• No results found

A key to the future

N/A
N/A
Protected

Academic year: 2021

Share "A key to the future "

Copied!
120
0
0

Bezig met laden.... (Bekijk nu de volledige tekst)

Hele tekst

(1)

A key to the future

Integrating sustainability into the corporate strategy

Author

Annemiek Kuipers 1145452

Supervisors RUG Dr. J.F.J Vos Dr. J.A. Neuijen Supervisor CSM M. Moerer June 2004

University of Groningen

Faculty of Management and Organization Major of International Business

(2)

Executive Summary

Sustainability is certainly one of the big issues of the 21st century. All over the world, the importance of an increased cooperation between companies and community is acknowledged. This is not only acknowledged by politicians and academics, but also by a growing number of company leaders. More and more company leaders are able to see the added value of integrating sustainability into their corporate strategy.

Also CSM became aware of the importance of sustainability. Therefore they stated to publish an internal report on the People and the Planet aspects of sustainability over the year 2003. A Steering Group was established to focus on sustainability and sustainability reporting. While focusing on integrating sustainability into the corporate strategy, CSM experienced difficulties such as limited commitment, cultural differences etcetera. Therefore, the objective of this research was to give recommendations on how sustainability can be integrated into the corporate strategy of CSM so that the above-mentioned difficulties can be solved.

In order to fulfill the objective of this research, the first aim was to answer the question of ‘why’

sustainability should be integrated into the company. Three important motivations were: to increase the possibility of long-term survival, to improve the reputation and to recruit and retain employees.

The second aim of this research was to answer the question of ‘how’ sustainability should be integrated. Therefore, a Case Study Analysis was conducted. This analysis focused on how other more experienced organizations in the area of sustainability have integrated sustainability into their corporate strategy. The selected companies were: Unilever, Nutreco, Nestlé and Danisco. These companies have all proved their experience in the area of sustainability. The Case Study consisted of a documentary analysis and an interview with the company involved. Both the formulation and the implementation of their motivation, mission, vision and their sustainability strategy were analyzed purposively and consciously.

The recommendations cover different areas. The criteria of a mission according to the Ashridge Mission Model are addressed. In the recommendations is stated that a mission should be linked with the corporate mission; and also with the purpose, values and behavioral standards of a company.

According to this research both a mission, as well as a vision with regard to sustainability is crucial if the aim of integrating is wanting to be achieved. A distinction is made on the basis of how companies aspire to integrate sustainability. Do companies see sustainability is a way of doing business, or more as next to doing business.

In the case studies most the companies have been selecting a top down approach for implementing sustainability, but the shadow side of this approach is a lack of commitment at lower level in the company. How can this be solved? An answer is provided in this research. Further the recommendation is to make a clear distinction between the different key areas; then management has to ask them self; what do we find important in our sustainability strategy. The commitment of top management is essential for implementing sustainability; this is how it seen by all the case studies included. The CEO needs to show adherence to the change that is necessary in order to integrate sustainability. If a company continuously states that they already are a “decent employer”, there is no foundation for change. Without any change, sustainability cannot be achieved. But how can sustainability be achieved then? If you want to know how, you can read the conclusion in Chapter 6. If you are still interested after reading the conclusion, then I would advice you to read the research report.

(3)

Acknowledgements

This research report is the result of a 6-month traineeship at CSM. When writing these acknowledgements, my thoughts go back to everything that I have experienced during this period.

Starting of course with the experience of working in a company; working days from 9 till 5, participating in meetings, writing an article about sustainability for the corporate magazine, having lunch with your colleagues, formal and informal conversations about work, this on itself was a learning experience for me. But besides this, there also were some experiences that were less self- evident: a research of the NMA, reorganization at headquarters and a business trip to Denmark. The total of all these experiences above, made me view my traineeship as a very interesting period.

Therefore …

I would like to thank Marjolein Moerer for giving me the opportunity to conduct my research at CSM.

It has been a very interesting experience to work for an international organization and to get grip on the way CSM deals with sustainability. In the beginning it was hard for me to find the balance between the theoretical side of doing research and the more practically oriented side. But in the end, I firmly believe that I learned the most of putting theory in practice. With the supervision of Marjolein Moerer, I found the balance between these two dimensions.

Then, I would like to thank my supervisors at the University of Groningen, Dr. J.F.J. Vos and Dr. J.A.

Neuijen for their time and valuable remarks regarding this research. Especially in the beginning of this research I was too ambitious; I tried to put three research questions into one, because so many ideas were haunting my mind. I would like to thank my supervisors especially for putting the brakes on my ideas without affecting my motivation to conduct this research.

Furthermore, I would like to thank the participating companies; Unilever, Nutreco, Nestlé and Danisco for their time and cooperation. Especially for their willingness to answer the infinite number of questions, even after the interview.

Finally, I would like to thank my father for his valuable remarks when I was writing this report. Then my mother for taking care of me when I was neglecting myself because I was so focused on writing this research report, and the rest of my family for just being my family. And, last but not least, Walter for being in Mexico; so I was able to fully concentrate myself on writing this report. But of course also for his valuable remarks during my research period!

Annemiek Kuipers

Diemen, 6 August 2004

(4)

Table of Contents

Executive Summary 2

Acknowledgements 3 List of Figures and Tables 7

Introduction 8

1 Research Design 9

1.1 Introduction 9

1.2 Introduction to the Problem 9

1.3 Preliminary Research 10

1.3.1 Step-by-step plan 10

1.3.2 Findings Interviews 11

1.3.3 Literature study findings 11

1.3.4 Conclusion preliminary research 13

1.4 Problem Statement 13

1.4.1 Research objective 14

1.4.2 Research question 14

1.4.3 Sub questions 14

1.5 Definitions 14

1.6 Restrictions and Basic Assumptions 15

1.6.1 Restrictions 15

1.6.2 Basic assumptions 16

1.7 Conceptual Model 16

1.8 Research Methods 19

1.8.1 Literature study 19

1.8.2 Motivation Research 19

1.8.3 Case study analysis 20

1.9 Research Model 21

1.10 Role of the Researcher 22

1.11 Conclusion Research Design 24

2 Description of CSM: Mission, Strategy and Structure 26

2.1 Introduction 26

2.2 The History of CSM 26

2.3 CSM Today 27

2.3.1 Short Profile 27

2.3.2 Mission 27

2.3.3 Strategy 29

2.3.4 Structure 30

2.4 Conclusion description CSM 31

3 Literature Study Sustainability 32

3.1 Introduction 32

3.2 Definitions of Sustainability 32

3.2.1 Selected definition for this research 34

(5)

3.3 History of Sustainability 34

3.4 Recent Developments 36

3.4.1 Global Reporting Initiative (GRI) and sustainability reporting 36

3.4.2 Reform of corporate governance 36

3.4.3 Financial markets’ interest in sustainability reporting 36

3.4.4 Strategic partnership 37

3.4.5 Growth of markets concerned with sustainability products and services 37

3.5 Forces towards Sustainability 37

3.5.1 External forces 38

3.5.2 Internal forces 39

3.5.3 Other forces of change 41

3.6 Motivations of Companies to focus on sustainability 42

3.7 Stakeholder Management 44

3.7.1 The shareholder value perspective 44

3.7.2 The stakeholder value perspective 44

3.7.3 Stakeholders 45

3.8 Sustainability Phase Model 45

3.9 Conclusion Literature Study 46

4 CSM and Sustainability: motivation, strategy and its position 48

4.1 Introduction 48

4.2 Motivation of CSM 48

4.2.1 Motivation Research 48

4.2.2 Discussion 49

4.3 Sustainability Strategy CSM 50

4.3.1 Introduction 50

4.3.2 Issues People and Planet 50

4.3.3 KPIs and the People and Planet questionnaires 51

4.3.4 TPM 52

4.3.5 Conclusion 52

4.4 Sustainability Phase Model 53

4.4.1 Introduction 53

4.4.2 The position of CSM in the Sustainability Phase Model 53 4.4.3 The aspired position of CSM in the Sustainability Phase Model 55

4.5 Conclusion of CSM and Sustainability 56

5 Case Study Analysis 57

5.1 Introduction 57

5.2 Methodology 57

5.2.1 Two phases 57

5.2.2 Choice of Cases 58

5.2.3 Analysis 58

5.3 Unilever 59

5.3.1 Company description 59

5.3.2 Motivation 59

5.3.3 Mission and vision 59

5.3.4 Environmental strategy 61

5.3. 5 Social strategy 63

5.3.6 Implementation 67

5.3.7 Summary sustainability strategy Unilever 69

5.4 Nutreco 70

5.4.1 Company description 70

5.4.2 Motivation 70

5.4.3 Mission and vision 70

5.4.4 Strategy for Sustainability 73

(6)

5.4.5 Implementation 79

5.4.6 Summary sustainability strategy Nutreco 80

5.5 Nestlé 81

5.5.1 Company description 81

5.5.2 Motivation 81

5.5.3 Mission and vision 81

5.5.4 Strategy for sustainability 83

5.5.5 Implementation 90

5.5.6 Summary sustainability strategy Nestlé 92

5.6 Danisco 92

5.6.1 Company description 92

5.6.2 Motivation 93

5.6.3 Mission and vision 93

5.6.4 Strategy for Sustainability 94

5.6.5 Implementation 99

5.6.6 Summary sustainability strategy Danisco 101

5.7 Conclusion Case Study Analysis 101

6 Conclusion Research 108

7 Recommendations 110

7.1 Introduction 110

7.2 Recommendations 110

7.3 Future research 111

7.4 Restrictions of the results 111

References 114

Glossary 118

Appendices Error! Bookmark not defined.

(7)

List of Figures and Tables

Figures

1.1 Step-by-step plan preliminary research 1.2 The Ashridge Mission Model

1.3 Conceptual Model 1.4 Research Model

1.5 Illustration of the researcher’s role on a directive and non-directive continuum 1.6 Typology of participant observation researcher roles by Gill and Johnson 4.1 The development of the People and Planet questionnaires

5.1 The impact of business on society 5.2 Organizational structure Unilever 2003 5.3 Corporate Credo Nutreco

5.4 The four pillars of NuTrace

5.5 Evaluation of Social & Environmental report 2002 of Nutreco 5.6 Organizational structure of Nutreco

5.7 The nine principles of the UN Global Compact 5.8 Overview sustainability issues Nestlé

5.9 Joint working group nestle and the International Federation of the Red Cross and Red Crescent Societies

5.10 The Nestlé environmental management system (NEMS) 5.11 Organizational structure Nestlé

5.12 Danisco’s corporate policy

5.13 Danisco’s four pillar approach to sustainability

5.14 Corporate Sustainable Development Structure Danisco 5.15 Organizational Structure Danisco

5.16 Sustainability Strategy Unilever (key-areas) 5.17 Sustainability Strategy Nestlé (key-areas) 5.18 Sustainability Strategy Nutreco (key-areas) 5.19 Sustainability Strategy Danisco (key-areas) 8.1 Two variants of doing business

8.2 The case studies measured against the extremes of “doing” business Tables

1.1 Relevant Situations for Different Research Strategies 3.1 Nike under pressure

3.2 Suggested extension of Bolwijn and Kumpe’s classification of 2000s 3.3 List motivations developed by 19 international companies

4.1 Top 10 motivations CSM 4.2 Top 5 motivations after labeling

4.3 Sustainability issues at corporate level CSM

5.1 Representatives that were interviewed for the Case Study Analysis 5.2 Overview motivation Case Study Analysis (internal/external) 5.3 Overview specified motivation Case Study Analysis

(8)

Introduction

We shall require a substantially new manner of thinking if mankind is to survive.

- Albert Einstein-

Communities of the future will be different from the ones we live in today. These communities will need to be different because, as we move further into the twenty-first century, a whole new set of social, economic, technological, and global forces are faced that are unlike those that brought us to where we are today. This will change the way as we live in our communities and, most critically, the way we develop them. At stake is the quality of life, not only for us but also for our children and grandchildren. Companies worldwide will need to understand these forces and to move one step ahead, using this knowledge to maximize development and to improve the places in which we live.

Sustainable development is nothing less than the key to the future. But what is the meaning of sustainable development? What are sustainable companies? How can sustainability be integrated into the strategy of companies? This research report will address these kinds of questions.

Companies worldwide are increasingly focused on doing business in a sustainable manner. But integrating sustainability in the business practices of a company is often being experienced as a search. This research report is about this search. The objective of this research was: to give recommendations on how sustainability can be integrated into the corporate strategy of CSM.

CSM has the aspiration to publish a sustainability report over the year 2004. A Steering Group Sustainability Reporting was constituted in order to fulfill this aspiration. This group experienced issues of different order on their way towards sustainability: how to set objectives, how to create commitment, how to take cultural differences into account etc. Therefore, the research question was focused on how to integrate sustainability. In order to answer this question, the research was divided in two parts. The first part was focused on the “why” of sustainability, and the second part on

“how”.

Why? In the first part, the motivation of CSM to focus on sustainability was traced down and discussed. Also their current position in the area of sustainability is discussed with the help of the Sustainability Phase Model. At the same time their future position in this model is discussed. How?

In order to answer the “how” question, the sustainability strategy of other, more experienced, companies was analyzed with the help of a Case Study Analysis. The included companies were:

Unilever, Nutreco, Nestlé and Danisco. A picture of their strategy was made on the basis of a documentary analysis and an interview.

The structure of this research report is as follows. In Chapter 1 the research design will be described, this chapter is consciously selected as the first chapter because the rest of the report is viewed from the daylight of the problem statement. Then, in Chapter 2 the mission, strategy and the structure of CSM are discussed with the aim of providing the reader with some background information of the company. Thereby, a general chapter is necessary in order to give recommendations that connect with the current mission, the current strategy and the current structure of CSM. Chapter 3 will provide the reader with some theoretical background of sustainability. This literature study is performed to serve as a basis for the rest of the research. In Chapter 4 the current activities of CSM in the areas of sustainability will be taken into account.

What is their position in this area? Chapter 5 consists of the Case Study Analysis; here the sustainability strategy of Unilever, Nutreco, Nestlé and Danisco will be described. Further in chapter 6 the conclusion of this report will be drawn. After this conclusion, the recommendations of this report will be given in chapter 7.

If a specific term or abbreviation is not understood and at the same time it looks a bit glossy, the explanation can be included in the glossary at the end of this research report.

- Enjoy reading -

(9)

1 Research Design

1.1 Introduction

In this chapter the problem statement of this research will be introduced. Also the process of defining a clear problem statement; the preliminary research, is described. Then the problem statement is split up into the objective of the research and the research question. Subsequently the sub questions are defined, just like the key words, the restrictions and the basic assumptions of this research. Then the development of the conceptual model, which will be used throughout this research, will be described. Subsequently the research methods as well as the research model will be taken into account, to show how the research was carried out. Finally, the role of me as a researcher will be described.

1.2 Introduction to the Problem

For introducing the problem, time has to be turned back to the foundation of the Steering Group Sustainability Reporting of CSM. In June 2002, this steering group was founded with the aim of integrating sustainability into the organization, and in addition with the aim of writing a sustainability report over the year 2004. But before publishing an external report over the year 2004, an internal report will be published over the year 2003 on “People” and “Planet”.

The above-mentioned steering group consists of 6 employees from corporate level. A member of the Board of Management and an external consultant is also included in this steering group. This group has set out different phases in order to fulfill their aim. These phases are:

1. Tracing down the sustainability issues at the divisions and the business units

2. The formulation of a strategy and determining the key-performance indicators (KPIs) 3. The organization of a monitoring system

4. The organization of a stakeholder management 5. Monitoring

At CSM the sustainability issues were traced down and also the related key-performance indicators were determined. At the moment, they are working on the organization of a monitoring system. The formulation of a strategy was deliberately postponed. They did not want to create expectations when there is no certainty that these expectations can be fulfilled.

When exploring the possibilities of monitoring, they came across several issues. The first one was:

how to create commitment towards sustainability in the entire company? The emphasis is laid especially on “entire”, because the different cultures within CSM have to be taken into account. The attitude towards sustainability is different in each country, but also in each division. Another issue mentioned by CSM was: how to accomplish an internal report that joins in with the entire company.

Can a diversified company like CSM develop a report that is being recognized by all their divisions and all their operating companies?

These issues were given as a research idea by CSM at first hand. However, it was still necessary to refine these in order to turn them into a research project. Some authors, for example Bennett, refer to this process as a preliminary research (Bennett, 1991:67). A preliminary research was necessary to gain a good understanding of the company and to clarify the existing issues, because these were still not completely clear. Many issues were mentioned but the underlying main issue, which will also be called the main problem, was not captured yet. Therefore, the purpose of this preliminary research was to gain a better understanding of the situation, in order to grasp this underlying problem on the base of which the problem statement can be defined.

(10)

1.3 Preliminary Research

In order to define a problem statement, which is based on the underlying problem, a preliminary research was needed. In this paragraph the step-by-step plan of this preliminary research will be given. Then the findings of the interviews will be described and analyzed with the support of literature. At the end of this paragraph the conclusion of the preliminary research will be described.

But first the step-by-step plan will be described.

1.3.1 Step-by-step plan

The several steps that were taken in the preliminary research will be set out here. A step-by-step plan is illustrated in figure 1.1.

The first step, the documentary analysis, was conducted to find out what CSM has already done in the area of sustainability. The minutes of the meetings of the Steering Group Sustainability Reporting were studied, just like the documents that were produced. In this analysis the information published on the Internet and the Intranet (OpenWorld), was also taken into account.

The documentary analysis provided the second step of the preliminary research; the interviews with the members of the steering group, with some input. The members of this steering group were interviewed because of their personal experience and knowledge about sustainability. The findings of these interviews are described in paragraph 1.2.2; this is the third step of the step-by-step plan.

The fourth step was to analyze the findings of the interviews with the support of literature; this analysis is described in paragraph 1.2.3. This analysis was performed in order to create a better understanding of the findings. On the basis of these findings and the literature study, the preliminary conclusion was drawn. In order to create support for the realization of this research, the preliminary conclusion was discussed during two meetings. The first meeting was with my supervisor and with

1. Documentary Analysis

2. Interviews Steering Group

3. Findings Interviews (1.3.2)

4. Literature Study Findings (1.3.3)

5. Preliminary Conclusion (1.3.4)

6. Discussion Conclusion (1.3.4)

7. Definitive Conclusion (1.3.4)

Fig. 1.1: Step-by-step plan preliminary research.

(11)

a member of the Board of Management, and the second one with the Steering Group Sustainability Reporting itself. Step 5, 6 and 7 are described in paragraph 1.2.4.

1.3.2 Findings Interviews

The interviews were used to explore the activities performed by the steering group and to discover potential bottlenecks in the project. The different subjects that were discussed in these interviews were:

- The objective of the steering group

- The motivation for starting with sustainability - The commitment towards sustainability - The progress of the steering group - The culture of CSM

The results came down to that part of the steering group was having the feeling that the objectives of the group in relation with sustainability were not made explicit. They stated that there are no clear objectives that point the group in a certain direction. There is no mission and there is no vision. Further, the motivation to focus on sustainability comes both from internal as well as from external, but the greater part stresses the external motivation as the mainspring for sustainability reporting. The expectation is that the commitment within the company is low, because until now not much is communicated about sustainability. Also the extent of commitment in the steering group itself is questionable; all the members have their own job and generally the accompanied responsibilities have priority.

When looking at the progress of the project, each member stated that the project has been developing slowly. The several causes that were brought up were: not enough direction is given, no sense of urgency, the divided responsibility and the cautious culture of CSM. These causes will be shortly analyzed in the following paragraph. During these interviews also the issue of how to deal with cultural differences came to the surface. Each country has its own norms and values, how should these be taken into account. For example, CSM wanted to know more about the age structure of the employees working at the company. They discovered that it is illegal in the United States to ask for the date of birth of employees, this falls under the law of discrimination.

1.3.3 Literature study findings

In this paragraph the causes for the slow progress of integrating sustainability into the corporate strategy; not enough direction is given, no sense of urgency, the divided responsibility and the cautious culture of CSM, will be taken into account. These causes were analyzed with the help of literature, this in order to improve the understanding of the findings.

One of the conclusions drawn from the preliminary research was that no objectives were set, and that both a mission as well as a vision for sustainability is missing. In general, the corporate mission plays three important roles for an organization (De Wit and Meyer, 1998: 812). Firstly the role of giving direction; a corporate mission can point the organization in a certain direction, by defining the limits within which strategic choices and actions must take place. The second one is the role of legitimization; the corporate mission can convey to all stakeholders inside and outside the organization that the organization is pursuing valuable activities in a proper way. The third one is the role of motivation; the corporate mission can go a step further than legitimization, by actually inspiring individuals to work together in a particular way. By specifying the fundamental principles driving organizational actions, an ‘esprit de corps’ can evolve, with the powerful capacity to motivate people over a longer period of time.

According to Hitt, Ireland and Hoskisson the strategic mission is a statement of a company’s unique purpose and the scope of its operations in products and market terms (Hitt, Ireland and Hoskisson, 2001: 27). A strategic mission flows from a strategic intent. A strategic intent is more internally focused whereas a strategic mission is more externally focused. Strategic intent is the leveraging of a company’s internal resources, capabilities and core competencies to accomplish the company’s

(12)

goals in the competitive environment. When established effectively, a strategic intent can cause people to perform in ways they never imagined possible (Sherman, 1995: 129-136). Strategic intent exists when all employees and levels of a firm are committed to the pursuit of a specific and significant performance criterion. Top executives develop their strategic orientation, based on the company’s strategic intent and mission; a predisposition to adopt a certain strategy or strategies over others (Rajagopalan, 1992: 761-785). Strategic orientation is also affected by the national culture in an executive’s home country and the institutional environment where the firm’s operations are located (Geletkanycz, 1997: 615-634).

A vision articulates a view of a realistic, credible, attractive future for the organization, a condition that is better in some important ways than what now exists (Campbell and Yeung, 1991: 16). A vision refers to a future state, whereas a mission refers to the present. When a vision is achieved, a new vision needs to be developed; a mission can remain the same. A vision is therefore more associated with a goal, whereas a mission is more associated with a way of behaving.

There are two concerns with a vision as a concept. First, a vision begins to lose its power when it is achieved. For example this can happen to companies that strive for market leadership: once achieved, the ambition that drove the company drains away. Second, if a vision is so ambitious that it is unlikely to be achieved in the next five or ten years it loses its power to motivate and stimulate (Campbell and Yeung, 1991: 17).

Wilson defines a vision as a coherent and powerful statement of what the business can and should be (ten) years hence (Wilson, 1992: 18). A vision must be coherent; integrating goals, strategies and action plans into a complete recognizable picture of the future company in its entirety. It must be powerful, to generate commitment and motivate performance. The definitions emphasizes what the business can be, because a vision must be realistic about the market, competitive, economic and regulatory conditions the company is likely to encounter. And finally, the vision must clarify what the business should be, because it should reflect the values and aspirations of management, employees and other stakeholders.

According to Wilson, a vision is needed because organizations live in uncertain times. In a more stable era, corporate direction is likely to be more continuous and incremental change may be acceptable. It is the uncertainty and volatility of the current business environment that makes for discontinuity in corporate direction, and demand radical rather than incremental change in strategy.

A vision is also needed as the integrating mechanism for the elements of strategic planning:

mission, philosophy, strategy, objectives and action plans. Finally, vision is needed as a force for empowering and implementation. Vision is linked to the dynamic power of leadership and plays a key role in implementation. Wilson stresses the fact that the development of a vision is divided in two parts. On the one hand the rational part, it is the product of analysis. But on the other hand the emotional part is just as important, the product of imagination and values.

After discussing the experienced lack of direction with the help of literature, time has come to look at another source for the slow progress of integrating sustainability into the corporate strategy of CSM: no sense of urgency. As discovered by managers all over the world, attempts to accomplish permanent change in the organization raises resistance (De Caluwé and Vermaak, 1999: 119). This appears to count for changes people value positively as well as negatively. A factor that contributes to this resistance is a missing sense of urgency, not the objective urgency but the perception of it from the persons involved. A high urgency can decrease the resistance to change and motivates to support change. A sense of urgency is in fact the urgency that a change is implemented in order to survive. If employees realize that the organization will be seriously damaged when the change is not implemented, the sense of urgency is high.

The third source that was seen as one of the sources for the slow progress of integrating sustainability was the divided responsibility. Divided responsibility is similar to the problem known as the many hands dilemma. The core of this problem is that different persons and functions in an organization share the responsibility of a certain action, while none of them separately can be criticized for the action (Jeurissen, 2000:31). In this way a vacuum of responsibility exists, with the

(13)

result that nobody is feeling responsible for the results on a more personal level. Connected to this lack of sense of responsibility is the problem discussed by Wilson appearing at change initiatives (Wilson, 2003: 10). According to Wilson, the problem with change programs is that employees get the message that they have a job to do but that they must also pay attention to the program. As a result, employees do not see the change as something integral to their day-to-day activity, but as something quite outside of it.

Another cause, which is partly responsible for the slow progress of the project, is the culture of CSM. The old sugar culture can be described as thoroughness, specialized and cautious. One side of this culture is the aim of doing it right the first time; CSM has a strong focus on providing stakeholders with reliable and high-quality information. The other side is that integrating sustainability, which is considered as a strategy on its own (see basis assumptions 1.3), is a time- consuming process.

1.3.4 Conclusion preliminary research

In the preceding paragraphs the first four steps of the step-by-step plan, see figure 1.1, were discussed. In this paragraph the last 3 steps will be discussed: the preliminary conclusion, the discussion and the definitive conclusion.

The preliminary conclusion was discussed during two meetings. The first discussion took place during a meeting together with my supervisor and a member of the Board of Management. In this meeting was concluded that the main problem was that a sense of direction is missing. When there is no mission, no vision and when there are no objectives regarding sustainability, setting up a policy is difficult or even impossible. If you don’t know where you are going, it is impossible to know how to get there. It is for this reason that a strategy regarding sustainability is missing up till today. CSM has deliberately postponed this phase of formulating a strategy. They did not want to create expectations when there is no certainty that these expectations can be fulfilled. CSM first wanted to orientate in this area of sustainability by tracing down the sustainability issues and the related KPIs. But now the phase of formulating a policy cannot be postponed, in order to provide the steering group with a sense of direction a strategy is needed.

The second time that the preliminary conclusion was discussed was during a meeting with the Steering Group Sustainability Reporting. The results were discussed once again and agreement existed upon the findings of the preliminary research and its conclusion: for the present there is no mission, no vision and there is no strategy regarding sustainability. After these discussions the preliminary conclusion turned into a definitive one.

Here the definitive conclusion will be shortly summarized again. The main issue is that CSM does not exactly know what the role of sustainability is or should be within the company. During the first contacts I had with CSM, the questions were focused on how to integrate sustainability into the corporate strategy: how to create commitment, how to write an internal social report? Less time was devoted to discuss the question of why sustainability should be integrated. What are the opportunities of sustainability? Or the threats? Should sustainability be integrated into the corporate strategy and to what extent should it be integrated? The next question to address then, after addressing the “why” question, was “how” sustainability should be integrated into the corporate strategy? In this research both the element of “why” and “how” to integrate sustainability within the organization will be included; there will be a special focus on culture. This because CSM experienced the cultural differences, especially between Europe and America, as a bottleneck in the process of integrating sustainability into the company. They would like to have more insight in what these cultural differences are.

1.4 Problem Statement

In this paragraph the problem statement of this research and the accompanying sub questions will be formulated. The problem statement consists of the objective and the main question of this research.

The objective will provide an answer to the question of what to achieve with the research, while the

(14)

main question indicates what kind of knowledge is necessary to achieve the objective of the research (Verschuren, 1986: 37). Subsequently, the main question will be worked out in several sub questions, which will function as a framework for this research.

1.4.1 Research objective

The main objective of this research is:

To give recommendations on how sustainability can be integrated into the corporate strategy of CSM.

This objective is realized by answering the research question in the following paragraph.

1.4.2 Research question The research question is:

How can sustainability be integrated into the corporate strategy of CSM?

This question will be answered by focusing on the sub questions; these are formulated in the following paragraph.

1.4.3 Sub questions

1. What are the motivations of CSM to focus on sustainability?

2. What is the strategy of CSM regarding sustainability?

3. What is the strategy of other, for CSM relevant, organizations in the area of sustainability and how do these organizations integrate this strategy?

4. What can be learned by CSM from the strategy of other, for CSM relevant, organizations in the area of sustainability and from the way this strategy is integrated?

The reason of why these four sub questions were developed will be shortly explained here. In the preliminary research two kinds of questions came to the surface. First, the ‘why’ question; why should sustainability be integrated into the corporate strategy? In order to answer the research question, I firmly believe that it is necessary to know why a company aspires to integrate sustainability. Therefore the first sub question is focused on the motivations of CSM. The second and the third sub question are focused on the ‘how’ question; how can sustainability be integrated into the corporate strategy. In the second sub question the current strategy of CSM will be taken into account. In order to give constructive recommendations it is necessary that the recommendations are connected with the current strategy. The third sub question is focused on the strategy for sustainability of other, more professional companies in the area of sustainability. The conceptual model that will be discussed later in this chapter, is developed in order to answer the third sub question. Then the fourth sub question is developed in order to couple back the gathered information of the first three sub questions towards CSM.

1.5 Definitions

A lack of definition often leads to an unfocused research, as different people employ the same term, but actually refer to different phenomena. To prevent this, the different key words used in the problem statement need to be explored and a common definition needs to be established. The terms sustainability, motivation, integration and strategy will therefore be defined here.

Sustainability

In advance of the Literature Study in Chapter 3, where several definitions of sustainability are investigated, the selected definition of sustainability for this research will be given here. The

(15)

definition that will be adhered throughout this research is one defined by Keijzer, Boons and Van Daal. In their eyes sustainability is the process in which organizations integrate social, environmental and economic aspects of their activities in a strategic way in their conduct of businesses. Why this definition is selected within this research is also explained in the Literature Study, see Chapter 3.2.

Motivation

Motivation is an internal state or condition (sometimes described as a need, desire, or want) that serves to activate or energize behavior and give it direction (Kleinginna, and Kleinginna, 1981:

286). Why this definition is selected within this research will be explained when discussing the motivations of companies to focus on sustainability in the Literature Study; Chapter 3.7.

Integration

In the strategy process that is described by Kenneth Andrews two phases are distinguished: the formulation of strategy and the implementation of strategy (De Witt and Meyer, 1998: 99). The meaning of integration throughout this research is: formulating and implementing a strategy that fits into the corporate strategy of the company.

Strategy

A strategy is the pattern of decisions in a company that determine and reveal its objectives, purposes, or goals. A pattern of decisions that produce the principle policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and non-economic contributions it intends to make to its shareholders, employees, customers and other stakeholders (Andrews, 1987).

1.6 Restrictions and Basic Assumptions

In this paragraph the restrictions of this research will be summarized one by one. Then the basic assumptions of this research will be described shortly.

1.6.1 Restrictions

Here, the restrictions are formulated in order to achieve the objective of fulfilling this research within the given time period of 6 months. These restrictions are:

- The actual formulation and implementation of the sustainability strategy will not be part of this research, the aim is to give recommendations on how to formulate and implement sustainability within the Corporate Strategy of CSM. The focus is laid more on the process than on the output of the process.

- The financial consequences of the integration of sustainability into the corporate strategy will not be taken into account in this research.

- The focus is especially on the social and the environmental aspects of sustainability, the economical aspects are not or just slightly taken into account. Topics like corporate governance, accounting principles and methods, investor relations, use of fiscal or tax structure, dividend payments are therefore not included when carrying out the Case Study Analysis.

- The research must fulfill the requirements that are formulated for a graduation report of the Faculty of Management & Organization of the University of Groningen and the requirements of CSM in Diemen.

- The results of this research should be known before the end of my graduate project, which is the 12th of July.

(16)

1.6.2 Basic assumptions

The basic assumptions that form the foundation of this research are:

- An organization has the possibility to adapt to changes in the environment - Sustainability requires a change in the way of doing business

- Sustainability is considered as a strategy 1.7 Conceptual Model

In the preliminary research it became clear that a mission regarding sustainability is not in place at CSM. The steering group stressed the need for a mission, which was for me the reason to gain more in-depth knowledge about this issue in general. What is a mission? What is the role of a mission? Is it necessary to have a mission? With the aim of answering these questions, I came across a lot of theory specifying how to formulate a mission, how to formulate a vision, how to formulate a strategy and how to implement a strategy. From this literature study a conceptual model was constructed, see figure 1.3. This model was used to answer the third sub question which is related to the ‘how’ question of this research; what is the strategy of other, for CSM relevant, organizations in the area of sustainability and how do these organizations integrate this strategy? With this conceptual model it was possible to gather information for the Case Study Analysis in a structured way. More specifically, this model was used to set up the interviews with the companies involved in this research. The interview scheme for these interviews can be found in Appendix I. More about how the conceptual model is used within this research can be found in Chapter 5, were the Case Study Analysis is described.

In this paragraph time will be devoted to explain the development of the conceptual model, see figure 1.3. This model can be divided in five parts; vision, mission, analysis of strategy, formulation of strategy and implementation of strategy. The mission part is based on the four different aspects of a mission according to the Ashridge Mission Model; purpose, values, behavior standards and strategy. Then the vision part is included which is more associated with the goal of the company in relation with sustainability, whereas a mission is more associated with a way of behaving. The vision has its influence on the formulation of the strategy for sustainability. Also included in this model is the strategy process, translated in the analysis-formulation-implementation distinction.

These parts will be more elaborately explained down here.

Vision

In paragraph 1.3.3 a vision is described as a view of a realistic, credible, attractive future for the organization; a condition that is better in some important ways than what now exists (Campbell and Yeung, 1991: 16). The vision part is included in this model because when a company aims to formulate a strategy for sustainability, it is necessary to know what the aspired future position is of the company.

Mission

By looking at the purpose of mission statements, it can be said that these are designed to fulfill three basic roles: the role of providing a sense of direction, the role of legitimization and the role of motivation (de Wit and Meyer, 1998: 812). ). Firstly the role of giving direction; a corporate mission can point the organization in a certain direction by defining the boundaries within which strategic choices and actions must take place. The second one is the role of legitimization; the corporate mission can convey to all stakeholders inside and outside the organization that the organization is pursuing valuable activities in a proper way. The third one is the role of motivation;

the corporate mission can go a step further than legitimization, by actually inspiring individuals to work together in a particular way. By specifying the fundamental principles driving organizational actions, an ‘esprit de corps’ can evolve, with the powerful capacity to motivate people over a longer period of time.

Campbell and Yeung stated that a mission is necessary within an organization. According to these authors it is possible to distinguish two schools of thought when the term mission is discussed. One

(17)

approach describes mission in terms of business strategy, while the other expresses mission in terms of philosophy. The first approach views mission primarily as a strategic tool, an intellectual discipline that defines the business’s commercial rationale and target market (De Wit and Meyer, 1998: 874). In contrast, the second approach argues that mission is the cultural ‘glue’ that enables an organization to function as a collective unity. This cultural glue consists of strong norms and values that influence the way in which people behave, how they work together and how they pursue the goals of the organization (De Wit and Meyer, 1998: 875). The first one involves more the minds of employees, while the second involves more the hearts of employees. Campbell and Yeung argue that effective missions are capable of winning the ‘hearts’ and the ‘minds’ of the organization’s members.

Ashridge Strategic Management Center’s founding director, Andrew Campbell, has spent much of his professional career studying mission statements. In fact, Campbell’s framework of four important mission statements dimensions has come to be known as the Ashridge Mission Model.

This model is illustrated in Figure 2.1, it is stated that a mission includes four dimensions: purpose, values, behavior standards and strategy (Campbell and Tawaday, 1990: viii). In this model, it is believed that when the four elements of a mission link tightly together and reinforce each other, a strong mission exists. Lee Wan Veer, director of the Ethics Resource Center (ERC), has said that:

‘ideally, the broader mission and purpose of the organization are translated into values, the values into codes of behavior, and the codes introduce policies and other performance expectations (Kinni, 2003: 3)’. This quotation corresponds with the vision of the Ashridge Mission Model.

In this research the corporate mission is regarded as the basic points of departure that sends the organization in a particular direction. The Ashridge Mission Model is adopted as part of the organizing framework for this research. This mission model is illustrated in figure 1.2. These basic points can be seen as referring to the dimensions of the Ashridge model; these elements encompass both the strategy and the culture aspects from Campbell and Yeung. The purpose of an organization is arguably the most important point of departure for strategy making, but also of influence are the values embodied in an organization’s culture (Collins and Porras, 1994: 56). The values shared by the organization’s members will shape what is seen as ethical behavior and moral responsibilities and therefore have an impact on strategic choices (Falsey, 1989: 32).

Campbell and Yeung noticed that managers at headquarters argued that although they can see the relevance and importance of mission thinking at operating level, they could see no value in it at headquarters level of a diversified company. A corporate mission is seen as an imposition, discouraging diverse business units from developing their own missions. But Campbell and Yeung considered that it is possible to have a headquarters mission and a set of diverse business unit missions. Mission can be seen in the same way as strategy. Because it is possible to have a corporate strategy and a different strategy for each business unit, it is possible to have a corporate

Purpose

Values Behavior Standards Strategy

‘Why the Company Exists’

‘What Senior Managers believe in’

‘The policies that guide how the company operates’

‘The commercial rationale’

Fig. 1.2: The Ashridge Mission Model (Campbell and Tawaday, 1990: viii)

(18)

Mission

Implementation of strategy

mission and a different mission for each business unit (Campbell and Yeung, 1991: 19). This subject of formulating sub missions, one for each division, is being discussed to show that it is a possibility when formulating a mission.

Strategy Process

The ‘mission’ part of the conceptual model was explained in more detail above. Subsequently, the strategy process (analysis-formulation-implementation) part will be discussed. The first question to ask then is: what is a strategy? According to Andrews a corporate strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principle policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and non-economic contributions it intends to make to its shareholders, employees, customers and communities (Andrews, 1987: 31).

Usually in a strategy process, a distinction is made between the strategy analysis phase, the strategy formulation phase and the strategy implementation phase (De Wit, and Meyer, 2000: 9). This distinction can also be recognized in the conceptual model above.

The distinction of the strategy process into a number of sequential phases is a simplification of this process. In reality the strategy process is more disordered; with analysis, formulation and implementation activities going on all the time, thoroughly interrelated with one another. In this view, organizations do not first make strategic plans and then execute them as intended. Rather, strategies are usually formed incrementally, as organizations think and act in small iterative steps, letting strategies emerge as they go along. Because sustainability is a relative new area in which organizations build their strategy, an incremental approach towards developing a strategy is chosen.

This approach is being expressed in the conceptual model by the ‘double’ arrows between the components of analysis, formulation and implementation.

Purpose

Values

Behavior Standards

Formulation Strategy

Pattern of purposes and policies defining the company and

its business

Identification of opportunities and risks

Identification of strengths and weaknesses

Personal values and aspirations of senior management

Acknowledgement of non-economic responsibility to society

Analysis of strategy

Organization structure Organization processes and behavior Top Leadership

Fig. 1.3: Conceptual Model

Vision

Referenties

GERELATEERDE DOCUMENTEN

Executive!Summary! !

and contracts that require cooperation among actors so as to rationalize resources). A response at the other end of the spectrum is strategic denial – operating by choosing

Revisiting the New Deal Organizations: Population Characteristics In this article, we explore whether the design factors identified by Lewis can explain the survival variance in

So, companies can achieve greater sustainability development with the help of the True Value methodology, because the company understands better how to use one ‘s resources to

Title The use of management control systems to integrate sustainability within corporate strategy: A multiple case study in the Dutch banking industry Author Paul

Explained in more detail, regression analysis helps to find out how the value of the dependent variable (in this case environmental innovativeness) changes when one of the

Therefore, it can be concluded that these findings are in line with and partially support the institutional theory of DiMaggio and Powell (1983). When considering the external

In line with this theory, empirical evidence has found significant results of the effect of celebrity endorsement on pro-social intention among young adolescents (Wheeler,