THE BLOG
01/18/2012 12:26 pm ET Updated May 05, 2015

Three Dimensions of Leadership

Shutterstock / pogonici

A lot has been said and written about what it means for a company (or organization) to be a leader. Certainly the area of sustainability and all the sub-categories under that umbrella offer a myriad of opportunities for organizations, companies, and individuals to carve out a niche as a leader in a specialty or sub-specialty.

I continue to be amazed at groups and organizations that refer to themselves as "a" leader or "the" leader without being questioned by their stakeholders or the community. I once worked for a very intelligent person who decried those who declared leadership based on size alone: "Just because we're the biggest, that does not make us the best." In fact, he went on to point out that the larger the company or organization, the more important it was to be a leader lest it lose more money or destroy more of the environment based on its size alone.

Wise words from a savvy leader who understood that while size matters, excellence matters more. Excellence is a constantly moving target. And there are different ways in which a person, an organization, or a business can seek to be one that sets, and then continually seeks to improve upon, the standard of behavior. True excellence can be achieved through leadership, or closely following the leaders in a given area or field. Remember Avis Car Rental's theme, "We try harder"? It was based on being smaller than their largest competitor and therefore sought to position the company as more service-oriented (a leadership position).

Leadership by Action

The first way that organizations must establish their leadership is through their own actions -- and this is the bare minimum. This can be hard for larger organizations that may have entrenched methods of doing things, because it requires that one's actions continually evolve, but that the underlying basis for those actions -- the values that define the organization -- remain rock solid and consistent. Companies that lead by actions are not afraid to experiment with new ideas and are willing (if not eager) to challenge their existing perceptions on a regular basis. Leaders in sustainability are not looking for ways to hang on to existing practices; they are investing new programs and models that reduce the use of energy and natural resources. They are not only experimenting with technologies that reduce carbon output; some may be looking at ways to remove carbon from the atmosphere and capture it. And at the forefront are those organizations that are basing their business model on turning one industry's waste into the raw ingredients needed for completely different industries. Examples of this include companies that are extracting the petroleum from discarded plastic bottles and using it to create the polyester fibers that they turn into sportswear, and those producing synthetic gypsum (roughly 20 percent of U.S. raw gypsum use) from the byproduct of manufacturing and energy-generating processes, primarily from desulfurization of exhaust gases from coal power plants.

Leadership by Influence

Leaders know that they need to look beyond their own actions and values, beyond those things over which they control, to those things over which they can exert influence, such as their supply chains. This includes holding suppliers to adhere to values relating to human rights, working and labor conditions, living waves, environmental stewardship, and governance issues. Leading companies recognize that they cannot outsource problems in an effort to distance themselves from their negative impacts -- as BP discovered when it attempted to lay the blame for the Deepwater Horizon disaster at the feet of the companies it had selected to work on its behalf.

Increasingly, companies are requiring suppliers to do more than guarantee a level of quality for the products that they supply; some are requiring that suppliers maintain a chain of custody to ensure that the products that they are using conform to environmental and social values, as well. Large power-purchasers have been exploring the extent of the influence that they can have on their suppliers' behavior by implementing requirements beyond prices. Examples include Walmart's efforts to reduce packaging and marketing materials and to sell sustainable seafood. In order to be a supplier to Walmart, the giant retailer must be convinced -- using third-party validation -- that the seafood products that they are selling to customers are, in fact, sourced from sustainable species.

The new focus on a "sustainable" economy is creating opportunities for companies that offer products or services that help other companies reduce their environmental impacts, and even those that track information back to point, country, or company of origin. A great example is in the area of information technology, which can be used not only to help improve efficiencies in manufacturing but also to look at entire systems and provide vital information. In day-to-day application, measurement devices that monitor traffic flow could be used to automatically adjust traffic lights to facilitate safety and efficiency of transportation. Buildings that install monitors of electric power use help manage the peaks and valleys in consumption, reducing energy costs and helping utilities determine where electricity is needed and when. Devices that measure the depth and speed of rivers can be used to feed real-time data that can protect lives and property from natural disasters such as floods.

Moving beyond the environmental pillar, on the social side, experts in issues like global development, fair trade, workers' rights, and labor relations will also continue to be in demand, because companies are increasingly going to be asked (required) to measure and report on their footprints in these areas, as well.

Leadership by Expertise

The last way that people expect companies to demonstrate leadership is through their expertise. Beyond the niche consumer segment that will always seek out and is willing to pay more for goods and services that match their values, the vast majority of consumers must be driven to action through more traditional value drivers for those particular goods or services. For example, the ultimate success of electric vehicles will depend on other attributes as much as their reduced environmental impacts. By offering aesthetic appeal, performance, safety, reliability, and the waiver that allows such vehicles to use the express lanes in some jurisdictions, those vehicles will have mass appeal, because they will engage the value drivers for a much wider range of automotive purchasers.

Programs such as charging and refunding deposits on glass and plastic bottles and aluminum cans to provide direct financial incentives for desired behaviors can be successful, but they often have limited impact when convenience and comfort needs are not met. When Home Depot creates a mechanism for people to bring back used compact fluorescent light bulbs (to prevent them from going into landfills), or when auto repair facilities take back worn-out car batteries, those are attempts to influence consumer behavior. In these cases there is little financial incentive -- and in the latter case, sometimes companies charge to dispose of battery "cores" -- that probably limit the programs' effectiveness. But asking people to remove the burned-out bulbs, store them, and then remember to take them on their next trip to the store is less convenient than simply throwing them out in the regular trash collection (as bad as that is for the environment).

But often, when there is not visible "return," companies can do little more than "suggest" the way in which their products are used and ultimately disposed of (or recycled). Manufacturers of computers, cell phones, and a host of electronic devices offer power- (and energy-) saving tips for consumers, but over 90 percent of the electricity used today for computers is not in the "server" room but at individual desktop stations that are left on at night and monitors that are left on when laptops are disconnected. In homes, chargers that live their lives in the socket are drawing power even when the portable device is not attached. TV sets that have not been turned on in weeks are drawing current to diligently keep track of the date and time and which channels to remember.