Can sustainability and profitability coexist in any business model? This is possibly one of the most asked questions in strategy consulting right now. The simple answer is yes — when implemented correctly, of course. In our current climate, environmentally friendly and fair trade strategies are becoming more and more valuable each day. Believe it or not, some reputable researchers state that sustainability is one of the most influential corporate growth mechanisms nowadays.
The idea that a sustainable business cannot possibly be profitable is outdated, to say the least. For decades, CEOs and brand managers have deemed social conscience and environmental responsibility as merely a fleeting fad. Since the first notions of sustainability in the 1970s, most business leaders have been dismissive of it. They’ve maintained old paradigms alive and resisted change. Needles to say, this mentality needs to be put to rest once and for all.
Let the numbers speak for themselves. Today, there are no less than nine eco-friendly corporations globally that can generate more than a billion dollars in revenue annually. These renowned companies manufacture and distribute a vast array of first necessity goods. However, they have also mastered the art of making sustainability profitable in the process. Their massive gains come mainly from products and services that embrace an environmentally and socially responsible approach.
These businesses are living proof that sustainable practices can result in a positive financial outcome. Not sold just yet? Take a look at companies like Nike, Tesla, Ikea, Chipotle, and Whole Foods. These are just a few examples of the so-called green giants that have turned sustainability into their trademark, embodying their biggest strengths. Sustainability has ceased to be a consumer trend. It’s become a pillar in the development of small businesses and large corporations alike.
While “sustainable development” is a relatively new concept, sustainability lays its roots in movements with a rich history. The main ones are:
- Conservationism, which supports keeping traditions in society.
- Internationalism, which encourages different countries to work together towards similar interests.
- Social justice, which promotes equal economic, political, and social rights and opportunities for all individuals
The motivations behind such an essential corporate value can be complex. Yet, for most companies and their consumers, sustainability comes down to one fundamental question: What kind of world are we leaving for future generations?
As some say, adapt or perish. We’re in the middle of a climate change crisis. Now more than ever, companies from all corners of the world must strive to get on board with the sustainability “fad” regardless of their business model. The sooner they do it, the better. It’s important to stress that such practices are not limited to environmentalism. A sustainable company must show its concern about social equity and economic development as well.
When building a comprehensive sustainability plan, businesses must take three crucial factors into account:
- Ecological integrity
- Economic systems
- Human rights
These vital elements will guarantee successful strategy development and smooth strategy execution. Without them, any attempt at becoming a more conscious brand might backfire.
Strategy Development & Execution
Organizations that want to develop a successful sustainability strategy must start by coming up with a solid plan. The goal is to derive a business benefit from aligning their commercial practices with all non-financial aspects. If a business can compellingly integrate environmental, social, and economic factors as a business advantage in the long run, that’s a good indicator that the execution will work.
But what does proper strategy execution mean? It’s easy to define it as the correct implementation of a developed plan. However, it encompasses a lot more than that. The explanation of this concept often falls short when attempting to drive business results. In consequence, more than 60% of seemingly well-developed sustainability strategies fail in their execution.
Companies must visualize strategy development and execution as a step-by-step process. One that might take many adjustments before it grows legs of its own. It’s all trial and error. However, it’s vital to ensure all stages provide enough information without overwhelming the managers with technicalities.
To significantly improve the odds of your execution being successful, the outline of your plan should look a bit like this:
- Map out the strategy
- Measure the key elements
- Review and report any progress
- Assess the environment and make corrections
- Identify and organize strategy projects
- Align goals for the organization
- Coordinate and monitor projects
- Enforce good communication with your workforce
- Align individual roles based on specific strategic roles
- Reward performance to drive behaviors that are reflective of the strategy
The business world is ever-evolving. But how do you achieve a smoother transition into sustainability? Managing change in your business strategy might seem daunting. After all, these adjustments will not only modify your processes and products, but they will also affect the people that work for your business. Ultimately, they will alter how your clients perceive your brand and how they interact with it.
Some can say that making either minor or major business reforms is difficult, but that is often an understatement. You must acknowledge that people tend to resist change, and there’s no way of escaping it when introducing a brand new sustainability strategy. However, there are organizational techniques handcrafted to help in the process. By implementing them, companies can find the right approach to managing change.
To achieve success in executing any sustainability strategy, following the right path into transition is essential. Studies reveal that over 48% of strategic initiatives are unsuccessful. These rates result in losses of up to 15% of the companies’ initial investment in implementing them. Nevertheless, success rates rise significantly when effective organizational change management is involved. The good news is that the workforce is more likely to embrace change when effectively engaged in its implementation and improvement.
As you might know, sustainability is a highly coveted quality for any organization nowadays, regardless of its size. That’s why mentioning your involvement in environmentally and social-friendly causes will inevitably add up when creating a value proposition for your company. This statement will answer your prospective clients a critical question: Why should they do business with you? That’s why you must take this opportunity to make a great first impression.
When writing your value proposition, it’s crucial to spot all the many advantages your products or services provide. It’s also a good idea to identify your customers’ problems and find a solution to them through your values. Point out how your sustainable initiatives will change their lives for the better. These simple actions will make your value proposition a lot clearer for your core audience.
A good value proposition will help you differentiate your brand and position it as the best alternative for your target. However, it’s vital to remain honest and avoid “white lies” to attract more potential clients. The truth will always come out, and you might end up damaging your credibility. State only the business solutions you’re able to provide at the moment. You can always revisit your stance and revise accordingly as your business evolves.
If you want to achieve a higher market share level than you currently have, you need to create and implement an effective growth strategy. We’re talking about a set of proactive steps that’ll boost your company’s growth or highlight a specific product or service. This process can focus on both short and long-term earnings.
Before we move on, it’s important to note that there’s no secret recipe that’ll cause a growth spurt or skyrocket your numbers. If you wish to increase your product’s user base and activation rate, you’ll need to pay attention to your target audience’s wants and needs. Based on what you’d like to achieve, you’ll need a tailor-made strategy to fit your brand’s very unique requirements meticulously.
Your sustainability growth strategy can include engineering, marketing, leadership, design, product management, or any other action that’ll make your business bloom. However, for these “hacks” to work out, you must adapt them to your organization and your particular goals. The best course of action is to apply a workflow based on your observations and use the final results to make decisions. This straightforward plan is bound to work whether you’re a startup or a big corporation.
Typically, there are four types of approaches that can potentially escalate and turn into a growth strategy:
- Product development
- Market development
- Market penetration
These ideas can stand alone, or you can combine them to achieve your projected goals. Learning how to implement them effectively is part of the strategy consulting benefits that we can provide.
Whether you decide to hire an advisor or try to grow your business on your own, start small. Pinpoint that special something that makes your brand stand out and exploit it. Remember to listen to your audience. They’ll be the most significant indicator that your growth strategy is working or not.
In simple words, your revenue streams are how your organization makes money. In the wake of the ever-evolving digital technologies and the growing global market, revenue models keep shifting every day. In fact, new models keep on emerging every so often. Some of the more common revenue streams for all sorts of companies in this day and age are:
- Recurring revenue - this includes advertising and subscriptions.
- Transactional revenue - like selling products via physical or digital channels.
- Service revenue - this would involve charging for a given service.
To determine which revenue streams will work for your business, you must identify which ones offer your audience the best value. This way, you can avoid liquidity problems by generating steady income sources. You must aim to secure a predictable profit for your company to succeed. That being said, if you’re still in the process of developing your business, look at what your prospective competitors are doing to get the cash flowing.
Another excellent strategy is to listen to your existing clients. It’s nearly impossible to make a substantial profit by offering your customers what they’re not asking for. Figure out what your core audience gets hyped about. This information will give you better clues on what to offer them and on which channels. Keep in mind that the more revenue streams you create, the more consistent your profits will be.
Sustainability brings a fantastic opportunity to grow a business’s revenue streams. As societal expectations change, consumers are more open to brands that offer new ways to keep up with the newly established norms.
The key to success is making suitable adjustments before your competitors even find out. Become one of the first brands to leverage your level of influence on a specific audience to solve a sustainability problem. You’ll find the fastest route to creating new revenue streams.
Given the value boost sustainability brings to organizations nowadays, embracing it is unlikely to harm their profitability. Long gone are the days when becoming a more conscious company was frowned upon. If anything, it’ll help grow a company’s earnings. In the long run, customers, stakeholders, and even employees will assess the value that corporate social responsibility and innovation bring to the table.
Still, there are several key factors to keep in mind when creating a profitable sustainability strategy. Founders and CEOs must keep an eye open for their customer’s requests and the market’s evolution. Paying attention to sustainability and innovation trends as they emerge will set the blueprint for an efficient strategy. While it’s true that some sustainable measures might initially increase costs in their implementation, the long-term benefits make a good incentive for such an investment.
On the other hand, several actions a company can take to become more sustainable won’t necessarily break the bank. These plans will reflect on the organization’s environmental and social responsibility patterns immediately without jeopardizing its revenue. Initiatives like cutting down on waste, saving energy, and promoting a healthier work environment are a great place to start becoming a sustainable business.
Profitability factors are not one size fits all. Each business can gauge its money-making potential and get to work based on its individual results. Once they’ve examined the correlation between their costs and profits, they can better identify which sustainability strategies to implement. It’s vital to keep a realistic approach and adopt only those initiatives that prove useful. Otherwise, you could end up causing more harm than good.