With global issues quickly multiplying, old corporate mindsets and ways of working are proving to be a destructive force that cripple societal progress and impact business. Here’s how risk-based thinking can be a positive force for society and work to your business advantage at the same time.

By Nicolas Bahr,
Global Managing Director for Operational Risk Management, dss⁺

“May you live in interesting times.” This infamous aphorism has been described as a blessing and a curse, but there’s no denying that we are certainly facing not just interesting times, but a crucial point in history.

Consider just a few recent events: last year a climate model by the World Bank predicted that by 2050, 216 million people will be forced to flee their country due to the climate crisis. In 2013, the first lab-grown burger cost US$280,000. Today it competes with big brand fast food on price — as it must if we’re going to address the carbon footprint of the meat industry.

Bettering society and improving business are not mutually exclusive. But we have to ask ourselves: are we predicting and managing unforeseen risks and opportunities such as these? Do we adequately understand and mitigate existential threats? How do we build a better world where we don’t just survive, we thrive?

The point is that change is happening fast, and cataclysmic events are far from rare. Exciting but unpredictable new technologies and accelerated climate change are throttling the engine for both opportunities and challenges. With volatility having such deep and lasting effects on society, the business world cannot be in the backseat. We urgently need to drive positive change, not simply react to it (or worse, ignore it.)

This is the 21^st century inflection point, a time when choices that governments and business make have monumental knock-on effects. So it’s high time to ask ourselves: how should we think about these challenges and what is a pragmatic way of working in this new world?

Key new approaches for a new world

Don’t be so focused on the present that you ignore the future

Short-term thinking is a luxury that we can no longer afford. Organisations of all sizes and sectors need to act quickly to survive, power productivity and protect the planet.

We understand that continuity makes business leaders feel safe; they became successful by doing things a certain way, so they feel confident maintaining the status quo. But these days, this can be dangerous. The phrase business-as-usual should no longer be a comfort, but a sign of alarming carelessness.

Take just-in-time manufacturing. Producing stock to meet demand has saved companies mountains of money, raised prices and helped make the global supply chain into the behemoth we know it to be. Efficiencies were being found everywhere. “Lean” became synonymous with successful.

And then COVID hit. Supply chains rasped to a halt. Business interruptions mushroomed. But it hasn’t been just COVID causing supply chain interruptions. Subsequently, in early 2021, a stranded container ship shut down the Suez Canal, holding up some US$9.6 billion dollars of goods each day. Recently, the blockages caused by anti-vaccine requirement protests in Canada cost the global automotive industry US$300 million. In this particular moment, just-in-time manufacturing is now more of a curse than a blessing.

Those who addressed their risks by changing course have avoided these headaches. Kellogg’s, for example, gained market share by addressing their supply chain issues quickly. During COVID, their demand came not from schools and restaurants who buy in bulk, but individual consumers at home. Their need for more packaging exploded. In Korea, their shipment of paperboard was severely delayed, so they scoured their region for new suppliers, finding one in New Zealand. They then took broader action, diversifying their supply chain and sourcing locally to a much higher degree. As a bonus, this evolution has even deflated their carbon footprint and lowered transport costs.

You too can prepare for the chaos of the future now. But resilience does not bloom out of nowhere. It is earned. The ability to problem-solve is what creates your resilience. By understanding the risks that your company faces — from input to output, from without and within — you can mitigate risks well before they manifest. Raise your eyes from from the short- or medium-term spreadsheets; instead, look to the broader future — because it’s coming faster than you think. For example, think about how climate change will affect your assets in a decade or two. Up-front preparation for different long-term scenarios will mean you don’t get caught out.

Strengthen your values and purpose — and mean it

These days, many companies are focused on creating and articulating strong purpose statements. That should be applauded: in many cases it has helped to rally employees behind company strategy and improve recruitment and retention.

But if your purpose is perceived simply as a marketing ploy and not demonstrated, trust from employees and customers will erode. What’s worse, an even greater threat may manifest.

Values are not just expectations, but guides for how to behave. These days, employees are faced with unknown risks, with often ambiguous or incomplete data, and looming pressure to take action quickly. If they don’t feel a connection to the purpose and values of the company, they have no guide except their own guesswork or ambition.

Take this scenario: safety is a stated core value at your company. This is important, as you run a high hazard operation that uses some highly corrosive chemicals. During routine maintenance, a member of your team notices some damage on a key piece of equipment. He suspects that this could be sign of further corrosion in the piping, and potentially other equipment. Your operations director knows that she must shut down the plant. But does she shut down just long enough to replace that one piece of equipment, or for an indefinite amount of time to conduct a full inspection? How does she decide whether to prioritise production output or the integrity of the operation, and thus the lives of employees? Her choice will be dictated by the degree to which your company spotlights and stands behind its core values.

Make global challenges your business, literally

Some companies go even bigger — they make saving the world their business. At a time when we face complex global challenges, such bold moves will become ever more common.

Take Royal DSM. They began as a coal mining company and later moved into chemicals. Their acronym reflected this — Dutch State Mines — that is, until they reinvented it. They now define DSM as “Doing Something More”. And that, they have. They created Brighter Living Solutions — products that boast a better environmental and social impact than mainstream products. In 2020, the products accounted for 63% of their revenue.

Then there’s Ørsted. They started as a Danish state-owned oil and natural gas company, and in the early 2000s, they entered the power and electricity game, merging with five Danish energy companies They became one of the most fossil fuel intensive companies in Europe, with 85% of energy generation coming from fossil fuels, mainly coal.

And then they did an about-face. They invested heavily in renewable energy and have slashed their carbon footprint by 86% since 2006. They are now the largest offshore wind company in the world with 25% market share, and are on track to being carbon neutral in generation and operations by 2025. They’ve also been labeled the world’s most sustainable energy company.

They are not alone. Companies like Patagonia are transforming the fashion industry, with 69% of their products composed of recycled materials. They’ve experienced growth of at least 10% YoY from 2016-2019 as a result. Similarly, by offering plant-based meat alternatives, Beyond Meat grew from a USD$16 million business in 2016 to a USD $406.8 million business in 2020.

Such transformation is not abrupt; it is the culmination of multiple, measured decisions that thoroughly flesh out potential opportunities and associated risks. With each step, the risk profile and risk landscape evolve. Let’s take another look at Ørsted: they conducted a detailed TCFD gap analysis which, among other things, helped them to identify climate-related risks and opportunities over the short, medium and long-term, and calculate how they would impact their business. This helped them to validate the resilience of their corporate strategy. In the coming years, more companies will embrace disruptive business models that tap into the ever-growing market for sustainable products. These companies are not just experts at innovation and vision, but also masters of risk management.

Think of our global challenges as a linked ecosystem

Now more than ever, the world faces problems that can feel unwinnable. Take the pollution crisis in our waters. Eight million pieces of plastic end up in our oceans each day. Trash is so pervasive that when an explorer made the world’s deepest underwater dive in 2019, he found the ocean floor, seven kilometres beneath the water, covered in plastic waste.

But even the most intimidating of problems can be solved. From breeding plastic-eating bacteria to trawler ships that scoop up nine tonnes of waste at a time, innovators are tackling the trash problem. Each solution addresses the same problem from a different angle, and thus holistically.

Elsewhere, inaction within major economies and stalled climate change talks has made the goal of climate neutrality seem impossible. But now a new sense of hope is emerging, especially in the private sector. ESG and sustainability are now major factors in investment decisions. Industries like mining are rapidly divesting from coal, and shifting focus to minerals that power the batteries and solar panels so critical to the energy transition. New technologies and the application of circularity principles allow companies to axe waste from their operations. Green hydrogen is on the horizon.

There’s still work to be done, but when considered alongside other positive developments, like shifting consumer behaviour — one in three are willing to pay a premium for sustainable products or services — it appears that the tides are changing.

So what does this mean for you and your company? Expand your thinking: zoom out to understand how you can contribute to addressing societal challenges, and zoom in to identify specific sustainability risks and opportunity in your operations that could affect the system. Doing so will allow you to improve your positive impact on society in a more rounded manner. Bring your risk experts into the discussion — holistic thinking is their specialty, after all.

Purpose-driven, not as individuals but as a collective organisation. Powered by technology yet not ruled by it. Curious about weakness so it can be mined for strength. Today’s key leadership qualities let you find strength by upending old mindsets and behaviours.

By Alyson Brandt,
Global Learning &Development Director, dss⁺

Leadership is a loaded word — one with ever-changing meaning. Once upon a time, it meant that decisions and power flowed one way only: from the top down. At dss⁺, we know leadership needs to be different.

It’s never been more vital for leadership to be spread throughout an organisation; to be thought of as a trait, not a title. Why? Because the right leadership culture radiates throughout the organisation, creating the context for positive transformation. For example, ensuring safety and quality are embedded, not relegated into a buzzword. Or that diversity and equality become characteristic of your organisation, driving innovation, not unrealistic targets that are “nice to have”. In short, modern leadership is a lever that helps you mobilise your organisation to become more resilient and make a greater impact. Without it you stagnate, and employees, investors and consumers will gladly work with a competitor who is doing everything you’re not.

So how can you make strong leadership happen? Cascade it throughout the organisation. Empowered frontline employees and middle management are critical for firing up cultural and process change, ensuring that theoretical strategies become concrete, daily realities. Higher-ups might set the vision and mission, but middle management ensure it comes to life, teams are motivated and that workplaces cultivate the right behaviours. Best of all, your middle management today becomes the C-suite of tomorrow, carrying these new battle-tested leadership skills to the top.

For leaders of all levels, it’s worth regularly self-assessing how you define strong leadership — and what you’re doing to make it happen. Here’s our take on how to lead with success.

Leaders who believe in the lone wolf in a dog-eat-dog world will find themselves on the wrong side of history. At a time when where we are all facing new challenges coming at breakneck pace, we need to be continuous learners and play well with others, embracing both their strengths and imperfections. This is far easier than trying to be a self-appointed Alpha Leader who is never wrong.

According to the Society for Human Resource Management, 84% of American workers say poor or badly trained managers cause their teams unnecessary stress. To that end, today’s true leaders realise that their actions don’t exist in a vacuum. With increasingly interconnected but fragile systems, the choices that large organisations make can result in a dangerous butterfly effect. Or a beneficial one: sourcing a new supplier for a raw material? Make it sustainable, and you can empower a community, and protect an ecosystem, on the other side of the world. That power is worth bearing in mind.

Automation, big data, 5G. These shiny toys can improve processes, but they can’t make better leaders, or build effective and ethical teams. In a world of increasing technological prevalence warmth, empathy and patience are more key than ever. That’s the acid test, because in a world where burnout is endemic (a 2021 Microsoft survey found that 41% of workers globally were considering quitting or moving jobs), you need to keep your talent engaged. If not, constant churn will mean even with the best intentions, your culture won’t be able to take hold or sustain.

Tech-powered processes can also, if not properly policed, increase pressure on your workforce to be ever more productive but often at the expense of safety or physical and mental health. A good leader will ensure that empathy and innovation go hand in hand.

Now more than ever, data lets us learn about our challenges and blind spots. To constantly reassess: what guidance or action does my team need right now?

That advice is backed up by our 2021 Operational Risk Management survey, which underscores the need to understand your organisation’s risk tolerance and weaknesses through data. But your tools can only do so much. The rise of big data will certainly help companies, but it is up to people to review, analyse and act based on the data. If you’ve got enough humility to let that information help you improve, the rewards speak for themselves.

Take diversity: crafting a workplace where everyone feels included and empowered is a key goal for all organisations. Data could help you check if you’re hitting the mark, and frequent “pulse checks” with employees can capture whether they really feel accepted and valued. In short, tech tools can give you amazing answers, but only if you ask the right questions.

A good mission statement crystallises your commercial purpose. A great one folds in something deeper: the qualities you stand for, and how that comes to life not just for customers but your employees. Want to ensure that mission statement passes the acid test? Crowdsource. Let team members at all levels have a say in crafting it.

Upskilling your teams is a task many organisations face. But how do you make sure those teams care? Internal education programmes are only worthwhile if they are met by a willingness to learn. That comes with a clear value proposition of ‘why these skills are useful to you’ and a culture that values learning. So, frame your programmes as vital knowledge in a changing world, rather than a compliance activity.

Designing relevant and engaging training is essential to creating new capabilities, and compelling people to change. Learning happens best by acting and reflecting; by engaging with others, and applying knowledge to real situations. A leader’s role requires modeling, reinforcing and coaching to create a safe learning environment. Engaging with your team to understand their development needs will lead to more relevant investments of time, and a stronger commitment to change and impact.

Journalist and author George Orwell wrote that “Good prose is a window pane” — in short, it should be transparent. The same is true of leadership.

Leaders should be open and clear not just in what they communicate, but how. Want some examples? Don’t try to camouflage your mistakes with meandering messaging. Speak like a person, not a press release. Own your errors. Share your strategy and processes so that if difficult decisions do have to be made, your employees and customers know why.

Today’s challenges are global, deeply complex and aggressively high stakes. As such, they require collaborative change and resiliency. It is only by inspiring and mobilising the collective organisation with our best qualities — openness, honesty, ingenuity and more — that these challenges can be overcome.

Start making those things happen, and you’re on the path to becoming a truly modern leader.

Listen to two sustainability leaders at dss⁺ discuss the opportunities companies have to make a positive impact on people and the planet.

Good things happen when rich scientific capabilities meet decades of industrial expertise. Melissa Barrett, our Global Sustainability Services & Corporate Impact Director, chats with David Rochat, EMEA Leader Sustainability Services about what makes the dss⁺ vision unique.