The sustainable transformation in companies is propelled by cultural change, with a sustainable corporate culture forming the foundation for long-term success. Culture eats strategy for breakfast. This memorable quote from management consultant Peter Drucker is decades old now. Almost everyone has heard it at some point. And yet, my impression as an organizational psychologist is that it is still not very well understood within companies today and very seldom guides their actions. Organizational development and change management are typically the first places where cuts are made when things get tight in a project. And that is in spite of the fact that investments in these areas often carry a tremendous return if the right methods are used.[1][2]
If we add the idea of sustainability to organizational culture, thats already two terms that are so broad and fuzzy that they are open to a wide range of interpretations. Everyone seems to have their own idea of what they mean. I frequently encounter misunderstandings and uncertainty relating to both topics in my work, which is why Im writing this text to clear things up. There are two reasons for this. First, both subjects are absolutely crucial to the evolution and further development of our companies. And second, they are also inextricably linked. True sustainability emerges from a certain culture. [4][5] And a culture that is viable for the future requires sustainability. Almost every company is currently facing the challenge of how to become sustainable. A comprehensive transformation of our economy is necessary if we are to ensure that our planet and our society remain livable. But getting there often means dealing with a whole range of complex issues. The tension between striving for growth, increased efficiency, and ecological and social responsibility seems almost impossible to reconcile. And so, many companies focus on the bare essentials: preparing for future sustainability reporting requirements. And most of them limit themselves to increasing process efficiency and introducing IT tools, which they hope will solve all their problems. This is pragmatic, and from a financial standpoint it seems to be the most effective move. But when it comes to the sustainable transformation, this strategy comes up very short. Achieving fundamental and long-term improvements in ESG performance requires a holistic approach. But what might this kind of approach look like?
Cultural change is the magic word here. Once sustainability is firmly embedded in the organizations values, basic assumptions, mindset, and modes of action, then the transformation can start to build momentum. Which doesnt mean it will be concluded in a short period and without any issues. Cultural change is complex by nature, and it is impossible to make detailed predictions. This uncertainty often causes companies to put their money toward moderate but still goal-oriented change management rather than process-oriented organizational development.
And yet, only organizational development enables the fundamental change needed for a successful sustainable transformation. And that is definitely cost-effective. After all, C-level micromanagement becomes obsolete once middle managers and employees are given the knowledge and responsibility they need to connect sustainability with the companys business interests. This can be the foundation of a sustainable business model that remains solid in the long term. There is no one-size-fits-all solution for companies to reach this point.
Lets take a look at the organizational development toolbox. Some of the methods involved are even older than Druckers statement, and they might be just as poorly understood. When applied properly, however, our methods make it possible for any company established or start-up, large or small to design its own sustainable culture. The sustainable transformation is highly complex and requires the integration of many departments and corporate levels. This means central management and decisions made exclusively by the top management at large companies are not only inefficient, but actually stand in the way of long-term success. Decentralized expertise and processes are needed instead.
As they go about these changes, companies should build on the strengths of their established culture. The majority of German employees see sustainability as an important matter, with 40 percent reporting that they would likely resign from a job if their employer were to violate sustainability criteria.[6] If companies employ the right methods here, they can achieve two aims at once, not only putting the entire company on a sustainable course with only modest outlay of time, effort, and funding, but also significantly enhancing employees psychological empowerment. Campana & Schott has been advising and supporting companies through this process of change for years. Id like to briefly introduce two of the methods we use, which I have seen succeed in establishing a sustainable corporate culture across many projects. Both methods can significantly enhance employees psychological empowerment. And that, in turn, has measurable positive effects on other factors including employee satisfaction, innovation behavior, and mental health.[8][9][10] These benefits, for their part, contribute directly to a companys economic efficiency. This makes investing in the corporate culture, previously an abstract proposition, a clear business case. A sustainable corporate culture is a necessary condition of a successful, cost-effective transformation. It will not resolve the challenges companies are facing today from one day to the next. But it does enable true change that addresses issues not in isolation, but as part of a big picture. This is the only way companies can ensure that they remain competitive in the long term.
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