15.992 | Spring 2008 | Graduate

S-Lab: Laboratory for Sustainable Business

Lecture Notes


Henderson = Rebecca M. Henderson
Locke = Richard M. Locke
Slaughter = Sarah Slaughter
Sterman = John Sterman

Framing the challenge
I. Introduction
1 Course overview (PDF) What does it mean for a private company to act “sustainably”?

An introduction to the course and to the central challenge of sustainability. Sustainability, defined broadly to include social equity, economic development, and environmental restoration, offers new opportunities (but also challenges) for business. The management aspects are multi-faceted, and this course seeks to provide students with an overview of these issues.

To frame our discussion, we will begin with a discussion of the Nike case.

What are the risks and opportunities involved in sustainability-based business models? How are the different dimensions of sustainability related? How can organizations cope with the dynamic that things tend to get worse before they get better?

Locke; Lorrie Vogel, Manager, Nike “Considered” Brand
2 The state of the world (PDF) Why is sustainability an important problem for business? A look at the science, and at the possible political and economic consequences of current trends. Sterman
3 Organizational response (PDF) An introduction to the problem of “worse before better” (WBB), overload, how firms overcome organizational barriers to move in new directions.

Have you ever worked for an “overloaded” organization that was stuck in the kind of firefighting that Professor Repenning describes? Why were you stuck? Did the organization recover? If so, how?

What are the major barriers to “going green” inside a for profit corporation? How can they best be overcome?

Framing a response
I. Get your own house in order
4 Redefining traditional business models How do companies build new business models, reform existing ones, and continue to perform in the marketplace? What are the costs and benefits for profit-seeking firms as they seek to embrace sustainability? How do they measure their impact?

Through an examination of Brazil’s Banco Real, we will explore the challenges and opportunities for companies as they embark on this change process.

Locke; Ricardo Marini, Banco Itau
5 Walking the talk: sustainability and new product development How do companies translate sustainability (e.g., cradle to cradle design) into their product development and commercialization processes? How do they implement these practices and remain competitive in the marketplace? What happens when some of their goals (cutting edge design, commercial success, eco-efficiency) contradict? How do they resolve these dilemmas?

We will explore these issues through a case discussion of the design firm, Herman Miller.

6 Sustainable retail. Can big box stores really go green? (PDF) Walmart has made enormous investments in greening their facilities and in products.

Can the world’s largest retailer make a real difference? Does their strategy selling green make sense? For whom?

II. Restructure the supply chain
7 Ensuring sustainability along the supply chain Walmart has made enormous investments in greening their facilities and in products.

Can the world’s largest retailer make a real difference? Does their strategy selling green make sense? For whom?

8 Ensuring the sustainability of shared resources Unilever looks at the collapse of the world’s fisheries — how should they respond?

What should Carl-Christian be sure to do this year? What must he accomplish? What are the critical issues he must address? How should he address them?

Design an action plan listing his top five priorities as you see them, and give some thought as to the mechanisms you would use to tackle them.

9 Social sustainability and labor standards Following reports of child labor among some of its suppliers, Ikea came under enormous pressure from consumer groups and non-governmental organizations (NGOs).

How should they respond? How effective is third party monitoring? How best can global corporations improve labor standards while respecting local socio-economic realities and cultures and defending their business models?

III. Be aware of what is possible
10 What is legal? What is politically feasible? Can a public company focus on more than building shareholder value? What does it mean to build shareholder value, anyway? How much discretion do managers have in determining the answer? Locke; Jeff Shames, MIT Sloan
11 Pause for reflection: everything’s connected A chance to reflect back on the material we’ve covered in the first half of the semester, focusing particularly on the way in which so many “sustainability” issues are related to each other.

Material that makes it clear that we are dealing with an interconnected system: a) it’s not just “climate” or “agriculture” or “social justice” — all the issues are deeply interrelated and b) actions that fail to understand the dynamics of the system may have counterproductive consequences. An example of an organization that has acted from this perspective?

IV. Build a new industry (or rebuild an old one)
12 Alternative transportation networks: simulation A deep dive into the problem of transportation: where are the leverage points? Where are the commercial opportunities? Sterman
13 Case example of alternative transportation opportunities (PDF) (Courtesy of Dr. Roger Saillent. Used with permission.) What are some of the exciting new developments in transportation? What are some of the pathways for their business development? Sterman
14 Energy efficiency as a new market Energy efficiency in construction is often cited as one of the most effective ways to reduce greenhouse gas emissions.

Gridlogix has a product that promises to reduce energy use by 20% with double digit returns. But to whom should they sell it? Why are there so few customers?

15 Green buildings: new markets and services (PDF) What are the economics of green buildings? Is it possible to build sustainable communities and make money? What kinds of business models make sense? Slaughter
16 Sustainable infrastructure and international markets (PDF) Some people think the great wars of the next fifty years are as likely to be fought over water as they are over oil. Who owns water? Who decides where the waste goes? What are the business opportunities in the space? Slaughter
17 Organic foods: creation of a new industry What does it mean to build a business around organic food? Henderson
18 Growth with vision Staying true to ones values in the midst of growth. Henderson
V. Change the world
19 Action at the macro level: setting a price for carbon Role play and discussion. Sterman
20 Action at the industry and societal levels: industry collaborations, certification efforts, and partnerships with NGOs (PDF) (Courtesy of Jason Jay. Used with permission.) What are some of the challenges involved in the design and implementation of effective policies to promote sustainable and productive use of renewable resources? Individual companies cannot tackle these issues alone. How successful are collaborative efforts with other firms in the same industry? What are the risks and opportunities for private company-NGO partnerships? Locke; Peter Senge
21 Action at the community level What role do public/private partnerships have to play in building a sustainable future? Henderson; Bill Reed
22 Individual action What can you do? Reflections on carbon footprints, values, happiness, leadership and the role of the individual. Sterman
VI. Summary
23 Poster session: project presentations    
24 Reflections    

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