The themes of technological innovation, entrepreneurship, and organizing

A MULTI-DIMENSIONAL MODEL FOR THE ADOPTION OF SUSTAINABILITY The Strategic Logic for the Adoption of the Model

External context in the long term drives change and the opportunities and challenges facing global corporations. In the days when most corporations primarily focused on their home markets, the scope of their enterprises was relatively small even in the case of MNEs. For most of the early twentieth century, corporations obtained most of their revenues and profits from their national markets. Most MNEs participated in exporting and licensing and the large ones often had subsidiaries and operations in the other major economies. As such corporations expanded internationally during the last century, their external context did become more complicated with a greater geographic scope. They did adapt their business models to recognize the additional forces and factors that required atten­tion and actions. However, the complexities ofthe situations were mitigated to a large extent because there were many similarities between the most advanced national economies. For instance, all of the G7 countries had relatively stable political, social, and economic systems and structures. The markets were generally expanding and custom­ers demanded fairly similar products. Variations in demand usually were easily accommodated through product innovations and modifications in marketing methods. While there were major differences and culturally based requirements like the French preferences for their own wines and American preferences for fast food, most MNEs accommodated the market-related expectations.

As discussed earlier, the business world changed dramatically in the 1990s. Free trade was expanded with the formalization ofthe EU and the NorthAmerican Free TradeAgreement (NAFTA). The EU enhanced economic exchanges throughout most of Western Europe and NAFTA eliminated many of the trade restrictions between Canada, Mexico and the US. While the underpinnings and implications of the EU and NAFTA are profound and beyond the scope of this discussion, such changes expanded the prospects for trade and busi­ness growth by integrating national economies into regional ones. The changes were more compelling in the EU than in North America. The difference might be explained by that fact that the national economies of the leading European countries (Germany, France, UK and Italy) were more or less coequal, whereas the US economy overwhelmed the economies of Canada and Mexico. Moreover, US economy was already interconnected with many other national economies on a global basis.

Regionalization introduces many more vari­ables to the scope of the business environment. As the scope expands, strategic leaders of global corporations have to modify their perspectives of what is necessary for achieving success and adopt new models for including the essential elements. Most importantly, strategic leaders have to shift their strategic thinking from what the company has to do to serve its home market to how it can meet the needs and expectations of more complicated market situations. In a nutshell, they have to be­come market-centric instead of company-centric. They have to transition from basic constructs like improving their competitiveness in markets, building a large portfolio of products and services, obtaining efficient and effective operations, and maximizing profits to more advanced approaches like achieving market leadership, creating cutting - edge brands that are unique, establishing strategic direction for exceeding expectations, and obtain­ing desirable market shares.

The logic behind the transition is not based on an “either-or” situation, but a realization that the scope and scale have to become much greater as a corporation moves from national markets to regional ones. It means that the basic requirements in serving national markets are still important, except that additional perspectives are also critical for achieving success in a much large business environment. It is important to point out that these discussions only cover some of the most salient aspects and that in both cases the requisite models are much more complicated than outlined herein. In most cases, global corporations have made the transition from focusing on national markets to regional or more broadly based markets, especially considering the phenomena in the developed countries. Obviously, some corporations are more successful than others and that outcomes are de­pendent on circumstances and the capabilities of the organizations involved. Gary Hamel in The Future ofManagement (2007) suggests the “there’s little that can be said with certainty about the future except this; sometimes over the next decade your company will be challenged to change in a way for which it has no precedent (p41).

More recently, many global corporations are struggling with the complexities of the global business environment. Globalization has taken root, but the means and mechanisms for achiev­ing success in the global economy are not well established. Most strategic leaders are still using management constructs that were developed for managing in national or regional economies. While some of the approaches may be useful in the global business environment, many lack the scope and sophistication for assessing, understand­ing, and managing the realities impacting global corporations.

Managing in the global economy neces­sitates more comprehensive and sophisticated management constructs and models for realizing extraordinary performance and achieving long­term success. Globalization requires that strategic leaders consider, analyze, engage, strategize and execute from the very broad perspectives. While it is impossible to know and manage everything in the world, sophisticated strategic leaders have to be holistic in their thinking and have inclu­sive strategies, actions and decision making, if they except to realize success in a complex and turbulent reality. In a global setting, global cor­porations have to become enterprise-centric, not just market-centric. They have to recognize that success depends on more than addressing markets and satisfying customers and stakeholders. It in­volves incorporating all of the driving forces and facets ofthe global business environment into the strategic logic of the corporation and the models used for decision making.

Globalization necessitates a transformation in management constructs and models from market - based approaches to inclusive and innovative ways of realizing sustainable success. The transforma­tion to a broader scope using more sophisticated constructs and models does not mean that the traditional constructs and models are no longer appropriate or useful. Some may be embedded within the systems and structures ofthe more con­temporary models; others can be applied in special cases, in which the underpinnings and forces are less complicated. For instance, SouthwestAirlines (SWA) is a specialized U S airline that successfully serves small markets. Its model is fine-tuned to the US and its business environment is national in scope and nature. While global forces impinge on all corporations, SWA’s strategic leaders have chosen to focus on a narrow perspective.

Most strategic leaders realize that their cor­porations must be more capable, innovative and responsive. They have made improvements; how­ever, in many cases the improvements are simply not good enough to stay ahead of the changes and expectations in the business environment. For instance, for more than a decade many stra­tegic leaders in the developed countries viewed globalization in terms of outsourcing processes and activities to lower their cost structures. They were company-centric focused on improving the sales and profits of their products and services. While strategic leaders believed that such strate­gies and actions would lead to profound outcomes and financial success, such theories were sound in the short term but over time have become less powerful as competitors followed the same line ofthinking. Such methods have helped consumers in the developed countries obtain more affordable products and services and allowed governments to keep inflation low. However, the hoped for gains in profitability became less and less viable as outsourcing evolved into a global phenom­enon. Ultimately, management constructs that can be easily copied are subject to being generic approaches with limited advantages, if any at all. Simple methods have the allure of being easy to understand and implement, but they also have the risk of being quickly duplicated by competitors. Table 1 provides some of the salient factors in­volving the transformation from national market to regional one and then to global perspectives.

The higher level of sophistication identified under “global” in Table 1 provides strategic lead­ers with the prospects of realizing more enduring performance and success. While very little in the business world lasts forever, the broader the scope, the more inclusive the model and the more so­phisticated the elements, the more difficult it is for others to emulate the strategies and actions.

Sustainability is the imperative of the twenty - first century. It implies exactly what the term means, i. e. to support from the foundation, to strengthen the framework, to endure over the course of time, to keep going regardless of the challenges, etc. For instance, it is fool-hardy to create new products, invest in new capital equip­ment, and develop new ventures among numerous other business initiatives unless they are sustain­
able over the long term. Sustainability is about realizing ongoing success from every dimension, not just the economic or environmental ones. While there are strategic leaders, practitioners and scholars who discuss concepts like “environmen­tal sustainability,” sustainability is really about integrating the social, economic, environmental, technological, ethical, political, and market forces and considerations into a holistic perspective (model), in which success is obtained in every dimension. For instance, outsourcing ofjobs from developed countries to developing countries may result in improved cost structures, but in the long term the consumers in the developed countries may not be able to afford the products, if they do have sufficient disposable income; therefore, such approaches may not be sustainable. Sustain­ability requires an integrated model for decisions, strategies, solutions and actions.

Sustainability is facilitated through sustain­able solutions. It is based on the realization that customers and stakeholders really want and desire solutions. A sustainable solution is the complete package of everything that is necessary to provide the customers and stakeholders with their own successfully outcomes. It includes the products and services, the support mechanisms, the complementary products, and all ofthe short-term and long-term requirements to make the solution succeed and endure.

SD involves the mechanisms that are employed to create sustainable solutions, sustain success, and advance sustainability. It is underpinned by strategic innovations. Strategic innovations are particularly powerful when they create extraor­dinary value for all contributors and recipients and eliminate difficulties and challenges across the business environment.

SD requires preemptive strategies for lead­ing change. From a sustainability perspective, strategic leaders have to have the confidence and courage to develop new solutions that offer ex­traordinary value and new-to-the-world outcomes. In my book, Enterprise-wide Strategic Manage­ment: Achieving Sustainable Success through Leadership, Strategies, and Value Creation, the construct of preemptive strategies is developed and discussed in detail. Preemptive strategies are cutting-edge methods for leapfrogging expecta­tions and competitors and achieving sustainable success. The following excerpts provide the main perspectives (Rainey, 2010, pp373-376):

Preemptive strategies are proactive approaches for leading change and taking the initiative to ag­gressively move on opportunities and challenges in the business environment before such actions are expected or become obvious. Preemptive strategies necessitate changing and even dis­rupting industry or market space norms through fast-paced, hard to duplicate strategic actions that provide distinctive and sustainable advantages for first mover, fast follower, or strategic change leaders. Preemptive strategies eschew the notions of reacting to change or anticipating changes only slightly ahead of a necessity for action. Preemp­tive strategies imply that strategic leaders seek out every opportunity to forge positive changes and exploit new opportunities before customers or competitors understand the implications.

Preemptive strategies require extremely assertive actions in making dramatic or radical improve­ments to the external and internal dimensions of [the company and/or] business units... Aggres­sive does not mean increasing the rivalry among competitors; it does mean taking every opportunity to make profound changes that advance the well being of customers, the extended enterprise, the organization, and all of the key contributors.

Preemptive strategies usually involve the full integration of the whole enterprise into a seam­less and highly assertive value delivery system (holistic management system) that isfully capable of planning and executing every action at the highest level of quality andperformance. Most im­portantly, preemptive strategies involve strategic innovations that significantly or radically improve underlying technologies, products and services - the solutions. Such innovations include inventing and validating clean technologies, developing and delivering more valuable solutions, enriching and exploiting improvedprocess capabilities, and reinventing the strategic management system and value delivery system with outstanding intellectual capital, capabilities and resources. Preemptive strategies involve transitions and transforma­tions to the next higher levels of achievements and sustainable outcomes...

[Preemptive strategies] involve out-of-the-box thinking about how to move closer towardperfec­tion and obtain the best solutionsfor customers and stakeholders, and to build enduring relationships with all of the essential contributors and recipi­ents. Strategic thinking shifts from the competitive spaces ofthe past to preempting the market spaces and creating the business enterprise ofthe future. This includes integrating the extended enterprise into a complete system, leading change to secure sustainable advantages, and using all of the ca­pabilities and resources in the most effective and least damaging ways.

Sustainability involves applying the most sophisticated management constructs possible to attain market leadership and value creation. In the context ofglobalization, it provides the underlying elements and perspectives that make the concept of globalization truly global. Sustainability integrates of all of the external driving forces into a coherent model for creating value and sustainable solutions for the present and future. Sustainability is more than the “triple bottom line” articulated by John Elkington (1997, P2). The “triple-bottom line” includes social, economic, and environmental considerations in managing businesses. While Elkington’s concept is an important contribution to management theories, preemptive strategies and sustainable solutions necessitate dynamic actions to produce sustainable success, especially from the development and deployment of new-to-the - world technologies and products.