November 19, 2024
Creating a Sustainable Culture: The Curious Role of Agility
We have long hypothesized that an organization’s culture is connected to achieving its sustainability initiatives. Much has been written about having “the right culture” for sustainability. Still, few, if any, answers have been provided about what the right culture looks like (See License to Transform and How CEOs can mobilize their entire organization to fulfill sustainability’s promise).
To explore the link between culture and sustainability, we analyzed the relationship between the ESG (environmental, social and governmental) ratings of companies and the organizational culture experienced by their employees. We obtained sustainability ratings of 387 Fortune 1000 companies from LSEG Data & Analytics and compared them to how each ranked on nine cultural themes using the MIT Culture 500 index that employs natural language processing technology to analyze Glassdoor reviews.
Companies with the highest overall sustainability ratings ranked highest on three cultural factors, which should not be surprising:
-
Empowerment: where employees can act with the resources they need and are accountable for results.
-
Innovation: where the organization supports creating new products, services, technologies or ways of working.
-
Inclusion: where no one is disadvantaged because of gender, race, ethnicity, sexual orientation, religion or nationality.
What was most surprising was that companies that scored highest on agility — how quickly and effectively employees respond to changes in the marketplace and seize opportunities — had lower ESG scores across the board.
Why might this be the case?
High organizational agility — being flexible, adaptable and able to pivot strategies or operations to meet customer demands and stay competitive — is generally considered a good thing. But too much of a good thing sometimes can result in unintended consequences. In the case of overly agile organizations, leaders and others might focus on the “shiny object,” lose sight of their long-term strategy and prioritize short-term results at the expense of longer-term sustainability initiatives. These behaviors can create instability and uncertainty as frequent changes disrupt workflows, confuse and frustrate employees and erode confidence in leadership.
Also, consider that greater agility might not benefit all areas of the organization. For example, functions like compliance and regulatory affairs, quality assurance, safety and risk management depend on consistency and stability and might find it challenging and problematic to fully adopt agile principles. Therefore, the needs of a specific function should dictate how best to integrate agile practices without overdoing them.
Our research clearly shows that empowerment, innovation and inclusion — which are, by nature, long-term objectives — support strategic sustainability initiatives. Dialing in the right amount of agility by moderating its impact as a derailer can help an organization achieve its sustainability aspirations while remaining competitive and profitable in the short term.
What can be done?
Here are some suggestions that CEOs might follow to enable greater levels of organizational agility while maintaining a focus on sustainability:
-
Identify where high levels of agility are essential. This typically includes research, software and product development, where failing fast, learning and rapidly iterating are key to success. Supply chain management, where speed and recovery from disruption go hand in hand, is also a likely prospect.
-
Prioritize areas of greatest need. Identify underperforming functions or departments and target one of them for an agility makeover. Use the learnings and experiences of employees there as preparation for moving to other underperforming areas.
- Decide where continuous improvement is the better response. Agility serves best in areas more subject to disruption, compared to functions like manufacturing, procurement, finance and accounting where efficient processes, consistency, quality and cost are the main considerations.
- Strike a balance between acting on short-term issues and pursuing long-term sustainability objectives. To use a sailing analogy, “feather the tiller” to make small tactical adjustments while keeping your eyes on the horizon to avoid the negative aspects of too much agility and cultural disruption.
- Don’t implement agile transformation everywhere all at once. This "big bang" approach can have serious negative consequences, including employee resistance, culture shock and inconsistent or inappropriate implementation. Instead, start with specific areas as suggested above and use the lessons learned to sell agile to other areas of need.
We began with empowerment, innovation and inclusion as three pillars of a sustainable culture and a cautionary tale about the impact of too much agility. But what else might contribute to the best culture for sustainability, and what roles do the CEO and other senior leaders play in creating it? We will attempt to answer these questions in the following posts.
This is the second in a series of blogs about culture and sustainability. The first blog, The Fundamental Importance of Purpose, looks at the link between purpose and sustainability.