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fairytale

Sustainability

Everyone loves a win-win story but it’s time to get real 

Published 12 May 2022 in Sustainability • 10 min read

Welcome to the Iconoclast, the first in a series of columns intended to challenge the status quo. Not always giving answers, not always right, but smartly challenging our own assumptions, actions, organizations, and institutions. 

 

Twenty-five years ago we were focusing on the business case for sustainability and corporate social responsibility. The requisite exemplary firms and socially responsible business models were dragged out and all the talk was of “doing well by doing good”.

The rhetoric today is painfully similar. Perhaps the biggest difference is that, 20 years ago, sustainability was treated as an option; today, groups from Business Roundtable – an association of chief executive officers of America’s leading companies – to BlackRock–the world’s largest asset manager – tell us that sustainable business models are no longer merely optional, but are required for long-term survival.  This argument is most often bolstered by the claim that doing good and doing well overlap tightly. 

Iconoclaste chart 1The space (Zone B) of win-wins among people, planet and profit is large and growing, goes the chorus.

However, this is the powerfully appealing and incredibly dangerous siren song of the status quo. This undue focus on win-wins doesn’t get us to where we collectively need to get. It allows us, as leaders and humans, to avoid the most important questions about ourselves and the roles we take on inside organizations.

Our obsession with win-wins 

In the business press and at business schools, it’s all about the “win-wins” and “socially responsible business”. Our business magazines (including this one) and business school cases are filled with heroic leaders creating business models that are environmentally sustainable and profitable.

They tell us (sometimes rightly) that by, say, serving the bottom of the pyramid, or differentiating our products through their sustainability bona fides, we can be profitable. And the same outfits assert (nearly always falsely) that acting responsibly is necessary for long-term financial success.

Take the example of Ray Anderson, CEO of carpet company Interface, who describes in a TED talk his moment of environmental awakening which felt like a “spear to the chest”. He had thought of himself as a titan of industry, he says, but suddenly saw himself as a “plunderer of the earth”. His company, he came to admit to himself, was gaining its profit at the expense of the planet. He then relates how he dedicated himself to changing its business model to be more circular and sustainable. The TED site gushes in its blurb about the video, “At his carpet company, Ray Anderson has increased sales and doubled profits while turning the traditional ‘take / make / waste’ industrial system on its head.” There it is again: the ubiquitous story of doing well by doing good.

His story is an inspiring and honest reckoning, and I’d recommend a listen. We should learn from it and we should look for win-wins. This is largely what you, as a business leader, are paid to do. And as a strategy professor, helping leaders and managers identify and implement win-wins is what I am paid for.

And yet, there is an uncomfortable rub of Anderson’s success story: it is noteworthy because it is necessarily rare. For most firms, doing what is required to achieve 100% sustainability in our current regulatory contexts and competitive environments would be unprofitable. Given the path dependency of their investments and competencies, for most firms being deeply environmentally unsustainable may be their only path to the continued profitability that is demanded by the larger power and ownership systems that control them.

In some ways, stories like Anderson’s recall fairy tales: they inculcate us with the belief in the ultimate fairness of the universe, suggesting that we can do what is right and heroic, and that doing so will redound to our—and our companies’—benefit.

But this happy tale is, of course, at best only a half-truth. Justice does not reign. Children die of malaria, jerks get promoted, wealth and opportunity get unfairly distributed at birth, and billions of sentient beings suffer and die because we like how they taste. My salary comes from a business school which prides itself on its focus on sustainability but has its client-executives fly in by the thousands. Nearly all of us are morally compromised.

So why, then, do we collectively focus on these win-wins if they are the exception rather than the rule? First, there is an important social benefit to doing so: These stories provide role models for positive action and may inspire and motivate readers to reach for similar win-wins, which are so important for our collective future.

Secondly, these stories help meet a deep psychological need. Believing that the world is fair and tending toward progress simply feels good; looking too much at the uglier alternative risks a deeply depressing nihilism and defeatism.

For these reasons, I wouldn’t advocate eliminating exemplary business stories of doing well by doing good any more than I would advise raising our children on a diet of Nietzsche. Nonetheless, there are serious costs to focusing too much on the win-wins.

Moving from the land of win-wins to the land of hard choices 

Smart managers seek to identify and implement win-wins. This “land of win-wins” is all about novel business models, innovation and efficiency gains. As regulation, technology and the cultural zeitgeist all shift, this space is enlarging. This is a huge and exciting space, and we need to push it vigorously.  

Yet as leaders and humans, we also need to focus on the “land of hard choices”. This is an area of decision making filled with unavoidable trade-offs, where providing for one stakeholder can only come at the expense of another; it is the land of zero-sum pareto optimum distributions of resources.

Deciding how to distribute benefits is incredibly difficult because the best course of action is subjective, value-laden, and can feel arbitrary. Should we, for example, use more environmentally friendly mining practices at the expense of profits? How much should we pay workers, since it comes at the expense of customers and shareholders? Shall I fire this loyal employee because I can probably replace her with a better one? Just how much should my organization reduce its CO2 footprint? At what cost?

Rather than facing these difficult choices, we tend to retreat into the comforting delusion that there is always a win-win to be discovered. We can tell ourselves, “Reducing our CO2 footprint by 30% will eventually provide us with a better reputation and we’ll make more in the long term,” or “Our goal of 15% will allow us to make the higher profits today so that we can invest more thereby do more good in the long-term.” Such claims of eventual win-wins don’t stand up to even cursory analysis; it is often hand waving and magical thinking.

The costs of focusing on win-wins 

There is a collective societal cost of incessantly focusing on the win-wins. First, they distract us. By focusing on small and occasional environmental wins, we lose sight of the broader perspective that we are failing in the fight to save the planet.

Secondly, this focus on the exceptional win-wins deludes us into believing that we are, on the whole, on the right path and that more win-wins will get us out of this environmental mess. The win-win stories wrongly legitimate the larger systems that give rise to the environmental crisis we are in. If instead of focusing on the attractive but rare win-wins, we concentrate soberly on the environmental situation and study the political, social, and economic systems that have led to it, it is impossible to believe that the system that got us into this mess will get us out of it. The scale of the environmental challenge is not going to be met by a few more clever business models.

And thirdly, if we get personal, we will see that focusing on the win-wins also generates personal costs to us as leaders and as people. It infantilizes us. It distracts us from facing some unavoidable trade-offs and we don’t mature as leaders. This personal impact of an over-emphasis on win-wins will be the focus here.

factory polluting
“So, what are we to do, say, when our companies’ business models are unsustainable, and are inherently degrading the world that will be handed to the next generation? ”

Facing trade-offs honestly 

So, what are we to do, say, when our companies’ business models are unsustainable (as most of them are), and are inherently degrading the world that will be handed to the next generation?

Once we get past the illusion that there are always win-win alternatives to uncomfortable trade-offs, we will face three nested, profound sets of questions concerning our values, our roles, and our relationships to our companies. 

1.  Defining values 

First, ask yourself: What do I care about more? What are my priorities? As an example, do I keep a marginally performing direct report and friend on the team because I care about her welfare, or do I fire her because I care more about optimizing the team’s performance and how I look to my own boss?

This may be a profoundly difficult and uncomfortable choice. Your first instinct may be to console yourself with delusional win-win stories. If you decide to fire the person, you’ll try to convince yourself that this was the best thing for the individual, anyway, because she will be happier elsewhere. If you decide to keep the person, you’ll try to convince yourself that her performance will improve next quarter.

By reflecting more deeply on your personal values, you’ll feel more grounded and at ease with the choices you make.

2.  Defining and prioritizing roles 

A second common dodge away from facing responsibility for value-laden decisions is to try to externalize the choice to the role. For instance, if you choose to fire your colleague in the example above, you will probably tell yourself that your role as manager requires that you prioritize what is best for the firm. To do otherwise would be a violation of the responsibilities of the role.

But such aikido-like moves of dodging responsibility doesn’t hold up to scrutiny. Each of us carries many roles – manager, citizen, parent or friend – and each of these roles comes with its own priorities and values. We still bear the responsibility of choosing which role to prioritize.

Achieving a meta-perspective on our roles and determining how we prioritize and amalgamate across them can provide a more integrated sense of self and more aligned behavior.

3.  Determining our relationship to our companies 

And this takes us to another profound question: If we are trying to prioritize among the various roles we take, it is important to ask: “How do we view our relationship with, and responsibility toward, our companies?”

In many countries, the implicit social contract between employer and employee has been thinning over the past few decades. Does your company “care” about you beyond the net present value you provide to it? Will it replace you if your NPV turns negative?

Do we see ourselves as tools of the principles or owners of our firms, paid to serve their goals? Or, at the other extreme, do we see ourselves as autonomous agents trying to bend the organization to our own priorities, whether in terms of maximizing income or pushing the company toward lower profits in the interest of serving our external priorities, such as environmental protection? Reframing our relationship with our firm can have powerful ramifications for the choices we make and the meaning we find in our work. 

Heresy? Honesty? 

These are heretical musings. Taken seriously, they challenge the legitimacy of the broader socio-economic-political system. They also encourage us to face up to our own place and choices in this system and in our companies.

The business world is enamoured with win-win stories. They are inspiring and useful. But they too blithely suggest that the current political-social-economic system will generate the innovation necessary to get us out of the mess that it got us into. We lap up these win-win stories because they are unthreatening and reassuring. They falsely insinuate that we can avoid the hard choices we don’t want to face by finding clever solutions that benefit profits, people and planet.

And the truth is that we have permanent residence in the Land of Hard Choices. The leader who reaches retirement telling herself that she never made small and selfish or morally ambiguous choices is delusional. It is only by facing and wrestling with these morally weighty, unavoidable trade-offs that we determine our own true moral compass, without illusion, and honestly face up to our own true values and hypocrisies. One hopes that through this honesty comes a life more worth living.  

Authors

Michael Yaziji

Michael Yaziji

Michael Yaziji is an award-winning author whose work spans leadership and strategy. He is recognized as a world-leading expert on non-market strategy and NGO-corporate relations and has a particular interest in ethical questions facing business leaders. His research includes the world’s largest survey on psychological drivers, psychological safety, and organizational performance and explores how human biases and self-deception can impact decision making and how they can be mitigated.

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