People, Planet, Profits & Projects

Putting their (our) money where their mouth is, President Barack Obama signed Executive Order (EO) 13423 into law.  For those of you not familiar with United States law, according to http://legal-dictionary.thefreedictionary.com/Executive+Order, an executive order is “A presidential policy directive that implements or interprets a federal statue, a constitutional provision, or a treaty.”  EOs do not require congressional approval and are often, as in this case, used to set policy.  EO 13423 is used to strengthen federal environmental, energy, and transportation management.  It created and still creates lots of projects within the federal government as well as providing direction to private companies who choose to institute more environmentally (green) projects.   A wealth of information can be found (for free) on the US EPA’s website, Greening EPA.

EO 13423 sets some significant goals for the government, one of the larger consumers of natural resources, thus the need for those significant goals.  The purpose of those goals is to limit and reduce the amount of resources used.  Now doesn’t that sound just like what project managers do?  At this point you must be rubbing your hands!  Some of the projects undertaken to reduce consumption are: 

1. Reducing energy intensity 30% by 2015, compared to 2003 level.
2. Related to the reduction in energy intensity is the reduction in greenhouse gas emissions by 305 as related to the 2003 baseline.
3. Procurement (a word we all know very well); expand purchases of environmentally sound goods and services, including biobased products.
4. Increase purchases of alternate fuel, hybrid, and plug-in hybrid vehicles.
5. Reduce water consumption by 16% compared to the 2007 baseline.
6. 95% of electronic products purchased must meet the Electronic Product Environmental Assessment Tool (EPEAT) standards where applicable and enable Energy Star® features on 100% of computers and monitors; and reuse, donate, sell, or recycle 100% of electronic products using sound management practices.
7. Construct or renovate buildings in accordance with sustainability strategies, including resource conservation, reduction, and use, siting and indoor envrionmental quality.

Of course, we all do not work for the federal government.  So what does that have to do with us, as project managers?  Well, what that does give us, sustainability responsible project managers, guidelines to work with for our companies to become more sustainable.  Remember, external projects are not the only ones usually undertaken by organization.  Given all the reasons that companies are becoming more and more aware of good reasons to become more sustainable, internal sustainability projects will become priorities.  As well as being the “right thing to do”, they are also fun project to work on with long term results. 

Executive Order 13423 has a lot more to it than I presented here.  However, just scratching the surface can provide an abundance of sustainability oriented projects for your organization.

When we stsarted out many years ago pointing to the intersection of green and project management, we didn't notice too much in the popular PM journals on the topic.  Sure, from time to time there would be a story about a wind-farm project, or a story that lightly touched on broader definitions of project success, but we rarely found coverage of sustainability as an 'integrated idea'.

And that still holds pretty true.

But we are beginning to see an uptick in a more holistic view of project success, more of a buy-in into project managers (or at least program and portfolio managers) as "benefits realizers", with the inherent patience and metrics to measure project success not only on delivery of a project product, but on the longer-term benefits of continued econommic success for that product, fewer ecological impacts from the steady state of that product, and the broader social impact of that product (in operation).

Case in point: this month's PMNetwork magazine, which, as you can see in the picture - and perhaps coincidentally - has a cover that features the color green.  But beyond the cover, deep inside the issue (without it being dubbed any sort of special 'sustainability' or 'green' issue) are many articles and features on renewable energy projects, on aligning sponsors more closely with project managers, even on the "long haul" 'sustainabile' careers of old crow project managers like your authors here at this blog.

It's a thread through the issue and it's increasingly a thread through issue after issue of PMNetwork, and we applaud the work of PMI to continue to weave that thread into the fabric of project managers.

Some other examples: the Finalists for the 2014 Project of the Year includes the Energy Systems Integration Facility being built by the US Department of Energy.  There's a feature on the creation of an artificial oyster reef in Matagorda Bay, Texas, to revive an ecosystem lost with the eventual erosion of the Half Moon Reef.  It's a project that involves collaboration between government and the Nature Conservancy.  The story on the emergence of Tanzania as a leading African economy features stories on the challenges it faces with energy.  Speaking of energy, Chile is also featured as a country with a promising set of renewable energy projects.  There's a sidebar describing renewables projects in that country.  And to top it off, there is a feature on REDD (not LEED, but REDD - Reducing Emissions from Deforestation and forest Degredation) projects for which the USAID and the World Bank has funded US$6.27 billion, and "that's a far cry from what the UN says is needed to combat climate change". 

All in all, it's reassuring to see the thread of sustainability - or at least a focus on sustainability-oriented projects - become more prolific.

It's now time for the next step: raise the level of coverage to include how projects - ANY kind of project - can have a connection to the CSR (Corporate Social Responsibility) objectives of the parent organization.  Show how a software project, a bridge, the launch of a new coffeemaker - ANY project - can benefit from long-term, holistic thinking.  

We're impressed with the change.  But we're still not satisfied. I suppose we could say that our passion for a true intersection of PM and Sustainability is...sustainable.

I thought I posted this earlier in the month.  I guess I didn't.  Must have been a "senior moment."

Google X is the research and development arm of Google.  Google has a value of almost $400 billion.  When you are Google, you have a serious critical mass of resources to be able to research and invest in new technologies.  Google is one of those companies that we considered “at the top of their game” in our 2010 book (Green Project Management), because of their commitment to creating a sustainability friendly company, socially, economically, and environmentally. 

My reading habits are rather eclectic, from the Wall Street Journal to various fly fishing magazines, to Real Simple, to Outside as examples.  In the recent Outside Magazine, there is a story about a new project coming out of Google X.  While it is an alternative energy project, it is different from previous projects.  While it is a wind power project, it is unusual.  Also, like some other revolutionary products (projects), Post-its® for example, this new project from Google X started out as something else.

According to the article by Megan Michelson,   The Sky’s the Limit, about 10 years ago; kiteboard pioneer Don Montague “hatched a plan to become the fastest person to circumnavigate the globe.”  He proposed using a 65’ catamaran with a parafoil cruising at 250 feet above the earth.  He happened to preview the idea with Sergey Brin and Larry Page, founders of Google and friends of his.  He was showing them how much power was available at higher altitudes and explained that he could actually generate electricity.  At that point, Sergey and Larry said “Don, don’t waste your time sailing around the world.  Let’s save the world.” 

Initially, Google invested about $15 million into the project, but last May the project was sold to Google X.  Using the enormous resources of Google X, the project continues with aspirations of building a 600-kilowatt wind turbine capable of powering 300 homes, the equivalent of modern land-based wind turbines.  One of the reasons that this type of wind generating technology could be so successful is that it streamlines the generating equipment.  Rather than the large, cumbersome land-based turbines, the equipment required is much more elegant.  The article has a quote from a professor at Delft University in the Netherlands, a university on the forefront of sustainability.  Professor Roland Schmehl is quoted as saying “While classic turbines are facing physical and economic limits, airborne wind energy shows interesting potential.” 

From Google’s website the challenge we are facing with wind generation is “Wind turbine architecture is at a plateau.  Conventional wind power systems are reaching the limits of their technology. To generate more wind power, turbine structures have become taller and heavier. On average, onshore turbines require 100 tons of steel, fiberglass, concrete, and other materials to produce a single megawatt of capacity to power 500 U.S. homes. Large structures like this are expensive and complex to construct and therefore can only be installed economically where the winds routinely travel between 20-28 kilometers per hour. Less than 15% of all land around the world meets this criterion.”

The good news is that a company like Google and their R&D facility is attacking this project.  Ideally, a significant amount of our energy needs could be generated using this new technology.  According to Don Montague, “Is it a race?  It doesn’t really matter who’s first.  If anyone is in production in 5 years, we all win.”

I promised to explore some more points from the McKinsey Global Survey[1] results.  The on-line survey was available from February 11^th, 2014 – February 21^st, 2014.  According to the article “3,344 executives representing a full range of regions, industries, company sizes, functional specialties, and tenures” responded to the survey.  In a previous post I wrote about aligning sustainability to a company’s business goals, missions, and values.  Aligning sustainability with corporate vision is critical and represents the “hub” of our Sustainability Wheel™ (a tool our upcoming book Sustainability in Projects, Programs, and Portfolios: Realizing Enterprise Benefits and Goals).  Another very important aspect of sustainability is “reputation management.”   

The survey results point out that “year over year, large shares of executives cite reputation as a top reason their companies address sustainability.”  Of the “core” activities reported in the survey, “reputation has the most potential value for their industries” and “many of this year’s respondents say their companies are not pursuing the reputation-building activities that would maximize that financial value.”  Right there is a hint as to what types of projects there may be in the future.  Project manager's utilizing softer skills (communication. negotiation, motivation) in an organization could have the impact organizations are looking for to boost the reputation, and boost the bottom-line.  The chart[2] below is very telling in that reputation has been one of the top reasons to address sustainability for the last few years.

Once again, it is the hub, or the connection between the organizations mission and the sustainability efforts, that needs to be highlighted and then pursued as part of the overall strategy of the organization.  Where the project manager can be of assistance is to include actions within their plans that overtly forward the organization’s sustainability efforts, keeping in mind that each project is unique and may need a unique plan to improve or at least emphasize sustainability reputation.  Why do we believe that the project manager can play an important role here? 

PMs can play an important role because two of the top three reasons (reported in the survey) that are key to improving sustainability reputation are “communicating company’s sustainability activities to consumers” (stakeholders) and “building and maintaining external-stakeholder relationships.”  Doesn’t that sound like something we do and have always done?

One of the major issues we see with all of this is how an organization easily evaluates their sustainability stance and efforts, versus how they are perceived by other companies both within their industry and external, as their standing with all of their stakeholders .  New tools available for evaluation are way more complicated that they have to be; too many moving parts and very uninteresting.  Since we wrote Green Project Management, we have been researching and developing a simple, exciting solution for organizations to be able to easily evaluate their project, program, and portfolio efforts with regard to sustainability and then easily set sustainability goals and realize the benefits.  Unfortunately, it seems to take more time to develop a simple solution that a complex one, but it will be worth the wait.  Look for the book sometime the Spring/Summer of 2015. 

If you live in the New England area of the United States, you probably know about DeMoulas supermarkets.  Mostly branded, "Market Basket", these 71 stores dominate the area, often pushing aside large national (really international) chains, such as Stop & Shop and Hannaford.

Recently, however, the stores have been all but shut down by a labor and leadership dispute that is about the way in which the company is run and who should be at the helm. 

Why do we bring up a supermarket in a blog about project management and sustainability?

We actually never intended to do this until we ran into an editorial by former US Secretary of Labor Robert Reich, who served under Gerald Ford and Jimmy Carter.

Now, before you read the editorial, we want you to be aware that we are aware that this is not a political blog, and we usually try to stay away from pure politics and economics.  And this editorial does drift into the philosophical and political area in the way it discusses capitalism and labor.  But at its heart, the editorial makes a beautiful point quite beautifully, whether you agree with Reich on anything else.

We think the editorial is important because:

• it talks about a focus on a wide set of stakeholders (like Project Managers do)
• it honors the intersection of business and sustainability (like we assert Project Managers should)
• it takes, in general, a more long-term, holistic view of success (which we think all of us can use)

We place the editorial below, with the highlighting our own, so you can draw your own conclusions.

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In recent weeks, the managers, employees, and customers of a New England chain of supermarkets called “Market Basket” have joined together to oppose the board of director’s decision earlier in the year to oust the chain’s popular chief executive, Arthur T. Demoulas.

Their demonstrations and boycotts have emptied most of the chain’s seventy stores.

What was so special about Arthur T., as he’s known? Mainly, his business model. He kept prices lower than his competitors, paid his employees more, and gave them and his managers more authority.

Late last year he offered customers an additional 4 percent discount, arguing they could use the money more than the shareholders.

In other words, Arthur T. viewed the company as a joint enterprise from which everyone should benefit, not just shareholders. Which is why the board fired him.

It’s far from clear who will win this battle. But, interestingly, we’re beginning to see the Arthur T. business model pop up all over the place.

Patagonia, a large apparel manufacturer based in Ventura, California, has organized itself as a “B-corporation.” That’s a for-profit company whose articles of incorporation require it to take into account the interests of workers, the community, and the environment, as well as shareholders.

The performance of B-corporations according to this measure is regularly reviewed and certified by a nonprofit entity called B Lab.

To date, over 500 companies in sixty industries have been certified as B-corporations, including the household products firm “Seventh Generation.”

In addition, 27 states have passed laws allowing companies to incorporate as “benefit corporations.” This gives directors legal protection to consider the interests of all stakeholders rather than just the shareholders who elected them.

We may be witnessing the beginning of a return to a form of capitalism that was taken for granted in America sixty years ago.

Then, most CEOs assumed they were responsible for all their stakeholders.

“The job of management,” proclaimed Frank Abrams, chairman of Standard Oil of New Jersey, in 1951, “is to maintain an equitable and working balance among the claims of the various directly interested groups … stockholders, employees, customers, and the public at large.”

Johnson & Johnson publicly stated that its “first responsibility” was to patients, doctors, and nurses, and not to investors.

What changed? In the 1980s, corporate raiders began mounting unfriendly takeovers of companies that could deliver higher returns to their shareholders – if they abandoned their other stakeholders.

The raiders figured profits would be higher if the companies fought unions, cut workers’ pay or fired them, automated as many jobs as possible or moved jobs abroad, shuttered factories, abandoned their communities, and squeezed their customers.  

Although the law didn’t require companies to maximize shareholder value, shareholders had the legal right to replace directors. The raiders pushed them to vote out directors who wouldn’t make these changes and vote in directors who would (or else sell their shares to the raiders, who’d do the dirty work).

Since then, shareholder capitalism has replaced stakeholder capitalism. Corporate raiders have morphed into private equity managers, and unfriendly takeovers are rare. But it’s now assumed corporations exist only to maximize shareholder returns.

Are we better off? Some argue shareholder capitalism has proven more efficient. It has moved economic resources to where they’re most productive, and thereby enabled the economy to grow faster.

By this view, stakeholder capitalism locked up resources in unproductive ways. CEOs were too complacent. Companies were too fat. They employed workers they didn’t need, and paid them too much. They were too tied to their communities.

But maybe, in retrospect, shareholder capitalism wasn’t all it was cracked up to be. Look at the flat or declining wages of most Americans, their growing economic insecurity, and the abandoned communities that litter the nation.

Then look at the record corporate profits, CEO pay that’s soared into the stratosphere, and Wall Street’s financial casino (along with its near meltdown in 2008 that imposed collateral damage on most Americans).

You might conclude we went a bit overboard with shareholder capitalism. 

The directors of “Market Basket” are now considering selling the company. Arthur T. has made a bid, but other bidders have offered more.

Reportedly, some prospective bidders think they can squeeze more profits out of the company than Arthur T. did. 

But Arthur T. may have known something about how to run a business that made it successful in a larger sense.

Only some of us are corporate shareholders, and shareholders have won big in America over the last three decades.

But we’re all stakeholders in the American economy, and many stakeholders have done miserably. 

Maybe a bit more stakeholder capitalism is in order.

The editorial was retreived from Robert Reich's own web page - here.