How can businesses remain sustainable? What is business sustainability all about? What are some of the impacts of globalisation on the sustainability of businesses? Can businesses draw lessons from epics of ancient civilizations? This article explores the idea of sustainability from an ancient Asian, karmic point of view and offers some insights into the long-lasting success of certain Eastern businesses.
With globalisation and now asianisation, the phenomenon of sustainability of businesses is undergoing a sea change. From profit-oriented principles of business sustainability through to triple-bottom-lines (people-planet-prosperity), we are now looking to establish linkages with philosophies of ‘karma’ that have their origin in ancient Asian epic. But, before we delve deeper into the context let us quickly explain the term ‘business sustainability’. The word sustainability is derived from the Latin word sustinere (tenere, to hold; sus, up). Sustainability is seen by some as “at the intersection of environmental, economic, and societal stewardship”1. The concept of sustainability was defined by the Brundtland Commission of the United Nations as “development which meets the needs of the present without compromising the ability of future generations to meet their own needs” (Brundtland, 1987: 8). This is a widely quoted definition of sustainability and sustainable development.
The above definitions and approaches makes one thing very clear; that sustainability is not just a contemporary scenario, but rather has been there all through the civilisations. The main difference to this today being the changes in the business scenario due to globalization, consequent flattening of the world and technological advancement, making the overall phenomenon more complex than before. The issue of sustainability of businesses actually involves usefully re-looking into the fundamentals in the current context. Business sustainability may therefore be described as cohesively managing and integrating the financial, social and environmental facets of the business. It is about creating ‘long-term’ stakeholder value. Yet, how long is long? Some authors (such as de Geus2) talk about a company (or business) as a ‘living entity’, having its own unique characteristics. Thus, it may be inferred that business sustainability is equivalent to the life expectancy of an organisation.
Life Expectancies of Organisation
Assuming business is a living entity, what then is the average life expectancy of an organisation? The Shell study described in de Geus3 calculated the average life expectancy of a large MNC to be 40-50 years. However, this study only included companies that had already survived their first 10 years, commonly a period of high corporate mortality. A study by Stratix Consulting Group calculated the average life expectancy of firms in Japan and much of Europe, regardless of size, at 12.5 years.4 Another study indicated the average life span of companies to be 12-15 years.5 It is worrying to look at the above figures and imagine the average life of a company to be so short. On the other hand, some organisations are still around after very long periods of time. For example, Beretta, the Italian firearms maker is 500 years old and Givaudan, the Swiss perfumery was established in 1895. A 2009 study by Tokyo Shoko Research Ltd6 notes that among nearly 2 million (1,975,620) firms in Japan 21,066 firms were founded more than a century ago and 8 firms founded more than 1,000 years ago, with Osaka-based construction company Kongo Gumi topping the list with 1,431 years of history (until its liquidation in January 2006). Regarding the reason for longevity of Japanese firms, it has been suggested that they focused on their core businesses by accumulating and developing unique skills and know-how, management based on the trust of stakeholders, a professional CEO system and conservative management.7 Cases like these prompt the view that a ‘natural’ average lifespan of an organisation can be much higher than the current averages may at first sight imply. But what are the reasons for unsustainability of businesses?
Reasons for Unsustainability of Businesses
Our research recorded responses from organisations (operating in Asia) on the reasons for unsustainability of businesses, the following 5 were cited: poor leadership, resistance to change, not being a ‘systems’ thinker, ignoring risk and greed as shown in the table.
The vast majority of organisations believed that the rise and fall of any organisation has a direct correlation with leadership ability, particularly attributes related to institutionalising good governance, vision, decision making ability and planning.
The second most common key reason, given by over two-thirds of our organizations, was resistance to change. Implementing strategic change is one of the most important undertakings of an organisation. Successful implementation of strategic change can reinvigorate a business, but failure can lead to catastrophic consequences, including an organisation’s collapse.8 Organisations and business preference is often to maintain the status quo, thereby ignoring the necessity to change and adapt to shifting conditions, which is yet another reason for unsustainability.
Systems thinking has been defined as an approach to problem solving, by viewing ‘problems’ as parts of an overall system, rather than reacting to a specific part, outcome or event and potentially contributing to the further development of unintended consequences. Many, nearly one-half, of our organisations indicated the tendency of ‘not being a systems thinker’ or lack of systems thinking culture in the organisation, as the third major reason for business unsustainability. It is like people of different opinions, thoughts and values sailing a boat and discovering holes in it when many of them are less bothered than the rest as the holes are not at their end of the vessel. Since their opinions are divided and priorities are different they spend their time disagreeing and opposing one another’s opinion, leading the boat to sink while they are even unaware of it. Just like the people on the boat, organisations whose cultures do not promote a unified percolation of thought and actions are vulnerable to sinking.
A lack of executive commitment to risk management is a primary contributor to the relative immaturity of risk management in many organisations. Many organisations have grown an internal maze of assessments as individual responses to various risks while omitting or misaligning the strategic risk.9 Ignoring risks or risk ignorance is the failure of an organisation to recognise that a risk exists. Risk ignorance as a reason why businesses fail was the fourth major reason, given by just over one-third of our organisations.
Greed is an excessive desire to acquire or possess more than what one needs or deserves, especially with respect to material wealth. Krugman10 noted that the notion that “greed is good” for society may contain a fatal flaw as: “A system that lavishly rewards executives for success tempts those executives, who control much of the information available to outsiders, to fabricate the appearance of success. Aggressive accounting, fictitious transactions that inflates sales, whatever it takes”. Greed was the fifth major reason for problems, given by over one-quarter of our organisations.
Now that we know the reasons for business unsustainability why be concerned about it at all? It is because, as de Gues11 states: “the damage that results from the early demise of otherwise successful companies is not merely a shuffle in the FORTUNE 500 list, work lives, communities, and economies are all affected, even devastated, by premature corporate deaths.” Is there then a way for organisations to work towards increasing business longevity? Does ‘Karma’ matters? Can we learn something from an ancient epic?
Business Longevity and Karma matters
The Bhagavad Gita, the sacred Hindu scripture enumerates that the soul of no living entity dies. The following is noted in chapter 2, Verse 22 and 23 respectively.
“Vasansi jirnani yathavihaya navani grihnati naroaparnai, thata sarirani vihaya jirna nyanyani sanyati navanidehi”12
Meaning – Just as a man giving up old worn out garments accepts other new apparel, in the same way the embodied soul giving up old and worn out bodies verily accepts new bodies.
“Nainam Chindanti Sastrani, nainamdahatipavaka, nachainam kledayantiapo, na so sayati mahruta”13
Meaning – Weapons cannot harm the soul, fire cannot burn the soul, water cannot wet and air cannot dry up the soul. The soul is eternal.
Drawing lessons from the above and considering the fact that organisations are living entities, it may be inferred that business sustainability has two different phases, which we call- Karmic and post-Karmic phase-
• When the business has its physical existence – this phase is driven by karma (“action” or “deed”). This karmic phase is responsible for shaping the future.
• When the business leaves a legacy behind – based on the previous karmic. This stage is the phase beyond physical existence of the business or post-karmic phase. The product, artefact, creation and thoughts are implanted in future generations.
This Asian perspective of karmic and post-karmic phases of business sustainability may further be explained through the following example of a highly successful Asian conglomerate with a huge global footprint- the 140-year-old Tata Group. The group’s philosophy is very much ingrained on the principles of ‘Karma’ that every action, or karma, has gunas or qualities and as noted in the Bhagwat Gita, the noblest is Nishkam Karma—action without expectation and is intended for the greater common good. The family-owned US $100 billion conglomerate is unique in its way to be controlled by the Tata philanthropic trusts through their 66 percent majority stake in Tata Sons, which in turn is the biggest shareholder in each of the Tata companies. The trusts are a conglomeration of two big and many smaller units, the first of which was set up in 1919 and named after Sir Ratan Tata, the younger son of the group’s founder. Before he died in 1918, he bequeathed all of his personal wealth towards philanthropy. Since then, the family has donated their wealth in the company to the trusts, the long-term supporters of social causes, community projects and academic institutions including setting up iconic institutions like the Indian Institute of Science (IISc), the Tata Institute of Social Sciences (TISS) and Tata Institute of Fundamental Research (TIFR)14. The group’s founder and his successors believed in leaving a legacy of good ‘karma’ behind. Currently, under the helm of Mr. Ratan N Tata, former Chairman of the Tata Group, the trusts’ (as well as the overall group’s) focus is on innovation. To stimulate innovative thinking, encourage innovation and create an innovative environment and culture in Tata companies, in 2006-7 the Tata Group Innovation Forum (TGIF) was formed. One of its initiatives- Tata InnoVerse- particularly promotes the essence of ‘Karma’. InnoVerse is a web-based open innovation platform through which every employee in Tata’s over 90 operating companies spread over 80 countries get ‘Karma’ points when they do anything from posting an idea, voting, commenting through to implementing an idea15. Through this system, the culture of innovation and opportunities of cross-pollination of ideas within the group’s companies are promoted. Employees’ ‘karma’ is rewarded and they get a chance to be partner in the progress of the group to leave a legacy behind. Tata Swach, a low cost water purifier, is just one of many examples of such ‘karma’ focused collaborative innovation where the Tata group of companies came together to put ideas into action. The Tata Swach Water Purifier that uses advanced Nanotechnology is the most awarded water purifier in the world16.
These examples are able to reinforce the fact that every organization, like humans, has a choice and potential in it to live through the karmic phase, creating products or services that will form the basis of the organisation being sustainable, even after its mere physical existence. Sustainability of business, thus, can be in its ‘immortalisation’ or longevity consciously created through karma. Now that the karmic and post-karmic phases of an organisation have been outlined, there is a need to understand the factors that may affect the sustainability of a business in the karmic phase.
Factors Affecting the Sustainability of Business
As mentioned previously, the foundations of the post-karmic phase will be developed when the organisation has its physical existence. Broadly speaking, there are two factors that affect business sustainability when an organisation has its physical existence or is in the karmic phase. These are as follows:
1. ‘Regular Maintenance’ – this helps the organisation to run on a day-to-day basis and acquire strength for any contingencies that may crop up in the future.
2. ‘Withstanding Contingencies’ – this is an organisation’s ability to withstand any unforeseen challenges that may hinder the business operations and to remain invincible.
But how does ‘Karma’ matter in regular maintenance and withstanding contingencies? Tracy notes: “Perhaps the greatest enemy of personal success is explained by the Law of Least Resistance. Just as water flows downhill, most people continually seek the fastest and easiest way to get what they want, with very little thought or concern for the long-term consequences of their behaviour. This natural tendency of people to take the easy way explains most underachievement and failure in adult life”17. Does this mean that the contingencies or uncertainties of the future are created due to the selfishness of a few people governed by the law of least resistance? Assuming the present is the testing ground of future consequences, are we able to then control the present and determine the future to make it sustainable? One interesting insight on human tendency is put metaphorically: “in Mayan mythology, the Universe was destroyed four times, and every time the Mayans learned a sad lesson and vowed to be better protected but it was always for the previous menace…2000 years later we are still looking backward for signs of the upcoming menace but that is only if we can decide what the upcoming menace is…”18. Recent NASA researchers unravelled that the prime reason for the fall of the classic Mayan civilisation was due to human ignorance, followed by deforestation that lead to environmental catastrophe which could not be managed once it went out of control. There are also non-ecological theories of Mayan decline that include overpopulation, foreign invasion, peasant revolt, and the collapse of key trade routes. In a nutshell, the 3Cs (Care-Connect-Co-create) went missing then. That is, they stopped caring for people and planet, stopped connecting for good causes and stopped co-creating a sustainable future while being overpowered by greed and other forms of human evil. Devastation and destruction were imminent19. History proves that everything we do as an individual, organisation, society or country is a matter of choice (that leads to ‘action’ or ‘karma’) involving an individual or a group of them and it has consequences good or bad. But predicting the future has limitations; it is probably best to make a business fundamentally stronger so that it can withstand adversities and contingencies rather than triggering distress calls (such as ‘SOS’ or ‘Save Our Souls’). On the contrary, revisiting fundamentals may provide options to choose whether to continue to succeed or fail and go under.
Conclusion While working over the years in the area of people and sustainability, we gathered the fact that sustainability is a balancing act to be judiciously executed. The essence of sustainable development is perhaps well represented through this quote: ‘The genius of sustainable development is to finesse the perceived conflict between economy and environment and between the present and future’20. In other words, it can be concluded that more often than not business sustainability is a choice that germinates in corporate boardrooms, spreads across organisations through clear vision and subsequent action/Karma and is a phenomenon that is culminated by human greed, lust for power and other inter- as well as intra-organisational political plays. Business sustainability is thus beyond just lasting and ‘Karma’ matters!
This article is mostly based on the book Succeed or Sink: Business Sustainability Under Globalisation, by Chris Rowley, Jayantee Mukherjee Saha, David Ang (Chandos, Oxford publication, 2011).
About the Authors
Jayantee Mukherjee Saha is the Director and Principal Con-sultant of Aei4eiA (http://www.aei4eia.com.au), a Sydney-based management research and consultancy firm focusing on ‘people & sustainability’ matters. Her previous employments include working for leading professional bodies in Australia and Singapore. Jayantee is an invited columnist in leading HR magazines in the APAC region and is the author of a number of publications including the recent book -“Succeed or Sink: Business Sustainability Under Globalisation” (Chandos, Oxford, 2011). She has recently been voted as the Deputy Chairperson of the Access and Social Justice Consultative Group at one of the Local Government Councils with responsibilities to advocate for an accessible and socially just inclusive community.
Professor Chris Rowley is the Director of the Centre for Research on Asian Management and Professor of Human Resource Management at City University and Director, Research and Publications, HEAD Foundation, Singapore. He is Editor of the leading journal Asia Pacific Business Review, Series Editor of the Working in Asia and Asian Studies book series. He has published widely, with over 450 articles, books, chapters, entries and practitioner pieces. He has given a range of talks and lectures to universities and companies internationally with research and consultancy experience with unions, business and government.
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