Chapter 4
Environment, Innovation,
and Sustainability
Principles of Management – Phuoc Van Hanh
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
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
Takeaway 1
The General or Macro environment
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.
Takeaway 1
The General or Macro environment
1. Economic Conditions
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.
Takeaway 1
The General or Macro environment
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.
Takeaway 1
The General or Macro environment
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?
Takeaway 1
The General or Macro environment
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.
Q: Covid-19. Challenges or opportunities?
Takeaway 1
The General or Macro environment
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?
Takeaway 1
The General or Macro environment
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
The specific environment, or task environment,
includes the people and groups with whom an
organization interacts.
Takeaway 2
The Specific or Task Environment
1. Stakeholders and Value Creation
Stakeholders are the persons, groups, and
institutions directly affected by the organization’s
performance.
Takeaway 2
The Specific or Task Environment
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.
Takeaway 2
The Specific or Task Environment
3. Uncertainty, Complexity, and Change
Environmental uncertainty is a lack of information
regarding what exists in the environment and what
developments may occur.
Takeaway 2
The Specific or Task Environment
3. Uncertainty, Complexity, and Change (cont.)
High uncertainty
High
High-moderate uncertainty
Requires greatest
Rate of flexibility and adaptation
change in
environment
Low-moderate
Low Low uncertainty
uncertainty
Low High
Complexity of environment
Figure 4.2 Dimensions of uncertainty in the external environments of organizations
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.
Takeaway 3
Environment and Innovation
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 firm.
Takeaway 3
Environment and Innovation
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
Takeaway 3
Environment and Innovation
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.
Takeaway 3
Environment and Innovation
2. The Innovation Process
Imagining –
thinking about new
possibilities
Scaling –
implementing and Designing –
commercializing as building first models,
new products or prototypes
services
Assessing – Experimenting –
identifying examining practicality,
costs/benefits, doing feasibility
markets/applications studies
Figure 4.3 The five steps in Hamel’s “Wheel of
Takeaway 3
Environment and Innovation
2. The Innovation Process
- Reverse innovation recognizes the potential for
valuable innovations to be launched from lower
organizational levels and diverse locations, including
emerging markets.
Takeaway 3
Environment and Innovation
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
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.
Takeaway 4
Environment and Sustainability
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.
Takeaway 4
Environment and Sustainability
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.
Takeaway 4
Environment and Sustainability
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.
Takeaway 4
Environment and Sustainability
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
Takeaway 4
Environment and Sustainability
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.
Takeaway 4
Environment and Sustainability
4. Human Sustainability
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?
End of chapter 4
Case: Timberland – From Bootmaker to Earthkeeper