The former Marks and Spencer executive chairman and Plan A pioneer shares his thoughts on how sustainability and profit can be compatible. Sir Stuart Rose, on the changing role of business leaders, gives the example of what M&S has been doing around sustainable fish sourcing, health and nutrition, waste and recycling and sustainable livelihoods in supply chains. Read More

Stuart Rose for the Guardian Professional Network (29 March 2012):

Sir Stuart Rose, former CEO of Marks and Spencer.

There is something revolutionary and very new about the current time and business leaders are thinking differently about their role. We face a dilemma because although everybody is better off than they’ve ever been at any time in our history, we’ve also got the biggest gap between the rich and the poor that we’ve ever had, and we’ve potentially got a planet which is going to go bust any day. Our world is moving at an ever-accelerating pace, and with the advent of social media, what happens in New York now can be reported across the globe 60 seconds later.

These changes call for more open leadership. There is a definite need for more open dialogue, for more social engagement, for more social responsibility and for more accountability. I think that business leaders today have to be more rounded than they used to be, they have to be completely multi-functional and fast-moving.

Taking the sustainability agenda forward

CEOs who want to take this agenda foward in their business must use their influence to put things on the agenda and create space for others to lead – to get people thinking, talking, then acting.

To give an example, I took 100 senior people from M&S to the cinema to see An Inconvenient Truth, a documentary on Al Gore’s campaign to make the issue of global warming a recognised problem worldwide. Although nothing might have happened as a result of this, I actually had about 75 emails the following morning saying “that’s scary”, “this is amazing, we ought to be able to do something with what we do and the breadth of what we’ve got”. For me that was the green light saying these guys want to do something.

In addition to this, I also set up a committee which I chaired. Plan A was part of the drumbeat, and every week I would raise the subject – the fact that I was the person chairing it meant that the senior managers at M&S had to come.

It’s also important to build support in other places. When I talked to the board about Plan A, one-third of them probably thought I was batty, and probably only 10% or so wanted to do it. That’s usual, because when you’re slightly ahead of the field you typically have only a minority of people who believe in you.

Thinking differently about how you engage with your investors is key. One of the problems behind a lot of the issues that we’ve got is that we live in a very short-term environment where we have to have results today, tomorrow, the day after, and not in a years’ time, three years’ time, five years’ time. That’s a big issue for public limited companies. When we were working on Plan A I said to the investors: “We’re going to invest £200m over the next three years and not put a penny on to the consumer.” They all held their hands up in horror, and said: “That’s £200m margin! We don’t like that. It’s going to take longer for us to get the share price from X to Y.” But that’s what leaders should do! Blaming investors for not doing things like Plan A, and for not acting in the long-term interests of your business, is an easy excuse that chief executives use.

The changing role of the CEO

CEOs aren’t just leaders within their business any more. They also play a role leading collaboratively with others in all kinds of places such as supply chains or government regulation. M&S has been doing this around sustainable fish sourcing, health and nutrition, waste and recycling and sustainable livelihoods in supply chains.

Leading consumers is also important. If you wait for customers to tell you that you need to do something, you’re too late. Good business leaders should be half a step ahead of what customers want, ie they don’t actually quite know they want it. That’s what innovation’s about. With Plan A, we didn’t wait for the consumers to tell us. With Fairtrade, we didn’t wait for the consumers to tell us. And with charging for plastic bags, we didn’t wait for consumers to tell us. We just did it.

Setting ambitious targets and making substantial investments

Thinking about sustainability initiatives just in terms of adding cost is the wrong way to think about it. M&S has proved sustainable business can be profitable. In 2007 Plan A was a £200m investment and I said it wouldn’t make any profit in the first five years. But in the 2010 annual report the auditors said £50m of extra profit was attributable to doing the right thing. So there’s the proof. So any chief executive that says “Oh, I’m sorry, I can’t afford to do it, I haven’t got the people, it’s all too expensive, the consumers don’t want it, they haven’t asked me for it, it’s the wrong thing to do and it’s going to cost me money” is wrong, wrong, wrong, wrong and wrong.

The creation of profit and running businesses sustainably are not in conflict.

Appealing to the majority

There are always chief executives who are ahead of the game, who recognise that the world is not the place it was 10 years ago and that they have to find different routes and listen to different inputs. They are in the minority. The tail end will never catch up and the rest are in the middle. The middle’s a comfortable place to be, and everybody else seems to be doing the same thing until you suddenly find, “Oops! He’s not doing that any more. Oh dear!”, and you realise you’ve been left behind. Today’s business leaders need to pay attention, because there is a group of leaders that are redefining the rules for everyone else.

Business schools need to play their part too. Executive education providers need to train leaders to be proper leaders. Top executives typically get an MBA, they stand on their heads, they do a whole pile of case studies on X, Y and Z. But who teaches them about how to behave? Leadership is not just about producing the right numbers. Leadership is about setting the right tone in the organisation. It’s about ethos, it’s about what you stand for, it’s about trust.

Sir Stuart Rose spearheaded the launch of Marks and Spencer’s Plan A in January 2007, setting out 100 commitments to achieve in 5 years. Plan A is now extended to 180 commitments to achieve by 2015, with the ultimate goal of becoming the world’s most sustainable major retailer.

On 29 March, Rose will launch a new report, Leadership in a Rapidly Changing World: How Business Leaders are Reframing Success, produced by Ashridge Business School and the International Business Leaders Forum (IBLF) on the changing role of business leaders.

Source: www.guardian.co.uk