CEOs get the lion's share of the attention, the plaudits, and the blame. Sometimes the CEO's name and reputation become almost inseparable from the company's. But organizations with tens or even hundreds of thousands of employees need leadership on all levels to thrive.
The Aspen Institute created a program called the First Movers Fellowship to recognize individuals who are creating positive change from within large organizations. Qn spoke with four First Mover Fellows about the challenges and rewards of leading from the middle, as well as how they were able to incorporate social and environmental considerations into their business programs.
Why Go Corporate?
Kevin Thompson, Senior Program Manager for Brand System Programs, IBM
Coming out of the Peace Corps, Kevin Thompson could have comfortably moved into the nonprofit sector, but he wanted to make changes that could scale. "I came to the conclusion that if I really wanted to have an impact on the way the world works, I had to go inside a corporation," he says. "If you can inject something into the nervous system of a corporation, the ability to amplify it over the whole world is just incredible."
After getting an MBA and completing a series of rotational assignments at IBM, Thompson spent three years developing and scaling a global leadership and business development program modeled on the Peace Corps for the company. The Corporate Service Corps answered a need for IBM senior executives who are increasingly required to lead diverse teams in a range of environments around the globe. The program sends teams of top-performing employees to contribute their business and technical expertise in developing countries, working in pro bono partnerships with local organizations. The program sent its 100th team and 1,000th participant into the field in February 2011. "In order to bring about change in a big organization, I think you've got to maintain a healthy dose of idealism while being very pragmatic," Thompson says. "At the end of the day, your business case has to be a business case, not an emotional argument."
The return on the Corporate Service Corps takes several forms. There are leadership, cultural adaptability, global teaming, and resiliency outcomes for participants confirmed by an independent evaluation from Harvard Business School. In many cases, the program also introduces IBM into new countries—building relationships with senior public officials in high growth emerging markets. And then there is the story. "The Corporate Service Corps was the biggest media story for IBM in 2008, so without spending a penny on advertising, we created enormous brand value in both mature and emerging markets," Thompson says. "There was also huge employee interest. Before we were even too far along, we were given specific direction from the CEO to increase from 200 to 500 participants annually."
Once the program reached scale, Thompson took a cue from the nonprofit realm. "A lot of nonprofits fall down because the start up vision person doesn't ever let go, and they're often times not the right person, once they get to scale, to stay on as the leader," he says. "It reaches a point where the skill sets required at a more mature stage of the operation are not the ones required at the beginning." Preferring to stay on the leading edge of innovation, he turned the program over to a colleague and is now working on a leadership curriculum for IBM's SmarterPlanet program.
Winning Friends and Influencing Suppliers
Paul Tepfenhart, Senior Director, Private Brands, Walmart
When Walmart set out to control costs while improving sustainability measures, executives realized that the biggest opportunity for gains lay outside the company. Paul Tepfenhart, senior director of private brands for Walmart, explains, "More than ninety percent of our total footprint rests in supply chains. It's not the stores. It's not our trucks. It's where our products are coming from and how they are being made."
"We did a transparency pilot with the objective of seeing into our supply chain—not just who supplied us, but who supplied them, and so on, back to the agricultural crop," Tepfenhart says. For each level of the supply base, it got exponentially more complicated. Companies were reluctant to hand over information that they believed represented proprietary data or gave them a competitive advantage. "This is a complex challenge. And there are lots of setbacks. Working in this area requires stick-to-it-iveness. You are constantly finding ways to adjust, adapt, and keep moving," he says. "Eventually we had some very successful pilots, once we learned how to address suppliers' concerns."
Having gotten a handle on the extended supply base, Tepfenhart and his colleagues saw that it would be futile to attempt to improve the sustainability of every ingredient or source material one by one. "To achieve momentum, we have to show success, reward it, and recognize it, so that the entire universe of suppliers steps up, wanting to be recognized for its sustainability efforts."
They made that easier for suppliers by deciding to focus on situations where an environmental or social aspect is improved and the economics stay neutral or improve. "Usually if the more sustainable components of a product are more expensive, it's because the assets don't exist in scale to make a switch-over, and so the laws of supply and demand are automatically going to make it more expensive in the startup. You have to step back and take a longer-term view," Tepfenhart says. In some cases, Walmart found that change requires little more than planning ahead and educating suppliers.
"As an example, palm oil production has been causing huge loss of rainforest," he says. "The simple economics is that for small farmers it's cheaper to clear-cut rainforest than to plant existing land. That's because there's no consequence for the public good—intact rainforest—being eroded so how do we create a system that rewards the behavior that's good for everyone? In the case of palm oil, it came down to us educating suppliers that we're going to use only sustainable palm oil in the not-too-distant future. It simply became part of what our suppliers need to be planning for."
An Expression of Core Values
Britta Rendlen, Head, Sustainability Risk Management, Swiss Reinsurance Company
Reinsurance is a big but generally invisible industry, with approximately $ 200 billion in annual premiums. Most of reinsurers' business comes from insuring insurers, making them the risk managers for risk managers. So it was significant when Swiss Re, the second largest player in the field, decided that sustainability risk needed to be formally evaluated. This back-office change has the potential to subtly shift the economics of sustainability.
Britta Rendlen heads Swiss Re's sustainability risk management team. "Integrity and sustainability are core values for the company," she says. "We want to avoid putting our good name behind projects we don't think are ethical and sustainable or could harm our reputation. While our risk engineers and underwriters look at technical aspects, my group evaluates potential environmental, social, and ethical risks."
To date, Swiss Re is the only reinsurer to have an extensive program to manage sustainability risks in business transactions. A big part of Rendlen's job is to embed it in the fabric of the daily work at Swiss Re. She says, "We have a clear set of rules on what kind of business can be written and what should be avoided. My team's role is to both develop and ensure compliance with these self-imposed restrictions." The biggest challenge is often that sustainability risk management can come across as just another layer of complexity that impedes and delays business. "I have to convince colleagues who are under a lot of pressure to generate business that this is really something they must pay attention to," Rendlen says. "It's encouraging to see that as we talk it's not two fronts working against each other but we're learning from each other and it's a partnership. I see this happening more and more."
"Quite often, we encounter gray areas. In those cases we conduct an in-depth evaluation of the specific transaction and issue a recommendation to proceed, proceed with conditions, or abstain," she says. "Our intention is not to kill a deal for sustainability reasons, but to work it out so that it becomes acceptable. Sometimes that's not possible and then we just have to abstain from the transaction even if it would have been lucrative." Moving ahead of industry standards and turning down potential profits requires support from the top. Rendlen explains the deep support for the program this way: "Going against our values could harm our reputation. And reputation is a very important part of trust. And trust is a key asset for any insurer."
Even when top management, core values, and corporate culture are behind a social enterprise, execution requires making and remaking the case for how the concept will be implemented. "People are interested in environmental, social, and ethical issues," Rendlen says. "The challenge is how to mesh growth goals with sustainability thinking. There's always interest, so there's never just a wall. It's just a really big task."
In a field that is so focused on risk, seeing opportunity doesn't always come naturally. "One client told me, the Swiss Re process of managing these environmental, social, and ethical risks is like a seal of approval for his company," she says. "At first I was uncomfortable with the idea, as we cannot fully vouch for another company's sustainability performance. However, it makes sense that our clients seek the exchange with Swiss Re on sustainability topics, as the dialogue with us is honest and risk-based rather than defensive and confrontational. In the end, it's a win-win to both clients and Swiss Re."
Big Returns From Thinking Small
Anupam Bhargava '98, Former General Manager, Line Maintenance Services at UTC Pratt & Whitney; Chief Executive Officer, Clearwater Systems Corporation
When you're trying to move a $55 billion company into a new area, framing the problem well is critical. Anupam Bhargava saw an opportunity in getting his big company to think small. In 2004, he started EcoPower Services, a Pratt & Whitney business at airports globally that restores jet engine efficiency, thus reducing airline operating costs while keeping planes in operation.
"When it started, we were selling services in the $5,000 to $10,000 price range. As a company, we were used to selling services that were in the $2 to $3 million price range," Bhargava says.
This small-scale, relatively simple business was going against the grain at a company that prides itself on bringing complex technology to bear on massive projects. "It took a while for people to realize doing things at a smaller, distributed scale can be equally valuable to building relationships, creating value, and delivering returns," he says. All along, he had to prove that the new business would utilize investment and generate return at a level and in a time period that is palatable to a large, publicly held company.
The EcoPower service lowers the fuel consumption and reduces the greenhouse gas emissions of engines. "It's both a financial and environmental win," he says. This new approach means hundreds of millions of gallons of fuel, annually, are no longer consumed by aircraft, Bhargava explains. "EcoPower made a material change to the way an industry approaches maintenance and reduces its impact."
Having been successful innovating within a large company, Bhargava found he needed to reconsider the traditional track. "As you advance through an organization, you take roles with more administrative responsibility," he says. But Bhargava found that moving up took him away from where he felt most passionate. "One of the things that I learned was the value of returning to zero," he says. "Maybe you built one innovation into a large organization; the next innovation may mean you move back to a role where you're now creating something new with a small group and you work your way through that cycle again. That's something I had to get comfortable with."
Fellow First Movers
"Business is the defining institution of our day," says Judy Samuelson '82, executive director of the Aspen Institute's Business and Society Program. "If we're going to find sustainable solutions to the range of complex problems we face, from climate change to poverty alleviation, we need to unleash the real capacity of business."
Part of doing that is making sure that up-and-coming leaders have the tools they need and a network of people working on similar problems. "We want to support people who are working inside big, messy, complex, resource-grabbing, multinational corporations," Samuelson says. "We need to be sure people with spirit, drive, and a strong value system do not burn out inside companies but instead have what they need for real staying power."
Participants in the First Movers Fellowship come from a range of fields and functions, but they share the goal of bringing social or environmental change to business. Bhargava says, "Working with others doing similar things across industries allows for amazing insights. Even though the details are different, the problems and processes can be the same and the walls come down quickly."
A number of fellows have said that the ability to call on a network of people with a range of perspectives is invaluable both for the encouragement it provides and for the practical advice. Kevin Thompson of IBM says, "The other fellows are such an incredibly high caliber, both at a personal and professional level, that it was rewarding and humbling to build relationships with them. One thing I've continued to draw on is the different implementation philosophies—how people make the case, set the agenda, manage the political or the financial aspects that will bring a project forward."