Leveraging the Power of Associations To Create a New Magnitude of Sustainable Value

David Cooperrider, Fairmount Minerals Professor and Chair

Center for Business as an Agent of World Benefit

Case Western Reserve University

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Opening Excitement & Today’s Session:It’s Great to Re-connect With You

What do associations uniquely bring to the world of social responsibility and sustainability?

Is this arena of sustainable value creation truly the biggest business opportunity of the 21st Century?

Are there emerging examples—associations helping whole industries—and do these stories show how “doing good and doing well” can help the world, the industry, and strengthen the association as a leader?

Why is the “temptation to do good” less effective than the goal to create sustainable value?

How fast is all this happening?

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A Story:The Most Exciting Project I Have Ever Worked On

Business as an Agent of World Benefit--More Than 2,000 Interviews--100s of Published Profiles “Positive Institutions” --see www.worldinquiry.org

“Awe is What Moves Us Forward”

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Sustainable Value —From Obligation to Design Mindset

Stake-holder Value¹

Shareholder Value

Unsustainable(Value Transfer)

Unsustainable(Value Transfer)

Unsustainable(Lose/Lose)

Sustainable Value

¹ absolute standards orrelative to competitors

Clean energy vehicles

Fossil fuel ICE

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Is Sustainability a Passing Fad?

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My “Peter Drucker Moment”two threads—DNA of today’s exploration

“Every social and global issue of our day is a business opportunity in disguise”

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“The task of leadership is to create an alignment of strengths…making a system’s weaknesses irrelevant”

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Appreciative Inquiry Involves a Shift

“No problem can be solved from the same level of consciousness that created it. We must learn to see the world anew.”

“There are only two ways to live your life. One is as though nothing is a miracle. The other is as though everything is a miracle.”

– Albert Einstein

Why conventional change approaches don’t work

Small groups of experts working in a series of meetings

Focus is on technical/science challenges

Planning teams hand solutions to implementation teams

Typical results:

– A Few Try to Convince Many That Change is Needed

– Change is Perceived as a Disruption of “Real Work”

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Fairmount Minerals StoryBirth of the “Sustainable Design Factory”

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Multi-stakeholder Large Group Designing

External Stakeholders: Customers Suppliers NGO’s Neighbors/Communities Board of Directors

Imagine 300—Three days Stakeholders—designing new products, services.

Internal Stakeholders Operations Administration & Corporate

Services Customer Service Engineering Logistics Quality Sales Technical Support / R&D

Sustainable Designing

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Highlights 40% Annual Growth in Earnings Past Two Years

2007 US Chamber of Commerce’s #1 Corporate Citizenship Award

A Culture of Community Partnership and Innovation

New Employee Owned Businesses, New Markets

Emerging as Top Rated Star in the Industry

Industrial Minerals Association & Fairmount Minerals

Associations Helping Make Members Successful

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Fairmount Started with Appreciative Inquiry in 1990 With a Focus on Empowerment 40% CAGR Past Four Years

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Sources of Business ValueLevels of Design Focus

Business& WorldContext

Brand/Culture

Market

Product

Process

RiskAnticipating regulations, going beyond legal requirements

Reducing energy, waste & process costs—future of totally renewable energy

Sustainable-value, green products

New stakeholder relationships, new markets

Brand story, promise, customer experiences

Designing industries, policy contexts, better world

Business and society value created

In June, dairy leaders met in Rogers, Arkansas for the inaugural Sustainability Summit: Creating Value Through Dairy Innovation.

The Summit was an unprecedented gathering of 250 leaders representing producers, processors, non-governmental organizations, university researchers and government agencies.

Together, these stakeholders generated action steps and made an industry-wide commitment to reduce fluid milk’s carbon footprint while increasing business value, from farm to consumer.

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Sustainability Summit: Creating Value Through Dairy Innovation

The Call to Reduce Greenhouse Gas Emissions At the University of Arkansas Center for Applied Sustainability

Dairy Management IncInternational Dairy Foods

Association (IDFA) and Others

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Goals:

Reduce greenhouse gas emissions in the fluid milk value chain

ANDIncrease business value in the fluid milk category

Outcomes:Launch a set of initiatives that leverages industry collaboration

Summit Goal

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Appreciative Inquiry System-in-the-Room:

Broad Enrollment: Special Configuration of People Whole system represented; innovation inspired by collaboration and co-creation Leverages strengths and maintains continuity with the best of the past Full voice

Success Factors for Innovation and System Change

Success requires:•right conditions for engagement

•right people in the room

Big Change Fast Accomplishes months of work in 2-3 days Action focus around clear task Creates momentum for implementation

Breakthrough Results Lens of sustainability opens new possibilities Design “Rapid Prototypes” Honoring differences & common ground

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OUR DEFINITION:Providing consumers with the nutritious dairy products they want in a way that

makes the industry, people and the earth economically, environmentally and socially better – now and for future

generations.

Sustainability in the Dairy Industry

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Why Lead?

OPPORTUNITY – PART OF THE SOLUTION “Waste” to revenue (energy from cows) More efficient operations Farming practices that reduce emissions Carbon credits Innovative products Dairy seen as green

RISKS – NOT AT TABLE TO SHAPE THE NEW ENVIRONMENT

Greenhouse gas legislation does not provide farmers and processors with offset opportunities

Utilities not required to purchase clean energy from farmers

Consumers could see dairy as part of the problem

v

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Waste &Pollution

Resources&Energy

Sustainability Requires a Life Cycle Perspective

Consumer/ End of Life

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DISCOVERStrengths

Innovations & InsightsPositive Core

DISCOVERStrengths

Innovations & InsightsPositive Core

DREAMOpportunities

Images of a Better WorldDairy Innovation

DREAMOpportunities

Images of a Better WorldDairy Innovation

DESIGNAspirations

Brainstorm PossibilitiesRapid Prototyping

DESIGNAspirations

Brainstorm PossibilitiesRapid Prototyping

DEPLOYResults

Initiatives and PilotsMomentum & Learning

DEPLOYResults

Initiatives and PilotsMomentum & Learning

Create breakthrough approaches to

reduce greenhouse gas emissions and increase business value in the dairy

industry

4-D Cycle & Summit Task

Current Potential

Dairy Industry Today

2.7 million U.S. passenger vehicle emissions per year

Emissions today: 30 million metric tons per year

Identified potential reductions:15 million metric tons per year

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Review Preliminary Opportunities,Identify New Opportunities

Vision statement

and guiding principlesTruck & Route

Efficiency + Renewable

Fuels

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Pastured Dairy/Seasonal Milk Production

Product Innovation

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CarbonMarkets

Energy efficiencies

Renewable Energy

Infrastructure

Industry Infrastructure

Branding, Communication

, Training

Production Efficiencies

Alternative Fuels

Human Resources, Education, Awareness, Acceptance

Funding and alliances

Enteric Methane capture

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Methane DigestersOpportunity Transform manure into renewable

energy Create revenue source and air/water

quality benefits for producers

Barriers Challenging for individual farmers to

finance, permit, build, operate and maintain

Lack of appropriate technology Utility pricing structures

Potential Strategy Develop third-party owner/financer model

to scale Lobby for regulations on utility incentives,

carbon offsets and RECs Pilot models in states with favorable

regulatory environments

Milk Production

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Agriculture Process ImprovementOpportunity Conservation tillage, efficient fertilizer use

and precision agriculture can:– Reduce fertilizer use– Minimize fuel use– Sequester carbon

Barriers Lack of producer access to successful

examples, capital, training, and support Risk perceptions and lack of incentives

Potential Strategy Partner with co-ops and land-grant

universities Partner with feed companies to create

demand for sustainable feeds Collaborate with commodity initiatives to

set sustainable feed targets Secure the market for carbon offset

credits

Crop Production

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Manure & Nutrient ManagementOpportunity Manure nutrient use offsets use of

commercial fertilizers and associated emissions and costs

Barriers Storage and transportation constraints Ease of use Access to necessary information and

demonstration cases

Potential Strategy Leverage co-ops and land grant

universities to spread best practices and identify effective and economic solutions

Develop third party service providers models and create demand for manure nutrients

Ensure appropriate carbon offset credits are available to producers

Crop Production

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Pastured DairyOpportunity Pastures sequester carbon and can

reduce net emissions from the farm and can lower production costs for small farms

Barriers Lack of access to information to

implement or improve pastured dairy practices

Infrastructure development costs Land availabilityPotential Strategy Drive outreach through academic

institutions,co-ops, processors and NGOs

Use industry leverage to prioritize competitive funding for pasture enhancement projects

Enable carbon credit creation and commercialization

Crop Production

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Animal Nutrition ManagementOpportunity Animal nutrition management can

reduce methane emissions– Feed additives– Alternative feeds– Methane vaccine

Barriers Limited demand to reduce methane

emissions from cows Consumer perception

Potential Strategy Create a transparent evaluation process

to test new technologies and methods for efficacy & safety

Create market incentives for proven methane reduction methods

Milk Production

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Processing EfficienciesOpportunity Profitably reduce emissions:

– More efficient systems (steam, refrigeration, compressed air, motors and lighting)

– Energy production technologies (cogeneration, waste-to-energy)

Barriers Capital budgeting Lack of technical assistance and

training Time and human resources Accurate baseline measures

Potential Strategy Executive commitment and industry-wide

targets Pool resources to develop technical

expertise Encourage alternative financing models Pilot demonstration projects

Processing

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Low Carbon PackagingOpportunity Reduce packaging material inputs and costs Reduce energy use to mold and form packaging

Barriers Industry has already pushed the

envelope in reducing material Limited examples of energy efficient

equipment Consumer acceptance Maintain properties important for

product quality, sterility and durability

Potential Strategy Launch a dairy-focused effort to

accelerate a broad set of sustainable packaging innovation opportunities, including:– Best practices and new products for each

package size– Targets for energy efficient equipment

Packaging

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Truck and Route EfficiencyOpportunity Advancements in heavy duty vehicle technology

can:– Save money – Reduce carbon emissions

Barriers Lack of capital to make efficiency

improvements Difficulty of changing behaviorsPotential Strategy Collaborate with fleet efficiency leaders to

improve:– Fuel economy– Route optimization– Refrigerant management

Join EPA’s SmartWay Program Work with Small Business Administration

(SBA) approved lenders, etc., to help owner-operators and small trucking companies

Transport & Distribution

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Shelf-stable ProductsOpportunity Eliminate the need for refrigeration Merchandise milk in non-traditional retail

spaces

Barriers Consumer acceptance Processing technology and training

Potential Strategy Explore improvements in processing

technology Encourage research to improve taste and

gather consumer insights Pilot non-refrigerated shelf-stable milk in

target markets

Retail

DISCOVERStrengths

Innovations & InsightsPositive Core

DISCOVERStrengths

Innovations & InsightsPositive Core

DREAMOpportunities

Images of a Better WorldDairy Innovation

DREAMOpportunities

Images of a Better WorldDairy Innovation

DESIGNAspirations

Brainstorm PossibilitiesRapid Prototyping

DESIGNAspirations

Brainstorm PossibilitiesRapid Prototyping

DEPLOYResults

Initiatives and PilotsMomentum & Learning

DEPLOYResults

Initiatives and PilotsMomentum & Learning

Create breakthrough approaches to

reduce greenhouse gas emissions and increase business value in the dairy

industry

4-D Cycle & Summit Task

Leveraging the Power of Associations To Create a New Magnitude of Sustainable Value

Three Essential Success Factors

#1. Avoid the “Temptation to Do Good”

Embrace the Opportunity to Create Sustainable Value

Make it Part of Association and Industry/Profession Strategy

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Today’s Business Practices

SustainableBusiness Practices

A “bigger win” for business and a “win” for society

Focused on a “win” for business

Unintended negative consequences for society

Sustainable Pathway

Quick Wins

Use existing technology and business models

Value of industry collaboration

Innovation Projects

Require technology and/ or business innovations

System Changers

Require “changing the rules of the game”

Creating Business Value Throughthe “Lens” of Sustainability

#2. Embrace and Play to Your Strengths

Strength to Convene

Strength to Accelerate Spread of Innovation

Strength to Scale Up

#3. Don’t Misread the Management Trends

Sustainability is the business opportunity of the 21st century. It is an innovation engine unlike anything we have ever seen in management-- and it’s a lens which will dominate the management agenda for the next generation of thirty or more years. Even more important, the outcomes will define the next episode in creative capitalism and, ultimately, will determine the well-being of our imperiled planet. Association management may be the most important piece of the puzzle—associations offer the possibilities speed, spread and scale—exactly what we need.

A Vision…How Might We?

•Let’s Do 50 Association Catalyzed

“Sustainable Value Creation Summits”

•Across 50 Professions and Industries Using the Strengths-Based Appreciative Inquiry Approach

•David.Cooperrider@Case.Edu