Synopsis
Both Benioff and Musk are the ‘one’ in this context. However, with climate change, there are currently only peers — there is no ‘one’. We have the US, China, India, Europe, etc., but no one who can make a final decision.
Agencies
Robert A. Burgelman teaches at Stanford University’s Graduate School of Business (GSB). Speaking to Srijana Mitra Das, he discusses how the process of strategy-making can help companies resolve climate challenges:
What is the core of your research?
I have been studying the role of strategy-making in organisational evolution. I wrote a book about Hewlett-Packard (HP) and its evolution — there, I made a distinction between companies that had a purpose of being around for a long time as opposed to startup companies, for instance, that exit fairly quickly. I’ve been interested in companies with a purpose to endure beyond the tenure of the founders. I call these ‘built to become’ — this is different from ‘built to last’ which is true for physical systems like the Statue of Liberty. In order to last, social systems must be able to change though — they must become something that may even be different from what the founders originally had in mind. This is ‘built to become’ and I’m interested in how the complex process of strategymaking helps companies achieve this.
Q. Given the climate crisis, what strategies do you see the smartest companies now adopting?
At an industry level, all the major automobile companies in the West and South Korea are going for electric cars — this is a huge industry, clearly moving to EVs now. Also, major oil companies like Shell, Exxon and BP are realising now that they must move from fossil fuels to alternative sources of energy — they have understood they need to redefine themselves as ‘energy companies’ and not just oil companies. There are two strategic aspects here — the climate crisis is one element of sustainability. But sustainability is not for free. There are costs associated with it. So, if a company wants to emphasise sustainability, that should serve as a disciplining mechanism for the rest of the organisation to make it possible to pay for these efforts. Sustainability can only be funded if we make the rest of our systems more efficient. The second insight is around companies doing what I call ‘minimum winning games’ — an example is the Swedish company BoKlok, founded by Ikea and Skanska, a leading global construction firm. They created BoKlok with an extremely clear target market, single parents with one child and the income of a social worker or nurse.
They built apartments which this group could afford and had a suitable financing plan that enabled these customers to own homes. Ikea also ensured that these apartments have solar panels — this is a brilliant example of a viable target market segment for affordable housing with major sustainability dimensions, like renewable energy, recyclable materials, etc., added on. I call this a ‘minimum winning game’. Another example is Intel which, during the 2010s, removed all lead from their semiconductors — this was a very important environmental improvement. This is also a minimum winning game in terms of one company taking up one measure that was extremely important. The sum of such minimum winning games can be greater than huge maximalist targets which are often harder to achieve.
Q. How does climate change fit your analysis of ‘the disruptor’s gambit’?
Visionary leaders change or disrupt the way we do things — Marc Benioff at Salesforce created a software as a service that helped many people do things they couldn’t earlier because these were too expensive. Similarly, Elon Musk didn’t really want to be an auto manufacturer per se but he saw the route Tesla offered from a fossil fuel economy to much more sustainable change. At the level of an organisation, you can characterise the strategising process in terms of what I call ‘peers plus one’ — the ‘one’ is the CEO. The ‘peers’ are top-level executives who bring differing views and strategic dissonance to the table — someone has to resolve that dissonance. That is the CEO.
Both Benioff and Musk are the ‘one’ in this context. However, with climate change, there are currently only peers — there is no ‘one’. We have the US, China, India, Europe, etc., but no one who can make a final decision. Three conditions of strategic leadership can help us resolve this. The first is that an entity wanting to be a leader in climate change must bring its own house to order — for the US, which has a huge transportation sector, this means getting away from oil-based transport. The Chinese use polluting coal for electricity — they need to fix this if they want to play a leading role.
The second is to encourage win-win collaborations between players in different systems — for example, the US is advanced in clean coal technology. It could have its experts work with Chinese utilities to bring these cleaner modes there while China could help with the development of battery cars in the US and so on. The third condition is that the leader must commit the largest amount of resources to the shared ecosystem — for finally, it is only the leader who can do the gambit.
Agencies
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