Impact Podcast | Can success and sustainability coexist?

KANINA BLANCHARD: Exclusive insights, actionable strategies, and ideas that ignite change. You're listening to the Ivey Impact Podcast from Ivey Business School.

JULIAN BIRKINSHAW:  Hello, I'm Julian Birkinshaw, Dean of the Ivey Business School. Welcome back to Dialogue with the Dean, a new series on the Ivey Impact Podcast, where I sit down with Ivey faculty to discuss their research perspectives on the challenges and opportunities facing business and society today.

On today's episode, we're addressing a universal challenge for business leaders: in a world dominated by quarterly targets and constant pressure for quick wins, how can businesses adopt a long-term strategy that strengthens their bottom line and makes a positive impact on society? To help answer this, I'm joined by Tima Bansal, a globally recognized leader in business sustainability. Tima is the founder and lab leader of Innovation North at Ivey, a professor of sustainability and strategy, and the driving force behind the Network for Business Sustainability and the Ivey Centre for Building Sustainable Value.

Welcome to Dialogue with the Dean, Tima.

TIMA BANSAL: Thanks, Julian. Good to be here.

JULIAN BIRKINSHAW: Thanks. So, I've known you for a long time; we met some 35 years ago. And I know that you were very early into the field that we now call “sustainability.” Just give us a little bit of a snippet of how you got into that work in the first place. I know you had a paper in the year 2000 called Why Do Companies Go Green? Just give us a bit of the background.

TIMA BANSAL:  So, as an economist by training – in fact, I did my master’s degree in economics here at Western – and as an economist going into business school, I thought, why would companies be environmentally responsible? Because they don't obviously make money; at that time, the dialogue was all around selling more stuff. So, when I did my doctoral work at the University of Oxford, I decided that I would look into why companies would go green. And so that was the basis of my first paper.

JULIAN BIRKINSHAW: And that is exactly the title of the paper. So, why do companies go green? And of course, the world's moved on since then. But at that point, why were companies going green?

TIMA BANSAL:  Well, the obvious reason is for the competitive advantage. So, they want to make more money, and sometimes they can't. So, if they have green products, for example, or if they turn off their lights and they're saving money, then they go, great. But then there's two other things that were really important. The second one was for institutional reasons. So institutional reasons means that the government is asking that of them, or sometimes communities ask them, social license to operate. The third one, maybe the most surprising, is that there's just someone in the organization that cares about this. And they care about it so much, so they just say, ‘this is what we're going to do.’ And so I call that the ethical reasons.

JULIAN BIRKINSHAW:  Right. It’s sort of a moral imperative. It's just the right thing to do. And back then, were those companies, so we say getting away with it? Meaning, were those individuals who were so keen on doing it for the right reasons, able to persuade others that that was an acceptable rationale?

TIMA BANSAL:  That's a really interesting question. I don't know if it was a matter of persuasion so much as it was a matter of conviction.

JULIAN BIRKINSHAW:  Yeah.

TIMA BANSAL:  And so, there's one company in particular, it was a food retailer, their name – I think it's fine to say that now – is Iceland. I don't even know if they're still around, but they went way above what others would be expected to do, what others were doing. And, when I had an article that was publishing in The Independent on Iceland, they told me that I could not publish their name.

And at that time, it was because they did not want to be seen as going outside of what's normal. So, it's interesting that when leaders went way above the norm, it was because they really believed it. Not because they got some benefit from it.

JULIAN BIRKINSHAW:  And they almost were explicitly saying, we don't want to make a big song and a dance out of this. We just want to do it because it's the right thing.

TIMA BANSAL: And it would bring attention to them. And they didn't want more attention because as soon as they get more attention, then they have to have more defense for what they are doing.

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JULIAN BIRKINSHAW:  I want to touch on a couple of your other papers. A recent paper you wrote was called What is Sustainability? And I kind of like that as a question because we get so confused between what sustainability versus corporate social responsibility means versus corporate purpose. Tell us what the big idea in that paper is.

TIMA BANSAL:  So, when I started my research, it was just on environmental responsibility. And I started that work in the early 1990’s. In 1987, the World Commission for Environment and Development came out with the definition of sustainability, which is meeting the needs of present generations without compromising the needs of future generations. And that was sustainable development. So, it wasn't very long before I transitioned from environmental responsibility to sustainability.

And that was purely intergenerational equity. And that's ensuring that today's generations get treated equitably and for future generations, we don't compromise their needs as well. It's different, though, from corporate social responsibility, which really started from an ethical frame as something that we need to do for society.

Sustainability is: if we consume all our resources today, we won't have resources for tomorrow. And so, sustainability has a much more analytical and science-based orientation, whereas responsibility has much more of an ethical orientation.

JULIAN BIRKINSHAW:  So, let's just dig a bit deeper into what that would then mean in practice. I think everyone can intuitively see that if we expend planetary resources today, we denude the planet for our children, and their children. So how do we then factor this into corporate decision making? What is your sort of implicit advice to companies about how they actually take this seriously?

TIMA BANSAL:  If one considers, as you said, the extraction of resources for the benefits today, then we will compromise the ability to meet the needs tomorrow. Then what we need to do is get companies to think more long term. So, it wasn't very long in my research career that I realized it's really about thinking more long term. It doesn't mean that you take short term out of view, but you can do both.

JULIAN BIRKINSHAW:  I mean, in simplistic terms, you could say, well, we should be creating ten, 20 year plans in terms of I'm making investments now and I'm kind of getting a payoff for them, five, ten, 20 years down the road. And arguably we do that in research and development anyway. I mean, a lot of research and development projects have that approach.

JULIAN BIRKINSHAW:  Can you give us a few more thoughts on how we might take this seriously as a company, other than just simply writing a long-term financial plan?

TIMA BANSAL:  I actually think that long term financial plans are really difficult to do. And, when I first started out, we used to use Toyota as an example, and they had a 100-year plan. Can you imagine a 100-year plan today?

So, we know that the world is changing, and we know that the world is changing really fast. So, if the world is changing really fast, how do you have this long-term plan? In fact, a year's plan can seem somewhat long nowadays. And so, what I think we need is much more of an orientation on purpose. And I know there's this whole purpose conversation that's going on as well. But if we understand that we are contributing to society in a certain way, that allows us to pivot as we need to in the short term, it will allow us to get to the place that we want in the long term.

Let me give you an example. You’re driving a car, where do you look? You look off in the distance, but you also look short term. You don't look somewhere in between.

JULIAN BIRKINSHAW:  So, and as you say, we talk a lot about the importance of purpose nowadays, about having a higher ambition, a sense of overall direction. And right now at Ivey, we're talking exactly about these issues, as it turns out. So why do more companies do that? I mean, it seems so, so blindingly obvious that it's almost not worth saying, except that it apparently is.

TIMA BANSAL:  And that's a great question. And part of the reason is because if you see a piece of cake, you know that you shouldn't be having the cake. But, you still eat the cake. At least I do.

So, I think that there's a lot of distractions in the marketplace that encourage firms to think short term. And so, if all your competitors are doing it, we tend to follow our competitors. Those that can stick their head above the parapet and say, we can do things differently, they're the ones that really have unique strategy, and they're able to execute over the long term and survive better in the long term.

JULIAN BIRKINSHAW:  Yeah, I think you start the paper with that example from Unilever, where – and this is a few years ago – but Paul Polman was the chief exec and he said we are no longer going to issue quarterly guidance to the markets, because we don't believe that that's actually in anybody's longer term interests. And the share price took a hit, as I recall, but fairly quickly recovered.

TIMA BANSAL:  Right. And he decided that he wasn't going to court hedge funds as well. And so that allowed him to also have that longer term perspective. So, he didn't feel the pressure.

JULIAN BIRKINSHAW:  Indeed. And just to stay with Unilever briefly, because it's such a well-known example. I mean, I think they did some terrific things when he was the chief executive, but it is also a fact that subsequently, Unilever's sort of started to unwind some of those purpose-driven activities. Any insights into why? Is it the case that perhaps he pushed it too far? Is it the case that the markets are kind of becoming a little bit more negative about companies that have higher purpose?

TIMA BANSAL:  Well, I think it'd be a mistake to disregard the anti-woke movement. And so, there's a lot of investors that are pushing against ESG, against diversity, inclusion. And so, I think that there are some companies that are pulling back from some of the investments. Having said that, I think that there is one clear evidence that ESG and DEI and other sustainability commitments reduce the risks that organizations confront.

So, I think that there's a whole lot of dialogue around this, but I think that a lot of companies really haven't pulled back from their policies. They pulled back from the discourse.

JULIAN BIRKINSHAW:  Yeah. I mean, for me, it's quite straightforward. I mean, in fact, the Ivey tagline purpose statement is inspiring leaders for a sustainable and prosperous world. Sustainable for all the reasons you've been talking about, and prosperous means commercially viable. And we can't choose between these things. I mean, if we go too far down either route, we get into trouble.

TIMA BANSAL:  And as a business school, as a university institution, I think it's really important for us to take a position that actually leads the way.

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JULIAN BIRKINSHAW:  I'm going to switch to a slightly different topic, but of course, it all links together because it's all part of your research in the round. And that is the concept of systems thinking. Now you should just explain to listeners what we mean by systems thinking. It's become a big part of your research and indeed some of your practical work we'll get to soon.

But just help us understand what systems thinking means.

TIMA BANSAL:  Yeah. And before I answer the question directly, let me tell you why I think it's so important for us to think in systems. There's two reasons. One is that the world is becoming more systemic. That means that we're becoming a lot more connected than we were before. There's not one product that's made in just a local place, other than possibly food.

So, everything has massively complex supply chains – we travel here and there. And then also, communications, where we’re just connected more than we ever were before. Yeah. And so, a system is the connections among things. And so, when everything is connected then there's feedback loops, interactions; when something happens here it changes something there. So, this is the butterfly effect right. The butterfly that flaps its wings causes a tornado in Brazil.

But that's one thing is that the world is becoming more systemic. But then the other thing is that sustainability is really about systems. And so, if we're looking at intergenerational equity, we have to understand how we ensure that resources are available for our future generations. Okay. So, if that's a systems thinking concept, what do we do? How do we actually think about this in our world, given that it's really hard to predict the future, right? We need a new way of thinking.

JULIAN BIRKINSHAW:  Got it. And just to make it practical for a second, before we go back to your particular method, so I know a lot of your work, for example, has been on the agricultural system in Canada – and that's, you know, a big part of the Canadian economy and feeding, feeding other parts of the world. Just help us understand through perhaps 1 or 2 of the examples that you've done, how a systems thinking perspective might help the players within the agricultural system?

TIMA BANSAL:  So maybe this isn’t a perfect example in terms of the agricultural system, but it's one that I think is really true core to our hearts in Southwestern Ontario right now. So Western Ontario is the most densely populated part of Canada, I believe. And so, what we end up doing is just urbanizing. So, we're building roads, we're building buildings, and that takes away all the natural resources that we have, right? So, for accommodating ourselves. But when we take away natural resources and replace it with an urban environment, it means that there's no place for water to run off. Now we have climate change, so we're seeing more flooding than ever before. If we had natural capital, then the plants and the ground would absorb the water. But now it floods, that takes down the infrastructure, we take out more infrastructure, it’s destroyed, we extract more resources. You can see that we end up with this vicious feedback loop. So now if we're thinking systemically, we would say we need some green land, and we need the developed plant and we integrate them together so that we combat and we contribute to a more resilient environment.

JULIAN BIRKINSHAW:  So, by seeing all these connections between these interdependent parts, we can make better decisions for the whole, rather than some sort of narrow part of that system?

TIMA BANSAL:  And I want to take that one step further, it is not just about government doing this or NGOs, I have a conviction that corporations do this. If we can get corporations to think much more systemically, then they as a corporation will not only do well for themselves, they'll do well for their community over the long term. So, they build resilience and they build sustainability.

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JULIAN BIRKINSHAW:  So, this is going to segue into one of your current initiatives, which you call Innovation North. And we actually had an event in late October, where we celebrated the five year anniversary of Innovation North's activities. And obviously, we're now moving it forward into a new form. Tell us a little bit about what that is, because as I understand it, you're trying to actually put your ideas into practice.

TIMA BANSAL:  So, Innovation North is a research practice initiative. So that's a fundamental belief that we need researchers, people in business schools, and other university disciplines to work much more closely with practice. Because if systems are so volatile as they are now, then we can't sit behind a computer and do our work. We need to be in the world working with managers, not only informing them, but they informing us of the issues. And Innovation North then says, let's imagine a future that is more resilient, sustainable, and prosperous. If we do imagine that future and we can work together to innovate for that future, then we will create the society that we want.

JULIAN BIRKINSHAW:  I very much like what you're doing here, and I think the idea that we have a sort of a fresh approach to innovation is powerful. A lot of listeners will have been trained in design thinking. Design thinking has become, you know, over the last 20 years, the sort of go-to methodology for consultants and indeed companies. We teach it at Ivey.

How is systems thinking different from design thinking?

TIMA BANSAL:  First of all, I think that design thinking has its place. And so, there's a very specific problem for a user, then I think that there's value to it. But a lot of problems that we have are actually complex problems. And if you just look at the user, you create unintended consequences.

So, how is systems thinking different from design thinking is that we do not look for a single set of steps that will solve the user's problem. What we do is we iterate through those steps multiple times, and then build an ecology of actions that will just nudge us forward, learn more about the system, and as we learn more about the system, we know what the next steps will be. So, systems thinking doesn't look for moonshots. It doesn't look for single answers. It looks for an ecology of actions that will nudge us forward right.

JULIAN BIRKINSHAW:  And at some point, you mentioned to me that this is almost the exact opposite of the Mark Zuckerberg move fast and break things.

TIMA BANSAL:  That's right.

JULIAN BIRKINSHAW:  Which, you know, is popular in Silicon Valley. You know, everyone's got their favorite examples of a Silicon Valley company that kind of blew up the system, created a solution, but without any thought about the kind of the consequences. And again, I think systems thinking seems to be an antidote to that.

TIMA BANSAL:  And that's a perfect example, because if you think of where we are right now, it's at the cusp of artificial intelligence, and we know that it can go in this place of great good so we can deal with issues of cancer or of climate change. Or, it can cause enormous imbalances and inequities in the world. And so, we have this fork in the road. And I believe that if we take a systems thinking approach to AI, we will get to the place that we want to get to. But if we take a breakthrough thinking approach to AI, it could very well be an existential threat.

JULIAN BIRKINSHAW:  So, you've given us a really good understanding of how to think about systems, but what are some of the tangible things people can do? Let's assume that people say, yes, I embrace the idea of systems thinking, what can they do? What are the things that they can actually do today, tomorrow to help them to take systems thinking seriously?

TIMA BANSAL:  A systems thinker, one: thinks about the whole the bigger picture before they think about the incremental parts. And so, one thing that a systems thinker would do was to think about where they want to be in the future and think about how they sit within that bigger picture. But secondly: then they have to know what the system is, and so they have to know how they sit within the system. And so that means that they have to talk to the people that they know, but they'll also talk to the people they don't often see. And so those could be people in the communities, it could be indigenous people, it could be marginalized people of all sorts, it could be the person who's picking up the waste that you never see. It’s when you talk to everybody in the organization, know how you sit within the larger system, that you get some of the best ideas.

JULIAN BIRKINSHAW:  Which of course is harder work. I mean, you've got to be prepared to talk, as you say, widely to people that you often wouldn't. But you're saying that is the best way of understanding what your next actual steps would be, having talked to people in that system?

TIMA BANSAL:  Harder work, possibly. I think that it's important work because that avoids the risks. So, what you do is you end up making investments that matter, as opposed to just making investments that make you believe you're moving forward.

JULIAN BIRKINSHAW:  I'm going to wrap up wrap up the conversation here, but I want one more thought from you because we've talked about Innovation North as your most recent initiative within Ivey that have tried to put your ideas into practice. And there's a few earlier ones you've done as well, which we haven't even talked about. But, what's the future of innovation North? What would you like to see this become as we, Ivey, try to make sure that we make our research as practical and as influential and impactful as possible.

TIMA BANSAL:  That's a fabulous question. So, what's the North Star for Innovation North? And I am really excited about business schools, Ivey specifically, working with corporations to tackle complex challenges like every corporation has one. For example, Walmart has to deal with product returns. How do they deal with them? Because product returns are bad for Walmart because they lose profits. They're bad for the environment because too many of them end up in landfill. They're bad for the customer because the customer doesn't get what they want.

And so ultimately, many corporate problems are complex challenges. I can imagine Innovation North actually tackling these problems, challenges with corporations and making forward movement. And we do that with having academics working with executives, having students involved with the challenges as well. And so, we are working together to get us to the place that we want to get to. We don't sit in silos anymore.

JULIAN BIRKINSHAW:  And I do like this principle because so often business schools have kept their research and their teaching and their consulting activities completely separate. And you're trying to say, you know, what would it look like if we brought these things together? Now, it does take, of course, companies to be a little bit more thoughtful about how they tackle these problems rather than just looking for the quick fix ups.

TIMA BANSAL:  I'm not sure that this is any worse than the quick fix. In fact, I would argue that's better. And that's because when you work with people who think differently than you do, which researchers tend to do, then we come up with innovative solutions together. So why wouldn't we want to have the two communities, academia and executives, work together?

JULIAN BIRKINSHAW:  You've given us some really neat ideas, not just about what your research has covered, but what Ivey, and indeed other business schools, can do to make ourselves much more effective at working with companies rather than just studying them. Thank you so much for your time.

TIMA BANSAL:  Thank you, Julian. This has been delightful.

JULIAN BIRKINSHAW:  This has been Dialogue with the Dean from Ivey Business School. Thank you to my guest Tima Bansal, founder and lab leader of Innovation North, Powered by Ivey, for joining me today. And of course, thank you to our listeners for tuning in.

On our next episode, Ivey Marketing Professor, June Cotte joins me in the studio to discuss her latest research that uncovers how simple shifts in messaging can help equalize funding for female and male entrepreneurs.

Until next time, goodbye.

KANINA BLANCHARD  This was Dialogue with the Dean, an Ivey Impact Podcast series. For more insights from Ivey, including thought leadership on critical issues and additional podcast episodes, visit IveyImpact.ca or subscribe on your preferred podcast platform. Thanks for tuning in!