By: Simon Perry, Principal Associate Analyst - Sustainability, Quocirca
Published: 11th November 2008
Copyright Quocirca © 2008
According to the common wisdom, measurement is the means by which we guide the execution of a strategy. Without measurement, we cannot gauge progress nor begin to accurately predict the outcome of various possible paths as a plan is tested against time and the business realities. Whilst this is true enough, perhaps the real nugget of wisdom is that measurement is actually of secondary value to the very human processes of communication and analysis that allow us to turn information into decisions and actions. If what we measure is keyed to how well we measure success, then how we report all those measurements, and to whom is key to how effectively the communication and analysis processes of strategic governance are performed.
All this is true regardless of which type of business strategy we’re talking about, whether one related to a business’s marketing, sales execution, financial management (which is all about cutting costs at the moment), or one for the streamlining of supply chains. In all these cases businesses have well defined and generally rigidly adhered to procedures related to measuring and managing the execution of any given strategy. While this is often due to regulated reporting requirements, it is also very common to find that across numerous businesses the underlying motivations for such strategies are fairly similar. For that reason the goals and the metrics that must be measured to guide the execution are also generally the same for any given strategy from one business to the next, even while they differ in their actual execution.
It is natural therefore that the IT industry has developed the software glue that effectively binds the measurement with the processes of communication and analysis, ensuring that the relevant stakeholders can more easily and accurately get access to information and make decisions. As similar strategies from one business to the next share similar motivations, metrics and goals, we have seen that a single set of core functionality is required in such software-based reporting tools and dashboards. Thus sales strategies are supported across thousands of different businesses by Oracle/Siebel, salesforce.com and others; similarly marketing strategies are helped along with the likes of SAP and StrategyMix. Financial management and inventory management can similarly be automated across thousands of different businesses by Oracle or SAP. Such systems allow us to better plan, to understand information, and communicate with each other.
Why then does no such clear a situation exist in relation to the governance of a business’s sustainability strategy, or more narrowly its carbon emissions management? Surely the simple answer would be that in managing these the what that is measured would be resource usage and CO2 emissions (or the CO2 equivalency of other emissions), the how we report those measurements would be via some sort of appropriate software-based reporting tool, and to whom would be to the principle stakeholders interested in the project outcomes. The reality however is a little messier.
Digging beyond the front page of most business’s sustainability strategies is a bit like reaching into the fortune cookie jar. Written on each cookie’s paper slip will be the real motivation behind the existence of the sustainability strategy. For a start, almost all will discount concern over the risks of climate change as being the real motivation, so relatively few are concerned with measuring progress in terms of emissions reduction. Meanwhile cost cutting, green marketing, the short supply of a required resource (including energy supply), and contributing to CSR efforts are far more often to be found. Here and there legislation might be quoted as the motivator but that is amongst a firm minority at present. Depending on which it is, defining success criteria of a the sustainability strategy alters drastically, and therefore what measurements need to be taken, never mind who will be interested and involved in analysing the measurements and making decisions.
Hence it is perhaps less clear-cut what an ideal reporting tool would deliver with regards to helping to manage a sustainability strategy. Should it measure energy usage and process efficiency, all expressed in monetary units? Should it measure brand value, the responses of marketing research focus groups, and the count of positive “green” news stories regarding the company? Perhaps it really should measure direct and indirect emissions, expressing them as the number of tonnes per unit of activity. And it might be clear by now that it is just as likely the Chief Financial Officer will be sitting atop the strategy’s governance as the Chief Marketing Officer.
All this is quite an unusual set of affairs and one that sets some particular challenges in terms of what reporting functionality might be desirable in software required to support a sustainability strategy. While there is no shortage of (usually online) calculators that provide varying degrees of functionality in terms of calculating embodied and in-use emissions, and resource usage, it is not entirely clear whether this is what the enterprise and mid size market needs in terms of a reporting dashboard.
The plethora of alternative truths underlying most sustainability strategies is no small problem, and not just one that creates challenges for any potential software vendor looking to bring a product successfully to market. Without a strategic recognition and acceptance of the real challenge, it is doubtful whether real success can be delivered as far as reducing global emissions. Legislation, such as the proposed Climate Change Bill in the UK may ultimately provide the necessary stick that will prod businesses to focus on the right problem, and take appropriate action. Perhaps then we will see sustainability efforts actually need measurement of metrics that actually relate to sustainability, rather than metrics that relate solely to financial or PR success.
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