Academy  of  Management  Professional  Development  Workshop  

 Sustainable  Enterprise  Models  

Innova4on    

Organizers:    Carmelo  Cennamo,  Maurizio  Zollo,  Bocconi  U.  

KersEn  Neumann,  WU  Vienna  Speakers:  

Ioannis  Ioannou,  London  Business  School    Tim  Devinney,  U.  of  Technology,  Sidney  Andrew  Van  de  Ven,  U.  of  Minnesota   1  

Understanding  the  firm’s  evolu4on  towards  sustainable  

enterprise  models  

Maurizio  Zollo  Dean’s  Professor  of  Strategy  and  Sustainability,  Bocconi  University  

VisiEng  Professor,  WU  Vienna  and  MIT  Sloan  School  Director,  Center  for  Research  in  OrganizaEon  and  Management  (CROMA)  

President,  European  Academy  of  Management  (EURAM)  2  

The  Core  Research  Ques4on    

How  do  firms  evolve  towards  a  sustainable  enterprise  model?  

3  

Underlying  Ques4ons  

4  

What  explains  the  ability  of  managers  and  of  organizaEons  to  understand  sustainability  issues  and  stakeholder  interests?  

Sensing  Capacity  

Change  Capacity  

Change  Effec4veness  

Change  Factors  

Learning  Capacity  

GOLDEN ©

What  disEnguishes  firms  that  can  successfully  design,  introduce  and  diffuse  strategies,  pracEces  and  cultural  traits  aligned  with  sustainable  models?  

What  impacts  can  be  expected  from  different  types  of  change  interven1ons  and  why?  

How  do  insEtuEonal,  organizaEonal,  group  and  individual  factors  influence  the  relaEve  effecEveness  of  these  change  intervenEons?    How  do  individual  and  organizaEons  learn  to  change  their  idenEty  and  behavior  in  line  with  ideal  models  of  the  sustainable  enterprise?  

Expanding  the  Organiza4onal  Evolu4on  Model  

5  

Change  in  individuals’  psychological  disposi4ons  

Learning    rou4nes  

Change  in  purpose,  frames  &  strategies  

Change    rou4nes  

Change  of  mo4va4onal  levels  &  levers  

Change  of  oper.  rou4nes  

Change  of  emo4onal    disposi4ons  

SUSTAINABILIY  STRATEGY  PROCESS  

SENSING  and  SENSE  MAKING  

SEARCH  and  SELECTION  

EXPERIMENTATION    and  SCALING  UP   LEARNING  

Economic,  social  and  environmental  

sustainability  outcomes  

INNOVATION  AND  ADAPTATION  CAPACITY  

STRATEGIZING   CAPABILITIES  

ORGANIZING   RELATIONAL  QUALITY  

CONTEXT  

INDIVIDUAL  AND  ORGANIZATIONAL  IDENTITY  

INDIVIDUAL  TRAITS  ORGANIZATIONAL  

TRAITS  

6  

HOW  Engines  of  change  

WHY  Sources  of  change  

RelaEonal  quality  

Change  ini4a4ves  §  Depth  of  change  §  IntenEonality  §  Formality  

Change  (dynamic)  capabiliEes  

Learning  capabiliEes  

External  sources  §  CompeEtors  §  Stakeholders    §  Policy-­‐makers  §  Broader  society  

Internal  sources  §  Sensing  §  Strategizing  §  Control  §  Leadership  

PERFORMANCE  •  Economic  •  Environmental  •  Social  

CONTEXT  •  Sectoral  •  InsEtuEonal  •  Cultural  

A  Framework  of  Enterprise  Model  Innova4on  

WHAT  Objects  of  change  

Firm-­‐wide  traits  §  Purpose  §  Strategy  §  Structure  

FuncEonal  acEviEes  §  ObjecEves  §  Processes  §  Systems  

Individual  traits  §  EmoEons  §  MoEvaEon  §  IdenEty/Values  §  CogniEon/Belief  

7  

ü A  program  to  monitor,  experiment  with,  and  enhance  evoluEon  of  the  enterprise  towards  sustainable  models  

ü A  business-­‐academia-­‐insEtuEons  partnership  co-­‐creaEng  insight  and  acEon  on  how  to  guide  these  evoluEonary  processes  

ü A  global  network  of  80+  scholars  in  40  research  insEtuEons  

ü Supported  by  some  leading  ins1tu1ons  and  businesses  

ü Co-­‐developing  a  common  data  collecEon  design,  backed  by  cross-­‐level  simulaEon  and  modeling  efforts  

What  is  GOLDEN?  

8  

Who  Is  GOLDEN:    Thought  Leaders  •  CSR:  Freeman,  Grayson,  Post,  Waddock,  Zadek  •  Enviro.  Sustainability:  Correa,  Frey,  Marcus,  Russo,  Smith  •  Strategy:  Devinney,  McGahan,  Ricart,  Zollo,  Zok  •  Learning,  Change,  Innova4on:  Brusoni,  Lekl,  Van  de  Ven,  

Zollo  •  HRM,  Corporate  Governance  and  Organiza4on:  Bagdadli,  

Berrone,  Camuffo,  Ricart,  Van  de  Ven  •  Opera4ons  and  Supply  Chain:  Borgonovo,  Locke  •  Marke4ng  and  Sales:  Rao,  Shainesh  •  Accoun4ng  and  Control:  Epstein,  Songini,  Speckbacher  •  Poli4cal  science:  Locke,  Zadek  •  Neuroscience:  Cappa,  Golosheykin    

9  

NORTH  AMERICA  Arizona  State  U.  Boston  College  Boston  University  Harvard  U.  MIT    U.  of  Minnesota  U.  Oregon    Rutgers  U.  U.  of  Toronto  U.  of  Virginia  U.  of  Western  Ontario  William  Paterson  U.  

EUROPE  Bocconi  U.    City  U.  London  Copenhagen  BS  Cranfield  U.  Dublin  City  U.  Erasmus  U.  ESADE  ESSEC  U.  of  Granada    

 IESE  LBS  Sant’  Anna,  Pisa  WU  Vienna,    Wageningen  U.    HWZ  Zurich  ETH  Zurich      

SOUTH  AMERICA  Centrum  (Lima)  Fundação  Getulio  Vargas  Fundação  Dom  Cabral  University  Sao  Paulo  

SOUTH  AFRICA:  U.  of  Cape  Town  

AUSTRALIA:  Griffith  U.  U.  Techn.  Sydney  

INDIA:  Tata  Ins4tute          of  Social  Sciences  IIM  Bangalore    

CHINA:  Tsinghua  U.    

CORPORATIONS  

AngloGold  Ashan4  Balbo  Group,  Corepla,  Enel,  

Endesa,  Microso`,  OMV,  Telecom  Italia,  Unicredit  Woolworths  SA  

INSTITUTIONS  

Aspen  Inst.  EABIS,  GRLI,  Great  Place  to  

Work,  Italian  Min.  of  Ec.  Development,  UN  Global  

Compact  Country  Networks  

RUSSIA:  St.  Petersburg  U.    

SE  Asia  Asian  Ins4tute  of          Technology  ESSEC  Singapore  

The  Global  Network  Organiza4ons  

10  

Mul4-­‐Level  Simula4ons  

The  Observatory  

Tests  of  Impact  Es4mates  

Es4mates  of  Change  Impact  The  Labs  

Ecosystem  

Framing  and  Scope  of  Research  Ac4vi4es  

A  System  of  Interdependent  

Ac4vi4es  

11  

Enterprise   Decision  Maker  

The  Observatory  Data  Collec4on  Logic  

Kers4n  Neumann  WU  Vienna  

12  

Global  Observatory  on  the  Evolu4on  of  the  Sustainable  Enterprise  

A  data  placorm,  based  on  archival  and  clinical  data,  on:  ü  CharacterisEcs  of  the  

insEtuEonal  and  cultural  context    ü  Firm  level  evoluEon  in  purpose,  

leadership,  growth  strategies,  structures  and  sustainability  performance  

ü  The  evoluEon  of  past  sustainability  iniEaEves  and  pracEces  with  stakeholder  and  impact  assessments    

ü  Individual  percepEons  of  sustainability,  organizaEonal  climate,  psychological  profile  (values,  emoEons),  cogniEve  reasoning  and  decision-­‐making    

13  

Sample  Selec4on:  Matched  Pair  Design  

Each  “cell”  of  the  matrix,  minimum  two  companies,  similar  size  and  profit  in  mid-­‐90s,  but  highly  diverse  social-­‐environmental  performance  

Sustainability  leaders  and  followers  matched  in  each  cell  of  a  matrix  of  regions  and  sectors.    8x5x2=80  firms  

1.   North  America  2.   La4n  America    

3.   Northern  Europe  4.   Southern  Europe  5.   Southern  Africa,  

Middle  East    

6.            China  7.   India  8.   Australia  

         

1.   Financial  services  2.   Food  and  retail  3.   Pharmaceu4cals  

4.      Informa4on-­‐Communica4on  Technologies  5.   Natural  resources/energy  

14  GOLDEN ©

   Mapping  Strategic  Issues  

1   2   3   4   5   6  

Select  Strategic  Issues  Requiring  Deep  Internal  Change   1   2  

   Iden4fy  Change  Ini4a4ves  to  Respond  to    Selected  Strategic  Issues      

A   B   C   D   E  

   Implementa4on  Within  Func4ons  

Head  of  STRATEGY  

HR   CONTROL   R&D   SALES   OPERATIONS   SUPPLY  CHAIN  

2

3

Archival  Data  1

Stakeholder  Interviews  

Execu4ve  Interviews  

Survey  to  Middle  Managers  and  Employees  

4

6

STRATEGY  

5

SUSTAINABILITY/CR  

Data  Collec4on  Process  

15  

Mapping  Strategic    Sustainability  Issues  

16  

Y  

X   Z  A  

C  

B  

Strategy  department   CSR/Sust.  department  

V  ✔

✔

✔✔

✔

Func4on  Specific  Fact  Finding  Complete  the  knowledge  on  how  the  ini4a4ves  were  carried  out  within  the  

different  func4ons  to  tackle  the  strategic  sustainability  issues  For  e

ach  iniEaE

ve  

Probe  key  funcEonal  issues  and  how  they  were  tackled  with  

change  iniEaEves  

FuncEonal  iniEaEves  for  change  Change  towards  sustainability?  

Func4on  specific  interview  Strategy    Organiza4on/HR    Management  accoun4ng/Finance    Environmental    R&D/Innova4on    Supply  chain    Marke4ng/Sales    

How  is  sustainability  understood  in  the  funcEon  (open  quesEon)  

Object  of  change  Mo4va4on  Origin  Selec4on  Implementa4on  and  Diffusion  Investment  Results  Explana4on  of  Results  

17  

Manager‘s  Survey  

 

       

DescripEon  of  strategy  and  assessment  of  compe44ve  advantages  

Decision  scenarios,  leadership  style,  personal  values  (Schwartz)  psychological  scales  (STAI)  

Cogni4ve  representa4on  of  sustainability    -­‐ Meaning  of  a  sustainable  company  -­‐ Sustainable  management  principles      

Priori4zing  of  auen4on,  PercepEon  of  stakeholder  sa4sfac4on  

Main  sustainability  issues  and  connected  ini4a4ves,  resource  alloca4on  

Knowledge  management  and  evolu4on  of  new  ideas:    generaEon  ,  selecEon,  replicaEon  and  retenEon  

IntegraEon  of  sustainability  in  working  prac4ces,  incen4ve  systems  and  resource  alloca4on  decisions  

Percep4ons  of  the  organizaEonal  milieu,  how  decisions  are  made  and  conflicts  are  solved,  trust  levels)  

Strategy  

Sustainability  awareness  

Sustainability  issues  &  ini4a4ves    

Stakeholder  salience  and  sa4sfac4on  

Knowledge  development  

Organiza4onal    architecture  and  resource  alloca4on  

Organiza4onal  climate  

Individual  traits  

18  

Carmelo  Cennamo,  Bocconi  University  

An  Agent-­‐Based  Model  of  Sustainability-­‐Driven  Innova4on  

19  

Agent-­‐Based  Simula4on  Model      •  SimulaEng  dynamic  interacEon  of  autonomous  agents  

•  Assessing  their  effects  on  the  system  as  whole  

The  Study’s  Approach  

Learn  about  ideas  implementa4on  (#,  quality,  speed…)  

20  

Sustainability  (economic,  social,  environmental)  

Context  (industry  dynamics,  insEtuEonal,  cultural,  macro-­‐economic)  

Individual  Traits    (cogniEve  frame,  

emoEons/moEvaEon,  values,  leadership)  

Rela4onal  Quality  (org.  climate,  stakeholder  collaboraEon  

Organizing  (governance,  

structure,  HR  systems,  control/MIS)  

Capabili4es  (sensing,  learning,  

change)  

Strategizing  (growth,  compeEEve,  

collaboraEve)  

Organiza4onal  Adap4ve  Capacity  

Key  Actors  in  the  Model  

Authority  of  agent  unit  

Key  Blocks  

SensiEvity  towards  sustainability  of  agent  unit  

Probability  of  idea(s)  generaEon  of  agent  unit  

Matrix  describing  probability  of  assessing  right  ambiEon  of  ideas  

Viscosity  coeff.  (external  factors)  affecEng  the  speed  ideas  communicaEon  +  budget  constraint  

22  

Defini4on  of  Idea  

Key  Blocks  

•  AmbiEon  •  Quality  •  Time  of  development    •  Cost  •  Energy  =  quality  *  

authority  of  generator  

Quality  FuncEon:    

 𝑓(x)  =  xα    *  (1  –  x)β  23  

All  units  generate  ideas!  

Model  Func4oning  

“Mature”  ideas  communicated  first  to  strategizing  unit  

Once  communicated,  all  units  stop  exploraEon  of  ideas  to  focus  on  the  proposed  idea  at  stance  

24  

Model  Func4oning  

Assessment  of  idea:  

•  New  energy  =  perceived  energy  +  authority*sensiEvity  •  If  assessment  posiEve,  idea  communicated  to  next  

funcEon  

The  idea  needs  approval  by  all  units  before  being  implemented  

Once  approved,  the  idea  is  assigned  resources  and  implemented.  (Units  go  back  to  generaEng  ideas)  

25  

Model  Func4oning  

Three  Org.  Scenarios:  

•  Hierarchical  organizaEon  •  Highly  hierarchical  organizaEon  •  Flat  organizaEon  

26  

Key  Findings  –  wrap-­‐up  

Highly  hierarchical  structures  have  more  ideas  implemented,  though  process  not  opEmal  (higher  variance  in  quality)  

ALL  units  have  similar  probability  of  seeing  their  ideas  implemented  

27  

Key  Findings  –  wrap-­‐up  

Higher  sustainability-­‐based  capability  leads  to  larger  number  of  ideas  implemented  

More  favorable  environments  (external  pressure)  lead  to  higher  engagement  in  sustainability  acEviEes  (but  lower  ambi4on)  

Key  Findings  –  wrap-­‐up  

Flat  organiza4ons  have  lower  rate  of  ideas  implemented  (and  idea  ambiEon)      -­‐  ‘VETO  POWER’  effect!  

Limita4ons  

Early  stage.  Fine-­‐tuning  of  the  model  needed!  

E.g.  sensiEvity  towards  sustainability  of  agents  is  independent  of  corporate  culture,  HR  policies  may  affect  it  

No  specific  account  for  learning  (besides  capability)  

Need  to  tease  out  #  of  ideas  implemented  and  quality  of  ideas  (higher/lower  ambiEon)…  

More  fine-­‐grained  analysis  by  modeling  scenarios