You’d think acting sustainably ought to be a no-brainer—surely, operating in a way that ensures our continued existence is preferable to extinction?

But for corporate leaders, sustainability can be a hard sell, conjuring up costly investments that cut into profits and distract from other business goals.

This is a mistake, particularly at a time of rapid technological, social, and environmental change, says Brayden King, a professor of management and organizations (and senior associate dean of strategy and academics) at the Kellogg School.

This week, he and fellow Kellogg professor of management and strategy Klaus Weber explain. Plus: internal communications and the seven deadly sins of business growth.

Sustainability as a competitive advantage

Many companies view sustainability as a burden and are reluctant to go further than what regulations require. This is because it’s genuinely difficult to change how a business operates while also trying to keep the firm profitable. This is especially the case for larger, publicly traded firms that are beholden to investors’ expectations.

“As soon as you have any performance shortfalls, you’re going to get scrutiny from investors who care primarily about short-term profits,” Weber says. “So there’s always a risk that your great sustainability initiatives are going to get axed or scaled back.”

Even when leaders “understand the importance of the problem, their incentives aren’t always aligned,” adds King.

But this attitude has its own costs, say Weber and King. Companies that lag on sustainability stand to suffer reputational risks, operational risks, and loss of talent. But perhaps even more importantly, they also miss out on a chance to innovate and develop a competitive advantage.

“Sustainability is not only reducing carbon emissions just because you have to,” Weber says. “It’s an opportunity to see market opportunities and develop new products and services that actually create new lines of business for them.”

You can read more in Kellogg Insight.

Optimizing communication

What’s the best way for large, disparate teams to communicate?

Niko Matouschek partnered with Kellogg colleagues Michael Powell and Bryony Reich to investigate. They focused specifically on communication within the context of companies that, like IBM, build products by assembling separately produced parts, or modules.

The researchers find that the optimal way for people at these organizations to communicate likely resembles a “core–periphery structure,” in which the organization has a central group of teams that share nearly all their information with each other and a group of peripheral teams that rarely share their information with each other.

“In the core, we speak a lot with each other,” Matouschek says. “People in the periphery may talk with us, but they’re not talking much to each other. That’s a core–periphery structure.”

This structure best ensures that people can share information as effectively as possible while expending as few resources as possible.

You can read more about the research in Kellogg Insight.

Jessica Love, editor in chief
Kellogg Insight