Continuous Operational Excellence Is the Key to Sustainability

Sustainability is a common phrase these days. In reality, it goes beyond the basic concept of “going green” and instead is about ensuring longevity. As far back as 1972, at the United Nations’ Conference on the Environment, experts discussed sustainability with a focus on preserving ecological systems to help alleviate social, educational, health, and employment challenges. In 1987, the United Nations’ Brundtland Commission defined sustainability as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

Today, sustainable practices protect finite resources and support the health of the ecological system, humans, and the economy. Despite this healthy push toward sustainability, one of the most overlooked yet biggest players in this arena is small businesses. Small businesses in the United States generate 44 percent of the country’s gross domestic product and employ more than 46 percent of the workforce. Without the active participation of small businesses in this effort, the country will fail in its vision for a sustainable future. While there is currently not enough academic research or political push to enable and empower small businesses to embrace sustainability, there are several ways small businesses can do their part, without external intervention.

The four Ps

As the concept of sustainability has evolved, its accepted definition now includes the four Ps: profit, people, planet, and purpose. In essence, the four Ps require businesses to ensure their practices support sustainability in each of these four areas. 

Here’s how incorporating and measuring the four Ps help small businesses remain sustainable. Instead of being measured just on profit margins, companies can also be measured on their people, including attrition percentages and the number of high versus low performers and take the appropriate action to improve retention and job satisfaction. 

The next measurement is their contribution to the planet. Unlike government agencies, small businesses may not have the ability or funds to hire full-time researchers to calculate their companies’ precise impact on the planet. There are free websites, such as GreenFeet, Carbon Footprint, climatiq, and others that allow companies to estimate and track their carbon footprint. This information can then be used as a starting point to make changes within their businesses.  

Small businesses can also measure their purpose, or their commitment to a greater mission, vision, and values beyond simply generating profits. This can include a company’s commitment to corporate social responsibility (CSR) and how it gives back to the community, including its involvement in volunteer opportunities and participation in philanthropic causes.

In 2022, Better rated several companies that have embodied CSR culture including Ben and Jerry’s, Gap, and The Walt Disney Company. In September 2022, citing his commitment to fighting the climate crisis, Yvon Chouinard, the founder of the outdoor clothing company Patagonia, gave away his company by donating it to a trust and a nonprofit organization. In doing so, the company stated, “As of now, Earth is our only shareholder…ALL profits, in perpetuity, will go to our mission to ‘save our home planet.’”

Other multinational corporations hold themselves accountable by producing annual environmental, social, and government (ESG) reports shared with stockholders, the public, and other stakeholders. Incorporating purpose into a company’s sustainability efforts also includes creating a culture that begins with employee onboarding and continues with periodic training and assessment to determine if employees are still aligned with the company’s mission and vision.

The concept of  “purpose” is not limited to for-profit corporations. Young thought leaders like Swedish activist Greta Thunberg continue to call on the world to take sustainability action. Government groups are adopting the idea of purpose as well. For example, in 2015, the UN adopted 17 Sustainable Development Goals to end poverty, ensure prosperity, and protect the planet by 2030. 

The four Ms

When small businesses embrace the four Ps as their core strategy, they also need to adopt the four Ms to achieve their sustainability efforts. The four Ms include: measure, minimize waste, develop methodology, and match values.

As the adage goes, what isn’t measured isn’t managed. For companies to know if they are doing well (or poorly) in their sustainability efforts, it is essential to identify which metrics will be used to measure success. Sustainability can be difficult to quantify, and key performance indicators (KPIs) will vary based on the type and size of the organization. Some areas to consider include water usage, energy use, waste management, pollution, and greenhouse gas emissions. 

All companies want to minimize waste, at the very least so it doesn’t impact their bottom line. Unfortunately, standalone practices tend to create chaos and confusion instead of sustainability. When processes are weaved into a company’s sustainability-based system, they transform to effectively minimize waste. For example, a small plumbing company begins its process when it receives a client’s order. The company determines how much time it will take to respond to the client, identify the problem, create the solution, receive payment, and send a thank-you note to the client in an effort to retain future business. 

In a small business in the transportation and delivery industry, a delivery partner for an e-commerce company needs to build an integrated system that creates sequential deliveries for its drivers. That sequence needs to be based on gas and route efficiency, and customer commitment date. Investing in this process will help the company to utilize its delivery drivers’ time better, save on gas and meet customer commitments. This, in turn, leads to happier people, a better impact on the planet, and a positive effect on profits, while leaning into the company’s purpose. 

Creating, integrating, and documenting sustainable best practices for everyday processes can become a training tool for employees. Continuous revision and improvement of these processes allow a company to effectively eliminate waste. In sustainability terms, this entire system is called investing in a “triple bottom line,” creating a culture that both identifies and minimizes waste in every aspect of a business’s process and relationships. The triple bottom line is an essential, decision-making criterion to ensure small businesses remain sustainable in today’s rapidly evolving world.

In addition, it is important for small businesses to develop methodologies from these processes to help demystify the processes for all stakeholders (especially employees and customers) and ensure consistency over time. Finally, these processes will match values if they align with the company’s triple bottom line. 

Continuous operational excellence

To become more sustainable, companies of every size need to adopt a culture of continuous operational excellence (COE) as their North Star. Striving for the four Ps and implementing the four Ms cannot be a one-and-done event. Instead, efforts need to be ongoing and intricately intertwined to develop a system that not only works for the business but also creates a culture that endures. 

By ensuring operational excellence remains front and center, businesses will be able to ascertain if their decisions impact all of the four Ps. In addition, COE requires companies to imagine ingenious solutions to attain their sustainability goals. This process is about businesses using the four Ps as decision-making criteria, guiding principles, and organizational culture, in order to become more sustainable and ensure companies’ longevity. 

Among the companies that successfully embrace this concept is the sustainable shoe and clothing brand, Allbirds. Founded in New Zealand in 2014, Allbirds uses natural materials and processes to create its clothing, including renewable materials such as wool and organic cotton, as well as low-impact dyes to reduce their environmental impact. The company made a commitment to cut its carbon footprint in half by the end of 2025, and potentially reduce its footprint altogether by the end of 2030.

Ecosia, another sustainable company, is a search engine that donates a portion of its advertising revenue to plant trees around the world. According to Ecosia, “By 2050 it is projected that 68% of the world’s population will be living, working, and breathing in cities. In the context of the climate crisis and rapid urbanization, cooling green infrastructure like trees and community gardens are becoming as critical as public transport or playgrounds.” By using sustainable operations management, Ecosia reduced its energy use and contributed to global reforestation efforts.
Adopt a culture of sustainability

It is undeniable that there are irrevocable and irreversible changes happening in today’s society. Consumers are becoming more aware of the impact they are creating on the planet and actively seek companies that adopt greater sustainability practices. Embracing a culture of sustainability will add to small businesses’ profitability and help ensure their long-term viability. One company that has managed to do just that is BrightFarms. Founded in 2011 in Irvington, NY, this indoor farming company grows fresh produce year-round, thereby reducing its environmental impact by eliminating the need for long-distance transport of produce. It uses sustainable growing practices and has reduced its energy and water use by up to 90 percent. The company became so successful that in 2021 it was purchased by Cox Enterprises.

Moving toward a sustainable future

Taking on a sustainability model is also a reminder to small business owners and leaders why they chose an entrepreneurial route in the first place. They had a vision—to create a bigger impact that went beyond themselves—and to offer greater value to society, rather than simply joining a large, corporate conglomerate as an employee. Adopting a sustainability culture will galvanize CEOs and senior management, directing their focus back to their initial vision, while simultaneously creating a better world for the future. 

Today, even individuals are focusing on sustainability in their own homes. Many base their purchasing decisions on whether an organization has a positive impact on society and the planet in terms of sustainability. According to a 2019 Porter/Novelli study, “90% of GenZ believe companies must act to help social and environmental issues and 75% will do research to see if a company is being honest when it takes a stand on issues.” And without small businesses becoming involved in such practices, the world will never be able to achieve that sustainability.

Many small business owners operate from the mindset that they aren’t big enough, strong enough, or rich enough to focus on sustainability. That’s simply not true. Small businesses need to make a paradigm shift and look at the long game. Sustainability requires very little financial investment and businesses can start from where they are today. It is possible for small businesses to carry on their work by embracing a sustainability model, without killing their own business or negatively impacting their profitability. When small businesses utilize the four Ms and invest in the four Ps, they can generate greater longevity and profitability and move toward to the important goal of sustainability to create a positive impact on the future of the planet.

Written by Kumar Vijayendra.
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