Archive for June, 2011
I recently started thinking about innovation during my recent dive into the important contributions Scots have made to intellectual progress between the 18th and 20th century. From science (James Watt) and philosophy (David Hume) to literature (Robert Louis Stevenson), medicine (Alexander Fleming) and commerce (John McAdam), creativity and innovation abounded. Why?
What are the elements that unleash the creative talents? And how can we nourish and appreciate creative talents in our workplaces?
According to Lowell Bryan and Claudia Joyce, authors of “Mobilizing Minds,” “most companies today were designed for the 20th century. By remaking them to mobilize the mind power of their 21st century workforces, these companies will be able to tap into the presently underutilized talents, knowledge, relationships and skills of their employees which will open up for them new opportunities but also vast sources of wealth.”
The outdated practices the authors refer to include operating systems designed for semi-skilled workers, such as detailed work process, ineffective incentive programs and demotivating performance evaluation systems focused on goods and services rather than ‘continuously delighting the client.’
Author Stephen Denning argues that suppressing creativity poses long-term risks. In his book, “The Leader’s Guide to Radical Management,” he writes that “the fact that current management practices prevent a full human flourishing is in itself an economic, management, social and moral problem of the first order.”
Yet calling for employees to be more innovative and creative in cultures that have suppressed “human flourishing” is demanding the impossible.
Could this be part of the reasons breakthrough “sustainability” solutions are proving to be so elusive? What do you think about the role of creativity in the workplace? What do you think we need to do to encourage fresh thinking?
For James Bilgo, Supervisor of EHS Program Management for Kohler Co., ensuring regulatory compliance is a unique challenge. A diverse manufacturing and services company, Kohler has more than 80 ‘facilities’ worldwide, including small tractor factories, high-end furniture showrooms, sales offices, spas, hotels and even golf courses. They all share the Kohler name, though, and Bilgo’s auditing team works hard to protect it. We caught up with him this week to talk about the company’s auditing programs and how he helped build a strong compliance culture.
GT: Today, the Kohler Co. is known for its strong culture of compliance. How did your team achieve that?
JB: Going back 25 years ago, we were probably like most companies in that we would go to our operations and spend a week there walking through their facilities and doing what everybody would call your environmental, health and safety (EHS) audit. We would then write up a report and then walk away.
What we noticed was that we started seeing the same thing, time after time at all our facilities. And we just said, ‘We need to take a different approach to this. We need to be part of their team. We have to build up that comfort level so if they have that problem, we’re the people they think about calling.’
So what we’ve done over the past 20 years is to develop systems that cooperatively and proactively show our operations the path to improvement. We then train them, help them, encourage them, and basically do whatever we can to help them get there.
GT: Can you describe what your inspections are like now?
JB: Today our visits don’t feel like inspections. Our facilities actually ask us, ‘When are you going to come next? We really need you here. We want to show you some of the good things we’re doing; we want to get this next tier level of performance.’
When we walk through a facility now, we don’t walk around and point out problems; we walk around and look at things. And many times, the things that stop us in our tracks are good things.
GT: When there is a problem, what kinds of things do you do to help them solve those problems?
JB: When there is an issue, we try not to just be critical; we want to be very positive. A lot of times we have a discussion, the facility managers make suggestions and we add our expertise about what other plants are doing.
We also have a Web page, where we put all of our best practices and all of the programs we think the facilities should be pursuing. When someone has done a good job, we put their best practice out there for everybody to look at and share.
Every year, we hold an EHS conference, where we bring in all our EHS people from all of our operations all over the world to share best practices, and figure out how to solve the problems. And when someone does have a problem, we end up sharing the solution with everyone so it’s more of a cooperative effort.
GT: How do you train your team to ensure they provide the right direction to the facilities?
JB: The guys who work for me, very seldom get technical training. I train my people more on how to have a crucial conversation, how to be a leader, how to have emotional intelligence so they can communicate in a very positive way to the operations. That’s a lot of what my guys take to the facility.
Our department has three main purposes. The first is protecting the Kohler brand. It’s very important that when people think of Kohler they think ‘They’re the guys with the really nice golf courses,’ or ‘They’re the guys who make those fantastic bathtubs.’ We want people to think about Kohler and think about great company, great quality. Two, we want to send all of our associates home in better condition than they were in when they arrived in the morning. And the third is, minimizing the impacts of our operations on the environment and on future generations. So all of our programs are geared to one of those three main objectives and that’s what we tell our operations.
GT: Can you describe how you’ve structured your system?
JB: Ours is a tiered system, in which the facilities are recognized for their achievements.
On the safety side, we developed the Kohler safety management system, a very detailed roadmap for operations to achieve world-class safety performance. We looked at other programs out there, developed our own and distributed it to the facilities. At first, everybody went through it and tried to find the easy things — and not necessarily the right things to do first.
So we found out that we kind of made a mistake there. You’ve got to build. You have to have a good foundation first before you can put on the roof. So we went back and we looked at the whole system, identified our expectations and prioritized the issues. Is this an issue that falls into Tier 1 (compliance); Tier 2 (management commitment); Tier 3 (Has it been adopted by all associates?); or Tier 4 (There’s no reason for us to even come and look at their operation)?
We’ve had this going for eight to ten years and we’re still heading down the path.
GT: What are some of the hallmarks of Tier 4?
JB: To reach Tier 4, the assessment involves going out and interviewing the associates on the floor, asking them questions and seeing how they answer.
What we’re looking for is whether they expound upon their answers and show us more than what we asked. If so, they’re portraying a positive EHS attitude and demonstrating that by showing us what they’re doing. To reach the highest tier on the environmental side, for example, they should be able to look in the garbage can and say, ‘See? We don’t even need garbage cans here because we don’t throw anything out anymore.’ We’re not there yet, but that’s what you want them to ultimately say.
GT: Do you still have checklists?
JB: We do have an assessment tool that asks specific questions that we confirm through documentation, interview or observation. It then explains what we should specifically be looking for. On Tier 1 it’s mostly show me the documentation; at Tier 4, it’s right to the interview and the observation. Is it very obvious to me that they understand it and they are living it?
GT: How do you ensure they maintain their status?
JB: We have a safety group (outside of our team) that does a complete assessment of the Tier 3 and Tier 4 facilities. Every few years, they will go back and reassess the operation to ensure it is maintaining its status. It’s my team’s responsibility to continue to work with the plant to keep up the good work.
James Bilgo is the Supervisor of EHS Program Management for Kohler Co. He will discuss the company’s collaborative auditing programs at NAEM’s upcoming “EHS Compliance Excellence” event on July 27-28 in Minneapolis.
The good news for companies in the early process of embracing a corporate water strategy is that heightened awareness of the issue has resulted in greater availability of data, tools, and best practices.
Although much of the most innovative work continues to be guarded due to competitive advantage, there are many leading companies and/or sector examples to learn from. From my experience, I would point to the beverage industry and most notably the Beverage Industry Environmental Roundtable as a prime example.
Having accepted water as a core business issue, how do companies develop a corporate water strategy given the fact that comprehensive, standardized methodologies may be years away? Successful companies have followed a common process:
Step 1: Know your water sources, use, consumption and discharge for all operations. Benchmark operations, set targets and drive efficiency. “Walking-the-walk” is a prerequisite for a successful corporate water strategy.
Step 2: Establish a cross-functional water team to define a viable three-to-five-year water stewardship vision that is measurable and aligned with overall business goals.
Step 3: Complete a baseline water risk assessment to understand and compare local watershed conditions beyond the four walls of each facility. Examine risks and opportunities including physical, regulatory and reputational.
Step 4: Develop, implement and maintain local water management plans (e.g., location or site specific) based upon Step 3 results. Incorporate performance monitoring systems and issue escalation processes.
Step 5: Engage with supply chain partners to understand your company’s broader water footprint, impact and opportunities.
Step 6: Strategically engage with external stakeholders through partnerships, reporting and other related efforts.
A word of caution: Water issues are highly localized and dynamic. Successful companies have addressed the following types of questions to apply their resources to greatest advantage:
- Are your facilities among the largest water users in a given community? How does your efficiency compare to peers and other local industries?
- Can water issues limit growth aspirations?
- Could individual sites face water restrictions in the next 5, 10, or 15 years? If so, are there viable back-up supply and/or treatment options?
- Can you meet current and future regulatory limits? What level of investment may be required and when?
- How intense is media or political attention to water in communities where you operate?
- Can you justify water-related business expenditures and strategically allocate resources?
Water risks are a reality for every business. What are some of the questions you think companies should ask in developing their water management strategy?
Nick Martin is an Associate with Antea Group. He will discuss ideas for developing a water strategy during NAEM’s webinar on “Water Risk Management” on June 21.
The message from stakeholders and investors is clear: Companies are expected to govern and begin disclosing water-related business risks. Historically, most companies have been able to simply acknowledge water as one of many important business issues. Much has changed in the past few years, with water positioned as a competitive issue and expectations trending towards quantification of water-related financial liability.
However, growing disclosure pressure isn’t the same as providing pragmatic “how to” for characterizing and quantifying water-related business risks. Moreover, characterizing the risk is only the beginning. The real challenge for companies is how to strategically prioritize risks and opportunities, build necessary competencies, and drive local water management plans. Why is water such a challenging, and potentially paralyzing, business issue you ask? Consider these factors:
- Nearly every activity, product, or business transaction uses water in some form – yet, there is no substitute;
- Water is both a local and temporal issue with potentially widely varying conditions (e.g., floods and droughts can occur in nearly the same location);
- Water, in general, is difficult to bound, measure, transport, and define access rights;
- It’s challenging to justify water-related strategic or capital investments based upon traditional ROI calculations;
- Cross-functional participation and solutions are required, including engagement up/down a company’s supply (value) chain; and,
- It is widely considered a human right, placing it in the sweet spot for media, political, and stakeholder attention.
What does this mean for companies that have yet to fully embrace water as a core business issue? There are two basic options:
- Start or accelerate a water strategy soon and possibly stay “ahead of the curve” thus determining your own pace of implementation; or
- Do the Basics – hedge your bets that water will not directly impact your company and expectations will stagnate. Given that water appears to be a resilient issue, companies that hedge could face monumental leaps to catch up to peers and meet stakeholder expectations in the near future, especially given the complexity and location-specific aspects. The cost of inaction could be significantly higher than self-paced implementation.
So, the first question many companies ask is how fast do they need to move? Well, the direct impact of water issues on any given company depends upon a range of variables including sector, size, brand recognition, and public image. First, let’s look at what we are seeing:
- Publications – recently published materials appear to be trending towards standardized buckets of water risk: Physical; Regulatory; Reputation; Investment. This has translated the business risks into simplified, real world concepts for a wide-range of stakeholders and investors to more easily comprehend and formulate inquires.
- Surveys – increasing number of non-governmental and supply chain surveys, including the second annual CDP Water Disclosure Project questionnaire, have significantly increased transparency of existing corporate strategies and knowledge gaps.
- Corporate Reporting – more companies are reporting water metrics, as well as water footprints, product life cycle assessments, and intensity indicators.
- Initiatives – water-focused NGOs and collective action partnerships have increased exponentially in recent years ranging from advocacy to standard development.
Collectively, these actions have provided investors and stakeholders with confirmation that 1) water is in fact a real business and investment risk; 2) a majority of companies are not proactively addressing the issue; and 3) water can be effectively managed, quantified, and reported on as demonstrated by the small number of corporate leaders in this space.
Nick Martin is an Associate with Antea Group. He will present ideas for developing a water strategy during NAEM’s webinar on “Water Risk Management” on June 21.