Cornell University Johnson at Cornell University

Departments

Achieving ethical clarity through dialogue

Strategic innovation as the key to sustainability

By Mark Milstein

Sustainable global enterprise constitutes one of the more cutting-edge areas of programmatic development at the Johnson School in recent years, beginning with the initial endowment of the Samuel C. Johnson Chair in Sustainable Global Enterprise in 2003, and closely followed by the creation of the Center for Sustainable Global Enterprise (CSGE) in 2004. The number of courses related to this topic offered at the Johnson School has increased steadily, and includes the Sustainable Global Enterprise (SGE) Immersion, available as a first-year option.

But what is sustainable global enterprise?

Sustainable global enterprise is a management approach that frames social and environmental challenges as unmet market needs that can be addressed with business solutions. This straightforward approach enables the Johnson School to build robust MBA and executive programs in business and sustainability based on innovation and entrepreneurship. This sets it apart from most other management programs focused on corporate social responsibility (CSR), environmental management, ethical decision making, values-based management, and philanthropy.

By viewing social and environmental issues as business growth opportunities to be realized through superior management skills in innovation, entrepreneurship, technology, and new business development, we challenge our students to understand the dynamic and transformational potential of private enterprise. This focus is fundamentally different from programs centered on the environmental management challenges related to compliance, emissions, and risk reduction. (including voluntary environmental programs, environmental management systems such as ISO 14001, pollution prevention, and environmental reporting), which tend to be tackled by legal, environmental, safety and health (EHS), and operations professionals. Those are positions most MBAs do not pursue.

John Paul (left) and Rishad Olpadwala, both MBA '08, discuss local electrification and energy issues with villagers in Ghana during their SGE Immersion. Working with a private fund, they were charged with delineating a strategy for identifying, evaluating, and acquiring technologies that could serve as foundations for scalable businesses targeted at rural populations in developing nations.
John Paul (left) and Rishad Olpadwala, both MBA '08, discuss local electrification and energy issues with villagers in Ghana during their SGE Immersion. Working with a private fund, they were charged with delineating a strategy for identifying, evaluating, and acquiring technologies that could serve as foundations for scalable businesses targeted at rural populations in developing nations.
The Johnson School's management approach also differs from programs focused on corporate social responsibility challenges regarding relationships with stakeholders (including social audits, SA8000 management standards, employee volunteer programs, worker safety, philanthropy, community relations, and CSR reporting), which are often the concern of public relations, corporate foundations, and human-resource groups. Again, the vast majority of MBAs and executives do not aspire to work in those areas. Instead, they dream of becoming central strategic decision makers and running companies – not training for functions they perceive as peripheral to their organizations.

This is not to suggest that significant efforts over the past two decades to reduce the social and environmental impact of firms' activities have not been valuable. Gains made in emissions reduction and worker health and safety have been important. But the ways in which these activities typically have been pursued have led many managers to view them only in terms of costs to the firm. Both environmental management (vis-�-vis emissions) and corporate social responsibility (vis-�-vis community relations) are about reducing the impact of business activities on the environment and society. Environmental issues are narrowly defined as pollution prevention. Social issues are narrowly defined as reputation management through stakeholder engagement. Such an approach assumes that the product-market mix of a company must be taken as given, while environmental and social activities inevitably are expensive in terms of time, attention, and financial resources. The growth opportunities presented by social or environmental issues themselves have not received due consideration.

Managers and students alike respond creatively to challenges framed as unmet market needs that can be addressed with market-based solutions. They are at their best when figuring out ways to use technological, financial, and managerial resources to meet those needs. Market saturation, hyper-competition, and commoditization of traditional markets have firms looking for new growth opportunities. Keeping this framework in mind, we are working to design courses that allow students to consider the emergent opportunities arising from the challenges of social and environmental issues such as access to clean water, poverty alleviation, and climate change. These courses are appealing to MBA students, as well as to others from around the university, because they focus on the development and commercialization of new, clean technologies that catalyze the creation and growth of new markets serving new customers.

The SGE Immersion enables students to gain firsthand experience in developing business solutions for real social and environmental challenges, refine management skills (e.g. leadership, international management, innovation), and prepare themselves for positions in general management, entrepreneurship, consulting, and international business. By working in multidisciplinary teams, MBA students, along with graduate students from other areas of Cornell (including, but not limited to, the College of Engineering, the department of Applied Economics and Management, School of Industrial and Labor Relations, and the School of Hotel Administration), engage in field projects that require them to address real problems faced by large companies like DuPont, Dow Corning, GE, IBM, Nike, Suncor Energy, and S. C. Johnson & Son, Inc., as well as smaller companies like Cascade Engineering, Freeplay Energy, Tandus Group, and WaterHealth International. Projects include strategic sustainability assessments, market feasibility studies, sustainable technology commercialization strategies, base of the pyramid (BOP) business development, and sustainable venture plans.

Additionally, the Center for Sustainable Global Enterprise supports students and managers in developing a deep theoretical and practical understanding of a complex set of interrelated economic, social, and environmental issues. We want to help build those skills and capabilities necessary for formulating and implementing practical, operational solutions that have value in the marketplace. It is not enough to speculate about what might be effective competitive management. Our Learning Lab programs leverage corporate managers and researchers, alumni, nongovernmental organizations (NGOs), multilateral institutions, government agencies, and academics to understand what works in the marketplace, what doesn't, and why. Our BOP Protocol project helps companies learn how to engage communities in identifying promising new entrepreneurial opportunities that lead to economic growth. Our Business, Engineering & Sustainability initiative helps break down disciplinary barriers between business and science to encourage more effective research and venture development and specifically looks at opportunities for business and engineering collaborations within the sustainability context. All of our programs and activities are designed to leverage Cornell's top experts, leading researchers, and most promising student scholars to explore scalable, replicable business solutions that move companies far beyond compliance, philanthropy, ethics, and reporting.

The Johnson School's Center for Sustainable Global Enterprise is providing students with a systemic look at the complex interrelationship of financial, social, and environmental factors in business in ways that relate to competitiveness and growth. If they are to realize some of the future's greatest growth opportunities, the next generation of managers must be creative, have deep knowledge of local conditions, and be motivated to build local economic capacity in unfamiliar markets through unique partnerships with public and non-profit institutions. To prepare for this, we connect sustainability issues to those activities that have been the domain of senior managers at the corporate and business unit level, decision makers in finance and strategy, and those key players in research and development who determine their organization's long-term product-market mix. These managers make investment decisions and shape a firm's overall strategic direction; they are held accountable for their firm's financial performance, which, at the end of the day, determines the challenges and opportunities it will, or won't, pursue.

Mark B. Milstein
Mark B. Milstein
Mark B. Milstein is lecturer of strategy, innovation, and sustainable global enterprise and director of the Center for Sustainable Global Enterprise at the Johnson Graduate School of Management at Cornell University. He teaches and conducts research on strategy, decision making, technology management, and innovation. Formerly the business research director for the Sustainable Enterprise Program at the World Resources Institute, Milstein earned his BA in economics and Japanese from the from the University of Michigan, and his MS in natural resource policy and MBA from the University of Michigan's dual-degree Corporate Environmental Management Program. He earned his PhD in strategic management from the University of North Carolina at Chapel Hill.