The Breakthrough Challenge

10 Ways to Connect Today's Profits With Tomorrow's Bottom Line

John Elkington, Jochen Zeitz

• Publisher: Jossey-Bass
• Year: 2014
• ISBN:
  9781118923931
• Edition: 1
• Topic: Business
• Subtopic: Business generale
• Index: Business

The world's most forward-looking CEOs recognize the real challenge facing business today: a fundamental shift in the nature of commerce. While sustainability programs, government action, and nonprofits are all parts of the solution, CEOs and other leaders must focus on social, environmental, and economic benefit—not only because it will make the world a better place, but because it will ensure lasting profitability and success in the business climate of tomorrow.

The Breakthrough Challenge is both an inspiring call-to-action and a guide for this transformation, based on the work of The B Team, a major initiative uniting leaders in sustainability. As a founding advisor and member of The B Team, John Elkington and Jochen Zeitz map out an agenda for change. The most important goal for businesses must be redefining the bottom line to account for true long-term costs throughout the supply chain. To achieve this, leaders must rethink everything: what counts on balance sheets, how to incentivize performance, who does what in the C-suite, and even what inspires us. The Breakthrough Challenge draws on over 100 exclusive interviews to show this shift in action, sharing the pioneering work of leaders such as Paul Polman, CEO of Unilever; Arianna Huffington, founder and CEO of The Huffington Post; Peter Brabeck-Letmathe, chairman of the Nestlé Group; and Linda Fisher, pioneering Chief Sustainability Officer at DuPont, among many others.

Change-as-usual strategies are not enough to move business from breakdowns to breakthroughs. The Breakthrough Challenge shows leaders how to achieve a true transformation and refocus the definition of profitability on the lasting wellbeing of people and planet—for the lasting success of their business.

Chapter 1
Adopt the Right Aspirations

“We are the leaders we have been waiting for,” insisted a McKinsey & Company director in a recent report viewing California's future through a triple-bottom-line lens.¹

That remains to be seen, but both he and the other five hundred or so economic leaders who attended the 2013 California Economic Summit, on which that report was based, understand that nowadays there is not just one California, but at least two: one coastal and fairly wealthy, one inland and poorer. As elsewhere around the globe, there are worlds of haves and of have-nots. Now, for better or worse, like it or not, transformational change is coming. “Our job as leaders,” explained Gavin Newsom, lieutenant-governor of California and former mayor of San Francisco, “is to create the right conditions where success is irresistible.”

Easier said than done. However, as we work toward a new economic order, breakthrough leaders are at last signaling that the old order is broken—unsustainable. Wherever and however their journeys started, they bring new thinking and new aspirations that push well beyond current profitability calculations to blaze a new path toward solutions that also serve the wider interests of people and the planet. They aim uncomfortably high—and expect their colleagues, their contractors, and even their competitors to follow suit.

Ten Aspirations for Breakthrough Leadership

The B Team underscores the need to stretch our aspirations and ambitions. Indeed, ambition is at the very heart of Plan B. During a meeting in late 2013, The B Team leaders outlined ten aspirations for breakthrough leadership:

• Aim to do the apparently impossible.
• Hold yourself accountable to all stakeholders, including future generations.
• Take the lead. Don't count on governments and NGOs to act first.
• Be truly ambitious across the entire people-planet-profit agenda.
• Create partnerships that have the potential to become much more than the sum of their parts.
• Be bold, but at the same time seek simple, practical solutions that companies can share.
• Redefine what successful businesses and success in business look like, understanding that businesses can still make money while having strong ethical values and a positive impact on both people and the planet.
• Help catalyze new social and political movements, aggregating the various submovements into a “movement of movements,” and help push them past a tipping point toward achieving the Plan B objectives.
• Provide an authoritative voice with a compelling, persuasive narrative that sketches the future we must now create.
• Engage and help mobilize people, particularly young people—whose future this will be.

Only if great numbers of business leaders take responsibility in this way are the Plan B goals achievable. In simple terms, The B Team concludes that breakthrough leaders, across the global economy, must become effective catalysts for radically better ways of doing business. Business clearly cannot make these changes on its own: political leaders, governments, and the public sector also will be crucial in designing and rolling out the new order. When businesses adopt these aspirations in the right way and at the right time, however, they can help build the critical mass needed to move all leaders toward breakthrough thinking, solutions, and outcomes.

Aim to Do the Apparently Impossible

Too often, leaders become entrenched in the art of the possible, forgetting to look beyond to the apparently out of the question. When everything is running smoothly, it's easy to know what is expected, and the “right” answers are available more or less off the shelf. However, in times of Schumpeterian creative destruction—as we are experiencing today—incumbent industries stumble, and new breeds of insurgent come to the fore, just as they did in the era of Thomas Edison and Henry Ford. Just as they are doing today with the likes of Jeff Bezos, Richard Branson, Larry Page and Sergei Brin, Elon Musk, Craig Venter, and Zhang Yue. (Zhang is also a member of The B Team and a leading Chinese businessman known for making more sustainable air-conditioning systems and low-impact skyscrapers, among other things.)

Such innovators are motivated by the same sort of thinking that drives people like Peter Diamandis and his extraordinary X Prize Foundation, which awards prizes for innovators and entrepreneurs who aim to solve the world's most pressing problems and whose inspiring motto is “Making the Impossible Possible.”

The inventors, innovators, entrepreneurs, and investors we remember best include those who at first got it spectacularly wrong and then, often after painful lessons along the way, got it spectacularly right. These pioneers were not afraid to tackle apparently impossible challenges. Imagine a world in which these risk takers opted for the status quo, where the Wright Brothers chose not to pursue their dreams of manned flight or where Alexander Graham Bell dismissed the telephone out of hand.

Breakthrough leaders know what they must do, or are determined to explore and find out along the way. Like Jeff Bezos and Steve Jobs, they often erupt from unrelated areas, usually because the old “right” solutions—some of which were the breakthroughs of their day—aren't the right answers now. Think of PayPal cofounder Elon Musk, who went on to disrupt three industries in succession: the auto world with Tesla, the energy world with SolarCity, and the space business with SpaceX. In picking him as its Businessperson of the Year in 2013, Fortune magazine noted that “Musk's creations have already made him tremendously wealthy—Bloomberg Wealth says he is worth $7.7 billion—but it is his audacity and tenacity that make him Fortune's Businessperson of the Year.”²

Audacity and tenacity are going to be necessary conditions for true long-term sustainability. No matter where they come from or what industry they are involved in, breakthrough leaders understand that they cannot leave transformative change to others. They know that it is they who must innovate, invent, and iterate. They understand that there isn't time to wait for someone else to take responsibility for the future, and two of the most important questions they must ask are “If not us, who?” and “If not now, when?”

Hold Yourself Accountable

Breakthrough leaders understand that the world is increasingly interdependent. No longer can businesses focus solely on the traditional bottom line alone or on the interests and demands of majority shareholders. Instead, these leaders are concluding that they must hold themselves accountable to all relevant stakeholders, including future generations.

Taking responsibility means more than simply issuing a promissory note—or press release—pledging that your organization is going to be more transparent or that it will institute a new program to encourage simultaneous financial, social, and environmental progress and wider well-being. Breakthrough leaders know that they must challenge everyone throughout their organizations to adopt actions that drive toward the new targets and measures of accountability and performance. To lead effectively, they must identify the weaknesses not only of their business model and colleagues but also of their own mind-sets, experience, and skill sets.

They understand that they must work to change the rules of the game, where the current rules incentivize the wrong outcomes. A key part of this agenda involves lobbying for more effective governments. This is an area where business and many civil society organizations can now find new forms of common ground.

Most of The B Team leaders would agree with Greenpeace's international director, Kumi Naidoo, when he says, “Without clear rules and effective governments, too many companies will continue to free-ride society.” It is easy to see why this is the case. As Naidoo puts it, businesses, on average, “would lose forty-one cents for every dollar in earnings if they were made to pay the full environmental costs of their operations.” We can argue about the numbers, but it is clear that internalizing these sorts of externalities will be acutely painful for many incumbent industries.

Take the Lead

It can be brutally tough to be the first one to make a move in a competitive arena, especially when it comes to the kind of systemic changes that The B Team calls for. All too often, incumbent businesses expect others to pioneer new paths and look to governments to proffer a green light, whether through new regulations or new incentives. In uncertain times, however, politicians and governments often play for safety. They try to restore the status quo, rather than helping roll out what we might call the “future quo.”³ They use lobbying from those industries vested in the old order as an alibi for inaction. In doing so, they fail to recognize that inaction is itself a form of action: their efforts to shore up the old order serve to block or slow the efforts of those investing in the new order.

Similarly, many businesses still look to NGOs to lead the way, often finding that it's easier to follow or copy or be inspired by trailblazing leaders and organizations. However, business is uniquely equipped with the tools and resources to make a real difference. Business leaders must learn how to guide and work with NGOs, not the other way around. “Corporations potentially bring much more to the table than cash, including their business expertise, supply chains, marketing capabilities, and employee engagement,” stresses Kathy Calvin, member of The B Team and CEO of the UN Foundation. “The nonprofit sector, particularly in international development, must learn to work with the business sector in a fully integrated manner—and not think of companies just as financial donors.”

The B Team encourages all business leaders to do what they are meant to do: think hard, rethink where necessary, and lead. Leaders make a fundamental mistake if they wait for others to act. Instead, they must take the plunge, helping others do likewise and, in particular, encouraging politicians and policymakers to follow suit, putting their own (and potentially formidable) shoulders to the wheel of change.

Be Truly Ambitious

When it comes to adopting the right aspirations, true leaders must help change the rules of the game right across the people-planet-profit agenda. Although The B Team leaders understand that the only way to eat the metaphorical elephant is one bite at a time, they also understand that the world can't just sit back and wait for the kind of systemic change needed to adapt our mind-sets and mental models to be fit for a future world straining at the seams with a predicted population of over nine billion people by midcentury.

Among those...

Table of contents

• Cover
• Title Page
• Copyright
• Dedication
• Foreword
• Preface
• Introduction: Profit from Tomorrow's Bottom Line
• Chapter 1: Adopt the Right Aspirations
• Chapter 2: Create New Corporate Structures
• Chapter 3: Apply True Accounting Principles
• Chapter 4: Calculate True Returns
• Chapter 5: Embrace Well-Being
• Chapter 6: Level the Playing Field
• Chapter 7: Pursue Full Transparency
• Chapter 8: Redefine Education
• Chapter 9: Learn from Nature's Model
• Chapter 10: Keep the Long Run in Mind
• Conclusion: Get Ready to Break Through
• Acknowledgments
• About the Authors
• More from Wiley
• Index
• End User License Agreement