Is now the time to pivot for a more sustainable future?

30 March 20216 min

In 1999, 'pivot' was not exactly a corporate buzzword; it was an iconic line from the sitcom "Friends". The scene was fairly simple: three friends struggling to get a couch up a narrow staircase, with a frustrated Ross (played by David Schwimmer) incessantly screaming the famous line: "Pivot!"

Fast forward to 2020 and you're as likely to hear businesses talking about pivoting as you are to see a Friends pivot meme. The world is grappling with a pandemic and a paralysed economy as businesses struggle to recover and stay afloat.

The onset of COVID-19 has forced organisations out of their comfort zones to explore ventures they never thought of exploring, and quickly change business practices that would otherwise have taken years to implement. In a short span of time, we've seen restaurants become ghost kitchens, a vodka maker create carbon-negative hand sanitisers and a paper-recycling company turn to recycled plastics to make face shields.

Would leaders and executives have had the courage to shift the same way that they have right now if there wasn't a pandemic? Maybe not.

Most businesses are not designed to change. To grow and expand, yes... but change? No, at least not drastically. Businesses are typically designed to exploit their current business model and maximise it until they can. Their systems and processes are set up to achieve repeatability, quality control, risk mitigation, compliance, customer loyalty and a range of other factors that have contributed to their past successes. Change rarely fits in. Or putting it another way, businesses are designed to resist change.

However, the world outside of the business doesn't stand still and wait for their 5-year and 10-year plans to shape up. It changes constantly in response to new technology, macro-economic forces, geopolitical forces, consumer expectations and a once-in-a-century biological threat that we now find ourselves extremely terrified of. There is no other choice but to shift gears but where to?

In a time filled with limited options and uncertainty, taking big leaps can lead to huge losses, which we cannot afford right now. How can business leaders make sure they are pivoting in the right direction?

The triple bottom line

Budget cuts and changes in priorities are very common in times of a crisis like COVID-19. It is more than understandable for companies to instinctively focus on staying afloat and keep their financial stability in check to survive. But, as we know, profit isn't everything.

According to the World Economic Forum, we need to achieve the symbiosis of people, planet and profit to build a more resilient and sustainable future.

Financial growth and plans for a sustainable future must go hand in hand, not at the expense of the other.

Natura CEO Roberto Marques put it simply: "We can't run a business in a dead planet."

Ørsted, Denmark's largest energy company, realised this early on. Amid the global financial crisis in 2007, they transformed their entire fossil fuel business to renewable energy and shifted to a far more sustainable business model, which has now earned them the title of the most sustainable company in the world.

Keeping the faith with your customers

Although customer loyalty is what underpins business, it also holds it back. While consumers expect reliability and consistency from brands they support so that they can trust them, they also expect them to innovate and offer something new.

According to Homegrown CEO Brad Gillis, it is imperative for business owners to realise and acknowledge that COVID-19 has caused permanent shifts in customer behaviour. "We need to start thinking about meeting our customers where they're at, and not expecting that they'll come to you," he says.

When the pandemic hit, the sales of Homegrown's sustainable restaurant company fell from having 50-100 daily lunch box orders down to two or three. Instead of simply tweaking their business, they invested in making permanent changes in their services and moved to the surging grocery delivery space. To differentiate themselves from established corporations, they focused on sustainable pantry staples from local producers and farms, which aren't easily found in grocery stores.

A recent global survey reveals that what people want is real change, for the world and their personal lives.

86 per cent of adults said they want the world to significantly change and become more sustainable and equitable after the pandemic. They didn't want to go back to the way things were. In order to pivot successfully, businesses must understand and listen intently to what people want and need.

Process not just product

It's no longer just the end product that people are concerned about. It's knowing and having faith in the entire process, what the product is made of and how it was produced.

"Consumers and employees are now acutely aware of how their lives can change overnight and how supply chains directly affect them," says Abbie Morris, co-founder of Compare Ethics, a sustainability platform that connects consumers with verified sustainable products. In fact, the sales from their site increased by 150 per cent in June 2020 compared with the previous month, suggesting that consumers are now paying closer attention to supply chains.

Nevertheless, there's still so much work that needs to be done. Let's take the humble pallet, for example. Like plastics, pallets are actually deemed an essential piece of equipment for many businesses, yet there has been little to no consideration given to how this critical element pivots to a more sustainable model.

The Centre for Supply Chain and Logistics (CSCL) 2017 Pallet Survey Report highlights that out of approximately 140 million pallets in Australia, 88 per cent are made of native timber, making it one of the major culprits in the quiet crisis of deforestation. What if manufacturers pivoted to a more sustainable, recyclable pallet such as Re>pal manufactured locally to customer demands, and powered by a renewable energy source?

It would be easy to say that building a recycled pallet industry isn't a global priority. But last year, if an article had appeared decrying a world shortage of ventilators in the face of a possible pandemic, would governments have jumped to pay attention? Whether we expect industries and economies to 'pivot', 'veer' or do a complete U-turn, it's not the action that matters, it's the vision and the will.

We, the people

The ability or extent to which organisations can pivot depends on the investment they had made in business resilience, and the mindset of its leaders and people.

A sense of purpose among employees has been proven to be an effective driver of change within a business.

According to McKinsey, people who feel that they are contributing to something bigger than themselves are likely to perform well and help the company to pivot successfully. It pays to know our 'whys'.

Perhaps, despite all the havoc and agony that the pandemic has inflicted, there can be something good to come out of it. Of course, this does not take away from the loss and suffering that has occurred, as many things can never be replaced. However, if such a wake-up call allows world leaders, big corporations, and all of humanity to pay attention and refocus on what's truly important, then it can only be considered a good thing.

Business needs to provide room for change and give itself space to move and make adjustments when situations call for it. So, when our backs are pressed against a wall, we do what we need to do. We pivot.

This blog was authored by: Scott Lemon