Quadrule Bottom Line For Prosperity and Competitive Performance

Making profits through competitive entrepreneurial activity drives economic progress. Consequently, enabling and promoting economic enterprise is a primary responsibility of corporate governance¹. Moreover, progress by entrepreneurs in implementing new combinations² extends to all aspects of a triple bottom line³: competitive productivity for profit; quality of life for people; and, sustainability of the planet’s resources for the survival and flourishing of species and ecosystems.

However, triple bottom line accounting and related frameworks fail to emphasise the foundations of sustainable prosperity in continuous and competitive entrepreneurship and innovation. Enterprising progress in the lives of individuals and their communities requires adaptive innovation – successful implementation of new combinations – in all aspects of sustainable prosperity.  Accordingly an interrelated quadruple bottom line of 4P’s – people, profit, planet, and progress – provides the basis for a more comprehensive framework for developing measures of sustainable prosperity.

Profit is the best index of sustainability we have and entrepreneurship in competitive markets is the least worst option for generating profit and sustainable prosperity. Of course markets are regulated; effective markets require private property rights, legally binding contracts, and equality before the law. Without profit markets are not possible and without markets quality of life is diminished. Decisive issues here are how the operation of markets and the generation and distribution of profit are regulated in relation to their impacts on a quadruple bottom line for sustainable prosperity.

Sustainable prosperity is “a result of sustainable development that enables all human beings to live with their basic needs met, with their dignity acknowledged, and with abundant opportunity to pursue lives of satisfaction and happiness, all without risk of denying others in the present and the future the ability to do the same”⁴. This definition puts human beings at the centre of sustainability. The licence to produce and distribute goods and services at a profit is based on human requirements to consume and experience goods and services for survival and identity.

Competitive survival for individuals, businesses, and communities and sustainable prosperity for an expanding population of over 7bn people requires relentless attention to continuous improvements in cost control, resource use, and conservation, and continuous innovation in products, processes, business models, and institutional arrangements.

In general terms a QBL – quadruple bottom line – for sustainable prosperity can be defined as follows:

SUSTAINABLE PROSPERITY: 4P’s

People – Quality of Life

Quality of life for people, e.g., health, vigour, wellbeing, flourishing.

Profit – Competitive Productivity

Competitive productivity in producing and distributing goods and services for consumption and profit with scarce resources.

Planet – Sustainable Ecosystems

Individual, community, and ecosystems survival across lifespans and generations.

Progress⁵ – Adaptive Innovation

Adaptive innovation – e.g., adaptive learning and change; trial and error risk taking and discovery – in all aspects of people, profit, and planet, and innovations in being innovative⁶.

Rigorous measures of financial operations and competitive economic productivity are well established. A start has been made in recent years on developing measures of sustainable prosperity⁷. The contribution of a QBL perspective is its requirement for explicit attention to entrepreneurial progress – continuous and competitive adaptive innovation – in all aspects of quality of life, competitive productivity, and ecosystems sustainability. In sum, entrepreneurship and innovation drive the progress of sustainable prosperity.

Notes

  1. Charkham, J. (2005). Keeping better company, 2nd ed. Oxford: Oxford University Press.
  2. Schumpeter, J.A. (1911/1934). The theory of economic development. London: Transaction Publishers.
  3. “… the ecological bottom-line: no ecosphere, no economy, no society”, p 147 Wackernagel, M. & Rees, W. (1996). Our ecological footprint. Gabriola Island, BC: New Society Publishers; and Elkington, J. (1997). Cannibals with forks: The triple bottom line of 21st century business. Chichester, UK: Capstone;
  4. The Worldwatch Institute. (2012). State of the world 2012: Creating sustainable prosperity. Washington, DC: Island Press.
  5. Strictly, progress is change that survives; and there is a natural desire – not necessarily met – for progress to provide an improvement on previous conditions.
  6. See, for example, Dodgson, M. & Gann, D. (2010). Innovation: A very short introduction. Oxford: Oxford University Press; Schon, D.A. & Rein, M. (1994). Frame reflection: Towards the resolution of intractable policy controversies. New York: Basic Books.
  7. See, for example, Global Reporting Initiative (GRI). (2000). Sustainability reporting guidelines on economic, environmental, and social performance. GRI: Boston; Stiglitz, J.E., Sen, A., & Fitoussi, J-P. (2010). Mismeasuring our lives: Why GDP doesn’t add up. London: The New Press; Bilbao-Osario et al (2012). Assessing the sustainable competitiveness of nations. The global competitiveness report 2012-2013. Geneva: World Economic Forum.

“… if variations useful to any organic being do occur, assuredly individuals thus characterised will have the best chance of being preserved in the struggle for life.” Charles Darwin, 1859

Variations – new combinations – that prove useful provide the foundation for adaptive renewal and entrepreneurial progress. Leadership matters because it enables adaptive adjustment to change, or initiates adaptive change to circumstances. Variations that prove useful for adaptive change and renewal are the innovations – for example in products, processes, business models, and business and institutional infrastructures – that enable entrepreneurial progress for sustainable prosperity.

In the creative competition for performance and renewal, effective managerial leaders influence people to contribute to general aims in relation to an infinite variety of quadruple bottom line (QBL) outcomes: quality of life for people; competitive productivity in producing and distributing goods and services at a profit; sustainable consumption of the earth’s raw materials and stewardship of ecosystems; and adaptive innovation that sustains and renews progressive entrepreneurial change for people, profit, and planet. More precisely, effective leaders exercise the reciprocal influence that engages people in action for common purposes and mutual benefits in contingent circumstances.

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Leaders contribute to QBL aims and common purpose outcomes by establishing DEAR outputs: the common goals & values required for shared direction; energising reasons that engage people in action; alignment and coordination of information, decisions, and activities across the different roles and contributions of individuals and groups; and relentless reflection on processes, results, and mental models to understand and learn from them and to harness and initiate continuous variation and renewal in coordinating and evolving collective action for common purposes and mutual benefits. This is the what of managerial leadership and defines leadership responsibilities.

The interrelated leadership practices of goal setting, positive relationships, and coordinated action define the how of managerial leadership. These practices apply across all contexts of leadership: frontline delivery; operational systems; strategic competitive position; and institutional legitimacy. All aspects of these practices are informed by the evolving dynamics of cooperative and competitive relationships in the implementation and innovation tasks of competitive performance and renewal.

This original synthesis of robust findings from organisation and leadership science provides the basis for a range of powerful tools, initiatives, and programmes to support organisations, teams, and individuals in developing, deploying, and renewing continuously their leadership capabilities in order to survive and flourish in the new era of business.

 

 

“… if variations useful to any organic being do occur, assuredly individuals thus characterised will have the best chance of being preserved in the struggle for life.” Charles Darwin, 1859

Variations – new combinations – which prove useful provide the foundations for adaptive renewal. Useful variations that enable adaptive renewal can be a response to change in circumstances or can initiate change in circumstances, such as new products, processes, and business models that drive progress in the struggle to survive and flourish on a global commons with limited resources.

In the creative competition for performance and renewal, effective managerial leaders influence people to contribute to a range of generic common purposes and an infinite variety of 4P outcomes: quality of life for people in producing and consuming goods and services; adaptive innovation that sustains and renews progressive change for people, profit, and planet; competitive productivity in producing and distributing goods and services at a profit; and sustainable consumption of the earth’s raw materials and stewardship of ecosystems. Effective leaders exercise the reciprocal influence that engages people in action for common purposes and mutual benefits in contingent circumstances.

LeadershipCPRenew

Leaders enable common purpose outcomes by establishing DEAR outputs: the common goals, values and identity required for shared direction; energising reasons for contributing to action; alignment and coordination of information, decisions, and activities across the different roles and contributions of individuals and groups; and relentless reflection on processes, results, and mental models and learning from them to harness and initiate continuous variation and renewal in coordinating and evolving collective action for common purposes and mutual benefits. This is the what of managerial leadership.

The processes of goal setting, working together, and staying together define the how of managerial leadership. These processes apply across all contexts of leadership: frontline delivery; operational systems; strategic market position; and institutional legitimacy. All aspects of these processes are informed by the evolving dynamics of cooperative and competitive relationships in the implementation and innovation tasks of competitive performance and renewal.

This original synthesis of robust findings from organisation and leadership science provides the basis for a range of powerful tools, initiatives, and programmes to support organisations, teams, and individuals in developing, deploying, and renewing continuously their leadership capabilities in order to survive and flourish in the new era of business.

Organizing for Performance and Renewal is an original framework created by Cambridge Leadership Development that enables sustainability and competitive renewal for businesses in the 21st century.

 

OrganizingForPerformanceAndRenewal

The CLD framework Organizing for Performance and Renewal is a practical tool for businesses in the 21st century.  It includes:

  • An emphasis on strategic purpose, processes, and people
  • The addition of processes and engagement

Key Points:

  • The importance of a stakeholder/constituency concept of enterprise performance, growth, and innovation in globally competitive markets
  • Achieving a continuously evolving balance across the competing requirements of a quadruple bottom line of profits, people, planet, and progress in globally competitive markets.

In more detail a quadruple 4P bottom line addresses: i) profits – competitive productivity; ii) people – quality of life; iii) planet – ecosystems sustainability; and, iv) progress – adaptive innovation (continuous improvement and innovation; including business model innovation)

  • A 21st century emphasis on purpose, processes, and people to complement and develop the 20th century emphasis on strategy, structure, and systems. This includes increased attention to the process routines that generate core capabilities in utilising and developing technologies.
  • Increasing attention to engaging people to do willingly and well what needs to be done across cooperative and competitive networks within and beyond the enterprise.
  • McKinsey found that ‘great companies create great meaning’. Establishing, sustaining, and renewing both common values and standards of behaviour and a sense of group membership and group identity are accepted as basic ingredients for enduring success.
  • Acceptance that leadership is the decisive factor in promoting common values and group identity. More than this, the leadership role of managers is fundamental to engaging people and to coordinating people, resources, and activities for a common purpose in order to deliver mutual benefits for stakeholders.

Operational Implementation

Managers and their networks of colleagues, associates, and direct reports are responsible for achieving the strategic purpose of their part of an enterprise for the mutual benefit of stakeholders.

Some key questions to address are:

Strategic Purpose

  1. How well do you and everyone you work with understand the strategic purpose of your part of the enterprise?
  2. To what extent do you and everyone you work with see a link between your day to day activities and the strategic purpose of your part of the enterprise?

Context: PEST – political, economic, social, technological (+ legal, ecological, cross-cultural)

  1. How aware are you of the changing globally competitive context and the implications of these changes for you and your colleagues?

Resources

  1. What resources, assets, and technologies do you draw on to support you in achieving a high performance impact?

Processes

  1. What are the critical tasks, processes, and routines in your area of responsibility?

People

  1. Who is involved in your area of responsibility?
  2. What are their skills, motives, and values?

Structure

  1. How are activities and processes coordinated in your area of the enterprise?
  2. How is coordination between processes achieved across the network of relationships through which strategic purpose is progressed?

Systems

  1. What systems do you draw on to keep performance on track?
  2. What do you do to enable continuous improvements in performance?

Culture

  1. What are the links between common values and standards of behaviour and your leadership contribution?

Leadership

  1. What do you do to engage people in a common purpose for mutual benefit?
  2. How well do you establish structure?
  3. How well do you ensure mutual respect?
  4. What contribution do you make both to initiate change and to adapt to change?
  5. What do you do to involve people in decisions about the ends and means of action?

Engagement

  1. What do you do to mobilise and develop people so that they add value to enterprise performance?

Impact

  1. How well do you and everyone you work with understand the impact of your efforts on the relationships between employees, customers, financiers, and other stakeholders?
  2. What do you do to learn from the impact you have?
  3. If you had the authority what would you do to improve the coordination of people, resources, and activities so that the enterprise had more of an impact on stakeholders?

To discuss how this framework could be applied to your organization, please contact us.

 

 

Leadership Is Renewal

In some quarters profit is a dirty word.  Yet without profit activities are not sustainable. The leadership challenge is how profit is generated and how it is distributed.

Continuous innovation in the production and distribution of goods and services at a profit is the foundation of modern societies because it enables quality of life for more and more people; however resources are always limited in relation to wants.  Effective and thoughtful leadership from people in all areas of activity is slowly and steadily accepting responsibility for producing the competitive productivity and profits, quality of life, ecosystems sustainability, and progressive innovations that make life in our global village worthwhile, enabling – profit, people, planet, and progress – the 4P outcomes that define the good life.

Achieving 4P Outcomes

To achieve 4P outcomes effective leadership is essential at all levels across the business.

Effective leaders establish and gain commitment to ‘company values’ that are based on goals and direction that are consistent with the business strategy, for every part of the organisation.

Their passion, commitment and communication skills energise people to engage in actions that coordinate the cooperative alignment of company wide implementation activities that deliver strategic goals.

These leaders also sponsor and proactively contribute to methods of achieving continuous learning that is reflective, and creates a culture of improvement, change and renewal.

Effective leaders achieve – Direction, Engagement, Alignment, and Renewal – DEAR outputs enable 4P mutual benefit outcomes.

Renewal From Within

LeadershipIsRenewal

Every day learning and knowhow happens naturally in the activities of people throughout the company.  Sometimes it is not noticed or acknowledged as an asset, but quietly it drives continuous incremental change extending to customer and supply chains, and competitor networks.  Effective leaders sponsor and promote this learning, proactively encouraging sharing, so that everyone from the reception desk to the executive desk has the opportunity to make a contribution to change, which may be radical over time, e.g. developing a new business model or strategy, new brands, or a new employment identity.  This is the source of companywide engagement, commitment, alignment and renewal that delivers significant added value throughout the business.

Successful Companies Develop Leaders From Within

Successful companies know that developing the leadership capabilities of their managers is a constant, not a one off event.  When companies embed a leadership development strategy into their business strategy they derive the maximum impact from their investment in those people: successful implementation of their business strategy throughout the company.

Communication and Commitment are Essential for Successful Team Working

One of the fundamentals for successful team working is being clear about the purpose of the team, however clarity is not enough to successfully deliver the business outcome required.

Some teams are teams in name only, they are simply individuals who sometimes come together physically or online, and have no common purpose or meaningful bonds that tie them together.

The first and most crucial task of a team is to actually become a team.

Kick Off Event

A Team Kick Off Session is an Effective First Step for Individuals to Become a Team.  It provides the opportunity to communicate the purpose of the team, and how it’s goals fit into the overall business strategy.

Sharing the core outcomes expected of the team is crucial together with explaining specifically what the team will collectively be held accountable for.

In our work with clients we have found that following this briefing by facilitating a brainstorming activity focused on how to capture and monitor achievements and collective accountabilities creates energy, collaboration and ownership.

This initial task is interactive and every input should be captured and positively received, encouraging contributions from everyone and demonstrating mutual respect, as well as stimulating innovative thinking.  It also establishes the expected working practices of mutual respect, co operation and a willingness to work together.

This task focuses minds on deliverables, and channels inputs in the direction of bottom-up, rather than top-down.  This approach automatically identifies gaps and anomalies, and in so doing achieves alignment of efforts across the whole organization at all levels.  Another benefit of this exercise is it also identifies where feedback loops are needed to allow for refinement in processes and monitoring.

Next Steps: Individual and Team Commitment

Each person on a team is committed to the need and purpose of the team, they respect the other members of the team, sharing and contributing constructively with the other team members to achieve their shared team goals.

You may have extremely talented individual contributors, however each of them need to agree to being a member of the team, sign up to the purpose of the team, respect other team members as well as themselves, and work together positively, committing their unique talents to delivering the team’s shared goals and outcomes.

More on Commitment in the next post on Team Working