As sustainability management becomes ever more closely linked to company resilience and reputation, CSR goals are coming into sharper focus for companies that are truly on the journey. But there are many choices to be made among a broad range of sustainability initiatives that could achieve those goals; just as in the world of product development, where there is an unlimited number of possible new product ideas and features, there will always be too many ideas and not enough resources. So how do you prioritize your company’s sustainability initiatives for maximum value and impact?
It’s a big missed opportunity if you’re not borrowing heavily from time-honored best practices in product development portfolio management. Business managers and product teams are essentially solving for the same problem every day: how to get to market faster with the things that matter most, and with the most efficient use of limited resources. Leading products companies do this with a combination of evaluation processes, software tools, metrics and cross-functional collaboration. So why aren’t product roadmap optimization methodologies also being systematically applied to “sustainability roadmap” optimization?
One key hurdle is that most companies have no integrated platform for evaluating and strategically prioritizing sustainability initiatives — a platform that includes not only sustainability KPIs but also criteria for how those initiatives are likely to impact customers, employees and investors. I’m encouraged, however, that the platform we use with our clients for product roadmap optimization, which includes customer experience and other impacts and an integrated early-stage sustainability assessment, turns out to be easily adaptable to project portfolios and optimizing sustainability roadmaps. That’s led me to believe that whatever tools and methodologies your company is using for product development portfolio management could likely be adapted as well, without your having to start from scratch. After all, new products must pass through “gates” in a phased-gate process through which ideas move from concept to commercialization. Done right, those ideas are examined at the early gates for customer experience impact, competitive advantage, cost, complexity and risk, and (in the most sustainability-savvy companies) products’ environmental impacts and sustainable design opportunities. Is a portfolio of sustainability project ideas really so different? Consider the following example.
Let’s say your company has set aggressive targets for emissions reduction, waste reduction, water replenishment, and phasing out chemicals of concern. Your sustainability team, with input from selected colleagues, brainstorms a basketful of initiatives that each addresses one or more of those objectives. This includes establishing supply chain emissions audits, a waste-to-energy pilot in your largest manufacturing facility, a joint development venture with a leading compostable packaging supplier, a water-replenishment technology adoption trial, a major energy-efficiency upgrade for your data centers, among other ideas. Each has great promise, but they can’t all be equal in impact or return on investment. Besides, you don’t have the budget or people to implement them all, and certainly not right away. So within resource constraints, how do you decide which ones to do, and which ones to accelerate or delay among those you will do?
Furthermore, once you decide to fast-track the data center efficiency initiative, for example, how will you prioritize its components (10 sub-initiatives ranging from converting to workload-optimized servers and upgrading cooling systems to centralizing automation of HVAC, lighting, security and fire systems)? What metrics will you base any of these decisions on, besides preliminary estimates of potential carbon reduction and energy cost savings, and how will decisions be made early before you have nearly enough information for detailed financial analysis or for reporting-level environmental or social impact measurement? How will you know if a certain combination of these initiatives will collectively deliver benefits in proportion to the relative importance of each of your CSR goals, especially in the context of whether you are currently ahead or behind in your progress on each of those goals? Last but not least, to what degree, positively or negatively, will each of your sustainability initiatives impact customer experience?
Effective product development teams routinely deal with this kind of triage, evaluating trade-offs and making choices before they have significant sunk costs in any initiative. The choices you make in allocating human and financial resources for sustainability initiatives will produce your sustainability roadmap. That roadmap can be optimized using product development portfolio management’s tools of the trade. Those tools include enterprise software applications such as innovation management, product lifecycle management, and product portfolio management applications that provide strategic prioritization capabilities (an example of which I presented at SB ’14 San Diego).
These tools are mostly agnostic as to what criteria/KPIs you use to evaluate and prioritize projects, but tend to be easily configurable to use your own CSR goals or other criteria-specific to your industry. And they will just as easily accommodate science-based goals, which I fervently advocate setting and using as the ultimate path to being a more resilient company. Whatever your criteria for sustainability project evaluation and prioritization, and whatever tools you may use, there is as much or more value in the discussions that will result from your use of the tool and getting the inputs right as there is in the outputs (scorecards, diagnostics on how to strengthen the roadmap, and other analytics that make strengths, weaknesses and opportunities more visible).
If you’re already using gate processes and analytics tools for prioritizing and refining sustainability initiatives and mapping them to goals, please share your thoughts and experience with the SB community. I’ll be pleased to do the same.