Importance of Making Commitments
This article aims to be a practical inspiration for those who decide to commit to positive impact by setting commitments within an organization. It brings with it a range of lessons learned on the journey towards realizing the vision of a large company, alongside a brave team driven by the purpose of creating positive impact by 2040. This article is the diary of this journey.
Importance of Setting Commitments
The importance of setting commitments for organizations becomes evident when the need arises to think long-term to address corporate challenges amidst systemic changes.
From The Overview Effect, we have accompanied companies that, due to a lack of internal alignment to define common commitments, have been unable to prioritize efficiently or have neglected potential opportunities. Setting a commitment places the organization in a good starting point for prioritizing efforts and the actual execution of its purpose from the very beginning.
The path of organizations towards committing to the planet and people, in the face of the evident and strict global social and climate agenda, reveals two sides of the same coin: long-term commitments and short-term commitments.
Long-term Commitments
Commitments that set long horizons, up to 2040 or 2050, act as beacons that pull companies into uncharted territory and drive them to seek new business models and ways of operating that break away from the entrenched "business as usual." These commitments are an exercise in projecting purpose in a changing and unpredictable environment and a bet on innovation and cultural transformation.
Short-term Commitments
On the other hand, setting intermediate commitments of two, five, or ten years is an exercise in rigor, self-demand, and continuous improvement that can act as an antidote to the current challenges in generating corporate value.
Defining what the organization wants to be in the future is one of the most demanding strategic challenges, as many companies join the commitment race but the metrics are fuzzy when measuring honesty, the commitment to change, and the level of dedication.
We cannot affirm that there is a direct relationship between the degree of organizational commitment and the degree of action towards impact; many assert that the two variables are inversely related. However, we see that an honest and humble commitment to positive impact becomes an effective tool against greenwashing, as it only allows for legitimate communication of what is achieved in the short term and focuses on contribution in each commitment.
Challenges in Setting Commitments
Setting commitments is a path that requires horizontal and vertical transversality within a company, dialogue, and transparency. During the journey of drawing and setting commitments, we have encountered distinct challenges that we want to highlight for learning purposes:
1. Strategy: The Role of Management and Boards
We have seen the crucial role that senior management and the board of directors play in pushing long-term commitments. High-level meetings accelerate decision-making towards positive impact and serve as quick mechanisms to overcome barriers. Nevertheless, despite being forums that streamline the prioritization of key projects in driving strategy, they are also forums distanced from day-to-day challenges.
To bridge the gap between vision and action, the teams responsible for positive impact must feel empowered to communicate and connect less visible risks with high-level decision-making.
What happens when the leader of a strategic project feels insecure about expressing their expert opinion on a matter being debated in a board meeting? And what if they disagree with starting to measure success objectives using social and environmental indicators? Is there a mechanism failing in the transformation path?
2. People and Purpose: Company Culture
The commitment of management can become stuck if the company culture does not permeate all levels of the organization. As emphasized in culture studies, organizations do not change on their own, people do.
The key role each person plays in activating innovation, agility, and growth is fundamental. Setting intermediate objectives, activating cross-department projects, and co-creating solutions between departments through innovation spaces are mechanisms that help drive areas towards aligned and collaborative achievement of objectives.
Discovering and aligning with a common purpose towards positive impact is the first step towards setting commitments and consolidating an impact culture in people. It helps exercise honesty in any company forum and can push employees to act as ambassadors for the organization, building an honest brand. Ultimately, attracting and retaining talent as well as fostering consumer loyalty will be more achievable if the company's purpose and vision are transparent.
What motivates employees in their day-to-day activities and why do they decide to be part of the positive change the company pursues? Does committing to positive impact help retain talent? Why?
3. Value Chain: Suppliers and Stakeholders
To address all the set commitments, achieve them, and even exceed them, it is necessary to influence all agents forming the value chain, especially those contributing the most to their impacts. The limitations of access to information and the degree of influence of suppliers are common constraints that hinder progress towards impact objectives.
We have learned that the work of establishing own frameworks that define what kind of impact is desired through suppliers will be crucial for setting commitments, both social and environmental focuses. For example, establishing a sustainable supplier criterion drives the commitment to decarbonization, improves the well-being of people in the value chain, and can even promote new more circular models of products and services for the company.
The company that manages to position itself as a driving agent towards the sustainability of its suppliers will generate greater positive impact, gaining legitimacy among its stakeholders and helping them improve their progress towards positive impact objectives.
Can a company be perceived as a legitimate actor educating society on social and environmental issues? Who can increase the trust that suppliers place in a company?
4. Innovation: Commitments Require Future Solutions
Innovation, understood as a transversal company value, allows exploring new ways of working that accelerate and increase the reach of commitments. Firstly, current business models have not been conceived according to present impact problems; we have seen how, in many cases, the technology enabling full circularity or carbon neutrality is not within the reach of all organizations, and it is important not to interpret this discrepancy as a business failure, because it is not.
The merit and improvement in generating positive impact lie in transforming these differences into new solutions. Combined with the will for differentiation and competitiveness, innovation is the instrument that allows us to do so.
What mechanisms help establish a company's own criterion defining "sustainable supplier" without this definition becoming obsolete in 20 years?
5. Transparency in Measurement
Setting commitments finally demands internal and external transparency. Only by being transparent can companies define opportunity territories and remain firm in their positioning on issues under scrutiny.
The process begins with a critical analysis of the company, the metrics used to measure progress, and the positioning on certain issues such as biodiversity protection, gender equity, or people care. If the analysis starts honestly, it will be more evident to prioritize relevant success indicators and set commitments realistically.
The company must be capable of defining indicators with its own criteria, sufficiently demanding and innovative not to become obsolete in measuring progress towards commitments. Indicators are the link between today's advances and the company's vision for tomorrow. They must measure solutions that technically do not yet exist while also capturing cultural and social changes that are not yet visible.
6. Co-creation
Many of the solutions that will enable the company to achieve its impact commitments will emerge from collaboration with other societal agents involved in their value chains: entrepreneurs, local associations, competitors, activists, consumers, etc.
We have seen that synergies between stakeholders are a business opportunity for the most committed organizations. Co-creation between diverse actors facing the same impact challenges builds common objectives and solutions focused on delivering positive results that go beyond economic ones.
The challenges discussed throughout the article move bidirectionally between the implicit and explicit aspects of an organization; the balance between both is the key to coherence and real progress towards commitments. There is no innovation without a culture of co-creation, and without transparency, there is no real externalization of purpose. It is important to consider that in traditional companies, a commitment project must advance hand in hand with a cultural transformation plan, going beyond strategic plans and pure innovation in products or services.
A Warning to Navigators
Building a company purpose rooted in commitments involves launching a strategic project that can be threatened over time. Therefore, we want to share these warnings to consider along the way:
The diagnosis -or starting point- towards the future may reveal company data that is painful and difficult to accept; it can also lead to paralysis by analysis when defining the vision.Defining commitments may lead to the de-prioritization of previously understood strategic projects and will require letting go of ingrained biases such as loss aversion.Contribution to commitments entails inevitable discomforts throughout the process. Companies that decisively tackle the challenge and turn it into motivation will emerge stronger and more capable of generating value for the surrounding society.Committing to positive impact is a process of humility and improvement that reveals weaknesses and strengths. It is a journey that involves all people in the organization and requires common alignment with values that foster transformation. Facing this brave and beautiful challenge, we hope these reflections serve as inspiration for all those who want to join the change.