Chapter 4
ENVIRONMENT,
INNOVATION,
AND
SUSTAINABILITY
LEARNING OBJECTIVES
Takeaway 1 The General or Macro Environment
Takeaway 2 The Specific or Task Environment
Takeaway 3 Environment and Innovation
Takeaway 4 Environment and Sustainability
Takeaway 1
The General or Macro Environment
1. Economic conditions
2. Legal-political conditions
3. Sociocultural conditions
4. Technological conditions
5. Natural environment conditions
Takeaway 1
The General or Macro Environment
• The general environment: all external conditions that set the
context for managerial decision making.
Figure 4.1 Sample elements in the general environments of organizations
1. Economic conditions
• Things like the overall health of the economy in terms of
financial markets, inflation, income levels, and job
outlook that affect the prospects for individual
companies, the spending patterns and lifestyles of
consumers, and even a nation’s priorities.
• They must be assessed, forecasted, and considered
when executives make decisions about the strategies
and operations of their organizations.
1. Economic conditions (cont.)
Global economic trends:
• Offshoring: the outsourcing of jobs to foreign locations.
• Reshoring: the return of jobs from foreign locations as
companies establish new domestic operations.
2. Legal-Political Conditions
• These conditions reflect existing and proposed laws and
regulations, government policies, and the philosophy and
objectives of political parties.
• Corporate executives follow such legal-political conditions
to monitor trends that can affect the regulation, oversight,
and competitive directions of their businesses.
2. Legal-Political Conditions (cont.)
• The legal-political conditions in the global business environment
vary significantly from one country to the next.
• Not all countries stand up for international copyright and intellectual
property protection. Lots of the piracy originates in countries where
legal protections are minimal or largely unenforced.
Q: Do you think about any country or issue specifically?
3. Sociocultural Conditions
• Norms, customs, and demographics of a society or region, as well
as social values on such matters as ethics, human rights, gender
roles, and lifestyles.
• Shifting currents and trends affect how organizations deal with
reputation management, product development, advertising
messages, and internal policies and practices.
4. Technological Conditions
• Continuing developments in the technological conditions
affect the way we work.
Q: How do the technological conditions affect work, in the
eyes of both employers and employees?
5. Natural Environment Conditions
• The natural resources that the environment provides for
organizations and society, and the need to protect the
availability of those resources for the future.
• Organizations are trying to reduce water consumption, cut back
waste and increase recycling, improve energy efficiencies, buy
and consume more local produce, and eliminate pollution.
URC Vietnam raises environment protection awareness
Takeaway 2
The Specific or Task Environment
1. Stakeholders and value creation
2. Competitive advantage
3. Uncertainty, complexity, and change
Takeaway 2
The Specific or Task Environment
• The specific environment, or task environment, includes
the people and groups with whom an organization
interacts.
1. Stakeholders and Value Creation
Stakeholders are the persons, groups, and institutions directly
affected by the organization’s performance.
2. Competitive Advantage
• Competitive advantage is something that an
organization does extremely well, is difficult to copy,
and gives it an advantage over competitors in the
marketplace.
• Competitive advantage can be achieved through
costs, quality, delivery, flexibility.
3. Uncertainty, Complexity, and Change
• Environmental uncertainty is a lack of information
regarding what exists in the environment and what
developments may occur.
3. Uncertainty, Complexity, and Change (cont.)
High uncertainty
High High-moderate uncertainty
Requires greatest
Rate of change flexibility and adaptation
in environment
Low Low-moderate
Low uncertainty
uncertainty
Low High
Complexity of environment
Figure 4.2 Dimensions of uncertainty in the external environments of
Takeaway 3
Environment and Innovation
1. Types of innovations
2. The innovation process
3. Disruptive innovation and technology
Takeaway 3
Environment and Innovation
• Change, uncertainty, and complexity call for constant
innovation.
• Innovation is the process of taking a new idea and
putting it into practice.
1. Types of Innovations
3 broad forms:
(1) Product innovations result in the creation of new or
improved goods and services.
(2) Process innovations result in better ways of doing things.
(3) Business model innovation result in new ways of making
money for the form.
1. Types of Innovations (cont.)
• Social business innovation uses business models to address
important social problems.
The case for letting business solve social problems - Michael
Porter
2. The Innovation Process
Whatever the goal - new product, improved process, unique
business model, or social problem solving, the innovation
begins with invention - the act of discovery - and ends with
application.
2. The Innovation Process (cont.)
Imagining –
thinking about new
possibilities
Scaling –
implementing and Designing –
commercializing as building first
new products or models, prototypes
services
Assessing –
Experimenting –
identifying
examining
costs/benefits,
practicality, doing
markets/application
feasibility studies
s
Figure 4.3 The five steps in Hamel’s “Wheel of
2. The Innovation Process (cont.)
• Reverse innovation recognizes the potential for valuable
innovations to be launched from lower organizational levels
and diverse locations, including emerging markets.
3. Disruptive Innovation and Technology
• Disruptive innovation creates products or services that become so
widely used that they largely replace prior practices and competitors.
- Ex: cellular phones that disrupted traditional landlines, convenience
stores that replaced traditional “tạp hoá”, online content platforms
(Netflix, Amazon Prime Video, Disney+, …) competed with traditional
televisions, …
- Read: Disruptive Innovation the Steve Jobs Way (1955 – 2011) (p. 96)
Takeaway 4
Environment and Sustainability
1. Sustainable development
2. Sustainable business
3. Sustainability goals, measurement, and reporting
4. Human sustainability
Takeaway 4
Environment and Sustainability
• Sustainability is a commitment to live and work in ways
that protect the rights of present and future generations
as co-stakeholders of the world’s resources.
• This commitment applies to everything from the air we
breathe and water we consume, to the spaces we
inhabit, to the human labor.
1. Sustainable development
• Sustainable development uses environmental resources to
support societal needs today while also preserving and
protecting them for future generations.
• Environmental capital or natural capital is the storehouse of
natural resources - atmosphere, land, water, and minerals - that
we use to sustain life and produce goods and services for
society.
1. Sustainable development (cont.)
• The triple bottom line assesses the economic, social, and
environmental performance of organizations.
• The 3 P’s of organizational performance are profit, people,
and planet.
2. Sustainable business
• A sustainable business operates in ways that meet the needs
of customers while protecting or advancing the well-being of
our natural environment.
• Sustainable innovations or green innovations help reduce an
organization’s negative impact and enhance its positive impact
on the natural environment.
3. Sustainable Goals, Measurement, Reporting
Procter & Gamble’s annual Sustainability Report links a corporate
vision with sustainability goals described as “long term operational
end points” like these:
• Powering our plants with 100% renewable energy
• Emitting no fossil-based CO2 or toxic emissions
• Delivering effluent water quality that is as good as or better than influent water
• quality with no contribution to water scarcity
• Having zero manufacturing waste go to landfills
4. Human Sustainability
Management practices have major consequences for the health
and well-being of people whose everyday work fuels the
organizations of our society.
4. Human Sustainability (cont.)
To what extent do management decisions and organizational
practices help support and advance human health and well-
being?
• Provision of health insurance to employees?
• Provision of health and wellness programs for employees?
• Avoiding job layoffs?
• Structuring work hours to reduce stress?
• Structuring work hours to avoid and minimize work–family conflict?
• Designing jobs to reduce stress?
• Designing jobs to give people control over their work?
• Being transparent and fair in handling wage and status inequalities?
Case study
chapter 4
TIMBERLAND
From
Bootmaker to
Earthkeeper
END OF
CHAPTER 4