Continuously relevant and responsible organizations via creativity, innovation and sustainability

Citation

Edgeman, R., Neely, A. and Eskildsen, J. (2015), "Continuously relevant and responsible organizations via creativity, innovation and sustainability", International Journal of Productivity and Performance Management, Vol. 64 No. 3. https://doi.org/10.1108/IJPPM-12-2014-0197

Continuously relevant and responsible organizations via creativity, innovation and sustainability

Article Type: Guest editorial From: International Journal of Productivity and Performance Management, Volume 64, Issue 3

Introduction

This special issue of the International Journal of Productivity and Performance Management focussing on "Continuously relevant and responsible organizations via creativity, innovation and sustainability" is an outgrowth of the June 2014 Performance Management Association (PMA) Conference. As with this journal, PMA focusses on performance measurement and management and – certainly – enhanced performance across many domains that include productivity.

The conference was held in Aarhus, Denmark and attracted researchers and practitioners from more than 30 nations and such leading organizations as Lego, SAP, Siemens Windpower, Statoil, Velux, Vestas, and others. Jointly hosted by Aarhus University and the University of Cambridge, the conference enjoyed on-the-ground support from the Interdisciplinary Center for Organizational Architecture at Aarhus University, the Organization Design Community, and Denmark's CfL Center for Ledelse (Center for Leadership). Each of the ground support units emphasize forming, reforming, transforming, and improving organizations with the range of interests and activities of these units spanning essentially all elements of organization design, leadership, performance, thrust, and impacts that, of a certainty, include enterprise relevance and responsibility. Equally the conference was materially and financially enabled by Australian, European, and North American sponsors: the KPI Institute, Corporater, Emerald Group Publishing, GSE Research & Greenleaf Publishing, and Business Expert Press.

The overarching theme of the conference was Designing the High Performing Organization. An innovative conference feature was an opening day, specially formulated for business where selected elements of organizational design, function, and performance repeatedly arose: continuously relevant and responsible enterprise behavior and actions that contribute to equally relevant and responsible performance and impacts. Though authors approached this issue using differing nomenclature and approaches, effective attainment of this requires translation of so-called triple top line strategy (McDonough and Braungart, 2002) into triple bottom line performance and impact (Elkington, 1997). Throughout the conference these ideas were echoed and examined at micro, intermediate, and macro levels with the quest for enablers of continuous relevance and responsibility going in many directions.

Although the list of identified enablers was a long one, focussed creativity and innovation were recurring ones, where both general and social-ecological innovation were addressed. The issue of sustainability, on the other hand, most often arose as a critical target and manifestation of relevant and responsible behavior, actions, performance, and impacts. Sustainability was approached in both specific and broad terms, though always in manners consistent with the commonly understood idea of sustainability as a capacity to endure. Coalescing these points then, the many faces, and enablers of enterprise relevance, responsibility, and sustainability addressed herein are primarily examined relative to socially equitable strategy, governance, performance, and impacts; ecologically sensitive policy, practices, performance, and impacts; and economically sound strategy, performance, and impacts.

Almost sure, is that the perspectives encountered in this special issue will provide insights that are both global and regional in nature as authors come from Canada, the Czech Republic, Denmark, Japan, New Zealand, Sweden, USA, and the UK. Let us commence this issue by briefly examining these perspectives on a contribution-by-contribution basis.

Aligned strategic resistance for superior enterprise performance and protection

The initial contribution to this issue, "Strategic resistance for sustaining enterprise relevance: a paradigm for sustainable enterprise excellence, resilience and robustness," introduces the acronym RESIST. This acronym derives from a combination of the words revive, strive, survive, and thrive. These are woven together in a manner that provide both the core and thrust of strategic enterprise resistance, where such resistance is associated with actions, objectives, performance, and impact. These are subsequently aligned with four performance-based enterprise objectives: sustainability, excellence, resilience, and robustness (SEER2). This is portrayed in Figure 1, where of particular note is that this alignment is not one-to-one in nature, but rather each-to-each, with translation accomplished through such enablers as people, processes, partnerships, policies, and practices.

Figure 1 Translation of RESIST strategy into SEER2 performance and impact

Central to this formulation is that enterprises are – or should be – obliged to pursue social and environmental relevant and responsible performance and impacts, not economically superior performance only (Arnaud and Sekerka, 2010). In particular, this contribution is most concerned with the practical exercise of enterprise social and environmental conscience in pursuit of solution to or mitigation of challenges associated with climate change and social strain, yet in ways that also deliver exceptional business performance.

In this construction enterprise revival is associated with restorative strategy, that is activated to produce socially positive and environmentally neutral to positive performance and impact. Striving is most clearly associated with relentless and targeted pursuit of such performance. Appropriately, survival refers to continuing existence, with the qualifying statement that some enterprises are intentionally designed for limited longevity. While survival is ordinarily associated with maintenance of a status quo, or even slow entropy, thriving is more commonly implies increasing organization, function, or prosperity in the form of wealth generation and accumulation, where wealth is multi-dimensional and is comprised of some combination of social, natural, and financial capital.

Integration and application of the RESIST approach purposes to deliver SEER2, that is, to deliver sustainable enterprise excellence, resilience, and robustness (Edgeman and Williams, 2014). The sustainability of an organization is its capacity to create and maintain both near and long-term social, environmental, and economic value for itself, its stakeholders and society at large. Excellence, on the other hand, is organizational ability to both strive and thrive across an array of important domains. Resilience and revival are closely related in that resilience is enterprise ability to self-renew through innovation and thus change and reinvent itself by adapting its responses to key shocks to or challenges in its competitive environment (Contu, 2002). Robustness, in contrast, represents relative immunity to shocks and surprises gained primarily through formation and execution of strategies, policies, partnerships, and practices that maintain or advance enterprise competitive position.

While many possible enablers of the transformation of RESIST strategy into SEER2 performance and impact, more prominently cited is social-ecological innovation resulting from integration of sustainable innovation (Larson, 2000) and innovation for sustainability (Etzkowitz and Zhou, 2006). In this context innovation for sustainability is principally innovation with either social targets, in which case it may be referred to as social innovation (Faaij et al., 2013), or environmental aims, wherein it may be referred to as eco-innovation (Bossink, 2013). Sustainable innovation refers to the culture in which innovation occurs, a culture in which innovation – regardless of its aims – occurs regularly, is pursued systematically and rigorously, and is systemic in the enterprise (Geels et al., 2008; Nill and Kemp, 2009).

Finally, a formal roadmap for executing this transformation, and assessing its progress, performance, and impact is presented. This is done through applying springboard modeling intended to be sufficiently simple and versatile for use by most enterprises, yet powerful enough to aid identification and subsequent implementation of best and next best practices and sources of competitive advantage (Hellsten, 1997).

A crippled bottom line

"The crippled bottom line – measuring and managing sustainability," proceeds from the seemingly clear case that triple top line strategy intended to yield triple bottom line performance and impact rarely considers that the earth is a closed system and hence has finite capacity. The intent of this contribution is to suggest and elaborate means by which organizations can effectively and responsibly pursue sustainability in light of global system constraints: each year humanity consumes the equivalent of 150 percent of the earth's annual production of those same resources, leading to inevitable, and continuing resource depletion (Blomqvist et al., 2013) in ways that contribute to societal degradation, water and food insecurity, pollution and contamination, desertification, and climate change.

In particular the authors examine the tension that often arises between organizational contributions to the people or social dimension of the triple bottom line that come at the expense of damage to the natural environment. In this construction the economic and decision theoretic concept of utility is employed as a surrogate for societal contribution, whereas CO2 emissions is used to represent ecological cost. As an explicit illustration arising from the construction industry, the benefit of housing provision is weighed against well-documented environmental damage caused by the production cement used to construct housing (Ballantyne et al., 2012; Le Quéré et al., 2009; Sabine et al., 2004).

An important issue associated with determination of social utility is the question of specific sorts of human needs met addressed by sustainable development efforts. A comprehensive review of the literature conducted by the authors exploring these categories of human and other needs addressed by such efforts identified the following categories:

(1) a good lift that is respectful of human rights;

(2) natural habitat and biodiversity preservation;

(3) natural resource capital consumed;

(4) peace (lack of conflict) with equitable treatments of society�'s members; and

(5) enterprise financial performance.

Associated with each of these the authors identify useful key performance indicators of both utility and environmental impact. Relative to the case study industry, these have been translated into indicators for housing, transport, food production, and cement production, thus providing a solid example of how fruitfully pursue triple bottom line performance in a way that meaningfully considers global system capacity.

Radical innovation for improved performance

It is widely accepted that innovation is inextricably connected to both sustainability and enterprise resilience (Nidumolu et al., 2009; Reinmoeller and Van Baardwijk, 2005). Innovation comes in many sizes, shapes, colors, and flavors. In "The performance-improving benefits of a radical innovation initiative" the authors explore positives of employing radical innovation approaches, concluding that by pursuing radical innovation opportunities that smaller, incremental ones from which benefit can be derived will be revealed along the way.

Stated in another way, regular, rigorous, and systematic pursuit of ambitious large-scale innovation opportunities that inspire incremental improvements provides a reliable enterprise support system for sustainable innovation. Small wins along the path to larger ones add enthusiasm for the process and build the endurance necessary to strive for the inherently more complex and larger rewards of radical innovations. Organizations may of course choose to blend eco-innovation priorities into such an approach.

In particular this contribution to the special issue examines the types of early-stage innovation concepts that are developed and mechanisms for doing so, along with their potential impact on existing business performance and contribution to selection of which ones from among a portfolio of projects to pursue. Critical to this effort is construction, composition, and use of a disciplined idea management system from which both direct and indirect value may emerge. This potential for value creation is due to identification and infusion of new concepts into the innovation stream of an existing company. The veracity of this method is illustrated via a highly developed case study that illustrates the ex ante value of this opportunity selection process. A natural expectation of this process is that it positively pre-disposes innovation projects toward the sort of success that archetypical innovation performance measures only indicate ex post facto.

Such an approach magnifies the importance of accurately assessing innovation project potential, shifting the focus away from a hard outcomes orientation. This of course has the potential for increasing risk an uncertainty, however, augmenting the participative innovation team approach employed in this contribution with sensitivity analysis on either a project-by-project or portfolio basis provides an additional means of risk and uncertainty mitigation. In all the authors highlight the following advantages of a specified structured approach:

(1) increased team member readiness for change, due to conscious examination of multiple possible futures;

(2) potential for improved product performance;

(3) potential for more efficient production processes;

(4) opportunity for new or radically improved product lines;

(5) architectural as well as modular innovations; and

(6) development and cultivation of breakthrough knowledge search and integration routines.

Though not the thrust of this contribution to the special issue, the emphasized approach is one that has potential to – if so channeled – identify and contribute to eco-innovation opportunities that, if exploited, may in turn contribute to mitigation of or solution to the sort of overwhelming environmental and social problems so prevalent in our world. Among other perspectives, it is with this one we commend this contribution to readers.

Sustainability reporting in the apparel industry

Apparel and textile industries "both directly and through massive supply chains – produce profound and well-documented economic, social, and environmental impacts, positive and negative alike (Connell, 2011; Dickson et al., 2009; Luz, 2007; Prakash and Potoski, 2006). Categories in which impacts occur include labor, water, agriculture, transportation, and more. Such issues are addressed in "Corporate sustainability reporting in the apparel industry: an analysis of indicators disclosed."

The magnitude of impacts is suggested by the sheer size of the industry: in excess of one trillion US dollars (Allwood et al., 2006). Water consumption, hazardous and toxic chemical use, non-renewable consumption use, and waste generation are particularly troubling issues with ecological ramifications that plague the apparel industry (Muthu et al., 2012; Uchimaru et al., 2013; Verma et al., 2012; Wang et al., 2013), whereas labor practices across the industry have been (Bhaumik and Dimova, 2014).

In these regards, off-shoring of textile supply chains motivated by significant cost reductions has had the effect of shifting social and environmental responsibility to inherently less responsible supply chain partners. Companion to off-shoring has been increasing concern for and attention to ethical issues associated with affordable apparel (Aspers and Skov, 2006).

Focal to this contribution to the special issue is systematic review of sustainability indicators from the sustainability reports and web sites of 14 Sustainable Apparel Coalition apparel brands. In addition to lack of standardization, and lack of verification, the review indicates that the voluntary nature of sustainability reporting calls to question both the completeness and veracity information contained in such reports.

This has magnified the importance of sustainability strategy, actions, performance, and reporting of the same are important from accountability, comparability, and progress perspectives. Reporting is central to accountability with a uniform set of indices important for comparability purposes. Such a set, unfortunately, is woefully lacking in the apparel industry and, instead, there is significant diversity among sets of indices used by apparel organizations and hence associated comparability issues. Within the apparel industry, assessment and advance of sustainability as well as identification and implementation of sustainable business models have migrated from nice to niche to necessary. The elephant in the room is the issue of how better to enable this journey.

Addressing this conundrum is far from obvious. The apparel industry presents a complex pallet relative to sustainability that reverberates throughout its value chain with a key driver of this complexity being an industry emphasis on disposability. Reflecting this complexity, the review revealed attention to sustainability disclosure across apparel brands – albeit in vastly different levels of detail and across differing dimensions – in five primary areas:

(1) sustainable supply chain management;

(2) design practice;

(3) business innovation;

(4) consumer engagement; and

(5) product sustainability.

Among other conclusions proffered in this contribution are that to advance sustainability in the apparel industry, brands, and their suppliers must more greatly focus collaboration. This conclusion is in part driven by the lack of direct control that brands exert over their suppliers. As with other conclusions of this contribution, this recommendation derives from identification of better and best practices in the review of apparel industry sustainability reports and web sites.

While the results of this contribution are by design apparel industry specific, there is little doubt that the results of this study can provide direction in other industries.

Enhanced prioritization in relation to quality function deployment

Relevant and responsible organizations are obliged to design products, processes, services, and systems that are ecologically sensitive, socially equitable, and economically wise. This obligation may be approached in many ways, not the least being separate consideration of ecological, societal, and economic concerns. Alternatively, pursuit of triple bottom line performance may be approached via compromise – that is – through constrained optimization of triple top line strategic goals.

Tools of various kinds may aid this quest, one of which is quality function deployment or QFD and its key element – the house of quality (Houser and Clausing, 1988; Vairaktarakis, 1999), critical to which is identification, elaboration, and incorporation of the VOC or voice of the customer (Griffin and Hauser, 1993). While QFD was originally pursued as a means fulfilling customers wants and needs through optimal product design, its use in multiobjective settings is well established (Locascio and Thurston, 1998; Shin and Kim, 1997). Integration of environmental and social considerations in QFD is most certainly possible and has been explored for nearly two decades (Curry and Kadasah, 2002; Edgeman and Hensler, 2005; Gerst, 2004; Kaebernick et al., 2003; Rahimi and Weidner, 2002; Vinodh and Rathod, 2010; Wolniak and Sedek, 2009).

In manufacturing environments it is critically important to match engineering/manufacturing design capabilities – sometimes called technical attributes – of the organization to express and elaborate needs, whether those needs are social, environmental, aesthetic, some blend of these or other in nature. Central to the value of this contribution to the special issue – "Enhancing prioritisation of technical attributes in quality function deployment" – is identification and exploration of two primary means of better identifying technical attributes and prioritizing them for deployment purposes. Though referred to in confidence interval terminology, sensitivity analysis is part and parcel to these approaches.

The contemporary Japanese business environment

Since rising from the ashes of Second World War, Japan has given many gifts to the world in the form of quality and strategic management tools, techniques, and theories. These range from hoshin planning, to lean management and manufacturing, to quality function deployment, and beyond. All these approaches supported the emergence of Japan as an economic superpower that delivered superior products through highly efficient and effective systems and processes and made household names of such companies as Toyota, Nissan, Honda, Mitsubishi, Mazda, Sony, Canon, Toshiba, and others. These companies have often conducted themselves in socially and environmentally relevant and responsible ways, often using the aforementioned approaches as enablers of such conduct.

The situation in Japan has changed however, and questions as to whether Japan can compete have arisen (Porter et al., 2000). Faced in recent years by extreme economic challenges and the aftermath of the tragic 2011 earthquake-caused tsunami and resulting Fukushima Daiichi nuclear reactor disaster with ramifications that spread like contagion across ecological, social, and financial dimensions (Asongu, 2012; Butler et al., 2011; Hirose, 2012; Hommerich, 2012) Japan must again partially reinvent itself in various areas, including its business environment.

This contribution to the special issue – "Major factors affecting contemporary Japanese business environment" – stems from the work of a joint research team from the Czech Republic and Japan that was undertaken with the objective of identifying contemporary Japanese business environment changes and trends. Japan has many cultural elements unique or nearly so among leading economies – it is a nation that is globally relevant, yet culturally more insulated than most leading economies. Questions that arise include those of how Japan will respond to cultural trends in the future and whether Japan again have lessons from with the world will benefit? This contribution addresses such questions and the answers to those questions are, indeed, broadly relevant ones.

Identifying relevant universities to benchmark

Universities fulfill important research, consulting and educational roles in many areas, not the least being with respect to development of relevant and responsible government and organizations. Cross-fertilization among university researchers and cooperating units is common, but universities may also learn from one another at institutional levels relative to identified areas of importance and that is the subject of this special issue contribution: "Identifying critical performance indicators and suitable partners using a benchmarking template."

Learning who to learn from is of value then, and may be facilitated through application of benchmarking approaches (Neely et al., 2007). At institutional and program-levels universities are highly familiar with selected benchmarking strategies as these are central to accreditation efforts and ranking systems. It is difficult to overstate the value of program accreditation and program and university rankings to higher education institutions. These affect reputation and hence perception. In some sense "perception is reality" in that it influences quality of student applicants, the quality of faculty researchers that can be attracted, and the sorts and levels of funding that can be successfully pursued.

Consistent with such adages as "like attracts like" and "birds of a feather flock together," universities are not wholly permeable. With rare exception, universities pursue upward mobility, yet within a closed system. As such, universities want to "be known by the company they keep."

Identification of that "company," whether at the program or institutional level, ordinarily requires identification of benchmarking partners: peer universities where the group of peer universities identified will commonly include a few true peers, and a few aspirational ones – but not unrealistically so – stretch yes, impossible no.

As such, benchmarking is central to an institution's quest for relevance. Effective benchmarking requires identification of appropriate benchmarking partners and that identification is aided by use of appropriate performance indicators. Relative to the theme of this special issue, the primary value delivered by this contribution is identification of key performance indicators to use in benchmarking of universities. This is done through use of a benchmarking template that is adaptable for other use.

Summary and conclusions

What is a relevant and responsible organization? How does an organization become relevant and responsible, and how does it remain so?

At the least organizations aspiring or claiming to be continuously relevant and responsible, must be able to effectively connect triple top line strategy to triple bottom line performance and impact. This implies that in addition to the economically sound performance that organizations have long sought, such organizations emphasize socially and ecologically responsible strategy, actions, and outcomes (Porter and Kramer, 2006; Reinhardt and Stavins, 2010).

Avenues to becoming and remaining responsible and relevant are varied, with several avenues of value explored herein. Among these have been quality function deployment; benchmarking; radical innovation; carefully constructed performance indicators; and sustainable enterprise excellence, resilience, and robustness. In addition to paths to relevance and responsibility, a national study of business trends in Japan has been provided, as have specific studies in both the cement and apparel industries.

Though the issue of what constitutes a continuously relevant and responsible organization is and is likely to remain a moving target, there are nevertheless other issues that such organizations must confront, now and for the foreseeable future. These include wicked challenges driven by climate change and social strain.

Organizations have often contributed to the creation of such challenges. Are they not also obliged to contribute to their solution or mitigation? This quest is central to this special issue. Let the journey begin.

Dr Rick Edgeman

Business and Technology Department & Interdisciplinary Center for Organizational Architecture, Aarhus University, Aarhus, Denmark

Professor Andy Neely

Cambridge Service Alliance, Cambridge University, Cambridge, UK

Professor Jacob Eskildsen

Business and Technology Department & Interdisciplinary Center for Organizational Architecture, Aarhus University, Aarhus, Denmark

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Further reading

Suh, N.P. (1990), The Principles of Design, Oxford University Press, New York, NY

About the Guest Editors

Dr Rick Edgeman is a Professor of Sustainability and (Enterprise) Performance at the Aarhus University (Denmark) and holds a secondary appointment at the Uppsala University (Sweden). Prior positions include a Professor and the Head of the Statistical Science Department at the University of Idaho, a QUEST Professor and the Executive Director of the QUEST Honors Program at the University of Maryland, a Professor and the Director of the Center for Quality and Productivity Improvement at the Colorado State University, and a Visiting Professor positions at the Luleå University (Sweden) and the Università della Svizzera Italiana (Switzerland). He is a Six Sigma Black Belt with more than 200 publications spanning sustainability, enterprise excellence, quality management, six sigma, innovation, statistics, and wicked challenges. The American Society for Quality cited him as one of 21 Voices of Quality for the twenty-first century, one of only six academic globally so identified. Rick is a former editor of Measuring Business Excellence and is an Associate Editor of Total Quality Management & Business Excellence. Dr Rick Edgeman is the corresponding author and can be contacted at: mailto:rick.edgeman@icoa.au.dk

Professor Andy Neely is the Founding Director of the Cambridge Service Alliance and the Royal Academy of Engineering Professor of Complex Services. He is widely recognized for his work on the servitization of manufacturing, as well as his work on performance measurement and management. Previously he has held appointments at the Cranfield University, London Business School, Cambridge University, where he was a Fellow of the Churchill College, Nottingham University, where he completed his PhD and British Aerospace. He was the Deputy Director of AIM Research – the UK�'s management research initiative – from 2003 until 2012 and was elected a Fellow of the Sunningdale Institute in 2005, a Fellow of the British Academy of Management in 2007, an Academician of the Academy of Social Sciences in 2008, and a Fellow of the European Operations Management Association in 2009.

Jacob Eskildsen is a Professor of Business and Quantitative Methods and the Head of the Department of Business and Technology at the Aarhus University (Denmark). Professor Eskildsen is a research faculty member with the Interdisciplinary Center for Organizational Architecture (ICOA) as well as the AIROD, CCP, Mindlab, and Design-EM research groups and projects. He is the author of numerous research articles that appear in such journals as the Strategic Management Journal, Total Quality Management & Business Excellence, TQM Journal, Measuring Business Excellence, International Journal of Productivity and Performance Management, and Business Strategy and the Environment. He is the Editor of the journal, Total Quality Management & Business Excellence. His research addresses performance management, applied statistics, big data analytics, customer and employee satisfaction measurement, and lean six sigma.