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Jayantha P. Liyanage Teuvo Uusitalo Editors
Value Networks in Manufacturing Sustainability and Performance Excellence
SpringerSeriesinAdvancedManufacturing Serieseditor DucTruongPham,Birmingham,UK
Moreinformationaboutthisseriesathttp://www.springer.com/series/7113
JayanthaP.Liyanage • TeuvoUusitalo Editors
Editors JayanthaP.Liyanage
UniversityofStavanger
Stavanger
Norway
TeuvoUusitalo VTTTechnicalResearchCentreofFinland
Tampere Finland
ISSN1860-5168ISSN2196-1735(electronic)
SpringerSeriesinAdvancedManufacturing ISBN978-3-319-27797-4ISBN978-3-319-27799-8(eBook) DOI10.1007/978-3-319-27799-8
LibraryofCongressControlNumber:2016940797
© SpringerInternationalPublishingSwitzerland2017
Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpart ofthematerialisconcerned,specificallytherightsoftranslation,reprinting,reuseofillustrations, recitation,broadcasting,reproductiononmicrofilmsorinanyotherphysicalway,andtransmission orinformationstorageandretrieval,electronicadaptation,computersoftware,orbysimilaror dissimilarmethodologynowknownorhereafterdeveloped.
Theuseofgeneraldescriptivenames,registerednames,trademarks,servicemarks,etc.inthis publicationdoesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexempt fromtherelevantprotectivelawsandregulationsandthereforefreeforgeneraluse.
Thepublisher,theauthorsandtheeditorsaresafetoassumethattheadviceandinformationinthis bookarebelievedtobetrueandaccurateatthedateofpublication.Neitherthepublishernorthe authorsortheeditorsgiveawarranty,expressorimplied,withrespecttothematerialcontained hereinorforanyerrorsoromissionsthatmayhavebeenmade.
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ThisSpringerimprintispublishedbySpringerNature TheregisteredcompanyisSpringerInternationalPublishingAGSwitzerland
ThisbookisdedicatedtotheR&Dteamofthe EUProject ‘SustainValue’,theirbeloved families,andaffiliationsforcontinuous commitment,creativity,andteamwork.
Preface ThesignificanceofthemanufacturingindustryinEuropeiswidelyknownand accepted.Manufacturingcompaniesgenerate,directlyandthroughservices,wealth andjobsinallEuropeancountries.Globalizationhasactivatedanovelindustrial revolution,leadingtoanewworldwidedistributionofproductionandmarkets.The increasingdemandsforsustainability,atthesametime,havecreatednewchallengesandemergingopportunitiesforsocietyandforbusiness.Thetraditional trans-nationalmanufacturingproductandservicedeliverysolutionscannotbe sustainedinbusinessenvironments,wheregrowingtradevolumesandcommercial operationalpatternsimposesignificantenvironmentalchallengesacrossEurope. Hence,aradicalshiftisrequired,withindustrybeinginakeypositiontopursue sustainableconsumptionandproductionsolutions.
Muchoftheopportunitytoaddresssustainabilityrestsonenhancednetwork management.Leadingcompaniesarelookingfornewapproachestomanage sustainabilityimpactseffectively.Ifmanufacturingnetworkpartnersdonotmanage thefuturechallengesaroundregulation,reportingandcomplianceassurance, scarcityofresources,ortheeffectsofclimatechangeontheirbusiness,thentheir abilitytooperateasanetworkpartnercouldbedramaticallyaffected.Thiscouldbe fataltotheirbusiness.
Tobesuccessfulinthischangingbusinessenvironment,manufacturersmustbe pro-active.Industrialpractitionersneedtobecreativeinrecognizingtheopportunitiesthatthesustainableeconomywillpresentforthedevelopmentofnew products,theidenti ficationofchangesinmarkets,andforoptimizingtheiroperatingnetwork.
Enterprisesmusttakeintoconsiderationnotonlytheeconomicgoalsbutalsothe needtomeetenvironmentalandsocialgoalsinconductingbusiness,recognizing thateconomic,environmentalandsocialimpactsoccuratallstagesinthevalue network.Thisrequiresmanagingtheinternalactivitiesandoperationsoftheproducingorganizationandensuringthatallvaluenetworkpartnersfollowthesame principlesandperformancestandardsthathaveaninfluenceonthesustainable productandservicedeliveryperformance.Sustainablevaluecreationisthekey
contributionofenterprisestosustainability,i.e.tocreatelong-termenvironmental, socialandeconomicvalue.Individualbusinessescannotdeliverthesystemchanges requiredatthevaluenetworklevel.Collaborationamongpartnerscanandmustbe enabledbydevelopingattractiveandcommonapproachesforsustainableproductionandservices.
Theexistingbusinessmodelsaremostlybasedoncreating,deliveringand capturingeconomicvalueforcustomersandshareholders,withlimitedorno attentionpaidtoenvironmentalandsocialvalueandabroaderrangeofstakeholders.Thesetraditionalbusinessmodelsarebasedonlinearindustrialmodelsthat externalizeenvironmentalandsocialimpacts.Thesecannotsupportthesustainable businesscreationthatisrequiredtomeetthefutureneedsoftheplanetandof increasinglydiscerningcustomers,whowantfeaturesotherthaneconomicvalue.
Whereenvironmentalandsocialvaluehasbeencreatedby firms,itisoften throughcompliancewithregulationsorcorporatesocialresponsibilityprograms. Whileimportant,theseapproacheshavenotgenerallyembeddedsustainabilityinto thecoreofthebusiness,andassuchtheirimpactisoftenlimited.Thechanging businessenvironment,widerrangeofstakeholdersengaginginthedebateover industry,resourcelimitationsandtheemphasisonthesocialresponsibilitiesof firmshaveraisedtheneedforbusinessmodelinnovationtointegratesustainability morefullyintothecoreofthebusiness.
Theaboveobservationsdemonstratetheimportanceofprovidingtoolsand methodologiestomaximizesustainabilityincompanies,showinghowthebusiness canbeimprovedbyusingsustainableguidelines.Italsoemphasizestheimportance ofdoingthisatthenetworklevel,astheimpactsdonotmainlyoccurinsidethe finalOriginalEquipmentManufacturer(OEM)business.Nevertheless,OEMsare keyplayersbecausetheyspecifydesignsandmaterials,selectsuppliersand co-ordinatenetworks.
Sustainabilityisbecomingacentralfactorincompanies’ long-termcompetitivenessandworkinginthiswaywillaffecttheirvaluenetworks.Theinvolvedbusiness partnersareintegratedwithinseveralnetworks,makingplanning,coordinationand managementatediousandchallengingtask.Thedecisionmakingsettinginparticular bringschallengesduetothedecentralizednatureofbusinessdecisionsandoperational activities.Inthiscontext,amajorimpactonthenetworkedproductionenvironments couldbeachievedthroughholisticandintegratedsolutionsforthesustainabilityof complexvaluenetworks,ratherthanthroughisolatedoradhocsolutions.
Thisbookisbasedontheresultsofthe SustainValue (SustainableValue CreationinManufacturingNetworks)project,whichwasasmall-scalecollaborativeprojectwithintheEU7thFrameworkProgramme.Thisthree-yearproject beganonApril1,2011withatotalbudgetof4millioneuros,ofwhichthefunding fromtheEuropeanCommissionwas2.8millioneuros.Theoverallaimofthe
projectwastodevelopindustrialmodels,solutionsandperformancestandards fornewsustainableandhigher-performingproductionandservicenetworks. Inprinciple,itaimedat:
1.enhancinggovernanceandbusinessmodelsthatenabletheactiveintegrationof dynamicandcomplexproductionsystemsworkingtowardscooperativeand sustainablevalue-addingbusinessnetworks,
2.simplifyingtheadoptionofsustainableapproaches,businessmodelsandsolutionsprovidingsustainabilityandperformanceKPIstogetherwithguidelinesfor implementation,
3.deliveringanewmethodologythatsupportssustainable,competitiveand customer-orientedlifecycledecisionsonproductsandservicesincomplex productionsystems,
4.supportingcomplianceverificationprocessesforcontinuousimprovementby developingsustainabilityassuranceperformancestandardsforcomplexbusiness processesinintegratedproductionandservicenetworks.
Thisbookbringsvariousimportantperspectivesintospotlight,togetherwitha numberoftechniquesandmethodsthatcanhelpsupportthemanufacturingsector toexplorenewavenuesineconomic,social,andenvironmentaltermsinemerging networkedbusinessenvironments.
Stavanger,NorwayJayanthaP.Liyanage Tampere,FinlandTeuvoUusitalo
Acknowledgements Thisbookisbasedona3-yearEuropeanprojecttitled ‘Sustainablevaluecreationin Manufacturingnetworks(SustainValue) ’,conductedin2011–2014period.
Researchanddevelopmentactivitieswerecarriedoutbyaconsortiumofpartnersconsistingofthefollowingorganizations:VTTTechnicalResearchCentreof Finland;PolitecnicodiMilano,Italy;UniversityofCambridge,UK;Centrefor Industrialassetmanagement(CIAM)ofUniversityofStavanger,Norway;Institute forIndustrialManagementattheRWTHAachenUniversity,Germany;German InstituteforStandardisation(DIN),Germany;FIDIA,Italy;Riversimple, UK;CLAAS,Germany;andElconSolutions,Finland.
TheresearchprojectreceivedfundingfromtheEuropeanCommunity’sSeventh FrameworkProgramme(FP7,2007–2013)undergrantagreement262931.
ThisbookisaresultoftheEUproject.Theauthorsofthebookdeeply acknowledgealltheconsortiumpartnersandtheEuropeanCommissionfortheir support.
PartIIntroduction
LivingwithComplexitiesandUncertainties .....................3
JayanthaP.Liyanage
SustainabilityConceptandComplexPerformanceDimensions .......15
JayanthaP.Liyanage
SustainableManufacturing:Challenges,Approaches andaRoadmap .........................................27
TeuvoUusitalo,PadmakshiRana,MariaHolgadoGranados andMarcoMacchi
TowardsSustainabilityGovernanceinValueNetworks ............43 KatriValkokariandPadmakshiRana
ProductsandServicesinaSustainableWorld ...................65 ChristianGrefrath,DirkWagnerandSebastianStermann
PartIIBusinessModellingforSustainableManufacturing ValueNetworks
BusinessModelsandBusinessModelling:StateoftheArt ..........75 PadmakshiRana,SamuelW.Short,SteveEvans andMariaHolgadoGranados
SustainableBusinessModels:TheoreticalRe flections ..............95 PadmakshiRana,SamuelW.Short,SteveEvans andMariaHolgadoGranados
PracticeReviewofBusinessModelsforSustainability .............111 PadmakshiRana,SamuelW.ShortandSteveEvans
ToolsetforSustainableBusinessModelling .....................123
PadmakshiRana,SamuelW.Short,SteveEvans, MariaHolgadoGranadosandKatriValkokari
AnIndustrialCase:Riversimple .............................155
PadmakshiRana,NicoSergent,SamuelW.ShortandSteveEvans
PartIIILife-CycleBasedSustainableSolutionDevelopment
RequirementsforSustainableSolutionsDevelopment ..............165 ChristianGrefrath,DirkWagnerandSebastianStermann
StateoftheArtRegardingExistingApproaches..................179 ChristianGrefrath,DirkWagnerandSebastianStermann
DevelopmentMethodologyforSustainableSolutions ..............193 ChristianGrefrath,DirkWagner,MarcoMacchi, MariaHolgadoGranadosandSebastianStermann
MethodsandToolsforSustainableDevelopment ofProductsandServices ...................................223
ChristianGrefrath,DirkWagner,MarcoMacchi, MariaHolgadoGranadosandSebastianStermann
PartIVPerformanceManagementinSustainable ManufacturingNetworks
DynamicDriversofModernPerformance:Values,Stakeholders, andResources ..........................................249
JayanthaP.Liyanage
PerspectivesonPerformanceAssessmentandManagement..........273 JayanthaP.Liyanage
IntegratedPerformanceFrameworkforSustainable ManufacturingNetworks ...................................291 JakobE.BeerandJayanthaP.Liyanage
MaturityAssessmentforSystematicPerformance ImprovementinManufacturingNetworks ......................303 LucaFumagalli,MariaHolgadoGranados,JakobE.Beer, PadmakshiRana,ChristianGrefrathandDirkWagner
EditorsandContributors AbouttheEditors Prof.JayanthaP.Liyanage isattachedtothe UniversityofStavanger(UiS),Norway,andspecializedinIndustrialassetmanagement.Hehasobtained B.Sc.inProductionEngineeringwithFirst-class honours(SriLanka),M.Sc.inErgonomics/Human FactorswithDistinction(Sweden),andPh.D.in OffshoreTechnology(Norway).
Prof.Liyanageisthechairoftheuniversity–industrycollaborativecompetenceClusteronIndustrial AssetManagement(CIAM).HeisalsoaguestprofessoratUniversitiTeknologiPetronas,Malaysia,and UniversityofCincinnati,USA.Heservedinthe BoardofDirectorsofSocietyofPetroleumEngineers(Stavangersection),Boardof DirectorsoftheNorwegianErgonomicsandHumanFactorsSociety(NEHF)and hasbeenamemberoftheStandardizationCommitteeSN/K536onAsset ManagementinStandardsNorway.Dr.Liyanagewastheco-chairoftheEuropean NetworkforStrategicEngineeringAssetManagement(EURENSEAM)involving approximately15Europeancountries.HeisactivelyinvolvedintheWorking Group(WG)onAdvancedMaintenanceEngineering,Services,andTechnologyof InternationalFederationforAutomaticControl(IFAC)andhonorarymemberof InternationalFoundationforResearchinMaintenance(IFRIM).Heisalsoa FoundingFellowoftheInternationalSocietyofEngineeringAssetManagement (ISEAM).
HeisactivelyinvolvedinanumberofR&Dandjointindustryprojectsoverthe lastdecadesbothatadvisoryandmanagerialcapacities,andhaspublishedmore than100publications.Heisaneditorialreviewerandamemberofinternational editorialboardsofanumberofinternationaljournalsandtheeditorinchiefof InternationalJournalofStrategicEngineeringAssetManagement(IJSEAM).
Forhisperformance,hehasreceivedanumberofprestigiousawardsinclusiveof UniversityofPeradeniyaAwardfortheBestPerformanceinEngineering(1995), ColomboDockyardAwardfortheBestPerformanceinProductionEngineering (1995),theOverallBestinMasters(1999),LyseEnergyResearchAwardfor ExcellentResearchandAcademicContributions(2001),SocietyofPetroleum EngineersBestPhDAward(2003),EmeraldLiteratiClubAwardforExcellence (2004)andRegionalAmbassadorAward(2014).
TeuvoUusitalo Lic.Sc.(Tech.)isaseniorscientistat VTT.Hehasover25years’ experienceinriskmanagement,projectmanagementandsustainabledevelopment,aswellasinengineeringassetmanagement. Thefocusofhispreviousandcurrentresearchprojects withindustryisfocusingonsustainablevaluecreation, enterpriseriskmanagement,businessmodeldevelopment,valuecreationandcaptureandimpactassessment.DuringhiscareeratVTT,hehasparticipatedin severalEU,Tekesandindustrialfundedprojectsasa researchscientistandprojectcoordinator.Currently, heisalsoworkinginvariousprojectsontopicssuchas circulareconomyanddevelopingeconomicmethodsandtoolstosupport decision-making.HeactedastheprojectcoordinatoroftheEU-fundedproject SustainableValueCreationinManufacturingNetworks(SustainValue).
Contributors JakobE.Beer studiedindustrialengineeringand engineeringmanagementinGermanyandtheUSA. WhileworkingonSustainValueatUniversityof Stavanger,Norway,hewrotehisPh.D.dissertation titledAnalysisandManagementofBottlenecksin SupplyNetworks.InSustainValue,hisresearch interestconcernedthemeasurabilityofsustainability performance.Today,JakobworksasalogisticsengineeratSSISchäferinGermany.
Prof.SteveEvans CEng,DirectorofResearch, InstituteforManufacturing,UniversityofCambridge DirectoroftheEPSRCCentreforInnovative ManufacturinginIndustrialSustainability ProfessorEvansspent12yearsinindustry, fi nally asEngineeringSystemsManageratMartin-Baker Engineering,theworldleadingmanufacturerofejectionseats.HebecameprofessorofLifeCycle EngineeringatCranfieldUniversityin1998and joinedtheUniversityofCambridgeInstitutefor Manufacturingin2011.Heisdirectorofthenational EPSRCCentreinIndustrialSustainabilityconducting researchintohowindustrycanbringambitiousenvironmentalandsocialsustainabilitygoalsintopractice.
StevehasactedasspecialistadvisertotheHouseofLords,asamemberofthe LeadExpertGroupfortheGovernment’sFutureofManufacturingForesight exercisesettingoutavisionforUKmanufacturingto2050andotherpolicyroles. HeisthechairmanoftheManufacturingPolicyPanelfortheInstitutionof EngineeringandTechnologyandafellowoftheRoyalSocietyArtsand Commerce.Heisapartnerorfounderoffourcleantechnologystart-ups.
Steveisanactionresearcherwhoworkswithmanycompaniesaroundtheworld toimprovetheirsustainabilityperformance.Hisresearchseeksadeepunderstandingofhowindustrymightchange,withadualemphasisonurgentand practicalchangenowandsystem-levelchangethatoffershopeforasustainable future.
LucaFumagalli isamechanicalengineer,andhehas collaboratedwiththeDepartmentofManagement, EconomicsandIndustrialEngineering(DIG)of PolitecnicodiMilanosinceJanuary2007.In2010,he completedthePh.D.programme,andfrom2015,heis anassistantprofessoratPolitecnicodiMilano.He worksondifferentresearchtopicsaboutproduction management,industrialservicesandinparticular maintenancemanagement-relatedtopics,witha speci ficconcernonnewtechnologicalsolutions.His researchactivityhasbeenrelatedalsowithEuropean researchfundedprojects.LucaFumagalliisalsopresentlyresponsibleoftheresearchoftheobservatoryTeSeM(www.tesem.net)and vice-directorofMasterMegmi(MasterExecutiveinGestionedellaManutenzione Industriale ExecutiveMasteronIndustrialMaintenanceManagement)delivered byMIP SchoolofManagement PolitecnicodiMilanoandSdM Schoolof ManagementUniversità degliStudidiBergamo(http://www.mip.polimi.it/megmi)
ChristianGrefrath studiedMechanicalEngineering atRWTHAachenUniversitywithproductdevelopmentandinnovationmanagementasmajorsubjects. Afteruniversity,hewasaprojectleaderat HeidelbergerDruckmaschinenAGinservicebusiness developmentandproductmanagement.From2009 until2014,hewasworkingasaprojectmanagerat FIR(InstituteforIndustrialManagementatRWTH AachenUniversity)anddoingresearchforhisdoctoralthesis.Hewasleadingseveralresearchprojects withemphasisonserviceinnovation,businessmodel management,servicedevelopmentandservicecomplexitymanagement.In2012,heestablishedandwasheadinguptheCompetence CenterServicesatFIRtoconsolidateknowledgeforprofessionalizingtheservice businessforindustrialcompanies.DuringhispositionatFIR,hewasresponsible forvariousconsultingprojectstohelpindustrialcompaniestooptimizetheirservice businessbymeansofleanapproachesorbusinessmodelinnovation.Dr.Grefrath holdsadoctoraldegreefromRWTHAachenUniversityinmechanicalengineering. Inhisdoctoralthesis,hedevelopedacostestimationmethodologyforcomplexity costsforindustrialservices.Since2015,heisresponsiblefor fiveproductfamilies overthecompletelifecycleasaseniorproductlinemanageratMHWirth.
Dr.MariaHolgadoGranados isaresearchassociateattheEPSRCCentreforInnovative ManufacturinginIndustrialSustainability,Institute forManufacturing,UniversityofCambridge.Sheis currentlytheleadresearcherontheEnergyand ResourceManagementSystemsforImproved EfficiencyintheProcessIndustries(MAESTRI) project,fundedbytheEuropeanCommissionthrough theHorizon2020programme.Sheisamanufacturing Engineer,graduatedatUniversityofSeville,Spain. ShehasbeenateachingassistantinaM.Sc.courseon DesignandManagementofProductionSystems.She hasobtainedaPh.D.inManagement,EconomicsandIndustrialEngineeringat PolitecnicodiMilano,Italy.HerPh.D.researchexaminedhowindustrialmaintenancecanserveasanenablerforpracticingmoresustainablemanufacturing operationsthroughprovisionofindustrialservices.Herresearchinterestsinclude industrialsustainability,energyandresourceeffi ciency,industrialsymbiosis,sustainablevaluecreation,sustainablebusinessmodels,productservicesystems, maintenancemanagement,maintenanceservicesandmaintenancecontributionto industrialsustainability.ShehasbeenaMarie-CurieResearchFellowwithinthe EuropeanprojectiMaPla ‘IntegratedMaintenancePlanning’ inUniversityFederico SantaMariainValparaíso,Chile,andalsoavisitingscholarattheIntelligent
MaintenanceSystemsCenterinUniversityofCincinnati,USA,andattheInstitute forManufacturinginUniversityofCambridge,UK.
MarcoMacchi isAssociateProfessoratPolitecnico diMilano,DepartmentofEconomics,Management andIndustrialEngineering,whereheiscurrently teachingIndustrialTechnologiesandManufacturing SystemsPlanning.HeismemberoftheEditorial BoardandBookReviewsEditoroftheInternational JournalProductionPlanning&Control:The ManagementofOperations(Taylor&Francis);Chair oftheIFAC(Int.FederationforAutomaticControl) WorkingGroupA-MEST(AdvancedMaintenance Engineering,ServicesandTechnology);Vice-ChairoftheIFACTC(technical committee)5.1ManufacturingPlantControl;scientificresponsibleofthe ObservatoryonTechnologiesandServicesforMaintenance.HehasbeenInvited GuestEditoroftheSpecialIssuesonMaintenanceandFacilityManagement (ProductionPlanning&Control:theManagementofOperations),Maintenance ModelingandEngineering(IMAJournalofAppliedMathematics),Advanced MaintenanceEngineering,ServicesandTechnology(JournalofManufacturing TechnologyManagement).HehasbeeninvolvedinprojectsfundedatEuropean level,asscientifi cresponsibleorresearcher.Hismainresearchinterestsareinthe fieldofassetlifecyclemanagementandmanufacturingmanagement.
PadmakshiRana isaconsultantatCSRWorks, Singapore.Herresearchandconsultancyworkfocus onsustainablebusinessmodels,valueexchangesand networks,stakeholdercollaboration,andmateriality andreportingforsustainability.Priortothe Singaporemove,shewasaresearchassociateatthe EPSRCCentreforInnovativeManufacturingin IndustrialSustainability,InstituteforManufacturing, UniversityofCambridge.Shecontinuestobeaffiliatedwiththecentre.PadmakshihasanM.Phil. (Environment,SocietyandDevelopment)andPh.D. (ManufacturingManagement)fromtheUniversityof Cambridge.Herdoctoralresearchexploredcorporate socialresponsibility partofthebusinesscontributiontowardssustainability,in foodmanufacturingcompanies.Herprecedingeducationalquali ficationincludesan MBA,followedbyamarketingcareerinecotourisminNepal.
Dr.NicoSergent isPowertrainArchitectat Riversimple.HestudiedIndustrialandAutomotive Engineering;andcompletedaPhDwithWillamsF1at Cranfi eldUniversity.NicojoinedRiversimplein2010 andwasinvolvedinallaspectsofvehicledesignand development.HeisnowresponsibleforthedevelopmentofRiversimple’sinnovativehydrogenfuelcell electricpowertrain.Hehasalsobeenheavilyinvolved inbusinessmodelingandpresentingRiversimple'sdifferentapproachesonsustainablebusinessandengineering.
Dr.SamuelW.Short isaCambridgeManufacturing EngineeringalumnusofIfM,withanM.Eng.in ManufacturingEngineering,holdsanMBAfrom QueensSchoolofBusinessinCanada,hasprofessional qualificationswiththeChartered InstituteofPurchasing andSupply(CIPS),ACCAManagementAccounting andFinance,andpractitionercertificationinPRINCE2 projectmanagement.Heisacharteredengineerofthe InstituteforMechanicalEngineers(IMechE).Hehas15 yearsofworkexperienceprimarilyintheaerospaceand defencesector.Hisworkexperienceincludesproductionmanagement,newproductdevelopment,supply chainmanagement,industrialdevelopmentstrategy,salesandmarketing,commercial management,internationalpartnerships,governmentrelationsandgeneralbusiness management.In2010,priortostartinghisPh.D.,hetookacareerbreaktoworkina voluntarycapacityinthedevelopmentsector.HewasbasedinSriLankawithalocal NGOadvisingoneconomicdevelopmentstrategy,workingwithcentralgovernment, regionalchambersofcommerceandSME’sacrossthecountry.Sincecompletinghis Ph.D.,Samuelmaintainsanactiveengagementinresearchandacademicpublications. Inparallel,heisdevelopingaconsultingpracticeinthe fieldofindustrialsustainability and finance.HeiscurrentlyfocusingonNEAsiaandChinamarkets.
SebastianStermann studiedBusinessAdministration andElectricalPowerEngineeringatMünsterUniversityof AppliedScienceandatRWTHAachenUniversity.During hisMaster’sdegreeheworkedintheServiceManagement DepartmentoftheFIR(InstituteforIndustrialManagement), wherehecontributedtoabenchmarkstudyonleanservices. InhisMasters’ thesisheanalyzedtheinfluenceof standardizedindustrialservicesonprocessstabilityand serviceproductivity.
Currently,Sebastianworksinthe “systemplanning” departmentoftheAmprion GmbH,oneoftheleadingtransmissionsystemoperators(TSO)inGermanyandEurope.
KatriValkokari (D.Sc.Tech.)worksasaprincipal scientistatVTTTechnicalResearchCentreof Finland.Shehasexecutedseveraldevelopment projectsonbusinessnetworksduringtheyears 2001–2015.Withintheseprojects,shehasdevelopedandpublishedseveralpracticaltoolsforthe strategicdevelopmentofdifferentbusinessnetworks.Shehasalsopublishedseveralacademic articlesintheresearchareasofbusinessnetworks, sustainability,inter-organizationalcollaboration innovationandknowledgemanagement.In2009, KatriValkokaricompletedherdoctoralthesison businessnetworkdevelopment.
DirkWagner studiedIndustrialEngineeringat RWTHAachenUniversity.Thefocusduringhis studieswasonthe fi eldsofmechanicalengineering andenergytechnologies.Attheendofhisstudy,he gotinsightsintothedailybusinessofabigGerman energysupplierfornearly2yearsinformofa traineeshipanddiplomathesis.Afterwards,he workedfornearly5yearsatFIR(Institutefor IndustrialManagement)attheRWTHAachen University.There,inthedepartmentofservice management,heworkedasconsultantinmany industrialprojectsandmanagedseveralresearch projects.Mostprojectsfocusedontheenergyaswellastheaviationsectorandthe sustainableusageofresourcesinserviceprocesses.Simultaneously,hefocused, duringhisdoctoralthesis,ontheassessmentofavailabilityguaranteesforwind turbines.Since2016,heisworkingasaProductManagerServiceandLogisticsfor theTRUMPFLaserGmbH.
LivingwithComplexities andUncertainties JayanthaP.Liyanage
1Introduction
Inthemodernglobalsetting,anumberofcomplexissuesplayapivotalroleinshaping theglobaleconomyatlarge.Bothopportunitiesandvulnerabilitiesareexpectedto growsubsequentlyasmorecountriesandindustrialsectorsseekaggressivedevelopment.Despitethefactthatmarketsharehasadominantimpactonthemodern corporateeconomy,environmentalconcerns,pricevolatility,supplyinsecurity,etc. havebeguntoshapeupachangethatgraduallycreatesaglobalriskmix.Inanattempt torespondtomarketrealities,someoftheglobalcorporategiantshavebegunto transforminto valuenetworks,makingastrategicmovetostaycompetitive. Itiscleartodaythatinnovationwillhighlyregulatethecompetitionforatleast thenext20–30yearsorso.Theeconomicintensityofsuchnewconditionsandrole inwealthcreationhaveintroducedinevitableimpactsthatwillhaveramifi cations acrossvarioussocial,political,economicandtechnologicalinstitutions.Various formsofinnovations(e.g.,business,process,product,service)alsofeedexternal institutionsandsocietieswithextrainvestmentsforresearchanddevelopment, improvedtechnologiesandinfrastructure,socialprograms,professionaldevelopmentactivities,etc.,creatingnewopportunities.This,inconjunctionwithother sensitiveissues(e.g.,environmentalsensitivity,resourceconsumption,riskexposure),keepsnewbusinessmodelssuchasvaluenetworksasacompetitiveoptionin themodernglobalindustrialenvironment.Presumably,overthenextfewyears, majorpoliticalandeconomicdecisionswillprofoundlybeimpactedsimplyby supplyanddemandpatternsacrossdifferentsectorsandbysupplyanddemand behaviorsbetweendifferentregions.Eventoday,someoftheinfluentialcorporationsarepositivelyinclinedtoreviewtheirbusinesspoliciesandoperationsto
J.P.Liyanage(&) FacultyofScienceandTechnology,UniversityofStavanger, N-4036Stavanger,Norway e-mail:j.p.liyanage@uis.no
© SpringerInternationalPublishingSwitzerland2017
J.P.LiyanageandT.Uusitalo(eds.), ValueNetworksinManufacturing, SpringerSeriesinAdvancedManufacturing, DOI10.1007/978-3-319-27799-8_1
managehiddenrisksandtocapitalizeonopportunitiesbasedonstrategicnetwork principles.
Withescalatinguncertainties,deregulatingmarkets,spin-offs,newformsof risks,etc.,therulesofthegamehaveapparentlybeenrede finedinvariousbusinesses.Competitionisfurtherintensi fiedinthewakeoflimitedresources,more marginalprospects,marketdemands,etc.Moreover,mergersandacquisitionsthat sweptacrosstheindustryonamassivescaleresultedintheclearmarketdominance ofmanyorganizations,whileothersstillstrivetoremaincompetitive,particularlyin theeventofsubstantialprofitdownturnduringaperiodofeconomicrecession. Rapidcostcutting,downsizing,andsubsequentrestructuringwerewidelyseenas thepanaceatoovercomeobviousthreatstosurvival.Inspiteoftheshort-term savingssecuredbyresortingtoquicksolutions,thelong-termconsequencesareas yetuncertain.Inthelongerterm,thereareknownrepercussionsofcost-cuttingand downsizingdecisions,andasStultz-Karim(1995)notes,becomingleanerand meanerdoesnotnecessarilymeanthatthoseorganizationshavebecomeprogressive.Inthefaceofescalatinguncertaintiesandrisks,industryingeneralappearsto haveadoptedarelativelycautiousstrategytosecureaddedvalue.
Inthecontinuousconfrontationwiththisdynamic,uncertain,andcomplex businessenvironment,theleadersoforganizationsseemtohaveunderstoodthatthe formofthegamehaschangedanditisnecessarytotakeadifferentstance.Change mostlypresentsvariouschallenges.Thus,manyanalystsquestionwhethermere financialstrength,sizeandscaleofoperations,anddiversi fiedportfoliosaloneare sufficienttogaincommercialsuccesstomorrow(e.g.,seeStultz-Karim 1995;Tomei 1998;BradelyandHartog 2000;Fanchi 2000;Agbon 2000;Malin 2000;Arnold 2000;Pearson 2000;Daneshy 2000;Armstrong 2000 etc.).Withgrowingeconomic concernsstillintheair,organizationshavebeguntounderstandthatasubstantial shareofbusinesssuccesstodayisconstitutedofintangibles(e.g.,knowledge, alliances,cooperation,imageandreputationetc.)andotherformsofstrengthsand thattheyshouldbeabletoexploittheseatthebestpossibleprice(see,forexample, Gaddy 2001).Thissignalsthatabusinessneedstodevelopnewperspectivesandto resorttonovelmanagementfrontiersinordertosustainprofitabilityandgrowth. This,inprinciple,underlinesamessagethatitiscriticaltoadoptadynamicperformancemanagementpracticethatappreciatesnon-financialaspectsandcapitalizesonintangibles,institutionalknowledge,etc.,tosustaincompetitivityby ful fillingcriticalstakeholderexpectations.Therearemanydriversthatmakethese transitionsquitecompellingandcontinuouslyrolling.
Moretodaythanever,exceptionalbusinessperformanceisheavilydependenton theextentofbusinessintelligencepossessedbyindividualorganizations.The natureofintelligencerequiredforstrategiccorporateplanningandoperationsandto securevalue-addedinprinciplerestsonadeeperunderstandingof:
• whatforcesshapethecompetitioninglobalindustry,
• whatistheemergingbusinesssetup,
• whatcorporatevisionandbusinessmodelwould fitthefuture.
Ideally,thisshouldallowanorganizationtocontinuouslymatchitsresources andcompetencieswiththeemergingbusinessenvironment.Thisshouldencompass variousstrategicchoices,wheretheleadershipadoptsthebestbusinessmodeland transformsitintoasetofdeedsthroughdecision-makingprocesses,indicatingthe mostfavorableresponsestogoverningcircumstances.Thiscaneventuallygenerate acomplexmixofbothaggressiveandsmoothoperationsresultingfromoffensive anddefensivedecisions.
2ForceField Inresponsetovariousformsofforces,bothmarketandinstitutional,organizations ingeneralareinclinedtomodifytheirunderlyingmanagementmodelsortemplates thatguidetheirdecisionsandactivitiesinordertoremaincompetitive(Porter 1985; Richard 1992;D’Aunnoetal. 2000).Thetheoreticalunderpinningisthatthereisa continuousinteractionbetweenorganizationsandtheenvironmentinwhichthey exist,asthoseorganizationsactasopensystems,sensitivetochangesandevents.It impliesthatthereisaninherentrelationshipbetweenenvironment,strategy,and performance(Thompson 1997;LuoandPark 2001;Prescott 1986).Forinstance,in mosthostcommunitiesaroundtheworld,protestsfromlocalcommunityorganizationsonenvironmentalpollutionandeconomicaccusationsaremakingit impossiblefororganizationstooperatewithoutengaginginsocialengineeringor economicdevelopmentactivities.Individualorganizationsindiversebusiness sectorsevolveaccordingtotheirleadershipanditsresponsetosuchforcesand changesinthemarketsandotherbusinessenvironmentsthatitserves(Agbon 2000; Abbottetal. 2001).Whileexploringthemanagerialmodelsthathavebeenadopted bymajorplayersunderthesecircumstances,itisworthwhileinitiallytounderstand whatdrivessuchachangeorwhatforcesandscenarioscanprobablybeinstrumentalinarticulatingturningpointsofthecommonfutureofbusinesses.
Ingeneral,allthebusinessesaroundtheworldarecontinuouslyexposedto diverseforces.PricewaterhouseCoopers(2002)identi fiessixsuchgenericforces thataffectallindustrialconditions,namelycustomers,e-business,knowledge, reportingandtransparency,attractingthetalent,andpoliticallandscape. Apparently,apartofthepressureisbasedonthestatutory,regulatory,and fiscal regimes,andtheotheremergesfromchangeswithinpolitical, financial,andsocial institutionsinclusiveofNGOs.Inaddition,competitionhasbecomemore aggressive,posingchallengesintermsofmarketcapitalization,exploitationof resources,andaccesstointellectualcapabilities.Thesituationisfurtherintensi fied bytechnologicalinnovations,spin-offs,etc.Thestreamofmarketsignalsreceived fromtimetotimefromhighlysuccessfulcompaniesportraysvariouschangesinthe corebusinessphilosophyandthuscorporatebehavior.Theseareparticularly embeddedinpolicystatements,corporatepublications,mediacoverage,public speeches,etc.Thosesources,coupledwithotherliteratures(e.g.,Armstrong 1994; Stultz-Karim 1995;Browne 1998;Tomei 1998;BradelyandHartog 2000;
Abbottetal. 2001;Sprunt 2001;GarciaandVredenburg 2002),providevoluminousevidenceaboutexistingconditionsandthechainofreactionsbythemajor playersinbusiness.Continuousreviewofinformationfromsuchsourcesindicates whatconstitutesthecurrent force field thatcanstronglyshapethefutureofbusinesses(seeTable 1).
Theintensityoftheimpactoftheforce fieldoncommercialsuccessislargely influencedbybusinessstrategiesandbehavioradoptedbyindividualorganizations. Obviously,thereisawidearrayofstrategicchoicesavailabletodifferentorganizationstoconfrontthesechallenges.Notallsuchchoicesareofcourseappropriate andfeasibleforeveryindividualorganization,butspecificselectionsarelargely dependentonaparticularorganization’sinterests,needs,priorities,andcapabilities. However,ingeneral,thewaycorporationsconducttheirbusinessinternationally hasbeenchanging,andorganizationsareapproachingdifferentmanagement strategiesinordertooperatemoresensitivelythanbefore(Armstrong 1994;Garcia andVredenburg 2002).
Table1 Themajor componentsoftheforce field forbusinesses
Stakeholderexpectations Expectationsaregreatlyenhancedasaconsequenceof informedsocieties,far-reachingknowledge,growingsocial campaigns,standardsoflivingandqualityoflife,coupledwith therespectforglobaldiversity,demandforhigherstandards, greaterchoice,bettervalue,etc.
Industrycondition
Thisislargelydependentonthemagnitudeofglobalization, mergersandacquisitions,theliberalizationofmarkets, regulatorypressure,etc.,coupledwithglobalwarming, advancedtechnologies,rapidstructuralchanges,spin-offs, volatileoilprice,sociopoliticalandeconomicpolicies,etc.
Globaldemographics
Thereisadirectimpactofpopulationgrowth,rapid industrializationandurbanizationanditssubsequentdemands, andbusinessaccountabilitiesonsocioeconomicdevelopment, coupledwithsupplysecurity,environmentalconcernsleading toalternativesolutions,andafocusonfuturewell-being
Resourceexploitation
Situationsareinfluencedbyagingsystemsandinfrastructure, rapidindustrialdevelopmentinenvironmentallysensitiveand riskyareas,coupledwithresourceintensityforcommercial activities,increasingcompetitionforlimitedresourcesandnew formsofrisksthatthoseactivitiesandorganizationsare exposedto
Newcompetencecompilation
Thisisdependentontheotherfourcomponentssubsequently demandingbettereconomicstabilityandnewformsof competence,forinstancewithinthehuman,technological, social,andmanagerial fields,toremaincompetitive
3PerceptionsoftheFuture Thegreaterthecompetition,thehigheristheneedforcompetitorstoforeseethe futureasbeingproactive.Scenarioshavebeenusedinthiscontexttoactively developstrategiesforlong-termbusinessadvantage,byaddressingtheunknown futureanditspotentialimpactonbusinesses.Itcombinesstrategicthinking,deeper context,andmeaningfulexpressionsofthefutureandsubsequentlyhelpsbusinessestoprepareformajorchangesaheadbyallowingthemtolinkuncertaintiesto decisions.
The WorldBusinessCouncilforSustainableDevelopment (2001)hasdeveloped aninterestingglobalscenarioofbusinessimpact,asillustratedinTable 2.
However,strategicplanningtoconfronttheundefi nedfutureisverymuch dependentontheusers’ perceptionaboutwhatisimportant,howthoseelements wouldevolveinthefuture,andlinkagesbetweenelementsinshapingtheforcesin theenvironment.Inthecurrentandemergingbusinessenvironment,environmental andsocialdemandsgraduallybecomemorestringentandinfluencecompetition. Togetherwithotherincreasingdemands,theseissuesposevariousrisksand uncertaintiesforindustry.However,theyalsopresentsignifi cantopportunitiesand advantagestoorganizationswhicharereadytoseeandpursuethem(Browne 1998; Armstrong 1994).Organizationsjusthavetolearnhowtotranslatethischangeinto ameansofdevelopingvariouscompetenciesthatcreatecompetitiveadvantage.To stayaheadintherapidlyevolvingnewera,itisnecessarytoresorttosuchcontinuouslearningandimprovementprocesses.Thisobviouslyinvolvesanelementof thinkingglobally(i.e.,gatheringbusinessintelligence)toactlocally(i.e.,deploying offensiveanddefensivestrategies)toremaincompetitive.Forinstance,itisknown thatthesuccessofvarioustypesofprojectsisincreasinglydependentonachieving
Globalscenarios2000–2050,basedonWBCSD(World BusinessCouncilforSustainableDevelopment 2001)
TheWBCSD(WorldBusinessCouncilforSustainable Development)Globalscenarios2000–2050arecenteredaround threeprincipalconcepts(i.e., FROG,GEOPolity,and JAZZ), definedwithreferencetothetripleeffectof:
• thenew (socialchangeandtechnologicalinnovations,new economy,andneweraofhumanhistory)
• themany (increaseinpeopleaccompaniedbyanincreasein thediversitythatinfluenceshowsocietiesandeconomiesare shapedandwhatdecisionsaremade)
• theconnected (theglobal ‘technosphere’—acombinationof technology,economy,andsociety torivaltheglobal ecosystem)
Thecomplexinterconnectionbetweenthemisconsequentialto thedivergencefromFROG(i.e., ‘unsustainability’ withnarrow economicmyth)toGEOPolityorJAZZ(i.e.,toward ‘sustainability’ withevolvingorcompetingeconomicmyths)
Table2 Globalscenarios basedonWBCSD
endorsementfromlocalcommunitiesandotherstakeholderswhoareconcerned aboutbusinessoperations.Sucharesponsibleapproachwillenableorganizationsto contributecrediblytothepublicdebateandtoworkconstructivelytoavoid unnecessarybusinessrisks.Furthermore,inordernottofailingoodbusiness prospects,organizationshavebecomemuchmorecautiousthantheyusedtobe (Abbottetal. 2001).Theytendtoexplorepotentialpitfallsdeeplyandtoidentifyall possiblestakeholdersfromtheonset(Tomei 1998;BradelyandHartog 1998),as they perceivethechangeintheperiphery.
Inprinciple,theongoingchangeisapparentlydrivenby:
• globaltransformations,
• socialandstakeholderpower,
• changesintheecosystem.
These,bylarge,arethecornerstonesthatshapethebusinessenvironmentandthe normsandprinciplesofbusinessconduct.Asignificanteffortislikelytobenecessaryifindustryistomaximizebenefitsandtominimizerisksposedbycurrent movements(BradelyandHartog 1998;Armstrong 1994).Thisinherentlyinvolves anorganizationallearningprocess,and,sayArgyrisandSchon(1978),organizationsaredynamicsystemswhichhavethecapacitytolearnandtobecomemore openintermsofacknowledgingrealitiesaboutthemandtheirenvironment.This importantlyshowcasesastrategiclinkbetweenthedevelopmentanddeploymentof thedynamiccapabilitiesofanorganizationandcohesiveactionstorealizecompetitivestrategiesandpolicies.Forinstance,accordingtoTeece(1998):
Dynamiccapabilityistheabilitytosenseandthentoseizenewopportunities,andto reconfigureresources,competencies,etc.toachievecompetitiveadvantage. such sense-makingorinterpretationisacriticalfunctionasitenablestheorganizationtoconnect withitsenvironmentwherethesubsequentdecisionswillbebaseduponhunchesand informedguessesaboutthetruestateoftheworld thissense-makingcanbeassistedby scenarioplanningthathelpsmanagersdevelopmentalmapsofpossiblecomplexfuture realities.Theobjectisnottopredictthefuture,buttounderstandthefundamentaldriversof changeandtoquicklychartactionplans.(Teece 1998,pp.72–74)
Thismakesadequateallowancesfororganizationstobe proactive–dynamic (SudhirandMurthy 2001)or sense-and-respond types(Hope 2000),asopposedto reactive–static.
4NewDemandsinPerspective Arecurrentcriticismagainstmanyorganizationsisthatrelativelylittletimeis allowedforaddressingcomplexandsensitiveissues.Increasingly,issuessuchas humanrights,sustainableeconomicdevelopment,corporateresponsibility,internationalstandards,fairness,socialjustice,therightsofindigenouspeople,and environmentalconservationarebeingraised(Tomei 1998;Bray 1999;Garciaand Vredenburg 2002).Further,Agbon(2000)contendsthatthecurrenteconomicsof productionarepurelyprofitablefromtheperspectivesoforganizations,
governments,andshareholdersbutnotnecessarilysofromtheviewpointofhost communitiesandothertypesofstakeholders.Thismaybeattributed,forinstanceas researchshows,tothefactthatorganizationsingeneraltendtodisplayadifferent attitudetowardeconomicallyweakstakeholders(Unerman 2000).However,there isanuprisingsocialvigilanceontheperformanceoforganizations.Iforganizationalperformanceisperceivedasdiscriminateandprejudicial,thenthereisahigh riskofrisingdisruptionstobusinessactivitiesbyhostcommunitiesinvariousforms (e.g.,Myanmar,Nigeria,Argentina,Alaska,andCanada).Suchincreasingdisruptionsandtheirdirectimpactontheeconomicsofbusinessventureshaveforced production,manufacturing,andprocessindustrytocautiouslyevaluatetheirrelationshipswithstakeholders.AsTomei(1998)observes,owingtoprinciples, requirements,andresponsibilitiesrelatedtocompensation,rehabilitationschemes, ordisputesettlementproceduresovercompensationforinjuries,severalorganizationshaveadoptedmeasurestominimizesocialconflictandadversesocialand environmentalimpacts.Inthisprocess,industrieshaveto fi rstlyde finetheirown roleforeffectiveparticipationinasustainablechangeprocessandsecondlydrawup properstrategiestoadaptthatwouldallowthemtoprotectthecredibilityand securityofactivitiestoensurethatthereisasharedpayback(Armstrong 1994; Browne 1998).
Theprincipleistoinnovativelyexplorewhattypeofstrategicplanningisrequired toadaptsuccessfullytotheemergingconditionsandthustosustainlong-term businesscompetitivity.Suchaprocessmuststayintunewithkeytrendsandmajor forcestobeearlypreparedtotakeadvantageofthem.Hence,itinherentlyinvolves, notesMintzberg(1994), analysis (i.e.,learningfromallsources)and synthesis (i.e., exploitationoflearningtodevelopavisionofthedirectionthatthebusinessshould pursue).Inthisprocess,onemustcontinuetoasknotjustwhether wearedoing thingsright butalsowhether theyaretherightthingstodo (Abbottetal. 2001).In manycases,thismayconstituteaparadigmshiftinthewaythebusinessisconducted,whichcanleadtoradicallynewandmoreexcitingbusinesspracticeswithan understandingthattheemergingenvironmentforbusinessexposesorganizationsto acomplexprofi leofopportunitiesandrisks.Forinstance,accordingtoSmith (1998),Abbottetal.(2001),etc.,increasedfocusonmanagementofrisks,or integratedriskmanagement,andinaddition,compliance-basedactionsprompted organizationstobeginlookingmorecloselyatthesocialandotherformsofrisk issuesimpactingtheirbusiness.Itisthisshifttowardbroaderrisk-basedapproaches, newmanagementagendas,andecoaccountingthatprovidedthethinkinganddisciplinenecessaryforevolvingtoanotherstageofabusiness.Eventheabilityitselfto transform,asArmstrong(1994)underlines,toaverygreatdegreedefi nestheir long-termbusinessviability.Moreover,theprevailingbusinessenvironment seeminglyhasprovidedfavorableconditionsandthusisrelativelyfertiletomake thistransition.Transitionpressurecancomefromvarioussources,rangingfrom scientificevidence,legislation,shareholdersandnewinvestors,andlocalcommunities,tocostsofresources,wastedisposal,decommissioningandpollution,the market,costofinsurance,etc.(Stultz-Karim 1995;Smith 1998).Italsomanifestsa rangeofissuesthatdefinethecontextinwhichbusinesshastobeconducted.The
presentbusinessintelligenceappearstohavelargelyunderstoodthatwhileprofitabilityisessentialforcontinuityofbusiness,societyisdemandingthatcompanies shouldbeaccountableformorethanjust financialperformancetoremainsuccessful. Then,interestingly,thedefinitionofmanagementseemstobegraduallyevolvingas aprocessthatstrategicallyaswellasdynamicallybalances valuecreation and risk mitigation underrelativelycomplexanduncertainconditions.
5FromaComplexPicturetoInstrumentalElements Astheworld’sdemandcontinuestogrowyearbyyear,ablendofoutstanding humanskills,technologicalinnovation,globaloutreach,andstrongrelationships withstakeholdershasapparentlybecomerequisiteforcommercialsuccessofany business.Inresponsetogreaterscrutinyfromsocial,political,andregulatory institutions,andinrecognitionofthewidereconomic,social,political,andeven ecologicalimpactofdecisionsandactions,businessesappeartorecognizethat successisnotjustanissueofsuperior fi nancialachievementsbutisalsodependent ontheimpactofamultitudeofstakeholdersoverawideareaofperformance. Amajorityoftopperformersappeartoinsistthatanexplicittransitioninbusiness managementpoliciesisimpetustosustainlong-termprofi tabilityandgrowth.In addition,theseriesofeconomicturbulences,whichhaveoccurredoverthelasttwo decadesalongwithmodernuncertainconditions,havepromptedalmostall industrialsectorstoperformacriticalreviewofbusinessstrategiesandpractices. Theoverallapproachhasbeentoexaminecarefullyeveryfacetofbusinessoperations,resultinginnewwaysofdoingbusiness.Variedperspectives,drawntoward newtypesofrisksthatcompaniesareexposedto,havegreatlymotivatedthis further.Inessence,currentstatushasstimulatedadebateandrecognitionofthe criticalityofresponsibleandaccountablebusinessperformanceasasmartrisk reductionandanopportunityexploitationstrategy.Thisinprincipleunderliesat least fivemajorcorporatebehavioraltraits:
• aworthy ‘licenseholder ’ (effi cientuseoflocalresources,expansionofeconomicactivityintheoperatingregion,correctbusinessattitude,respect,and catertolocalneedsanddemands),
• astrongcompetitor (createvalueandmanageriskthroughastrongerbusiness standard,respectmarketethicsanddynamics,etc.),
• aresponsiblepartner (stimulatebusinessactivity,competeethically,respect mutualprofitsandgrowthstrategy,effi cientlydeveloplocalsupplychains, servicesectorsandinfrastructuresinordertodevelopandgrowbusiness,no harmthroughactivities,etc.),
• agoodcorporatecitizen (bringsustainablebenefitstothepeople,improve qualityoflife,createopportunities,displaylegitimateconduct,etc.),
• agoodneighbor (bearolemodel,seriouslytakeintoaccountcommunity growth,immediateenvironmentalimpact,socialprogress,etc.).
Despitethefactthatactualperformancebehaviorsoforganizationscanbe attributedtodiversereasons(e.g.,socialnorms,peerinfluence,neighborhood effects,imitation),theprincipalstimuliofsuchbehaviorsarecommonconditions andcharacteristicsinexternalenvironments(Granovetter 1979;Manski 2000).The apparenttransitioninbusinesspracticesalsoembodiesachangeinmanagerial philosophytoembrace corporatesocialresponsibility and/or sustainablebusiness thattranscendsasynthesisof economic,social,and environmental performance (Fig. 1).
Despitenotabledifferencesinsomeaspects,thereisagrowingmanagement recognitionacrossindustrythatdecisioncriteriaandcourseofactionshould favorablypromoteacommitmenttosustainablebusiness.Forinstance,the emergingcriteriaadoptedforinvestmentdecisionsbytopcompetitorsarenotsaid tobeexclusivelyeconomicinnaturebutalsohaveserioussocialandenvironmental considerationsintheappraisalofinvestments,newprojects,modi ficationsto existingassets,andsoon(see,forinstance,Jonesetal. 1996;BradelyandHartog 2000;Hargis 2000;Agbon 2000;Wolffetal. 2000).Therearesomenovelmethods andtoolsthathavebeendevelopedtosupportthisprocess,including Ecological andDevelopmentalAssessmentModel (Waibleetal. 1996), Sustainable DevelopmentRiskAssessmentTool (Abbottetal. 2001),and Sustainable DevelopmentAssessmentChecklist (BradelyandHartog 1998).Inrespectofthese developments,thereisageneralmovetowardchallengingthebusinesscommunity toadoptsuitabledynamicstrategiestocopewithemergingvibrantindustrial conditions.
Fig.1 Majorperformancetraitsintheglobalbusinessenvironment
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