With Triple Bottom Line Management, the maximum level of economic business performance is achieved when an equilibrium of stakeholders’ interest is found.
The equilibrium of interest then becomes a set of non-negotiable goals with economic, social and environmental strategies in order to achieve them.
The search for an equilibrium requires a shift in the business Executives’ perceptions about consequences of single bottom line strategies in the conditions of the rise in intensity of social challenges that the companies are facing.
To accelerate the shift, En-Sync 8020 employs a set of accelerated learning steps for 3BL Strategy Development.
The search for an equilibrium requires a shift in the business executives’ perceptions about consequences of single bottom line strategies in the conditions of the rise in intensity of social challenges that the companies are facing.
To accelerate the shift, En-Sync 8020 employs a set of accelerated learning steps for 3BL Strategy Development.
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Triple Bottom Line Management
Triple Bottom Line Management is a framework that expands a company’s accountability from shareholder value to a broader stakeholder value, from the old definition of the purpose of a corporation to a new definition
An individual or institution that legally owns one or more shares of stock
“The paramount duty of management and of boards of directors is to the corporation’s stockholders. The interests of other stakeholders are relevant as a derivative of the duty to stockholders.”
Published by the Business Roundtable, Aug. 19, 2019
Anyone who is influenced, either directly or indirectly, by the actions of the company
“…Creating value for customers, investing in employees, fostering diversity and inclusion, dealing fairly and ethically with suppliers, supporting the communities in which we work, protecting the environment…”
all before ever mentioning "shareholders," which does not happen until the last paragraph.
Social Power of the Stakeholder
Ongoing transformation of the modern society, increases the social power of stakeholders as holders for social and environmental licenses to operate the businesses.
Social power of the stakeholder is the capacity of stakeholders to influence the conduct (behaviour) of other stakeholders and businesses.
Challenges for Triple Bottom Line
Modern companies are under ever-increasing pressures and challenges to while deliver Triple Bottom Line results. Below are some of the most critical challenges are highlighted here, by Senior Business Executives interviewed by En-Sync 8020:
- Growth in governments’ regulations and involvement
- Increasing social power of employees and communities
- Increased social mobility
- Slow pace of changes in educational systems
- Growth of social media
- Growth of economic nationalism
- Increase in market volatility
- Undergoing value chain transformations (for example, digital transformation)
- Rise in consumer influence
- Time for circular economy is approaching fast
- Tougher environmental regulations
- Increased environmental awareness
Economic Bottom Line Strategy
Failure to recognise an increase in social power of stakeholders and continuation with shareholder value, as a driver for strategy development, can lead to a loss of social and environmental licenses to operate, despite huge successes in business improvement and operational effectiveness.
The story below is of a company that went from dust to glory and back to dust in 5 years as a result of its 5-year strategy described as “Driver cashflow up at any cost”.
- Drastic decrease in product prices
- Inflated cost of operations
- Non-delivery on operational targets for last 3 years
- Decrease in share price and market capitalisation
- Environmental and Lawsuits
- Parent company’s desire to sell asset
- Failed Merger & Acquisition Attempt
- High management turnover
- Projects’ overrun
Bottom Line Transformation
- New CEO and COO
- New 5 year strategy
- New name of the company
- Business Improvement initiatives
- Improve labour productivity 31%
- Reduce personnel 18%
- Meeting and exceeding production plans for the first times
- Increased planned maintenance from 35% to 55%
- Decreased AISC 18%
- Increased production 13%
- Reduced capital cost 34%
- Improved operating cash flow 55%
Seekingalpha.com:
- Company has turned free cash flow positive and has finally presented its vision for the mid-term future.
- We are convinced that a turnaround has been accomplished and we are expecting significant growth going forward even at today’s product price levels.
- Management has succeeded on just about the most difficult task available in the industry. We are confident that it will deliver on its 5 year plan.
- Company remains severely undervalued and should rerate over time to account for its successful reinvention.
- High Hopes for Management Buyout
- Trade Unions and Communities ongoing complaints to the government
- Multi-billion penalties and fines
- Some assets / plants are closed to keep the company profitable
- Request by the government for multi-million one-off payment as a gesture of good will
- Request by the government to have a share in the company
- CEO, COO and CFO left
- Sell off of the assets to keep the company alive
- The last asset is closed under order from the government for environmental concerns
- “Company lost the social license to operate” as described by the parent company
- Buyout by the parent company
- Company of 2013 stopped to exist
Triple Bottom Line Strategy
3BL Strategy Development is to find a strategic equilibrium of stakeholders’ interests and objectives that secures social and environmental licenses to operate and maximises an economic performance of the business through an achievement of cooperation and support among stakeholders.
- Employees
- Local and Federal Governments
- Communities
- Political Parties
- Growth of social media
- Unions
- NGOs
Motives of stakeholders and their expectations on the relationship with the business
Three types of interests:
- economic,
- social,
- environmental
Frequently, the interests of stakeholders are mutually exclusive – As a result, the overall business performance suffers
Non-Negotiable Goals
The situation when the interests of the stakeholders are still met and the business performance / economic bottom line is maximised
Satisfied interests of stakeholders and maximised business performance become non-negotiable goals as a foundation for strategy development
Three types of non-negotiable goals:
- economic,
- social,
- environmental
Triple bottom line strategy of a company is an integration of three types of strategy:
- economic,
- social,
- environmental
Every type of strategy has sequenced tasks to be performed of various complexity level and key measures to be impacted:
- net income,
- social license to operate,
- environmental license to operate
3BL Accelerated Learning & Development
As business move from a primary single economic bottom line perspective and start include equally social & environmental perspectives, the impact of positive results for management and employees will become evident over time.
Those Executives who can learn quickly how amplify the importance and benefits of Triple Bottom Line management and strategy will reap the rewards of success.
En-Sync 8020 has developed an approach and its objective is to accelerate the learning of the company’s executives and employees on importance and benefits of Triple Bottom Line Management and strategy
Expose the misbalances in the current business strategy by conducting an assessment of existing strategic objectives and strategies in relation to economic, social and environmental bottom lines
Simulate various equilibriums of stakeholders’ interests and impact on business performance to identify non-negotiable goals for every business stakeholder and allow the executives to learn the consequences
Link non-negotiable goals of stakeholders into 3 types of strategies to achieve these goals (economic, social and environment) with requisite milestones, clearly articulated tasks and expected outputs
Ensure the strategies are supported with mature organisational systems, accountabilities for the strategies and tasks are allocated to roles at the right level of complexity and role holders with the right level of capability
Identify the factors the factors that negatively impact intention of social license holders to support the economic, social, and environmental strategies and continuously monitoring in real time changes in the intention to support
Accelerated Learning Technology
En-Sync 8020 utilises a combination of accelerated learning, dynamic factor modelling, economic, social and environmental value drivers. This allows designed trials with accelerated active learning where errors can be made in a safe simulated environment, which aid the disruption of old perceptions and ideas about the single economic bottom line strategy.
3BL Accelerated Learning & Development allows the Executives of the companies to see the consequences of ignoring the 3BL equilibrium today and in future and learn about the benefits of changing their perceptions and behaviours about the Triple Bottom Line management.
