Art Stewart has been operating in the strategic management, leadership and corporate responsibility space for over 25 years. He currently heads his second consulting practice that is gearing up for a hard launch in Q1 2015. In his former role as vice president of corporate development for a Boston-headquartered global management consulting firm, and earlier as President of his first consulting firm, he worked with a wide range of organizations all grappling with aspects of ethics, accountability, human capital impact, social consciousness, and other components of corporate responsibility and sustainability.
What do you see as the latest trends in strategic management related to sustainability and corporate social responsibility?

At a macro level, there is a widening divide between two organizational designs and the accompanying emergence of what is known as “conscious leadership”. The first design is one that relies on an old guard mentality. It is how most companies have operated for a long time; clinging to what I term the dying assumptions of “conventional wisdom”. It’s a protectionist mindset. The second organizational design is a new one that is emerging as self-actualized. This model is about creating a more durable form of 21^st century capitalism. Most leaders and organizations today are navigating the vast terrain in-between the two extremes.

Can you tell us more about the characteristics of each organizational design?

Let’s start with the old guard protectionist model. This model prioritizes the traditional financial drivers of share price, multiples and equity ratios, for example. It focuses on mergers and acquisitions versus organic growth. Financial performance is the sole driver of business value and growth. Often, the management model is further characterized by a market domination approach; a divide and conquer mission. It also involves a very linear push and pull go-to-market strategy. There is likely a policy of non-disclosure of nonessential information, a hording of intelligence, and it is authoritarian in nature with a top-down governance model. Trust is presumed and mandated. There tends to be an old boys club culture. Employees may stay for life, if they are lucky but at a price. This type of model sets up a systemic resistance to corporate social responsibility (CSR).

The next generation, self-actualized management model is more porous and often enables “Conscious Leadership.” This model still prioritizes traditional financial drivers but within a context of greater apportionment with transparency and the ability to hold leaders accountable. The new model is about talk-walk consistency where brand integrity is vital to market leadership and durable growth. It embraces a cutting-edge understanding of diversity – such as generational orientation, diversity of thought or worldview, life experience, as well as cultural, family and community upbringing (norms of origin).

These diversity characteristics can then be converted into a narrative and data that are integrated into the organization’s knowledge bank to enhance the unique intellectual property that feeds its competitive evolution. Traditional corporate socialization behaviors, like groupthink and its politicized subculture that are still too common within large organizations, give way to alternatives such as flat or self-governing management models organized around strategic clusters. Rather than being sure of their value based on gut, these organizations look to external validation through sophisticated multi-stakeholder engagement activities.

All companies are moving along this continuum at a different pace. One’s industry has a big impact on how quickly their organization may evolve. Everything is highly nuanced and nothing is black and white. It may be one step forward and two steps back depending on the context in which the company operates.

What makes someone a conscious leader?

A conscious leader has a natural empathy for a wide range of human experience that may be brought into business decisions. This person cares about what forms an employee’s world view and perspective. He or she will consider an employee’s cultural upbringing and community to determine how to relate to people and solve problems. High emotional acuity can be leveraged for competitive reasons, even though it is the antithesis of the no emotion, traditional corporate persona.

Today, we see many leaders who have a big disconnect between their public persona and brand commitments versus their personal behavior. Look at the lapses in leadership over the last 15 years. It crosses all industries. Everywhere we look there is a breach of trust. The public doesn’t make distinctions between a leader’s personal and work life.

In order to protect the brand, it’s an organization’s responsibility to ensure all stakeholders feel aligned with the mission and values. There is a moral authority component to leadership, even with moral as a subjective term, we can agree on terms. There is a sense of an ethical compass that requires leaders to be demonstrably consistent, to lead with integrity and walk the talk.

How would a change from the way companies do business now to conscious leadership impact relationships with key partners and suppliers?

This model views partners and suppliers in a totally new capacity. It approaches partners and suppliers as strategic providers and value creators, instead of being merely vendors and cost contributors. All players in a company’s ecosystem help find ways of enhancing competitive viability. Competitors work to make the whole industry better and everyone takes part in the rewards. This is a shared value approach, requiring stakeholder throughput.

How does this change the way employees see the company, especially the up and coming Millennials?

For the last five years, the United States has had economic turmoil and that generated limited opportunities for millennials. Some have had to compromise their values in order to be employed. The latest economic predictions show 2014 shaping up to be the best year for new job gains since the late 90s. That means opportunities are out there. If that trend continues, millennials will have alternatives and will seek employment from companies that align with their values.

Millennials know what they want. They expect management to earn their trust and don’t want to work for companies that just talk. They want to work for employers that are substantively engaged in real world transformation. They want to work for companies that take climate change, the environment, ethical sourcing, and sustainability seriously.

Do you see sustainability as a top business driver and what will catapult it to the top of the list?

Well, like I said, it is already happening. If we look at global sustainability reporting standards and the drive toward stressing materiality, we can envision a more conscious form of management.

Financial goals are required for both types of management and leadership. It makes sense to align the financials with sustainability objectives. It makes sense to build reporting criteria and benchmarks to hold companies and industries responsible. There are organizations out there already maturing these frameworks. Organizations like the Global Reporting Initiative, SASB, and ISO have already built models that companies are using. Thousands of companies already report using GRI 3.1 and GRI4. Many have engaged in the SASB Working Groups to help define the financial aspects. Other have used guidance from the ISO 26000 framework to build company campaigns and programs.

Many companies are focusing on ESG (Environmental, Social, and Governance) and materiality to align with traditional business and conscious leadership. One of the most promising signs is in the weeding out of some of the frivolous pronouncements that used to be made in pursuit of appearing more responsible.

Better standards, tools, and access to decision making data help make the case for the traditionally reluctant CFOs. In time, we will be able to show how CSR generates new revenue streams, has demonstrable cost savings, and protects the overall brand and health of the company. The evolution to conscious leadership has already begun.

Bio:

Kelly Eisenhardt is Co-Founder and Managing Director at BlueCircle Advisors, an environmental compliance and sustainability consulting and training firm based in Massachusetts (www.bluecircleadvisors.com.)  In her role at BlueCircle Advisors, she is responsible for providing business intelligence, strategy and implementation of environmental, social and governance (ESG) risk programs.  Her experience aligns well with her client’s needs for technology, compliance, and sustainability expertise by helping companies create and manage their corporate environmental and social responsibility programs.

To contact Kelly Eisenhardt, send emails to kelly.eisenhardt@bluecircleadvisors.com or follow her on Twitter @KelEisenhardt.  For more information about BlueCircle Advisors and the company’s products and services, please visit www.bluecircleadvisors.com, on Facebook at BlueCircle Advisors, on Twitter @OurBlueCircle, and on the LinkedIn group at the BlueCircle Advisors group.