A Couple Surprising Facts about Sustainability

April 18, 2019 | by Jeannette Cabanis-Brewin

Earth Day is almost here, but that was not the inspiration for this column.

In fact, the topic of sustainability was far from my mind when I went looking through recent articles in my favorite business publications, seeking an Aha! to kick off this week's blog. I followed a link to the MIT Sloan Management Review's article, "Beat the Odds in M&A Turnarounds" because I know that project management expertise is a key differentiator for successful M&As and I hoped to see this noted in their "Six Critical Factors" section of the article. Surprisingly, the authors do not mention the role of project or program management (but you can read more about that here and here).

Instead, towards the end of the list, I discovered this:

Attitudes toward environmental, social, and governance (ESG) factors: ... deals that involved businesses with a similar approach to ESG matters had a success rate that was a massive 19 percentage points higher than those with differing approaches. Such deals also showed a much bigger improvement in [Total Shareholder Return, or] TSR performance. These softer elements of corporate strategy can serve as a proxy for the culture and values of the two organizations, with similar attitudes indicating a more natural fit.

Reading that matching attitudes toward social responsibility yields better shareholder performance jogged my memory of another data point, also one that was unexpected. In our 2017 Stategy Execution Process Benchmark study, we discovered, in looking at the differences between organizations that rated themselves as "highly successful" at executing strategy, and those who reported low success rates, that they scored highest on the performance measure of "The enterprise is socially responsible." In fact, at 4.10 on a 5-point scale, this was one of the highest scores in the entire study, on any measure.

Hmm. Looking again at the Sloan Management Review article, I noticed that other factors that predicted success for M&As included taking a long view of success, rather than focusing on short-term gain, along with "having a well-defined purpose."

Connecting these dots gives us a picture of what it takes to build organizations that can change, succeed, and last even under challenging conditions. A purpose, beyond short-term profit and commitment to not only shareholders, but larger social benefits may be the secret sauce organizations need to thrive.

(Oh ... and ... don't forget to add a side of project management.)

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