Key Elements of Change Management: Standardize, Centralize, Simplify

I just read an interview featuring Bob Otto, the retiring CIO and CTO of the U.S. Postal Service in CIO Insight, and it excited me because I just know he is right on the money. If you want people to accept new technology it must be standardized, centralized and simplified.

After a discussion of the pace of change in technology during Otto’s tenure, interviewer Brian Watson asks him how he gets his people to accept change:

“I have three guiding principles—principles I’ve used since I was young. First, standardize everything. If you find a process you like, standardize it. Second, centralize everything you can. If you have services in five different places and you can centralize them, you will have reliability, predictability. Third, simplify. The computer has taken over your life, so I want it to be intuitive [for people to operate and manage]. I also test my own dog food. Everything we build has to pass the “Bob” factor. I put myself in the place of the lowest common denominator, of someone who might not have a high school degree. I look at how people could be intimidated by technology, and I don’t want them to have a hard time.”

I like the part about testing his own dog food; I’ve always tried to do that as well. Those are the same guidelines we use when we develop our enterprise software. We are aiming for a centralized information repository that enables our customers to look at a global enterprise from one dashboard.

Meanwhile other organizations are learning to standardize, centralize simplify when managing change based on new technology. Last year, ESS went into a Fortune 500 company and replaced 67 separate applications that were being used to monitor environmental health and safety, crisis management, waste and emissions. Replacing all those disparate applications with our integrated GRC platform, thereby standardizing and centralizing the operation, saved the company $1.5 million in support costs, upgrade costs and other direct costs associated with deploying those applications.

In addition, the company was able to redeploy 200 people who had previously been engaged merely in supporting those applications.

It goes without saying that the company was thrilled, but as I was driving home from the office yesterday it occurred to me that we had also minimized their risk.

How? It’s simple. All those applications prevent a company from having a holistic view of its business risk. Every silo of data is viewed separately, without the strategic overall perspective the company really needs.

What’s more, every separate application actually increases the risk involved in data integrity. When all that data is imported into a tool that does give an overall view, how do C-level managers know whether the data has become corrupt on its journey through the applications to the dashboard?

So I’ve come to the conclusion that our unified platform is itself a risk manager — preventing the corruption of data by giving the enterprise a way to look at all its data through the same lens.

So standardize, centralize and simplify works.

Although I am technical, much of our software is deployed at the plant level by people who do not have time to struggle with new technology and would rather ignore change if it doesn’t simplify their lives. They are busy. Ease-of-use is a must. What good is an all-in-one dashboard if the relevant information can’t be accessed by the guy in the plant as well?

2 comments October 8th, 2007

Savvy CEOs Respond Quickly to Corporate Crises

Lately the headlines seem to be full of corporate crises. Mattel and Graco have been forced to recall products, pharmaceuticals have been withdrawn from the market. CEOs seem to be constantly apologizing to customers for potential product liability issues. Or even for untimely price cuts, as Steve Jobs did when angry customers protested on the Internet about price cuts on the iPhone.

Some of these crises could have been averted, but most could not. However, they can all be monitored and responded to in a timely fashion that lowers the risk for the company and preserves its image with stakeholders.

Notice how fast CEOs have to respond these days. Years ago, when Johnson & Johnson found that some bottles of its product Tylenol had been tampered with, the company made its crisis a case study through the swiftness of its response. The company responded within days, recalling the product and getting out information to its customers.

But that was before the widespread emergence of online communities. Companies no longer have days to respond to a health and safety crisis, whether inside their own companies or externally for their products. A crisis plan must be in place. It must allow for immediate response, and it must respond within the new parameters of sustainability and stewardship.

For this reason, it’s a good idea to have integrated software systems with the ability to monitor, predict, and communicate potential problems. In our own company, we are working hard to make our products more predictive, proactive, and analytic rather than merely responsive.

It’s imperative that we control risk as best we can, and when we can’t, we must have the quickest, most effective response.

Add comment September 28th, 2007

“Green” Values Aren’t About Branding: It’s About Survival

There’s a new blog called 21st Century Citizen that explores what the true values should be for those who are living in this century. This is very different from the Environmental Leader blog that’s discussing where your company’s brand will be when the “green” fad ends. One is deeply felt and strategic, while the other marks a trend. Enterprises must make the strategic choices, rather than branding through “quick fixes.” That never works.

Having been around in the ’70s when there was an earlier “green” movement, I know that all issues have a life cycle shaped like a bell curve. Al Gore has now made environmental issues hot (no pun intended) by talking about global warming. Indeed, we will come to a compromise system of carbon trading and emissions efficiencies, regulations and compromises, and then environmental issues will be off the table as emergencies once more.

But 21st Century Citizen asks the question “should you ride or bike?” and comes to grips with some of the complexities involved in that decision. To bike, many people would have to move closer to their jobs. Or change jobs. Or work from home. Or move closer to the grocery store. The long and short of it is that we have to re-examine not one choice, but all of our life choices as individuals in order to create sustainability. I think the purpose of this new blog is to start the discussion about the future.

And corporations are pondering some of the same decisions, as well. It’s not just your greenhouse gases that you have to track. It’s your chemical waste. It’s the components of your supply chain, and the byproducts of your manufacturing process. Environmental issues may disappear and re-appear from the radar screen per se, but the safety issues posed by environmental contaminants around people will always be an issue for employers. The world is round, not flat, which means we have finite resources available to meet our ever increasing population’s demand. The thoughtful management of these resources as well as our waste and pollution byproducts will continue to become ever more critical for sustainability.

This round of environmental initiatives isn’t about branding. It is about survival.

1 comment August 1st, 2007

Groups Affirm Need to Address Climate Change

This has been the hottest summer in Arizona for quite a while. In the meantime, rivers have been flooding in Texas, and San Francisco saw rain for the first time in July. In Mumbai, people were swept away in main streets. So it is no wonder that governments and businesses are now in a race to meet or exceed the Kyoto protocol, promising new methods for controlling greenhouse gas emissions.

The Toronto City Council voted 37-0 this week to adopt a plan that aims to cut greenhouse gases in the city by 6 per cent by 2012, 30 per cent by 2020 and by a full 80 per cent by 2050. It will involve retrofitting buildings and exploring geothermal energy for large public buildings.

On almost the same day, the Business Roundtable, an association of 160 chief executive officers of leading U.S. companies, announced a new policy statement on climate change, acknowledging that climate change poses a serious risk and that the time for action is now. You can download the entire document.

Because ESS has been in the business of reporting on emissions for more than ten years, we know that the enterprise has been taking the issues of sustainability more and more seriously. This year, clearly we have reached a tipping point. Business leaders have even asked for a better national registry for emissions tracking, because they are building benchmarks and measurable objectives into their plans, much as a the City of Toronto has done.

Once numbers are assigned to these goals, business will achieve them — you heard it here first.

1 comment July 19th, 2007

Companies Serious About How They Impact Environment

I’ve been asked to write a chapter on environmental issues as part of a book on corporate governance and ethics, so I’ve been thinking a lot lately about what constitutes real corporate social responsibility. I can remember when corporations first embraced the concept, but it really involved philanthropic efforts, like supporting schools and donating to charitable organizations. The first corporation I can remember that took an environmental issue as a mark of corporate social responsibility was the ice cream maker, Ben and Jerry’s, when they decided to raise money to save the rain forest by naming one of its flavors “Rain Forest Crunch” and donating a percentage of the profits to charity.

Fast forward about thirty years, and the environmental questions have grown beyond a small, image-oriented part of the enterprise and into a position front and center — the boardroom. Now corporate governance involves more and more the question of “how does our company and its industry impact the environment?” Following that audit (because that’s what it is, and we help companies do those audits) comes the strategic question: “how do we create a sustainable business model that does not deplete resources faster than it creates them?” With these questions, “corporate social responsibility” becomes a big piece of all corporate ethics policies, and is at the heart of every company’s governance.

Add comment July 13th, 2007

Overseas Companies Looking for Health & Safety Solutions

I’m back in Asia, having meetings during the past week with customers and potential customers in the Philippines. I have found that companies that are not ready to tackle environmental problems are quite interested in health and safety solutions, especially software that is integrated with emergency management modules. Most executives had no idea that EH&S solutions existed that were part of a single platform devoted to Prevention, Mitigation, and Performance, appearing on their portals as unified data. The emergency management piece, which is part of our Mitigation offering, drew particular attention.

One of the most pressing issues around emergency management is the coordination of communications, and we were told repeatedly about needs in this area. I’m glad we’ve got something good to offer.

This is a long way from compliance, which is where we started building our software. We are now into the larger areas of operational risk, as part of governance, risk and compliance. When I look back, I have seen that our horizon has been expanding over the past ten or twelve years.

We are just following the lead of our customers who have begun to see their needs from a more strategic perspective. This week I learned from an article in the New York Times that many large corporations are now including a CSO (Chief Sustainability Officer) in the executive suite. The compliance officer reports to the CSO. I predict that this move from Compliance to Sustainability will be a fast-growing trend.

1 comment July 5th, 2007

Business Is Taking the Lead in Worldwide Sustainability Movement

It’s just as Bruce Piasecki predicted in his book World, Inc: large corporations are taking a leadership role in creating sustainable environments. How far this has gone was demonstrated to me today in an Environmental Leader story about Tokyo Electric Power Company (TEPCO), which is buying emissions reductions from a Biomass Clean Development Mechanism Project in Chile being sold by Arauco, the largest forestry company in Latin America. CantorCO2e, a subsidiary of Cantor Fitzgerald, is facilitating the transaction and most of the information about it is on CantorCO2e’s website. Cantor, which many remember as the company that lost many of its partners and staff in the 9/11 tragedy, has developed a special subsidiary to deal in environmental solutions.

Apparently, Arauco will create energy through the burning of Sustainable Biomass (wood waste) which will then be dispatched to the Chilean electricity grid, thereby reducing CO2 and methane emissions equivalent to 500,000 tons of carbon dioxide, using the latest and cleanest technology available. Much of the biomass will come from Arauco’s own pine plantations and none of it is taken from native forest. These emission reductions will be sold to Tokyo Electric Power Company, one of the largest power suppliers in Japan.

Why this is noteworthy? First, because it shows a partnership that is global in nature and dedicated to a sustainable solution. Second, because the facilitator is a subsidiary of a company that has long been known to broker and trade in corporate debt, providing liquidity to major global corporations. Market mechanisms are being used to further environmental objectives. So this is not a feel-good initiative, but one with sound economic underpinnings.

Add comment June 26th, 2007

Newmont Mining Sets New Standard for Forward-Thinking EH&S Policies

Newmont Mining is a Denver-based gold exploration company that’s listed on the S&P 500. I was searching online for interesting EH&S statistics and information, and when I typed EH&S into Google, Newmont came up on the first page of search results! That’s huge for a mining company.

And then I went to the website and saw the company’s sustainability initiative,
which it calls “Beyond the Mine.” This initiative is probably responsible for Newmont’s “Google juice” in EH&S searches. As part of this initiative, the company has instituted a three person board-level committee on health and safety, which is part of its corporate governance structure. The purpose of this committee is to advise and oversee management on environmental health and safety issues. The committee has the power to “investigate any activity of the Corporation and its subsidiaries relating to environmental, health or safety matters. The Committee has been, and shall be, granted unrestricted access to all information and all employees have been, and shall be, directed to cooperate as requested by members of the Committee. The Committee has the authority to retain, at the Corporation’s expense, persons having special competencies (including, without limitation, legal or other consultants and experts) to assist the Committee in fulfilling its responsibilities.”

This strikes me as a very forward-thinking policy for a company that does business globally, as Newmont does. And if you read further into it, the policy is designed to help them attract and retain workers, as well as exhibit corporate social responsibility.

I’m glad to see Newmont going in this direction.

Add comment June 22nd, 2007

Court Rules Feds Liable For Pollution At Its Own Projects

Usually when a toxic spill occurs, regulators can issue fines or take legal action to force companies to clean up emissions. Yesterday the U.S. Supreme Court turned the tables on the government by ruling that the government can be liable for a portion of costs incurred when contractors clean up toxic spills while doing work for federal agencies.

The court decided that the federal government is liable for costs incurred when Atlantic Research Corp., a Virginia-based government contractor, proactively cleaned up a site in Camden, Arkansas where rocket propellant had leaked from the worksite into the soil and groundwater. The company had been hired to retrofit rocket motors.

This is a case where a private entity chose to act based on its own commitment to environmental stewardship instead of waiting on government sanctions.

In short, the court’s decision says that the government is subject to its own environmental laws. The Bush administration opposed sharing the cleanup costs, arguing that Atlantic had no standing to sue because the federal regulators had not cited the company for any violations of federal law. It was a move widely seen as an attempt by government officials to avoid financial liability for pollution that happens during federally-sponsored projects.

The government is widely regarded as one of the nation’s leading polluters. The court’s unanimous decision is expected to impact several other federally-sponsored projects where the government’s position previously discouraged companies from removing contaminants. It is estimated that thousands of sites nationwide that are contaminated with hazardous materials could be cleaned up as a result of the decision. Waiting for regulators to initiate enforcement actions could mean years of delays. That’s why the court’s decision is so important, because now companies can proceed with clean up actions without waiting for prior federal approval.

In this case, the company was willing to act while regulators chose not to act. As I have previously noted more and more companies are taking proactive steps to show they have solid environmental stewardship practices, in accordance with their corporate governance commitments. Companies now want to avoid the perception that they pollute without regard to sustainability.

Now it’s the private sector that is moving to address sustainability issues, while the government is slow to respond. That is a trend that bodes well for the future.

Add comment June 14th, 2007

Corporate Sustainability Initiatives Can Change The World

I have just finished reading Bruce Piasecki’s excellent book, World, Inc., in which he points out that corporate leaders can change the world through their sustainability initiatives, and may be the only ones who can do so. Bruce has been a consultant to Fortune 100 companies for more than twenty years, and he has seen a big shift in their attitudes toward sustainability. So have I. Corporations are now taking leadership on sustainability instead of merely complying with government regulations. And sustainability is part of larger governance, risk and compliance (GRC) boardroom-directed initiatives. Suddenly, there is a business case for corporate social responsibility. It’s a must-have program, not a frill.

This, Bruce says, is part of a new, socially responsible capitalism that he sees in companies like HP and Suncor, among others. After all, EHS issues don’t exist in a vacuum — they never have –and now sustainability is seen as necessary for recruiting and keeping top talent, for attracting and retaining institutional investment, and for participating in a global business environment that seeks to establish high standards for development. Younger workers do not want to work for companies they can’t be proud of. And pension funds are divesting their portfolios of polluters. Ultimately, money talks.

The themes of Bruce’s book are the very same themes I hear as I encounter clients and partners and other EHS decision makers both in the US and internationally. I’m looking forward to speaking at his conference in June.

Add comment May 31st, 2007