eXampleCG Enabling Excellence Forum

Few companies are born with a broad-based commitment to sustainability. To develop one, companies need leadership commitment, an ability to engage with multiple stakeholders along the value chain, widespread employee engagement and disciplined mechanisms for execution.


Read more at http://www.exed.hbs.edu/assets/Documents/become-sustainable-company.pdf

Measuring the real cost of water

Big savings are available to companies that look beyond their utility bills and understand the broader economic costs of their water consumption.

March 2013 | byKimberly Henderson, Ken Somers, and Martin Stuchtey

The low nominal cost of water in many regions means that a lot of investments aimed at cutting its use don't seem to offer satisfactory returns. The picture may change when organizations take a broader view of water: as a "carrier" of production inputs and outputs to which a variety of costs and recoverable values can be assigned. Since these elements may total as much as 100 times the nominal cost of water, optimizing its use can yield significant financial returns.

One pulp-and-paper company analyzed its water-use costs as a carrier, including tariffs, charges to dispose of effluents, and water-pumping and heating expenses. It also examined the value of recoverable chemicals and raw materials "carried" by water from its factories and the potential heat energy lost in cooling processes. By closely surveying these operations, the company identified opportunities for better water storage and for reducing chemical use in paper bleaching. Additionally, the company recaptured heat from condensation processes and reduced the amount of steam consumed by boilers. These moves saved nearly 10 percent of measured carrier costs, reducing total operating expenses by 2.5 percent and improving sustainability by cutting water use nearly in half. Industries such as steel, packaged goods, chemicals, and pharmaceuticals have similar carrier cost-value profiles. Companies may be able to identify substantial savings by focusing on the broader economic costs of water.



About the authors

Kimberly Henderson is a consultant in McKinsey's Săo Paulo office, Ken Somers is a consultant in the Antwerp office, and Martin Stuchtey is a director in the Munich office.

This article is attributed to Mckinsey & Company

Increasing the ‘meaning quotient' of work

Through a few simple techniques, executives can boost workplace "MQ" and inspire employees to perform at their peak.

January 2013 | bySusie Cranston and Scott Keller

Musicians talk about being "in the groove," sportsmen about being "in the zone." Can employees in the workplace experience similar performance peaks and, if so, what can top management do to encourage the mental state that brings them about?

We've long been interested in work environments that inspire exceptional levels of energy, increase self-confidence, and boost individual productivity. When we ask leaders about the ingredient they think is most often missing for them and for their colleagues-and by implication is most difficult to provide-they almost invariably signal the same thing: a strong sense of meaning. By "meaning," we and they imply a feeling that what's happening really matters, that what's being done has not been done before or that it will make a difference to others.

The idea of meaning at work is not new. Indeed, two contributions to McKinsey Quarterly over the past year have highlighted this theme. In one, the authors demonstrate how misguided leaders often kill meaning in avoidable ways. The author of the other suggests that "meaning maker" is a critical role for corporate strategists. In this article, we will show from our research how meaning drives higher workplace productivity and explain what business leaders can do to create meaning.

Meaning and performance

The mental state that gives rise to great performance-in sports, business, or the arts-has been described in different ways. The psychologist Mihŕly Csěkszentmihŕlyi studied thousands of subjects, from sculptors to factory workers, and asked them to record their feelings at intervals throughout the working day. Csěkszentmihŕlyi came up with a concept we consider helpful. He observed that people fully employing their core capabilities to meet a goal or challenge created what he called "flow." More important, he found that individuals who frequently experienced it were more productive and derived greater satisfaction from their work than those who didn't. They set goals for themselves to increase their capabilities, thereby tapping into a seemingly limitless well of energy. And they expressed a willingness to repeat those activities in which they achieved flow even if they were not being paid to do so.

Athletes describe the same feeling as being in the zone. Bill Russell, a key player for the Boston Celtics during the period when they won 11 professional-basketball championships in 13 years, put it thus: "When it happened, I could feel my play rise to a new level. . . . It would surround not only me and the other Celtics, but also the players on the other team. . . . At that special level, all sorts of odd things happened. The game would be in the white heat of competition, and yet somehow I wouldn't feel competitive. . . . I'd be putting out the maximum effort . . . and yet I never felt the pain."

Flow sounds great in theory, but few business leaders have mastered the skill of generating it reliably in the workplace. An easy first step is to consider what creates flow in your own work situation-a question we have put directly to more than 5,000 executives during workshops we've conducted over the last decade. In this exercise, individuals initially think about their own personal peak performance with a team, when, in other words, they have come closest to the feelings Csěkszentmihŕlyi and Russell describe. Then they pinpoint the conditions that made this level of performance possible: what in the team environment was there more or less of than usual?

The remarkably consistent answers we've received fall into three categories. The first set includes elements such as role clarity, a clear understanding of objectives, and access to the knowledge and resources needed to get the job done. These are what one might term rational elements of a flow experience or, to use a convenient shorthand, its intellectual quotient (IQ). When the IQ of a work environment is low, the energy employees bring to the workplace is misdirected and often conflicting.

Another set of answers includes factors related to the quality of the interactions among those involved. Here, respondents often mention a baseline of trust and respect, constructive conflict, a sense of humor, a general feeling that "we're in this together," and the corresponding ability to collaborate effectively. These create an emotionally safe environment to pursue challenging goals or, to borrow from the writings of Daniel Goleman and others, an environment with a high emotional quotient (EQ). When the EQ of a workplace is lacking, employee energy dissipates in the form of office politics, ego management, and passive-aggressive avoidance of tough issues.

While IQ and EQ are absolutely necessary to create the conditions for peak performance, they are far from sufficient. The longest list of words we have compiled from executives' answers to our peak-performance question over the last ten years has little to do with either of these categories. This third one describes the peak-performance experience as involving high stakes; excitement; a challenge; and something that the individual feels matters, will make a difference, and hasn't been done before. We describe this third category as the meaning quotient (MQ) of work. When a business environment's MQ is low, employees put less energy into their work and see it as "just a job" that gives them little more than a paycheck.

The opportunity cost of the missing meaning is enormous. When we ask executives during the peak-performance exercise how much more productive they were at their peak than they were on average, for example, we get a range of answers, but the most common at senior levels is an increase of five times. Most report that they and their employees are in the zone at work less than 10 percent of the time, though some claim to experience these feelings as much as 50 percent of it. If employees working in a high-IQ, high-EQ, and high-MQ environment are five times more productive at their peak than they are on average, consider what even a relatively modest 20-percentage-point increase in peak time would yield in overall workplace productivity-it would almost double.

What's more, when we ask executives to locate the bottlenecks to peak performance in their organizations, more than 90 percent choose MQ-related issues. They point out that much of the IQ tool kit is readily observable and central to what's taught in business schools. The EQ tool kit, while "softer," is now relatively well understood following Goleman's popularization of the concept in the mid-1990s. The MQ tool kit is different.

What to do differently

Business leaders, we know from other sources, are striving hard to find the missing MQ ingredients so they can improve motivation and workforce productivity. Late last year, for example, a survey (conducted by The Conference Board and McKinsey) of more than 500 US-based HR executives identified employee engagement as one of the top five critical human-capital priorities facing organizations.

Management thinkers are also on the case. Gary Hamel urges modern managers to see themselves as "entrepreneurs of meaning." In The Progress Principle, Harvard Business School professor Teresa Amabile and her coauthor Steve Kramer present rigorous field research highlighting the enormous benefits that a sense of forward momentum can have for employees' "inner work life." Csěkszentmihŕlyi writes extensively about "the making of meaning" in his book Good Business.

In our experience, though, there's often a disconnect between the desire of practitioners to create meaning in the workplace, the good ideas emerging from cutting-edge research, and the number of specific, practical, and reliable tools that leaders know how to use. Often, platitudes about communication, quality feedback, job flexibility, and empowerment are used as substitutes for such tools. Much of this amounts to little more than advice about how to be a good manager. Inspirational visions, along the lines of Walt Disney's "make people happy" or Google's "organize the world's information," have little relevance if you produce ball bearings or garage doors.

In McKinsey's research, we've uncovered a set of specific, actionable techniques underpinned both by experience and a significant body of social-science work. The full tool kit can be found in Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage. The three examples described here are not only among the most counterintuitive (and therefore the most often overlooked) but also the most powerful.

Strategy #1: Tell five stories at once

We typically see organizational leaders tell two types of stories to inspire their teams. The first, the turnaround story, runs along the lines of "We're performing below industry standard and must change dramatically to survive-incremental change is not sufficient to attract investors to our underperforming company." The second, the good-to-great story, goes something like this: "We are capable of far more, given our assets, market position, skills, and loyal staff, and can become the undisputed leader in our industry for the foreseeable future."

The problem with both approaches is that the story centers on the company, and that will inspire some but by no means all employees. Our research shows that four other sources give individuals a sense of meaning, including their ability to have an impact on

society-for example, making a better society, building the community, or stewarding resources

the customer-for instance, making life easier and providing a superior service or product

the working team-for instance, a sense of belonging, a caring environment, or working together efficiently and effectively

themselves-examples include personal development, a higher paycheck or bonus, and a sense of empowerment

Surveys of hundreds of thousands of employees show that the split in most companies-regardless of management level, industry sector, or geography (developed or developing economies)-is roughly equal. It appears that these five sources are a universal human phenomenon.

The implication for leaders seeking to create high-MQ environments is that a turnaround or a good-to-great story will strike a motivational chord with only 20 percent of the workforce. The same goes for a "change the world" vision like those of Disney and Google or appeals to individuals on a personal level. The way to unleash MQ-related organizational energy is to tell all five stories at once.

A recent cost-reduction program at a large US financial-services company began with a rational-change story focused on the facts: expenses were growing faster than revenues. Three months into the program, it was clear that employee resistance was stymieing progress. The management team therefore worked together to recast the story to include elements related to society (more affordable housing), customers (increased simplicity and flexibility, fewer errors, more competitive prices), working teams (less duplication, more delegation, increased accountability, a faster pace), and individuals (bigger and more attractive jobs, a once-in-a-career opportunity to build turnaround skills, a great opportunity to "make your own" institution). The program was still what it was-a cost-reduction program-but the reasons it mattered were cast in far more meaningful terms.

Within a month, the share of employees reporting that they were motivated to drive the change program forward jumped to 57 percent, from 35 percent, according to the company's employee-morale pulse surveys. The program went on to exceed initial expectations, raising efficiency by 10 percent in the first year.

Strategy #2: Let employees ‘write their own lottery ticket'

The first strategy gives specific and practical guidance about how to tell the story. Yet the best meaning makers spend more time asking than telling.

In one of Daniel Kahneman's famous experiments, researchers ran a lottery with a twist. Half of the participants were randomly assigned a lottery ticket. The remaining half were given a blank piece of paper and asked to write down any number they pleased. Just before drawing the winning number, the researchers offered to buy back the tickets from their holders. The question they wanted to answer was how much more would you have to pay people who "wrote their own number" than people who received a number randomly. The rational answer should be no difference at all, since a lottery is pure chance, and therefore every ticket number, chosen or assigned, has the same odds of winning. A completely rational actor might even want to pay less for a freely chosen number, given the possibility of duplicate ones. The actual answer? Regardless of geography or demographics, researchers found they had to pay at least five times more to those who chose their own number.

This result reveals a truth about human nature: when we choose for ourselves, we are far more committed to the outcome-by a factor of at least five to one.

In business, of course, leaders can't just let everyone decide their own direction. But they can still apply the lessons of the lottery-ticket experiment. The head of financial services at one global bank we know first wrote down his change story, shared it with his team for feedback, and then in effect asked all individual team members to write their own lottery ticket: what change story, in each of the businesses, supported the wider message? His team members in turn wrote change stories, shared them with their teams, and the process continued all the way to the front line. Although this method took far longer than the traditional road-show approach, the return on commitment to the program was considered well worth the investment and an important reason the bank achieved roughly two times its revenue-per-banker-improvement targets.

Likewise, when Neville Isdell took charge at Coca-Cola, in 2004, he cocreated a turnaround strategy by bringing together his top 150 employees for three multiday "real work" sessions. The process was then cascaded further down into the organization, at small working meetings where participants could in effect write their own lottery ticket about the implications for their particular parts of the business. With hindsight, this process of creating and interactively cascading what became known as The Manifesto for Growth is seen as a pivotal intervention in a two-year turnaround in which the group stopped destroying shareholder value and generated returns of 20 percent, driven by volume increases equivalent to selling an extra 105 million bottles of Coke a day. In this period, staff turnover fell by 25 percent, and the company reported what external researchers called unprecedented increases in employee engagement for an organization of this size.

Leaders who need to give their employees more of a sense of direction can still leverage the lottery-ticket insight by augmenting their telling of the story with asking about the story. David Farr, chairman and CEO of Emerson Electric, for example, is known for asking virtually everyone he encounters in the organization four questions: (1) how do you make a difference? (testing for alignment with the company's direction); (2) what improvement idea are you working on? (emphasizing continuous improvement); (3) when did you last get coaching from your boss? (emphasizing the importance of people development); and (4) who is the enemy? (emphasizing the importance of "One Emerson" and no silos, as well as directing the staff's energy toward the external threat). The motivational effect of this approach has been widely noted by Emerson employees.

Strategy #3: Use small, unexpected rewards to motivate

US author Upton Sinclair once wrote, "It is difficult to get a man to understand something when his salary depends upon his not understanding it." The flip side, however, isn't true. When business objectives are linked to compensation, the motivation to drive for results is rarely enhanced meaningfully.

The reason is as practical as psychological. Most annual-compensation plans of executives are so full of key performance indicators that the weighting of any one objective becomes largely meaningless in the grand scheme of things. Furthermore, most compensation plans typically emphasize financial metrics whose results depend on myriad variables, many beyond individual control. On top of that, most companies don't have deep enough pockets to make compensation a significant driver of MQ in the workplace.

Leaders of organizations that successfully instill meaning understand the power of other methods. Terry Burnham and Jay Phelan's book, Mean Genes, describes an experiment in which 50 percent of a group of people using a photocopier found a dime in the coin-return slot. When all were asked to rate their satisfaction level, those who got the dime scored an average of 6.5 on a scale of 1 to 7, while those who didn't scored just 5.6. The lesson here is that when we aren't expecting a reward, even a small one can have a disproportionate effect on our state of mind. And that's also true of employees in the workplace.

At ANZ Bank, John McFarlane gave all employees a bottle of champagne for Christmas, with a card thanking them for their work on a major change program. The CEO of Wells Fargo, John Stumpf, marked the first anniversary of its change program by sending out personal thank-you notes to all the employees who had been involved, with specific messages related to the impact of their individual work. Indra Nooyi, CEO of PepsiCo, sends the spouses of her top team handwritten thank-you letters. After seeing the impact of her own success on her mother during a visit to India, she began sending letters to the parents of her top team, too.

Some managers might dismiss these as token gestures-but employees often tell us that the resulting boost in motivation and in connection to the leader and the company can last for months if not years. As Sam Walton, founder of Wal-Mart Stores, put it, "Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They're absolutely free-and worth a fortune."

Of the three Qs that characterize a workplace likely to generate flow and inspire peak performance, we frequently hear from business leaders that MQ is the hardest to get right. Given the size of the prize for injecting meaning into people's work lives, taking the time to implement strategies of the kind described here is surely among the most important investments a leader can make.

About the authors

Susie Cranston is a senior expert in McKinsey's San Francisco office, and Scott Keller is a director in the Southern California office.

This article is attributed to Mckinsey & Company

Getting Results From Your Social Networking Strategies

Social networks We're all getting reminded every day to take ownership of our digital brands and jump on social networks. For companies the pressure they put on themselves is enormous. So strong in fact that I've heard of CEOs monitoring follower counts on their corporate Twitter accounts a few times a day. It's no surprise that in the past six months there have been more companies joining Facebook, Friendfeed, and Twitter, starting executive blogs, podcasting and videocasting than ever before.

Many of these companies have no idea if these efforts are paying off or not. Some have no idea if they are actually helping their brands to be seen as more knowledgeable and trusted. Best case they are educating prospects and consumers, worst case they are quickly earning a reputation for spamming their followers. It's time for a reset of expectations on social networking strategies as a result. The initial excitement any company's marketing and PR departments generates by creating accounts and blogs quickly gives away to tracking popularity-based metrics instead of ones that can lead to long-term results. This is a major problem for companies attempting to get results from their social networking strategies today.

Social Networks Are Not a Popularity Contest

Unfortunately many companies including the CEO of one I know of check follower counts like other CEOs check their stock price - religiously and often. I've noticed this popularity contest mentality in companies I've been tracking for years as they venture into social networking. They get a Facebook fan page, Twitter account, YouTube Channel, LinkedIn account, get Wikipedia pages done, even a Flickr account, and maybe even have an executive blog or two set up. Once created all of these social networking accounts never gel together; they stay separate and often send confusing, even contradictory messages. It's easy to tell what's going on internally. Social networks are being evaluated only on one metric: popularity. The longer a company only relies on that single metric the longer the social networking efforts fail to deliver.

Making Social Networks Relevant To Strategies First

Conversely there are those companies who take a different approach to social networking and use its innate strengths to better communicate with and serve customers. They realize customers own the experience, a great point that Paul Greenberg makes in his latest book, CRM at the Speed of Light, 4th Edition. Paul does a great job of showing how companies who are getting the greatest value from participating in social networks are customer-driven. They create entire strategies based on the strengths social networks give them to connect with customers and aren't afraid to be accountable for their customer service performance. Paul's book is a great framework for learning how to transform your company using social networks to better connect with customers.

Making It Happen Now

After having read Paul's book and also from the observations of companies as they move into social networking, some attaining success while others struggle, the following lessons emerge:

Begin with the customer in mind first. If you are going to bring lasting change into your company where social media is concerned, this is the point to get really passionate about. Be strong and keep the customer at the center of every social networking strategy, because in the end, serving them is all that really matters.
Get your company to quit spinning its wheels on popularity metrics. Best case this is a measure of upper funnel marketing and PR performance or interest. Worst case it is a measure of how well you are imitating your competitors who may also be evaluating social networks on popularity-based metrics alone. This goes nowhere, get away from this metric and get more focused on how your strategies can be strengthened through social networks.

Accountability is King. You have to admire the courage of companies who have had problems with customer service in the past yet they get on social networks with the intention of being accountable. Transparent. Real. The buck stops with the managers who run these customer service accounts on Twitter Facebook and other apps. I suspect there are those B2B and B2C companies who lack the courage to do this, to be accountable for their customer service performance in real-time over social networks. Yet it is only a matter of time until one of their competitors decides to target their customer base with exceptional support, service and introductory offers, no doubt winning many over.

Drive and measure metrics by strategy not by social network. This mindset needs to dominate companies who are adopting social media. It is the only way to see if the investment is paying off or not. Measuring customer satisfaction by which support channels most contributed to its growth instantly shows the relative value of staffing Twitter and Facebook accounts with support specialists and managers for example. Using metrics to measure engagement and interest rather than just extrapolating click-based activity is a far better predictor of a sales lead. Segmenting audiences using social networking tools for list and audience management are far more effective in generating feedback on new product ideas than broadcasting it to an entire Twitter follower base. Define your strategic objectives for the year and then map in social networking strategies where they can make the most contribution. This is a great way to make sure social networking initiatives and strategies don't go off on their own tangent.

Staying ahead of the content curve by finding passionate contributors, using collaboration systems is critical. On social networks it's been shown time and again that you get what you give. When it comes to content, the fresher and more relevant, the more valuable entire marketing, selling and service strategies become. Consider using collaboration technologies internally to get all the relevant content in your company organized, and use unstructured data analysis tools to fully use this content as well.

Bottom line: Strengthening your marketing, PR, selling and customer service strategies with social networks deliver more measurable and relevant results than focusing on social networks alone.