in the same boat, excuse the pun. It also makes the H-H tool useful. To be able to assess a stakeholder along a scale is like using an objective standard. To be most effective in developing the objective standard, expert judgment can be used to validate the incremental differences along the continuum. More and more stakeholders are becoming aware of sustainability issues, on both ends of the H-H Scale. It is helpful for a project manager to know where the most influential stakeholders appear on the scale. Combining a power/interest grid with the H-H Scale, helps the PM better understand the stakeholder’s needs and desires. There are no guarantees for project success, which is why we need to use all tools available. To put it in perspective, ignoring the sustainability interests of stakeholders only adds to what? Project Risk! Adding the H-H Scale to your quiver will help you better understand potential risks to the project, therefore “will better equip them to identify, manage, and respond” to those risks, and will add to better stakeholder management. |
Sustainable Governance
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Project Portfolio Management is another progressive step in the overall process of managing projects to meet or exceed customer expectations. It looks closely at aligning organizational strategies and business goals with the projects the organization undertakes. I needed this first bit of information as background, as a foundation. Now I’d like to look at the overall, “overall” and the specific of the “specific”. Meaning, I’d like to kick this all up a level and look at the overall, governance, and the specific, IT governance, as it relates to sustainability. Simplified, governance is the way an organization is structured in order to pursue its business. I believe that structure needs to be sustainable. When I refer to sustainable in this context, I am looking at the way an organization pursues its business with relationship to the social, environmental, and profit (Triple Bottom-line), rather than just its profit objectives. Of course, one of the objectives of a business is to stay in business. Even with a not-for-profit, there is a money making motivation to keep the operation afloat. So both for-profit and not-for-profit are included. It is easy to relate governance with sustainability when you think about one aspect of governance is the adherence to regulations, as well as using best practices to gain efficiencies, and considering standards and industry recommendations. One of our assertions state “Project managers must first understand the green (sustainable) aspects of their projects, knowing that this will better equip them to identify, manage, and respond to projects risk.” This is also words for the governance body to take to heart. Can you think of any companies that have paid the price because they did not consider sustainability (environmental in particular) risks? Perhaps those organizations should have thought about including sustainability in their governance strategy. IT governance is a subset of the overall management of an organizational strategy but has to be closely tied to the overall business strategy. Why is IT governance so important? The reason is that an organization’s IT can have the biggest impact to planet, profit and people. If you are a Google or an Amazon, you rely heavily on IT and can make a huge impact. Even if you are a one-person company, you probably rely on your computer and Internet connection more than you’d like. And, whether you are a mega-consumer sales company or a Craigslister, how you manage your power consumption, for instance, will make a difference on your businesses bottom-line, impact on the planet, and how your human resources (maybe just you) are impacted. It is time to follow the continuum from green project management, to sustainable project management to sustainable program management, to sustainable portfolio management to sustainable governance. It is no longer adequate to address sustainability only from the project level. We all know, to be most effective, sustainability has to be part of an organization’s thinking, driven from the top, a strategy incorporated within its governance and particularly its IT governance. |
I started doing project management work before I knew it was project management work. Just like a lot of us, I “accidently” became a project manager. Then there was a time when I purposely did project management work. It was no longer an accident that I was doing it. The next logical step in the project management progression was to somehow manage a group of projects that have similar or related content is a coordinated way. Back in the day, at the 1998 Lucent-wide Project Management Conference, I gave a talk entitled Program Management - An Integrated(ing) Approach to Setting and Meeting Customer Expectations. That was in the relative infancy of program management at Lucent Technologies. The Project Management Organization was an outgrowth of the coordination of project management within an organization; putting the same face on how projects are managed across the organizations internal boundaries.
