Green Organizational Architecture: What could it be?

1. EIASM
2012
Green
Organizational
Architecture:
What
could
it
be?
Organizational
Architecture
with
Weak
or
Strong
Sustainability
in
Mind(OASSIM
model)
Albert
Lejeune,
Ph.D.
ESG-­‐UQAM
lejeune.albert@uqam.ca
13/02/2012
Paper
accepted
at
the
EIASM
2012
Workshop
on
Information
and
Organizational
Architecture,
Brussels,
Belgium,
March
9-­‐10,
2012

2. Table of content
INTRODUCTION
3
THE
SUSTAINABILITY
PROBLEM
IN
ORGANIZATIONAL
ARCHITECTURE
4
THE
THEORY
OF
SUSTAINABLE
BUSINESS
ECOLOGICAL
INTELLIGENCE
AND
TRANSPARENCY
THE
EMERGENCE
OF
GREEN
MANAGEMENT
SEEN
THROUGH
ORGANIZATIONAL
ARCHITECTURE
THE
INFORMATIONAL
'GREEN'
PATTERN:
THE
SUSTAINABILITY
REPORTING
THE
PATTERN
OF
THE
'GREEN'
PROCESSES:
TOWARDS
TOTAL
ENVIRONMENTAL
QUALITY
THE
STRUCTURAL
'GREEN'
PATTERN:
MOVING
TOWARDS
BLURRED
NETWORKS
TO
CREATE
VALUE
THE
STRATEGY
'GREEN'
PATTERN:
THE
(NATURAL)
RESOURCES-­‐BASED
STRATEGY
THE
PATTERN
OF
‘GREEN’
CULTURE:
TOWARDS
A
NEW
ENVIRONMENTAL
PARADIGM
(NEP)
ARCHITECTURE
FOR
GREEN
MANAGEMENT
MANOEUVRABILITY
AND
ADAPTABILITY
THROUGH
ORGANIZATIONAL
LEVELS
BARRIERS
TO
GREEN
MANAGEMENT
4
5
7
9
10
10
11
12
TOWARD
A
RESEARCH
MODEL
15
WEAK
AND
STRONG
SUSTAINABILITY
ORGANIZATIONAL
COGNITION
FROM
BUSINESS
MODEL
TO
THE
THEORY
OF
THE
BUSINESS
THE
OASSIM
MODEL:
THREE
MODES
OF
LOGIC
REASONING
ABOUT
SUSTAINABILITY
16
18
20
24
CONCLUSION
26
12
14
REFERENCES
GÉNÉRÉES
ZOTERO
ERREUR
!
SIGNET
NON
DÉFINI.
REFERENCES
(TO
BE
COMPLETED)
ERREUR
!
SIGNET
NON
DÉFINI.
ANCIENTNESS
RÉFÉRENCES
ERREUR
!
SIGNET
NON
DÉFINI.
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3. Introduction
The lack of interest in management science in general and in the discipline of information
systems (MIS) in particular on the topic of sustainability is remarkable. Melville (2010)
notes only one reference linking IS and sustainability before he even puts out a research
agenda in this direction. Even more remarkable is the ignorance of the issue of
sustainability shown by the discipline of enterprise architecture. The issue of designing a
company guided by the principles of sustainability is not on the agenda. Except for some
seminal papers on sustainability-oriented corporate change (Shrivastava, 1995a,b,c;
Shrivastava and Hart, 1995; Hart, 1995), it seems to be now more a concern of bloggers
or Open Source communities. Research in MIS and organizational architecture is thus
lagging behind management practices in sustainability. Yet the issue of sustainability in
its three components - environmental, social and economic - exists on the management
side but the picture is not easy to read. Companies face new challenges as illustrated in
repeated conferences on the threats of climate change, sustainable development laws, new
reporting practices and the emergence of the carbon market. Innovative firms turned these
challenges into opportunities, e.g. General Electric with its new Ecomagination division.
When organizations become more sensitive to environmental issues, are they deploying
corporate architectures for sustainability? What are those architectures? Griffiths and
Petrick (2001) answer that they are (1) architectures that capture and use ecological
information for strategic purpose, (2) architectures that incorporate employee knowledge
for strategic purposes and (3) architectures for rapid response to sustainability
opportunities and threats. The Griffiths and Petrick’s (2001) answer is right on the way to
reach a definition of a green organizational architecture. But are those architectures
expressing a strong sustainability approach?
In fact, following Roome (2012), most of sustainability practices are mainly weak
sustainability approaches. Roome (2012: P.620) defines weak sustainability: «Weak
sustainability sets out to bring environmental concerns into the framework provided by
the structures and systems of business». Weak sustainability characterized more the
period of ‘corporate environmental management’ which is for Bansal and Hoffman
(2012) the first wave of environmental issues in business management; the two others
being ‘corporate environmentalism as strategic management’ and the third, ‘corporate
environmentalism as sustainability’. Within the last wave some enterprises or
organizations embrace strong sustainability: «Strong sustainability seeks to integrate the
company into environmental or socio-ecological systems, so that the patterns of
production and consumption to which the company contributes are within the capacity of
the Planet to sustain» (Roome, 2012: P. 621). Thus the issue of weak/strong
sustainability asks for a revaluation of the sparse contributions to a green organizational
architecture: are corporate architectures for sustainability proposed by Griffiths and
Petrick (2001) fitting the strong sustainability attitude?
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4. Here comes our research question: how to influence managers’ thinking toward (strong)
sustainability when they build an organizational architecture? The purpose of this paper is
to integrate the issue of sustainability in the process of viewing an organizational
architecture with (strong) sustainability in mind.
Between the introduction and the conclusion, the paper has two main parts: 1. a review of
the sustainability problem in organizational architecture and 2. a proposition of a research
model (OASSIM that stands for Organizational Architecture with Strong Sustainability
in Mind). The first part is organized as follows: A. The theory of sustainable business, B.
Ecological intelligence, C. The emergence of green management, D. Architecture for
green management, and E. Barriers to green management. The second part, the research
model, is divided in three parts: F. Weak and strong sustainability, G. Organizational
cognition, H. Logic and sustainability.
The sustainability problem in organizational
architecture
The issue reintroduces the notion of theory of the business (Drucker, 1994) by presenting
the argument that sustainability should be part of the theory of the business in this
century. Resource limits of the biosphere (ecological footprint) require that the managers
include the biosphere in the task environment to design sustainability-oriented innovation
(Klewitz and Hansen, 2011; Hansen et al., 2011). The issue also highlights the growing
ecological intelligence developed by consumers and its effect on the transformation of
key domains such as organizational culture, strategy, structure, processes and information
that are becoming increasingly 'green' due to persisting ISO standards, GRI reporting
requirements, regulations, etc. Barriers to the process of ‘green management' are
described, from a survey conducted by the MIT (Berns et al., 2009).
The
theory
of
sustainable
business
In 1987, the Brundtland Report defines sustainable development as development that
meets the needs of the present generations without compromising the ability of future
generations to meet their own needs. While the GEO-5 report is being released in 2012,
the GEO-4 report, released in late 2007 by the United Nations Environment Programme
(UNEP) specifies the nature of problems and opportunities brought to humanity. The
whole world lives above its means. The human population is now so large that the
amount of resources needed to sustain it exceeds the available resources. And the
ecological footprint of humanity - that is to say, the environmental requirements - is 31.9
hectares / person, whereas the biological capacity of the Earth is on average only 15, 7
hectares / person.
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5. Weak and strong sustainability approaches are made of different assumptions (Daly and
Walsh, 2010) illustrated by different conceptual frames (Roome, 2012) that must
transform the theory of the business (Drucker, 1994). As Daly and Walsh (2010: P. 509)
point out: «Drucker argues that the skills and competencies that managers required in
modern management are rapidly changing and now operating at a much more
fundamental, intellectual and theoretical levels than previously understood. Increasingly,
according to Drucker, it will be in this space that a firm’s future competitive advantage
will come from and that this must begin the assumption design of the firm». While
Shrivastava (2012) puts forth an aesthetics of sustainability, this paper takes a cognitive
angle to investigate the problem of sustainable organizational architecture. This
cognitive approach is justified as Roome (2012) builds on mental frames to distinguish
between weak and strong sustainability. In fact, Roome (2012) identifies six conceptual
frames that illustrate the opposition between weak and strong sustainability: (1) mental
frame, (2) decision frame, (3) organizational/institutional frame, (4) time frame, (5)
values frame and (6) change/innovation frame. The weak/strong sides of these various
conceptual frames make the sustainability assumptions more explicit and visible at the
root of a theory of the business (Drucker, 1994) and imply the argument that
sustainability should be part of the theory of the business in this century.
According to Drucker (1994) a theory of the business is made of the assumptions that
«shape any organization’s behavior, dictate its decisions about what to do and what not
to do, and define what the organization considers meaningful results. These assumptions
are about markets. They are about identifying customers and competitors, their values
and behavior. They are about technology and its dynamics, about a company’s strengths
and weaknesses. These assumptions are about what a company gets paid for. They are
what I call a company’s theory of the business». Now for the proponents of strong
sustainability, sustainability should be integrated in a theory of the business. For
example, from the electric car to the LEED building, new markets are emerging; the
consumers are developing their eco-intelligence while new green technologies are each
day questioning the firm learning capacities.
Sustainability requires a new theory of the business, a theory - if we refer to Roome
(2012) - seeking to integrate the company into environmental or socio-ecological
systems. This requires a new - fundamental, intellectual and theoretical - cognitive space
(Daly and Walsh, 2010) where must begin the assumption design of the firm.
By updating its assumptions on the environment, the new theory of the firm must
incorporate the principles and concepts of sustainability and opportunities offered by new
'green' products and services valued by customers.
Ecological
intelligence
and
transparency
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6. Indeed, according to Goleman (2009, 2010), it seems that companies no longer have a
real choice to change their logic: consumers develop ecological intelligence requiring
total transparency of the composition of products and manufacturing processes. For
Goleman (2009, 2010), the consumer is now in a position to know the impacts of any
purchase on the environment. He gives the example of the website Good Guide
(http://www.goodguide.com/) where consumers continually assess the ecological quality
of purchased products. For Goleman the expression of ecological intelligence is
extending the ability of native naturalists to categorize and recognize patterns in sciences
such as chemistry, physics and ecology, using the lens of these disciplines in dynamic
systems operating at different scales, from molecules to the planet. This knowledge of
how things and nature work includes the recognition and understanding of the myriad
ways with which artificial systems interact with natural systems. This new awareness
allows us to read the interconnections between our actions and their impact on the hidden
planet, our health and our social system. Goleman (2010: Page viii) stresses the fact that
Wal-Mart – because of his 2009 book – «is now designing a sustainability index that will
use life-cycle-analysis-type data to rate all the products on the store’s shelves».
In fact, the understanding of sustainability is a scientific challenge (Antal and Hukkinen,
2010) which requires an understanding of new concepts such as biosphere, ecological
footprint, climate change, sustainability science etc.
«In contrast to the myths and stories of ancient peoples, the underlying knowledge and
reasoning of contemporary societies is grounded in science. Of course, not everybody
can be expected to mobilize complex, science based belief patterns prior to every
environmental management decision. Instead, we deal with our cognitive limitations by
condensing real world complexities into simple conceptual blends that capture their
pragmatic relevance» (Antal et Hukkinen, 2010, Page 941).
In that vein, in 1999, the U.S. National Research Council (NRC) defined the science of
sustainability as place-based science because it aims to address environmental problems,
locally. Sustainability science is problem-driven with the aim of creating and applying
knowledge to assist decision making to improve sustainability. One of the beliefs of
departure is that this knowledge must be co-produced by both researchers and
practitioners (Clark and Dickson, 2003).
Ecological intelligence questions the cognitive abilities of consumers and policy makers.
Between emotion and reason (Stenning and Van Lambalgen, 2008), the decision maker,
with new analytical tools such as LCA (Life-Cycle Assessment), is able to review the
logic of the theory of the business.
This approach resonates with FISDev framework Framework for Integrated Sustainable
Development (see http://sustainabilityframework.org/). FISDev is a collaborative tool for
addressing sustainable development. The purpose of FISDev is to provide an architecture
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7. that organizations can implement to introduce best practices of sustainability in their
methodologies.
Figure 1
The FISDev approach (see http://sustainabilityframework.org/, visited summer 2010)
Refering to Figure 1, and building on Shrivastava (2012) who defines Sustainability 2.0,
green organizational architecture can be – at first - vaguely defined as an organizational
architecture that bring together Sustainability 2.0, Enterprise 2.0 and the Web 2.0 thanks
to a new theory of the business based on strong sustainability assumptions.
The
emergence
of
green
management
seen
through
organizational
architecture
Organizational architecture is a metaphor; it gives shape to an organization through both
its formal and informal structure. If organizations can demonstrate characteristics such as
agility, quality, reducing greenhouse gases, initiating green innovation, raise execution
speed etc., these characteristics are emerging. They arise from microfoundations (Teece,
2007) or individual competences and new ideas that emerge at the micro level of the firm
(Ayuso et al., 2006). They result from a pattern, a pattern of arrangement and alignment
between organizational domains such as information, processes, culture, people and
learning. Thus the practice of organizational architecture consists of dismantling an
organization in its fundamental components to understand the emerging characteristics.
This architecture requires an understanding of the informal or invisible dimensions (Itami
and Roehl, 1991). Indeed, competitive advantage of a company may be achieved through
organization contracts that are unclear or through agreements, arrangements and
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8. alignments that are not formalized. These hidden contracts illustrate how employees,
values and culture interact; the emergence of the strategy - contrary to its formulation; the
alliances and networks; and finally how people, groups and organizations learn about the
sources of employee motivation. All these elements have emergent properties.
Figure 2
M
a
ni
fe
st
R
e
pr
e
s
e
nt
at
io
n
informati
on
process
structure
strategy
culture
Crystallization Stage
Organizational domains in the OM approach (Morabito et al., 1999)
Depending on the organization, in a radical or incremental way, green management
emerges. Pane Haden et al. (2009) define green management as a process deployed
throughout the organization that uses innovations to achieve sustainable development,
waste reduction, social responsibility and competitive advantage through continuous
learning while integrating environmental strategies and goals to the business goals and
strategies.
To deploy this process, managers have to become architects: they design organizational
structures, perform process engineering, empower people and develop their skills, exploit
the potential of information technology, facilitate learning and make changes at all
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9. organizational levels. Applying the analysis of life cycle for new products, integrating the
total quality approach to pollution control, they invent their green management. In so
doing they alter patterns in organizational domains (information, processes, structure,
strategy, culture, etc.), each with its crystallization rate and its degree of manifest
representation (see Figure 2). So each day, the theory of business of each organization is
tested, to emerge through shared understanding, a better alignment, better tools, a variety
of perspectives creating friction, multiple opportunities for interaction and a surplus of
resources, particularly time to experiment with new ideas (Birkinshaw et al., 2011).
The following sections review the various organizational areas in order of decreasing
manifest representation, as amended by sustainability-oriented initiatives.
The informational 'green' pattern: the sustainability reporting
Efforts of environmental activists and committed policy makers led to the creation of the
GRI (Global Reporting Initiative), non-profit organization based in Amsterdam since
1997 and created by CERES, Coalition for Environmentally Responsible Economies, an
NGO based in Boston and central actor the integration of environmental issues into
business activities. The GRI developed guidelines for sustainability reporting that have
become over the years a standard for triple reporting: financial, environmental and social.
However, some companies began to publish separate environmental reports that complete
their annual report. Between 1989 and 1993 there were 70 companies publishing
environmental reports compared to 300-400 in 1996 (Etzion and Ferraro, 2010).
It is interesting to note with Etzion and Ferraro (2010) that it is by analogy with the rules
for filing a financial statement that the guides have expanded the GRI (see Table 1).
According to a KPMG study in 2005, over 40% of firms that claim standards of GRI in
their sustainability report, and in 2008 77% of the 250 largest firms in the Fortune 500
used the GRI guidelines. The three main target audiences are the organizations
themselves, civil society and investors. This shift in the way of enterprise reporting
eventually changes practices. Bloomberg ( http://www.bloomberg.com/ ), a specialist
financial news network, is developing its own environmental, social and governance
performance metrics (ESG). ESG metrics are now available on famous Bloomberg
screens to the world of banking and financial services (Marquis et al., 2010).
In terms of observable organizational pattern (see Morabito et al., 1999), sustainability
reporting is an informational pattern that differs from both its apparent high
representation - its materiality - and its rapid rate of crystallization. But a company can
issue sustainability reports without being transformed by new cultural values that are
'green'. Changes in the informational pattern are faster and more visible than cultural
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10. changes. But all the changes - and consistent alignment over time –depend on the culture,
both the national culture and its expression in the organizational culture.
Table 1
Evolution of the principles of GRI sustainability reporting
Source: Etzion and Ferraro (2010: 1097)
The pattern of the 'green' processes: towards total environmental quality
Total quality approaches are designed to eliminate wasted time, effort and material.
Pollution is nothing but a form of loss to be eliminated in the pursuit of total
environmental quality. This quest for total environmental quality will often have a
positive impact on the performance of the firm (Klassen and McLaughlin, 1996). For
Christmann (2000) various environmental 'best practices' can positively affect the
competitive advantage. At a higher level, the deployment of green management is an
organizational process change. As mentioned, Pane Haden et al. (2009) define green
management as a process deployed throughout the organization that uses innovations to
achieve sustainable development, waste reduction, social responsibility and competitive
advantage through continuous learning while integrating environmental strategies and
goals to the business goals and strategies.
The structural 'green' pattern: moving towards blurred networks to create
value
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11. Following Azzone and Noci For (1998), green management tends to change the general
characteristics of company structures. The goal for designers of an organizational
structure is for the structure to allow the proper functioning of the (green) learning
process. Hence there will be passage of a formal hierarchical structure to a more
horizontal structure of teamwork, lateral organization, etc.
In the context of
organizations' responses to extreme events, Mendonça et al. (2007) point out that despite
the progress made in ICT, the role of improvisation, the adhocracy and other emergent
phenomena has not decreased in the responses to an emergency. However, new
environmental requirements have become a moving target, requiring to implement new
programs to develop new skills across an industry (ex: packaging and recycling) to all
suppliers and subcontractors. For Azzone and Noci (1998), chains of value creation will
become fuzzy supply chains, according to environmental requirements.
The strategy 'green' pattern: the (natural) resources-based strategy
Hart (1995, 1997) defines three types of green strategies (see Figure 3): 1. The prevention
of pollution, 2. Environmental product stewardship and 3. Sustainable development. As
product stewardship guide the selection of raw materials and product design with the
objective of minimizing environmental impact, reducing GHG emissions and other
pollutants is the fundamental goal of pollution prevention. For Hart (1995) these two
strategies are beneficial in the Northern Hemisphere, whereas real sustainable
development avoids the negative links between environment and economic activity
between the countries of the South and the North. Whereas in the mid-1990s, only 20%
of the population lives in the North, 80% of the economic and industrial activity takes
place there: firms should make the link between the consumption of material goods in the
North and the degradation of ecosystems in the South (Hart, 1995).
Rather than the ultimate control of toxic emissions (end-of-pipe investments), Hart (1995)
proposes the review processes using continuous improvement methods to achieve
specific environmental objectives, forming a competitive advantage by combining this
capability with the approach of Total Quality Management (TQM). Environmental
stewardship product will require an adaptation of the design constraints of the product life
cycle (LCA). This requirement can be taken further with the practice of D f E: Design
for Environment. This strategy will work even better if external stakeholders may be
associated (as in the case of BMW, which plans to facilitate the removal of its products at
end of cycle with outside firms for recycling). The third green strategy, sustainable
development, requires a leadership that has a strong sense of social and environmental
purpose. It requires great moral strength and a leader dedicated to the social process of
empowering people. It also requires a shared vision of the future, as demonstrated by
Maurice Strong when he took the head of Ontario Hydro by redefining its mission toward
renewable energy.
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12. The pattern of ‘green’ culture: towards a new environmental paradigm
(NEP)
Corporate cultures can support or destroy competitive advantage. For Branzei et al.
(2001), three dimensions define the environmental performance of a company: (1)
organizational embeddedness, (2) the ability to take action and (3) responsibility for
environmental conservation. These authors suggest that firms go through stages of noncompliance with environmental laws and regulations to a stage of compliance and then
move on to environmental excellence and finally to environmental leadership.
Figure 3.
The three green strategies and sustainable competitive advantage according to Hart
(1995)
Architecture
for
green
management
manoeuvrability
and
adaptability
through
organizational
levels
The deployment of a green management process will require a new cognitive
organization able to change the organizational culture and from there, depending on the
speed of crystallization and the materiality of organizational fields, change the strategy,
structure, processes and information domains.
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13. These changes in organizational patterns may occur at different organizational scales (see
Figure 4): at the organization as a whole, at one of its components or business units, at
one service pattern that allows a unit to function or at the information level. It follows
from this that an adaptable organization reacts to environmental changes by passing new
constraints at lower levels and forces it to change, while an organizational level is
manoeuvrable when it allows a better alignment of the components at a particular level.
Adaptability(vertical alignment)
Figure 4
Manoeuvrability (horizontal alignement)
Adaptability and manoeuvrability of organizational levels
Source: Morabito et al., 1999
The pattern of information is a hard – soft continuum that parts from the data to reach
knowledge through information. The generation of knowledge is constrained by the
world views of individuals, their abilities and belief system (Yolles, 1999). For Yolles
(1999), the world view is centered on the culture and has a cognitive organization
(beliefs, values and attitudes).
The degrees of alignment, and therefore manoeuvrability, are ultimately based on the
organizational culture (Morabito et al., 1999). A culture that is closed is a culture in
which overt behaviors remain unchanged. This leads to a stagnant organization, an
organization that has trouble adjusting to a competitive environment through SOI.
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14. The alignment of the fields of culture and organizational learning facilitates the
instantiation of additional new business culture contracts (eg, reciprocity and information
sharing), which in turn lead to a better alignment between more organizational domains.
For de Jong (2010), a psychological contract is a team shared mental model that consists
of beliefs about mutual promises between individual team members and agents of the
organization. Behavior and the resulting alignments are characteristic of an innovative
culture (Schein, 1994). Innovative cultures, inventive organizations, and manoeuvrability
are dependent on each other and together form the basis of effective organizations in
highly turbulent environments (Morabito et al., 1999). Such an organizational
configuration should allow the deployment of green management. These learning
organizations are commonly defined and understood as organizations where people
continually improve their creative capacity, where exploration is a mandatory behavior,
where existing practices are continually questioned and a culture of dialogue always
maintained.
Culture changes when the cognitive organization - the beliefs, attitudes and values change. Further the patterns of knowledge also begin to affect change in the logic models,
like the theory of the business, which give the system a capacity of anticipation (Yolles
and Dubois, 2001).
The theory of business described by Drucker (1994) is a cognitive organization, made up
of beliefs (Dennett, 1979), attitudes and values (Schein, 1994) likely to change the
culture. Culture, when it is still fluid and not yet crystallized, has the ability to change
patterns in domains such as strategy, structure, processes, and information (see Figure 2).
The implementation of green management tests both the manoeuvrability and adaptability
of an organization. If the organization is manoeuvrable, the changes will take place along
a continuum in terms of information, for example, in the marketing department. If the
organization is adaptable to the changes made on a larger scale, then it changes its
strategy and it forces lower levels to change.
Determinant conditions to the achievement of higher levels are ecological values,
government regulations and economic benefits. Finally leaders’ interpretations will be
influenced by four categories of company stakeholders: regulators, organization, media
and communities, and environmental groups and lobbies. Attitudes towards nature are
rooted in a set of human values shared by different countries: values, attitudes and beliefs
centered on the ecology form the new environmental paradigm (NEP).
Barriers to green management
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15. A survey conducted by researchers from MIT in 2009 in collaboration with the Boston
Consulting Group (see # http://www.mitsmr-ezine.com/busofsustainability/2009 pg1 )
defines two major obstacles to the implementation of green management: 1. Lack of
understanding of sustainability and 2. The difficulty of modeling a business case for
sustainability. The report mentions the following three causes:
•
•
•
The lack a factual basis
The lack of common definitions and common language
The difficulty of measuring the results of actions and the lack of understanding of
collective actions
In terms of organizational architecture, we can observe weaknesses in the informational
domain (Figure 2) that limit the manoeuvrability of the organization, and problems with
cognitive organization that do not allow a change of culture.
The lack of basic facts and common definitions of ‘green’ language cannot promote
collective action. In return, the lack of collective actions is a learning barrier to the
measure of the results of actions, which adds to the misunderstanding.
The MIT report says that 70% of firms do not have a good compelling business case
mainly because;
•
•
•
It is difficult to predict and plan beyond a horizon of 1 to 5 years, while measures
of financial performance are quarterly
It is difficult to identify, measure and monitor the effects of long-term investments
There is a high uncertainty level in the environment
Here the situation is much contrasted between companies hesitant to change and those
who view a green future (for example, General Electric (GE) that launched its
Ecomagination division). With its Ecomagination division, GE demonstrated both
adaptability (forced and directs the organization's strategic choices of the business units
to the 'green' imagination) and manoeuvrability when a service such as R&D, for
example, begins to apply the principles of open innovation. Sustainability has
transformed the culture, strategy, structure, processes and information at GE.
Toward a research model
A research model on sustainable organizational architecture must clarify the notion of
sustainability and make distinctions between green capitalism, green washing and more
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16. radical sustainable initiatives. Weak sustainability is a common way to bring
environmental concerns into the framework provided by the structures and systems of
business (Roome, 2012: P.620) while strong sustainability seeks to integrate the company
into environmental or socio-ecological systems, so that the patterns of production and
consumption to which the company contributes are within the capacity of the Planet to
sustain» (Roome, 2012: P. 621). From the point of view of an economist, Nilsen (2010)
builds on the opposite definitions of weak and strong sustainability. Thus the Z axis on
the Figure 5 is a continuum between weak and strong sustainability.
As mentioned earlier, weak or strong sustainability approaches are made of different
assumptions (Daly and Walsh, 2010) illustrated by different conceptual frames (Roome,
2012) that must transform the theory of the business (Drucker, 1994). As Daly and
Walsh (2010: P. 509) point out: «Drucker argues that the skills and competencies that
managers required in modern management are rapidly changing and now operating at a
much more fundamental, intellectual and theoretical levels than previously understood».
So the Y axis is the cognition axis. The Y axis opposes two common understandings of
what organizational cognition is: organizational computation or organisational
interpretation. This distinction between computation and interpretation at an individual
level of analysis is classical in the development of cognitive sciences. The model will
show that weak sustainability is more connected with computation and strong
sustainability with interpretation. To change an organization, the culture has to change
first – through new beliefs, values and assumptions - and initiate, by a ripple effect,
changes in the other organisational domains like strategy, process, structure, information
etc. Organizational cognition will be key to initiate a culture change.
Finally, the X axis is the organizational architecture axis represented as a continuum
between business model and the theory of the business. The business model as a mean to
calculate a generated value is connected with computation and thus weak sustainability.
The theory of the business is made of new hypothesis and assumptions and connected
with strong sustainability. The remaining pages of the paper are dedicated to the
exploration of this OASSIM model (Figure 5.) for Organizational Architecture with
Strong Sustainability in Mind.
Weak
and
strong
sustainability
Like Roome (2012) in strategic management, Nilsen (2010) in economics makes the
distinction between weak and strong sustainability. For Nilsen (2010), «Weak sustainable
development (Weak) is characterized by the goal to sustain a constant level of
consumption or utility. To achieve this goal, nature and capital goods can be substituted
with each other. Neither nature nor capital has an intrinsic value, but is an instrumental
value to achieve the highest possible level of utility. Weak is often called 'SolowGreen
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17. Hartwick sustainability' as it is based on the work of Nobel Prize winner Solow and
Hartwick (Neumayer, 2003, p. 22). A main challenge is to calculate how big the
compensation in capital must be for the loss of natural goods. This is the idea in costbenefit analysis, a main tool in neoclassical economics also used in environmentally
sensitive issues (Pearce & Barbier, 2000; Pearce & Turner, 1990). Weak belongs to
neoclassical economics which has dominated the sphere of economics: "Most, but not all,
economists are weak sustainabilitists" (Perman, Ma, McGilvray, & Common, 2003, p.
91).» (Emphasis added)
Weak sustainability is connected with organizational computation by a main challenge:
the challenge to calculate how big the compensation in capital must be for the loss of
natural goods. That challenge can be also linked with the GRI reporting practices.
Figure 5
Cognition
interpretation
Abductive
logic
Deductive
logic
computation
wea model
k
theory
Organizational
architecture
strong
Sustainability
Inductive
logic
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18. Organizational architecture with sustainability in mind (OASSIM): a research
model
Nilsen (2010) continues: «A less common, but increasingly more used theoretical concept
is strong sustainable development (Strong) (Nielsen, 2008, p. 114). Strong requires that
there must be a restriction on the substitution between the economy and nature, both must
be sustained. The restriction on substitution clearly pulls sustainability away from Weak
and its homogenous focus on human development, in the direction of encompassing
ecological values. Strong has a heterogeneous foundation which makes the qualitative
different values of economy and ecology possible.»
From an organizational cognition point of view, strong sustainability requires qualitative
interpretation of different values in economy and ecology.
Organizational
cognition
For Lant and Shapira (2001), organizational cognition is a continuum from computation
to interpretation: «When the metaphor of the computer as a model for human information
processing emerged, cognitive research started to focus on information processing. Most
of the work in this tradition is consistent with the computational-symbolic
representational model of human cognition and information processing» (Lant and
Shapira, 2001: Page 2). A common criticism to this approach is that it equates
computation with cognition.
Apart from cognitive scientists and philosophers, psychologists have criticized the
rational model for not accurately describing how individuals make judgment and choice.
If the origin of the computational approach in organizational cognition was influenced
primarily by developments in psychology, the interpretive approach has its roots in
sociology and, in particular, the sociology of knowledge (Lant and Shapira, 2001).
Sustainability requires meaning: meaning is the way of choosing referents. This method
fits in the brain and involves the use of mind. The computationalist manipulates symbols
according to their shape, hence there is no meaning at this level.
On the one hand, for Byrch et al. (2007: Page 28), the usual sustainable challenge is about
weak sustainability: «Despite the debate over its meaning, sustainable development, and
the related concept of sustainability, would seem to have more proponents than ever.
Many individuals and organisations – in particular government and business
organisations – are taking up the “sustainability challenge” and incorporating their own
understanding of sustainable development into various aspects of their operations. In
simple terms, the definitions adopted and their respective interpretations demonstrate the
relative emphasis given to environmental, social, and economic domains by different
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19. groups, and how the concepts of equity, fairness and futurity are applied to those
domains».
On the other hand, again for Byrch et al. (2007: Page 28), strong sustainability will
require an ‘ecocentric’ worldview instead of technocentric or anthropocentric
worldviews. «There is a substantial body of literature that suggests that these varying
emphases in turn reflect individuals’ fundamental beliefs about humanity’s proper
relationship with nature; that is, their environmental “worldview”. Environmental
worldviews which are more biocentric are said to lead to significant sustainable
environmental performance – although more research is needed to sustain a clear link as
worldviews do not always translate into actions consistent with those underlying beliefs».
The computational approach to sustainability can be equated with an approach that is
defined by the use of the digital computer. Malrik et al. (2011) emphasize the birth of a
computing ecosystem (Ecosystem Informatics, see Dietterich et al., 2009) and thus define
the major areas in the analysis of environmental data: disaster management, climate and
climate forecasting, natural resources and engineering approaches that control resources
(May and Saitta, 2010). But even the organizational sustainability computationalists have
to work on an interpretation of the concept of sustainability and they will quickly reframe
it in a dynamic systems approach. Thus, Malrik et al. (2011), data mining experts on
sustainability, comment: «According to the United Nations Brundtland Commission,
sustainability can be defined as the ability to support the needs of the present population
without compromising the ability of future generations to meet their own needs.
Sustainability implies a consumption of resources involving little internal or external
adverse impact. It is said of a system or process that is sustainable if its inputs and
outputs have little negative impact on the environment. /.../ The earth sciences call for
global sustainability. The goal is to provide knowledge that can reduce global
environmental risks».
In a more interpretative approach of the concept of sustainability, things get complicated:
there are discourses and paradigms, a literal meaning and a meaning in context (see
Figure 6). Semantically, Fergus and Rowney (2005) show that sustainability is
understood through the prism of the paradigm of instrumental rationality applied to the
conceptual framework of neoclassical economics (see also Nilsen, 2010).
For their part, Glavic and Lukman (2007) review the terms related to sustainability and
produce as shown schematically in Figure 7. These authors propose a hierarchical
classification of terms related to sustainability and their relations on the basis of a layered
approach that includes: political sustainability, sustainable systems, subsystems,
principles and approaches based on three pillars - society, economy and environment –
referred to in the Brundtland Report (1987). The proposed terminology is based on the
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20. use of United Nations Environment Programme (UNEP), the U.S. Agency (EPA), the
Organization for Economic Cooperation and Development (OECD) and Journal of
Cleaner Production. The study highlights a lot of ambiguities in the use of terms.
From
business
model
to
the
theory
of
the
business
The business model is traditionally understood as being the architecture of the firm and
its partner network, created to market and deliver value and relationship capital and to
generate revenue streams and profits (Osterwalder, 2004). The revenue streams and
profits as well as the generated value must be computable. Literature in strategic
management rarely deals with the design of business models (Zott and Amit, 2010). Yet
the business model defines a new unit of analysis involving a holistic (Zott, Amit and
Massa, 2011) view of a system of activities that can be specified through the notions of
content and structure.
Figure 6.
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21. Semantic framework for sustainable development
by Fergus and Rowney (2005)
Figure 7.
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22. Hierarchical classification of sustainability related terms,
Glavic et Lukman (2007)
The integration of sustainability requirements of the business models has been the object
of only one publication (Stubbs, W. and C. Cocklin, 2008) while many publications
describe the practices of sustainability in management but remain focused - through
sustainable development concept – on ethics and social responsibility (Bansal and Roth,
2000).
Kilov (2002: 1) recalls that « Models are created and used for understanding. To achieve
that, the modelers together with the stakeholders pick and choose those things, actions,
and relationships among them that are of interest to the stakeholders. A model includes
only the essential characteristics of the modeled world and suppresses everything else. »
In that sense, business models are schema for understanding how a network of
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23. cooperating organizations creates and captures value from technological innovation
(Chesbrough, 2006).
On the X axis (see Figure 5.), there is a continuum between business model and theory of
the business the same way as model and theories are connected in social research.
Following Van de Ven (2007), models are partial representations of theories but do not
simply represent operational versions of a theory (Page 143). They serve as mediators
between theories and data, or between theory and the world. A research model is an
instrument for linking theory with data in terms of function, representation and learning.
Following Teece (2010: Page 173), a business model, if it is not a spread sheet or
computer model it «might well become embedded in a business plan and in income
statements and cash flow projections. But, clearly, the notion refers in the first instance to
a conceptual, rather than a financial, model of a business». For Teece (2010), a business
model is nothing less than the organizational and financial ‘architecture’ of a business.
Coming back to the organizational domains illustrated in Figure 2, financial information
has a high manifest representation and lies at the heart of a business model while culture
has a low manifest representation and belongs with strategy within the theory of the
business.
The first definition of a green organizational architecture is an organizational architecture
that brings together Sustainability 2.0, Enterprise 2.0 and the Web 2.0 thanks to a new
theory of the business based on strong sustainability assumptions. Following the
OASSIM model, the green organizational architecture becomes the set of organizational
domains with low manifest representation (e.g., culture and strategy) which, through a
better interpretation (new values, beliefs etc.) and enactment (new behaviours) of strong
sustainability, influence all organizational domains.
From a conceptual point of view, the business model is a cognitive system whose
components interact with other components of the organizational context. For Tikkanen
et al. (2005): « By the cognitive aspects of a business model, we refer to the systematic
meaning structures or the belief system of a company. The belief system is seen as the
driver of decision-making and, subsequently, action.»
Green innovations come from the introduction of the sustainability in a business model.
The involved design activity will happen in an organizational context, a social space of
representation where a business theory has to be tested. As mentioned earlier, the theory
of the firm must be continuously tested (Drucker, 1994). The theory of the business - one
that is successful - is a hypothesis. A valid theory that is clear, consistent and focused is
extremely powerful.
But today the concept of bio-environment implies a connection with an ecological
approach. Foxon (2006), a specialist in climate change, connects the ecological
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24. approach, Simon’s bounded rationality and the theory of the hierarchy - using the work of
Kemp (1994) as an example. Within the systems approach to innovation, Kemp (1994)
provides a framework for understanding the constraints between the technical and
institutional systems within a hierarchy of three levels that Kemp called technological
niches, regimes and social-technical landscape. This framework draws on the theory of
the hierarchy - developed by Simon and specified later by Ahl and Allen (1996) – and
assumes that the higher level has a greater degree of stability and resistance to change
than the lower level, because of interactions and relationships between the elements that
make up this configuration. The central level is the socio-technical system in which set of
technologies and institutions exist and interact. While the existing regime (like the current
occidental carbon regime) generates incremental innovations, radical innovations are
generated in niches at the lowest level. When the surface is not quite homogeneous,
niches appear, providing spaces that are at least partially isolated from a normal market
selection, such as specialized sectors of the market, where two different sets of rules
apply. These niches provide places for learning and for building social networks that
support these innovations, such as supply chains and relationships between producers and
users, who define new experiences. The theory of the business here is a learning theory
in a niche technology.
The
OASSIM
model:
Three
modes
of
logic
reasoning
about
sustainability
The science of sustainability is a science that is built around problems to solve. In this
sense it is related to cognitive science because it looks for a way to help thinking about
the environment. Moore (2007) has particularly worked on logical steps by which
pressure groups and managers of a city eventually implement all or some aspects of
sustainability. For Moore (2007), managers’ logic based on the definitions of sustainable
development such as the Brundtland Report (1987) falls into a category of logical
deduction, managers who are founding their sustainability initiative in environmental
reporting standards are in a process of induction, while managers who trust their common
sense , have limited means and say "Let's see and work" work in a logic of abduction.
One of the first approaches to sustainability in urban planning involves the deduction of
proposals based on the principles of "Sustainability" as negotiated from 1985 to 1987 and
presented in the Brundtland Report.
According to Moore (2007), managers who reason with logical deduction construct
idealized models, pre-political and "thin", rather than "dense" as specified in Table 2.
These models are static, do not reflect the Bruntland report (1987) and offer only one
possible form of democracy: liberal capitalism.
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25. Table 2.
Fine design (thin)
• Visible attributes
• Analysis and Design as in
engineering
• Scientific analysis
• Formal and mechanical
• Structural and modular
• Specify / specification
•
•
Early Knowledge Binding
Essentially explicit knowledge
Dense design (thick)
• Hidden and essential character
• Analysis and Design as in
anthropology
• Phenomenon and experience
• Intuitive and reflective
• Cognitive and integral
• Relational Specifications
• and psychological
• Late Knowledge Binding
• Essentially tacit knowledge
Fine vs dense design (Morabito and Sack, 2007)
Inductive reasoning allows reasoning from a local experience; a project is subject to a
checklist (checklist) of GRI for companies (see Table 1.) or LEED for buildings. Moore
(2007) criticizes the inductive approach lists. First, the paths to sustainability do not exist
as ‘ideal-types’, but are challenged in defined urban contexts, so that the same social
actors handle the concept or the discourse of sustainable development. Second, inductive
logic involves a shift from specific to general. Finally, when measuring local conditions
in terms of universal best practices, these local conditions are seen as obstacles to be
overcome rather than as opportunities for action. In a way, models and lists referring to
sustainability can be useful as heuristic and analytical tools. However, they tend to
suppress public speaking required to motivate action in a given location.
In fact, models and lists of sustainability are produced by social scientists who have
studied the past through rational methods of deduction (models) and induction (lists).
However, planners and urban planners - in the study by Moore (2007) - seem to be much
more productive than social scientists, generating sustainable future through the use of
abduction as a logic design. Moore (2007) recounts that they worked locally and looking
to the future rather than universally and back. Thus, the abduction is, according to Moore
(2007), a situated logic by which designers and citizens become responsible for what they
learn to visualize.
By integrating the analysis developed by Moore (2007) in the OASSIM model (see
Figure 5.), the abduction mode of reasoning fits the search for a new theory of the
business by using a strong interpretation of sustainability to redefine organizational
domains like strategy and culture. On the contrary, inductive logic characterizes
computation of the costs and benefits generated by weak sustainability while ‘greening’
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26. organizational domains like information and process. In the middle, deductive logic can
be used on a wide spectrum of more or less manifest organizational domains.
Conclusion
Quoting again Lant and Shapira (2001: Page 1) «March and Simon (1958) viewed
organizations as information processing systems consisting of embedded routines through
which information is stored and enacted. Some researchers have taken this to mean that
organizations are systems that process and code information in a computational manner.
That is, the problem that organizations face is one of searching and processing relevant
information when such search is costly and decision makers are boundedly rational.»
That can be the case with weak sustainability and GRI reporting. Further, «Other
researchers interpreted March and Simon to mean that organizations are social entities
that enact their world. Some see in these words the element of collective marci». That
can be an essential condition to implement strong sustainability.
For Lant and Shapira (2001: Page 1) «These two views separated in the last decade into
two distinct branches of cognition research in organizations: the computational approach
and the interpretive approach. The computational stream of research examines the
processes by which managers and organizations process information and make decisions.
The interpretive approach investigates how meaning is created around information in a
social context».
This cognitive approach to green organizational architecture generates the following
research questions:
1. What is the integration logic at work (inductive, deductive or abductive) when the
managers design a SOA (Sustainable Organizational Architecture)?
2. Are the managers applying weak or strong sustainability?
3. Are the managers innovating incrementally or radically?
4. Are the managers designing a (new) business model rather than building a (new)
theory of the business?
5. On what organizational domain(s) are they reasoning (information, process,
structure, strategy or culture)?
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