Keywords

1 From Global Challenges to Strategic Opportunities

Many people consider it a historical date: September 25th 2015 saw an agreement of 195 member countries of the United Nations to adopt what is known as 17 “Sustainable Development Goals (SDGs),” a joint commitment to end poverty, ensure prosperity for all and protect the integrity of the planet (United Nations, 2014). It has become clear since then that implementing the new global “Agenda 2030” will require collaboration at scale between governments, corporations, and civil society (Kuenkel & Schaefer, 2013). The December 2015 climate summit in Paris invited hope that there is a growing global awareness carried forward by visionary, concerned, and committed people from companies, cities, research institutions, governments, and civil society organizations. When in 2017 the president of the United States stepped out of the Global Climate Agreement, the US saw an unprecedented act of published solidarity by American companies promising to keep up with the international agreements. The Sustainable Development Goals (SDGs), officially “Transforming Our World: The 2030 Agenda for Sustainable Development,” provide a global framework for the world’s actors to effect significant large system change. Created through broad intergovernmental agreement, resulting from extensive stakeholder consultative processes, the 17 SDGs with their 169 targets are aspirational, global, comprehensive, and highly interconnected (Le Blanc, 2015). These goals guide numerous sustainability initiatives at multiple levels. They focus on globally intractable issues such as complete eradication of poverty and hunger, good health, and wellbeing for all, gender equality, and reduced inequality, among other laudable and exceedingly difficult goals. Companies are increasingly part of these multi-stakeholder initiatives.

But despite the rise in awareness and collective action, the current state of the world is far away from the envisaged sustainability. Researchers from the Stockholm Resilience Centre have suggested nine interdependent chemical and biological planetary boundaries, namely: climate change, ocean acidification, stratospheric ozone, biogeochemical nitrogen and phosphorus, global freshwater use, biological diversity, chemical pollution, and atmospheric aerosol loading (Rockström et al., 2009).Footnote 1 They reckon that humankind has already transgressed four of these boundaries and that the transgression of one may accelerate the transgression of others. In addition, territorial wars as well as civil wars are raging in many countries. Nations that began to transform into democracies after the Arab Spring have a long way to go to achieve the necessary societal and economic stability. Millions of people are migrating for a variety of reasons; for example, to find places of peace, or better economic prosperity, or as a result of the effects of climate change. In many countries, the gap between rich and poor is widening. Hence, aggravated sustainability challenges are increasingly not only affecting corporations, but they have also arrived at the desk of corporate strategists.

This chapter suggests that corporate strategists can learn from international multi-stakeholder sustainability initiatives about how to shift companies towards sustainable world-making and how to manage complex change around pressing sustainability challenges. Based on successful cases of international collaboration it introduces a radically new approach to strategy: the concept of stewarding transformative change collectively. The chapter looks at multi-stakeholder collaboration as an approach to navigating complex change in cross-institutional settings (Boisot & McKelvey, 2011) and extracts major insights from successful initiatives. It reflects on transformative design principles that made these initiatives successful and concludes that bringing collaborative human competencies back into strategy design and implementation must be at the forefront of sustainability-oriented strategic management. The chapter suggests redefining sustainability-oriented strategic management in the context of the Global Goals as the achievement of a dynamic vitality: for the company, the wellbeing of internal stakeholders, the financial viability of the company and the society. On this basis a conceptual architecture is introduced that functions as a meta-level guidance to improve existing strategic management frameworks. Using various examples from promising strategic shifts in companies, it illustrates how the simplicity—not simplification—of a new model can cut through complexity and successfully inform strategic management in a collaborative approach (Burke, Wilson, & Salas, 2005). The chapter concludes with an outlook on how transformative processes can accelerate sustainability transformations.

2 The Paradigm Shift: Businesses as Sustainable World-Makers

The need for strategically engaging with sustainability is increasingly accepted in the corporate world, as businesses recognize that without a major shift, unsustainable global trends will impact them over the next 20 years (Hayward et al., 2013; KPMG International, 2012). In a global survey of more than a thousand CEOs, 84% (HayGroup, 2011) were convinced that the corporate world could have a decisive positive impact on managing global sustainability challenges, if there was a strong commitment to collaboration across sectors and to collective efforts for transformation. Because the most pressing problems of the twenty-first century are all connected and interdependent, they cannot be interpreted or addressed in isolation. The major world challenges captured in the 17 Global Goals are systemic in nature and require the driving of collective impact across societal stakeholder groups (Hanleybrown, Kania, & Kramer, 2012), regardless of whether they relate to energy, climate, economic activities, sustainable value chains, financial systems, or food security. No single actor has all the solutions, but each actor may essentially contribute a parcel of knowledge, a puzzle piece that counts. Addressing sustainability challenges will inevitably lead to multiple actors needing to change behavior and action. This includes actors that are not under the influence of corporations, such as governments, citizens, or civil society organizations. Additionally, in order to find solutions for sustainability challenges one company alone, even if it is large and powerful, is often not influential enough to induce the changes necessary. Hence, strategic frameworks that consider sustainability need to include issues, actors, and factors that are not only under the control of the company, yet need to be influenced in order to achieve the envisaged results.

An interesting example that illustrates this challenge can be seen in the growing attempt of companies to introduce sustainable sourcing practices. The strategic challenges are obvious: for example, in the cocoa sector, as a result of enormous public pressure to abolish child labor and secure a living income for small cocoa farmers, many companies have embarked on strategies to increase the sourcing of sustainable cocoa. While this may initially have come across as a simple technical challenge of securing sustainably certified cocoa, the last five years have seen an enormous increase in the participation of companies in multi-stakeholder initiatives around sustainable cocoa production that go far beyond company-internal measures. In the Ivory Coast, the country from which more than 40% of the world’s cocoa is sourced, not less than 23 initiatives have been started by corporations, with the largest volumes coming from corporations such as Mars, Mondelez, and Nestle.Footnote 2 More than 10 explicit multi-stakeholder initiatives aim to strengthen the livelihood of farmers in the country.Footnote 3 In addition, many companies have joined multi-stakeholder platforms such as the German, Austrian, or Swiss sustainable cocoa forum. The adoption rate of voluntary sustainability standards like Rainforest Alliance, UtzKapeh, and Fairtrade (among others) has tremendously increased, but many actors complain that the root problems have not been solved. The vicious cycles between poverty, dependency, and a fragile state mount to a typical intractable challenge that companies cannot address solely within their company internal procedures. The competitive approach alone to securing procurement does not yield the necessary results—precompetitive cooperation between corporations becomes important in order to gain influences beyond the company’s reach. A study conducted hints to the fact that a more holistic approach is needed that not only increases the negotiation power of farmers, but also helps cocoa-producing nations to collaborate in a pre-competitive way (Hütz-Adams, Huber, Knoke, Morazan, & Mürlebach, 2016). Similarly, in the coffee value chain, many companies not only embark on strategies that combine sustainable sourcing practices and improving the life of small coffee farmers, but join pre-competitive cooperation with other companies in complex multi-stakeholder platforms. The Global Coffee Platform, inaugurated in October 2016, is an inclusive multi-stakeholder platform with the goal of creating coherence among the sustainability activities of many diverse stakeholders from the public, the private, and the civil society sectors, and achieving a thriving and sustainable global coffee sector.Footnote 4 The platform commits to a bottom-up approach that supports actors from public and private sectors in coffee-producing countries to develop a common vision that addresses critical sustainability challenges in coffee production and brings national issues into a global agenda for sustainable coffee production. The ultimate aim is to improve the livelihoods of coffee farming communities around the world, and to keep the natural environment of coffee production areas intact. It is a suitable example of how a complex global challenge is addressed with multiple actors in a mix between local action and global reach. Both the cocoa initiatives and the coffee platform are examples of how to gradually build a strategic global and collaborative transformation system, by taking on one commodity and working towards the implementation of SDG 12 on sustainable production and consumption.

2.1 New Forms of Collaboration

Multi-stakeholder collaboration is a complex answer to complex challenges. It necessarily integrates many different perspectives on problem definition, means to resolution, and what constitutes success. This new form of collaboration will impact the way companies operate in future. It will much likely influence their approaches to strategic management. No matter which framework companies use for their strategic management process, they will inevitably come across new expectations, notably those that insist that the role of businesses widens to include employees’, societies’, suppliers’, and global wellbeing as much as stakeholder engagement or pre-competitive cooperation. Furthermore, the issue of purpose—the contribution of the corporate world to the Global Goals in the form of creating collective value (Donaldson & Walsh, 2015)—is likely to move on the strategic agenda of business sooner rather than later.

An article in the Harvard Business Review (Porter & Kramer, 2011) sparked an ongoing scholarly and practitioner discourse on shared value creation as a corporate strategy to create business value that at the same time furthers social value by collaborating with civil society organizations.Footnote 5 It is increasingly clear that such approaches go far beyond corporate philanthropic engagement and even Corporate Social Responsibility. This hints to a strategic understanding of addressing sustainability challenges with company specific measures as well as collaborative approaches with competitors or other societal stakeholders groups. Regardless of whether the task is creating responsible supply chains, developing innovative technology for climate adaptation, or coordinating better water resource management, multi-stakeholder collaborations not only create learning advantages for companies, but may also conserve time and costs. Hence, if more and more companies engage in collaborative sustainability initiatives in order to address issues of common concern, ranging from water scarcity challenges to sustainable supply chains, they do not do this as part of their corporate philanthropy: most often they strategically consider this the only way to sustain their business in the long run. There are many examples for such strategic moves: European coffee roasters and traders have long understood that, in order to stay in business, they need to be able to source sustainable coffee—hence their engagement in stakeholder initiatives. German chocolate manufactures are eager to contribute to an improvement of living conditions of cocoa farmers in West Africa, as only this will help them secure cocoa beans in the long-run. International beverage companies have a special interest to improve water resource management globally and locally, as they are dependent on well-managed water resources without social conflicts. International textile traders have been severely targeted by international campaigning NGOs; they have been made responsible for deteriorating working conditions in the Asian textile industry. Increasingly they not only engage in multi-stakeholder initiatives to improve the situation, but also add sustainable textiles to their product ranges.

The literature defines multi-stakeholder initiatives in many different ways using varied terminology. Such collaborations have been called multi-stakeholder partnerships, multi-stakeholder platforms, multi-stakeholder consultation, multi-stakeholder dialogues, and multi-stakeholder governance (Biermann, Man-san Chan, & Pattberg, 2007; Kuenkel, 2015, 2016; Lozano, 2007). The term multi-stakeholder collaboration is the common ground behind these different terms. It can be defined as the attempt to solve problems collaboratively, or jointly drive change for the common good, across the boundaries of companies, societal sectors, and institutions. They can be long-term initiatives or short-term target-oriented partnerships, and take place within countries or in transnational arrangement. Multi-stakeholder collaboration is an emerging field of practice that is characterized by:

  • Multiple actors, often with conflicting interests, who are not used to working together, and need to align around an issue of common concern. They need to identify joint improvement approaches (e.g. expanding the production and marketing of sustainably produced coffee, improving water resource management, protecting natural resources, building a sustainable societal health system, etc.), and implement them collaboratively or at least coherently. They need to jointly advance collaborative interaction patterns that lead to tangible improvements.

  • A form of collaborative strategy and collective action, where effectiveness depends on engaging multiple actors, with different levels of power and access to resources, who—at times—have limited degrees of trust towards each other. They need to build functional collaboration systems that enhance joined delivery and outcome orientation.

  • Multi-dimensional problems, which require solutions that are complicated (e.g. ensuring good practices in the production of the commodity); complex (e.g. requiring a testing and learning approach, emerging solutions, and innovation for scalability) and chaotic (e.g. subject to unforeseen market or political influences) (see also Snowden & Boone, 2007). Multiple actors need to jointly steward transformative change in volatile environments while establishing a strong learning culture.

Multi-stakeholder collaboration takes place in a non-hierarchical setting without discretionary power of stakeholders over each other. Power differences are common, however the utilization of power of one stakeholder group over other stakeholders inevitably leads to a termination of the collaboration, and subsequently not to an achievement of the goals. Bringing about change collectively in multi-stakeholder collaboration is a new skill to be acquired. It becomes the capacity of a collective of actors, composed of individuals representing different organizations or institutions, equipped with the collaborative capacity to steward transformative change that benefits society, the collaborating stakeholders, and the company. Multi-stakeholder collaboration initiatives can therefore be understood as laboratories for a new strategic concept: stewarding transformative change collectively in multi-actor settings. They demonstrate a new way of shifting societal systems and subsystems into improved functionality, and subsequently better sustainability. This new skill, the ability to steward complex change with a diversity of actors aligned around an overarching goal, is highly relevant for a radically new approach to strategic management. It mirrors the future of most companies as agile network of dynamic and self-driven actors that need to be engaged in strategic and transformative change.

2.2 The Fundamental Shifts Needed

If companies aspire to move sustainability centre stage and strategically integrate the engagement for the Global Goals into their core business strategies, they are confronted with an enormous strategic management challenge (Rondinelli & Berry, 2000) for a number of reasons. First, the 17 clearly interdependent highly complex goals with 169 targets are difficult to comprehend and even more difficult to operationalize. Second, linking business strategies with the goals questions the traditionally more narrow focus of strategic management on maintaining competitive advantage, continuous growth and optimization of resource utilization for clearly defined business performance. Third, for corporations that are still largely dominated by linear thinking, clear cause and effect relations, as well as performance enhancements in hierarchical settings, the internal and external collaborative stakeholder engagement required can seem rather complex, uncertain and difficult to manage. Fourth, goal achievement is dependent on so many factors and actors beyond a company’s control that the measurement of progress is difficult.

Hence, the shift towards strategic management for sustainability and towards a corporate contribution to achieving the Global Goals must necessarily include the widening of frameworks and practices. Instead of focusing only on the firm’s long-term business performance, corporate strategists need to look for an alignment between company and societal goals. This is an ambiguous task and involves considerable risks, because doing good for the (global) society must inevitably also lead to maintaining or enhancing the economic viability—or even more so, the vitality—of the company. The concept of a company’s vitality is multi-faceted: it includes the wellbeing of employees, the suppliers and customers, while maintaining and advancing the financial viability. But it also extends to the company’s contribution to societal and even global wellbeing. Conceptualizing the strategic integration of economic, environmental, and social performance beyond compliance into vitality contribution is a managerial learning journey with unpredictable outcomes. It adds to the complexity of managing change in volatile business environments the complexity of collaboration. But this is not about making strategic frameworks more complicated by adding additional factors to consider, it is about making a simple, yet at the same time fundamental shift in strategy by looking at the company as a contributor to sustainable world-making. It means to stay in business and become a partner of a sustainable future.

The fundamental shifts for strategic management include:

  • Moving from outperforming competitors only to seeking strategic alliance for positive impact: The above examples have shown that many companies in the commodity sector, which aim at sustainable supply chains, begin to collaborate with competitors in a pre-competitive space. Another example is the pre-competitive collaboration between competing beverage companies to work towards integrated water resource management or river rehabilitation in countries where they are most active. Strategic alliances leverage positive impact on enabling conditions and government regulations that help improve the lives of workers, small producers, communities, and citizens. They also ensure long-term supply of resources.

  • Moving from short-term company returns to seeking collective and societal value: In the cocoa sector a number of companies have begun to work closely in projects with the government of Ivory Coast—the main cocoa producing country—and civil society organizations. This is not philanthropy, again, it is about ensuring that small farmers can stay in cocoa-production and companies get their long-term cocoa supply.

  • Moving from looking at sustainability as compliance issue to looking at the company’s contribution to the global (as well as local) future. For example, future-oriented mining companies look at their social and environmental impact not anymore as a mere compliance issue, but seek to embed their operations in a region’s economic and social advancements.

In sustainability-oriented strategic management, the business of business is no longer just doing business, but ensuring the long-term (global to local) conditions for being able to do business. It is the call for companies to include their contribution to societal and global value creation into their core strategic processes. For this, the practice of cross-sector and multi-stakeholder collaboration is a brilliant learning arena as it often constitutes a way of addressing complex challenges or wicked problems (Batie, 2008; Conklin, 2006), and therefore has the potential to influence current practices in planning and strategic management. This chapter argues that a more profound shift may drive a breakthrough towards redefining the role of business as sustainable world-makers that take the future of humankind and the planet to heart. The following sections show how companies can draw on existing knowledge from successful multi-stakeholder sustainability initiatives, and how they can transfer these learnings for their new approach to sustainability-oriented strategic management.

3 Design Principles from Successful Multi-Stakeholder Collaboration Initiatives

At the core of most sustainability initiatives lies the collaboration between various societal stakeholders in order to shift an unhealthy, often dysfunctional pattern of human behavior into a more sustainable pattern of human interaction that finally benefits all as well as the environment. Such transformative change attempts are complex in nature. They require different types of interventions than those typically present in the strategic frameworks of companies. Often, change interventions emerge as “organic” process based on iterative learning that involves multiple pathways and practices. They are decidedly nonlinear and the “right way” to bring about the change envisaged is a matter of negotiation and dialogue. Given the complexity of the system of multiple actors and multiple efforts at multiple levels, it is clear that multiple different approaches need to complement each other. But the collective actions of various different stakeholders can only merge into coherent patterns of action, when strategic interventions are carefully co-designed as part of an overall transformation in an iterative way. Multi-stakeholder sustainability initiatives cannot do without monitoring systems or performance indicators. But these are tools accompanying an otherwise agile process of actors learning to negotiate collaborative pathways into the future. The practice of multi-stakeholder collaboration challenges the assumption that change can be managed, planned, and monitored. It suggests that transformative change can only be stewarded by different actors collectively. They need to integrate multiple approaches and stay open to collective learning.

Multi-stakeholder sustainability initiatives need to find agile ways of dealing with their inherent complexity and accept the fact that the intractable challenges they aim to address (such as global value chains, sustainable water resource management, or climate mitigation) depend on many different solutions. Key stakeholders in sustainability initiatives need to navigate through internal and external conflicts, lingering mistrust, and severe differences in opinions. They need to develop strategies in multi-actor settings, across institutional boundaries, mind-sets, and world-views. Leading successful projects in multi-stakeholder settings requires a broad skill set in the area of dialogue and collaboration, engagement and collective intelligence. Another characteristic of such complex sustainability initiatives is that they thrive on network connectivity. For many companies the fact that they regularly meet with stakeholders from government or civil society organisations means that they are building networks into a world of impact that they would not normally have access to. Additionally, sustainability initiatives become successful when people begin to know each other as people, when they can harness the power of mutual support across institutions.

In a sequence of interviews with global change agents in sustainability initiative (Kuenkel, 2015), 80% responded to the question of “what made the multi-stakeholder collaboration process successful or fail”: the personality and ability of certain actors. Hence, while impact is measured in technical facts and figures, the factors for collaborative success are attributed to personality traits. Strategic sustainability issues are technical, yet the agents of transformation are human. It is human competency that makes collaborative multi-stakeholder approaches impactful. This is evenly important for sustainable strategic management.

The identification of factors influencing the success of multi-stakeholder collaborations can inform the practice of strategic management. They can become a meta-guidance for stewarding transformative change towards sustainable business practice. Designed in the right way, they shift or rearrange existing societal settings and organizational boundaries (Lozano, 2007) into better functional interaction patterns that increase not only the vitality of the company, but also that of the society. The discourse on success factors is considered an important contribution to the role of multi-stakeholder collaboration in the context of sustainability (Beisheim, 2011; Brouwer & Woodhill, 2015; Kuenkel, Gerlach, & Frieg, 2011; Pattberg & Widerberg, 2014). However, they need to be anchored in a deeper understanding of the multiple levels of system dynamics in complex socio-ecological systems (Boisot & McKelvey, 2011). The conceptual discourse around how societal and global change processes achieve collective impact shows how a more systemic perspective is helpful in analyzing multi-stakeholder sustainability (Hanleybrown et al., 2012). Derived from extensive practitioner exchange as well as literature review,Footnote 6 the following six design principles are reflecting the discourse on success factors and are evenly relevant for sustainable strategic management.

3.1 Design Principle 1: Generating Future Possibilities Through Co-designing Strategy

Successful multi-stakeholder initiatives tap into people’s desire and competency to collectively shape the future despite different interests and world-views. While multi-stakeholder initiatives are most often started by a small group of visionary actors (Beisheim, 2011), they gradually, in a step-by-step process, engage more and more stakeholders (Kuenkel et al., 2011) who contribute to shaping the goal. Because there is—despite differences in power—most often no disciplinary hierarchy between collaborating stakeholders from different institutions, strategy formation is a multi-layered process that begins with a core group, but eventually needs to include all relevant stakeholders (Kuenkel et al., 2011). The core group’s task is to create momentum, test the resonance for an overall coherent goal, and build a strategy process that relies on considerable and extensive consultation to generate agreed-upon action planning (Pattberg & Widerberg, 2014). People engage when they see the bigger picture, a win-win situation (Beisheim, 2011) or a shared value, and when they understand how they can contribute to positive change. Co-designing strategy is a prerequisite for successful implementation.

3.2 Design Principle 2: Engaging Stakeholders Towards Cooperative Delivery

Successful multi-stakeholder initiatives build cohesive collaboration systems around issues of common concern. They need to engage for meaningful change, but they also need to make the purpose and boundary of the collaboration system clear. Stakeholders need to feel that they are part of something larger, but also know where they belong. Relationships require attention throughout these initiatives (Tennyson, 2011). Approaches how to deal with conflict need to be agreed upon, not imposed (Beisheim, 2011; Brouwer & Woodhill, 2015). Process management skills such as transparency and reliability of sequences of strategy meetings as well as result documentation are as important as content expertise (Kuenkel et al., 2011; Pattberg & Widerberg, 2014). Reliable processes contribute to continuous building of trust in a context of diverging interests. Clarity on process planning, authentic participation, and high quality communication ensures ownership. Managing stakeholder engagement, building networks, and encouraging collective action at various levels of implementation ensure cooperative delivery of results.

3.3 Design Principle 3: Fostering Innovation with Agility and Adaptation

Successful multi-stakeholder initiatives tap into the human desire to create new pathways and find innovative solutions to issues of common concern. Most complex collaboration efforts take place around content issues, and bring together experts from different stakeholder groups. Knowledge, expertise, complementary resources (Beisheim, 2011), and information need to be provided in a way that helps stakeholders and partners to see the full picture (Pattberg & Widerberg, 2014). Joint and participatory learning (Brouwer & Woodhill, 2015) mechanisms allow evaluation of results to be rapidly integrated into the next process steps (Kania & Kramer, 2011). At the outset, most stakeholder collaboration efforts are concerned with problem solving rather than with innovation. But with good process designs and the integration of different expertise, they often shift towards innovative approaches. Implementation plans including monitoring mechanisms are important, but must be open enough to respond to emergent opportunities. This includes the identification of best practices, benchmark insights from similar initiatives as well support for innovative entrepreneurial activities regarding the issue of common concern. Attending to creative ways of co-designing innovative approaches encourages self-driven and self-organized, but goal-aligned collective action. It fosters agility and the capacity to adapt to changing circumstances more quickly and makes knowledge management dynamic.

3.4 Design Principle 4: Unleashing Humanity Through Focusing on Collective Value

Most multi-stakeholder sustainability initiatives emerge from an ethical imperative, such as fairer distribution of resources, access to resources, overcoming economic imbalances, or safeguarding the natural environment. They are built on a growing sense of responsibility for the future, and the creation of shared or collective value (Donaldson & Walsh, 2015; Kania & Kramer, 2011). They often get their credibility from a common purpose and a concern that transcends vested interests. Authentically dealing with differences helps actors access their humanity. It contributes to a greater awareness of the interconnections among disparities and the interdependencies among actions. An appreciative approach in collaboration, a balance of power and influence, and a continuous effort towards mutual understanding contribute to achieving collective value.

3.5 Design Principle 5: Harvesting Collective Intelligence Through Dialogic Communication

Successful multi-stakeholder initiatives build new human interaction systems across the boundaries of societal sectors and institutions. They connect people who do not know each other and would not normally work together. Progress is not built on convincing others to only follow a predefined goal, strategy, or action plan, but rather the willingness to negotiate pathways into the future (Kuenkel et al., 2011). Plans and agreements are important as much as milestones and key performance indicators, but these tools become transformative guidance rather than non-negotiable facts. Accepting the openness to adaptation is often an arduous process, but becomes a fertile ground for collective intelligence. High-quality communication and well-structured dialogue clearly make a multi-stakeholder initiative more credible. Trust develops in accordance with the reliability with which recommendations, inputs or learnings from different stakeholders are taken into account (Brouwer & Woodhill, 2015; Pattberg & Widerberg, 2014). Ensuring structured dialogue, establishing collaborative forms of governance, and developing agreed-upon iterative learning mechanisms contribute to harvesting collective intelligence.

3.6 Design Principle 6: Creating Wholeness Through Attention to Contextual Impact

Successful multi-stakeholder initiatives focus on tangible outcomes without losing the attention to contextual impact (Brouwer & Woodhill, 2015; Kuenkel et al., 2011; Pattberg & Widerberg, 2014; Tennyson, 2011). Success is more likely when various activities are understood in relation to each other and the collaboration’s contribution to a larger system of transformation is clear. This includes the observation of relevant trends as much as continuous context and situational analysis. As a result, some initiatives seek out what can be called complementary meta-collaboration. This describes the collaboration between different multi-stakeholder collaboration initiatives that may not have been planned together, but that follow similar or complementary impact strategies. Attention to a larger impact is a multi-layered occurrence and important throughout the collaboration initiative, from the initial phase of engaging stakeholders to the scaling of the results. Appropriate context management, capacity development, and a regularly reviewed focus on impact contribute to successful contextual impact.

These above elaborated design principles are derived from a retrospective analysis, and built on the experience that combining them makes collaborative strategic change for sustainability—in multi-stakeholder settings—achieve the envisaged impact. However, to make the principles work, one needs to acknowledge the complex and dynamic balance between them. Figure 12.1 shows how they become a conceptual architecture for strategy formation. The principles create a pattern of interacting practices that enhance strategic collaboration for change. This results in successful sustainability initiatives.

Fig. 12.1
A circle diagram of the architecture for strategy formation. It includes six patterns of interacting practices, contextual impact, co-designed strategy, cooperative delivery, adaptation innovation, and so on.

The conceptual architecture for strategy formation. Source adapted from Kuenkel (2019)

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4 A Transformative Approach to Strategy Development

Today, the need for cross-sector, cross-company, and cross-institutional collaboration is most apparent in the sourcing of cocoa, coffee, palm oil, flowers or other agricultural commodities, and is rapidly extending to textile, minerals, and other supply chains. But it can evenly be found in climate change mitigation, natural resource management, city development or technological, and social innovation. Multi-stakeholder collaboration initiatives can be seen as an exemplary and radically new way of achieving strategic change. These initiatives require a conceptualization of strategic leadership of a different kind, as the impact rests on the leadership capability of a collective of actors who need to implement change jointly across sectors and/or institutions with no or little centralized coordination (Senge, Hamilton, & Kania, 2015). The purpose of multi-stakeholder collaboration efforts is to gradually shift complex human interaction systems into increasing “vitality” in continuous negotiation between the interests of individuals and the interest of the whole. This learning arena is also applicable to company internal sustainability strategies. More and more companies organize internally as dynamic networks (Laloux, 2014; Robertson, 2015), in which collectives of managers and employees develop the ability to drive transformative change in complex adaptive systems (Bernstein & Linsky, 2016; Kauffman, 2016) with multiple internal and external stakeholders.

4.1 Sustainability Strategies as Transformation Systems

What sustainability-oriented strategic management can learn from multi-stakeholder initiatives is that it is time to bring human beings back to where they belong: into the centre of attention as transformation agents towards sustainability. The above list of design principles can point toward certain practices of how to enact this, if they are connected with each other and with the underlying human competencies that need to be invigorated to engage with sustainability. Hence, the collaboration literacy increasingly displayed by actors in sustainability initiatives can be seen a pathway to transformation literacy—the skill to steward transformative change collectively across the boundaries of institutions, nations, sectors, and cultures—or within a company across the territories of different departments.

Looking at sustainability strategies as a way of creating complex, yet coherent transformation systems is an approach that needs to make its way into strategic management, if companies want to contribute to humankind’s ability to stay within the “safe operating space” of the planetary boundaries (Rockström et al., 2009). Only if leaders from the corporate world together with cross-institutional actors become collectively transformative at scale, will they maintain the conditions for their own operations. They also need to accelerate the internal changes needed to shift companies towards sustainable business practices. Designing these complex strategies as nested and mutually consistent transformation systems has a hugely empowering effect for all actors. Waddell reports that stakeholders in the renewable energy field started to create new connections and collaborations as soon as they realized that they were all part of a larger change system (Waddell, 2016). Yet, even within companies, too many purported change initiatives take a pilot or single-issue approach, with little regard for the fact that sustainability strategies must be interdependently implemented.

Figure 12.2 shows a summarized overview of the interrelated sustainability issues companies are confronted with. Approaching sustainability challenges in the form of a deliberate overall transformation system requires the building of multiple internal and external stakeholder collaboration systems. The reward, however, is clear: based on a coherent goal as transformative guidance multiple actors—internal and external stakeholders—can jointly drive the strategic change. Small incremental change is as important as accelerating or aggregating it to systems change (Hinrichs & Kangas, 2003).

Fig. 12.2
A block diagram represents the overview of interrelated sustainability issues. It includes company external and internal stakeholders, thematic and contextually relevant internal and external stakeholder collaboration, and so on.

The company related sustainability transformation system. Source adapted from Kuenkel and Kühn (2018), copyright by Petra Kuenkel

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4.2 Stewarding Transformative Change Collectively

While most companies still see strategy as the responsibility of the top management only and subsequently design and implement strategic change in a top-down fashion, the concept of stewarding transformative change collectively mobilizes dynamic engagement of many actors. This does not necessarily mean to abolish hierarchy, but requires genuine efforts to integrate the three typical phases of successful multi-stakeholder collaboration initiatives: Co-sensing, co-designing, and co-creating.

Co-sensing means acknowledging that multiple actors in a top-down and bottom-up fashion, complemented by external views and expertise, can more rapidly arrive at a comprehensive assessment of a current situation. The most common first phase of strategy development is usually an analysis or assessment of the external environment (e.g. macro-environment, industry, markets) and the company (e.g. resources, capabilities, core competencies) as such. Data gathering and analysis is often done by experts or by external advisors. This can be interpreted as a sensing exercise, but co-sensing means mobilizing internal and external expertise in well-designed structured dialogues, be they offline or online. It encourages both internal and external stakeholders to contribute to rapidly making a picture complete.

Co-designing means acknowledging that strategy is a continuous process of dialogue, iterative learning, and negotiation. The second phase of strategy formation most often refers to the formulation of a strategy and subsequent goal setting. This includes opportunity identification and risk assessment. It can take place in the form of scenario planning, followed by a decision for a certain scenario or a mix of scenarios. Decisions are made on the basis of competitive advantages, alignment with an overall strategy, readiness of the organization and fitness of portfolio management. The process of goal setting can be loose or strict, depending on the company’s culture. It is also influenced by policies, regulations or compliance demands, and includes financial performance targets, followed by accountability metrics. A process of co-designing would not lose any of these elements, but more explicitly organize strategy formation through various internal collaboration systems. Additionally, it would call for and support strategy development by multiple internal stakeholder collaboration systems that fit under broader goal coherence. It may even include dialogues on future strategies with external stakeholders.

Co-creating acknowledges that only well functional collaboration systems of internal or external stakeholders will accelerate strategy implementation. In most strategic frameworks the third phase refers traditionally to strategy implementation with elements such as strategic initiatives, organizational restructuring, acquisitions or mergers, etc. It naturally contains elements such as incentive systems, performance measures as well as evaluation of results. Organized feedback loops would inform the re-assessment phase. Seeing strategy implementation as a process of co-creating has a number of implications. Rather than embarking on a strategy rollout in a top-down fashion, it highlights goal coherence, innovative adaptation, and iterative learning. Above all it fosters the emotional connection of all relevant internal stakeholders with sustainability issues. The emotionally compelling goal—this is a learning from multi-stakeholder collaboration initiatives—is what keeps people going, makes them inventive, and eases accountability.

5 A Conceptual Architecture for Sustainability-Oriented Strategic Management

For sustainability transformation through implementation of the 17 SDGs to become more effective, companies must identify their role within a larger change system, transform internally and operate in multi-stakeholder networks that drive the effectiveness of the overall large-scale change system as represented by the SDGs. The previous sections advanced the idea that sustainability-oriented strategic management must attend to a complex transformation system and that strategists need to enable multiple actors in that system to steward transformative change collectively. Conceptualizing sustainability not as an issue of compliance only, but as a continuously increasing contribution to the vitality or wellbeing of multiple systems suggests seeing strategy as a collaborative endeavour. The last section therefore introduced a re-definition of the typical phases of strategic management as co-sensing, co-designing, and co-creating. Based on the design principles for successful multi-stakeholder collaboration initiatives, this section introduces a conceptual architecture for transformative change that can be used as a meta-guidance throughout all three phases. The transformation system companies need to attend to, when they embark on sustainability-oriented strategic management, can only be managed—or stewarded –with design principles that foster multiple different, yet complementary smaller collaboration systems throughout all three phases of strategic management. These can be described as issue-based groups of actors aiming to change the status quo for the better. Multiple initiatives at different levels, with different actors are required to effect transformative change almost like islands that connect and converge, and subsequently strengthen each other (Senge et al. 2015).

The key difference between more traditional linear strategic management frameworks (Helfat et al., 2009) and the conceptual architecture introduced here, is that the latter

  • looks at the pattern that needs to be invigorated within each of the three phases (Kuenkel, 2017) (see Fig. 12.1).

  • responds to the need for multiple thematic or contextually relevant collaboration systems, and

  • subsequently brings people and their competencies centre stage.

  • functions as a meta-guidance to ensure the design principles are present.

The radically new concept of stewarding transformative change collectively needs to be supported by methodologies that enable actors to identify the relevant practices related to the six design principles. These may be different depending on the strategy phase and the level of attention: company internal, industry, and stakeholder context or global or societal trends. The conceptual architecture illustrated in Table 12.1 summarizes the choice possibilities of design principles in an exemplary way. These principles in their translation to company related strategic management create a conceptual architecture that integrates intervention approaches with successful practices in collaborative transformation. The conceptual architecture aims at guiding practices that support transformative design of interventions for overall systems change.

Table 12.1 The conceptual architecture for transformative change [source: adapted version from Kuenkel (2018)]
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5.1 Co-sensing Strategic Assessments

In the co-sensing phase of sustainability-oriented strategic management the discovery, data analysis, and assessment of the current situation refers to the company internal situation, the industry and stakeholder assessment as well as the assessment of societal and global trends. However, the results of this phase are a collectively created diagnosis of the current situation, not the result of an expert assessment (although this can be done in a complementary way). Figure 12.3 shows the relevant design principles as well as example practices for co-sensing strategic assessments.

Fig. 12.3
A table of co-sensing strategic assessments. It includes industry and stakeholder context, company internal, societal, and global trends with respective process recommendations.

Design principles in the co-sensing phase. Source Collective Leadership Institute, copyright: Petra Kuenkel

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On the company internal level, the main design principles that function as entry points for collaborative quality and comprehensive results are FUTURE POSSIBILITIES with focus on Empowerment and ENGAGEMENT with focus on Connectivity. The main purpose of co-sensing at the company internal level would be to find answers to the questions:

  • Which people and knowledge do we need to connect to arrive at a rapid assessment of the current situation regarding corporate sustainability?

  • What are the existing narratives and structures that further or prevent transformations to sustainability?

On the level of industry and stakeholder context the main design principles that function as an entry point are COLLECTIVE INTELLIGENCE with focus on Diversity in acknowledgment of stakeholder views and INNOVATION with focus on Excellence as spotting frontrunners. The main purpose of co-sensing strategic assessments on the level of industry and stakeholder context is to find an answer to the questions:

  • Which most critical as well as potentially collaborating stakeholders are most relevant for us to shift towards sustainability?

  • Who are the front-runners in sustainability in our industry? How do they perform economically and what can we learn from them?

On the level of societal and global trends the main design principles that function as an entry point are WHOLENESS with focus on Contextuality by looking at the global context and HUMANITY with focus on Empathy as a form of looking at the company from the point of view of disadvantaged citizens. The main purpose of co-sensing at the level of societal and global trends is to find answers to the questions:

  • Which global trends regarding sustainability and endangered sustainability will severely impact our company performance?

  • What are social, environmental, and economic sustainability challenges that we can help to address with our products and services?

5.2 Co-designing Strategy Formation

In the co-designing phase of sustainability-oriented strategic management the evaluation of the co-sensing exercises leads to strategic choices regarding opportunities, continuous improvement processes, portfolio adjustments as well as ways of nurturing innovation and best practices. It naturally develops into goal setting, but not in a top down fashion. Goals are co-constructed and then consolidated as a result of the co-sensing phase and can be collaboratively negotiated. Crucial is to design engagement processes in a way that the overall goal arrived at will indeed function as transformative guidance. Multiple initiatives’ sub-goals then contribute to the overall goal in coherence. These different levels of goal setting take place in collaboration as an emotionally compelling process. It is the identification of people with small or larger sustainability goals that will eventually accelerate transformations. Figure 12.4 shows the relevant design principles as well as example practices that foster co-designing strategy formation.

Fig. 12.4
A table of co-designing strategy formation. It includes industry and stakeholder context, company internal, societal, and global trends with respective process recommendations.

Design principles in the co-designing phase. Source Collective Leadership Institute, copyright: Petra Kuenkel

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Co-designing strategy takes mostly place on the company internal level. The design principles that work towards effective goals and most suitable strategic choices are the same as in the co-sensing phase. The design principles of FUTURE POSSIBILITIES focuses on Future Orientation through envisioning processes and the design principle ENGAGEMENT emphasises Process Quality in the way goals are co-constructed. The main purpose of co-designing at the company internal level would be to find answers to the questions:

  • How do we best engage all relevant internal stakeholders so that they become empowered to take responsibility for the desired changes?

  • What is the emotionally compelling overall goal that invigorates people to take action and initiative towards sustainability transformations?

However, co-designing can also take place on the level of industry and stakeholder context, where contextually relevant or strategically important. The co-sensing phase may conclude that pre-competitive collaboration must be integrated into the strategy, or external stakeholder views may improve strategy formation. Very advanced companies may even obtain feedback on their strategy or at least for certain elements from societal stakeholders. Bringing external views and knowledge into the process of strategy formation follows the same design principles as in the co-sensing phase. The design principle COLLECTIVE INTELLIGENCE focuses on Dialogic Quality by enhancing meaningful conversations, while the design principle INNOVATION focuses on Creativity collaboration with external stakeholders is achieved. The main purpose of co-designing at the level of industry and stakeholder context is to find an answer to the questions:

  • Which pre-competitive and multi-stakeholder collaborations help us improve sustainability strategies?

  • How can partnerships and stakeholder relationships be more creatively leveraged for sustainability performance?

Co-designing with societal and global trends in mind means to go into strategy formation beyond the interests of the company and clearly define the company’s contribution to planetary sustainability. This is best reflected through the design principles WHOLENESS with focus on Contribution by defining the company’s role in global sustainability transformation and HUMANITY with focus on Balance between the company’s wellbeing and the wellbeing of the (global) society. Main purpose of co-designing strategy formation at the level of societal and global trends is to find an answer to the questions:

  • What is the company’s contribution to societal wellbeing and global sustainability?

  • How is an adequate balance between the financial viability interests of the company and the interests of environmentally and social sustainability best achieved?

5.3 Co-creating Strategy Implementation

In the co-creating phase of sustainability-oriented strategic management, implementation and iterative strategy review ensure progress in the desired direction. As part of the overall design of the transformation system this can take the form of strategic initiatives, organizational restructuring, and portfolio strengthening or expansion strategies. Metrics in the form of measurements for sustainability progress play an important role in this phase. Beyond the traditional forms of key performance indicators and financial viability analysis, metrics accelerate sustainability performance, if they are not simply imposed, but co-developed. Only then do they empower and encourage all actors to track progress. A high quality co-creating phase (based on the other two phases) results in many actors stewarding transformative change collectively. Subsequently, a company moves faster towards sustainability performance and is more agile in adapting to unforeseen circumstances. Figure 12.5 shows the relevant design principles as well as example practices that foster co-creating strategy implementation.

Fig. 12.5
A table of co-creating strategic implementation. It includes industry and stakeholder context, company internal, societal, and global trends with respective process recommendations.

Design principles in the co-creating phase. Source: Collective Leadership Institute, copyright: Petra Kuenkel

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Strategy implementation is largely taking place at the company internal level. The design principles that work as an entry point to effectiveness in implementation are the same as in the co-sensing phase. However, the design principle of FUTURE POSSIBILITIES focuses on Decisiveness as a driver of getting things done and the design principle ENGAGEMENT emphasises Collective Action, the prerequisite for implementation at all levels. The main purpose of co-creating strategy implementation at the company internal level would be to find answers to the questions:

  • How do we create a company-internal dynamic of making collective action for transformative change towards sustainability happen at all levels?

  • How do we empower staff to implement, track progress, and learn continuously at all levels of the company?

There are a number of instances in which co-creating takes place on the level of industry and stakeholder context. This can be the company’s engagement in sustainability initiatives or platform with competitors, it can be the way a company tries to influence industry associations towards sustainability or it can be specific sustainability partnerships a company implements together with civil society organisations. In sustainability-oriented strategic management these engagements are not add-ons for reputational purpose only, but part and parcel of the identified overall transformation system. The design principle COLLECTIVE INTELLIGENCE focuses on Iterative Learning between the company and external actors. The design principle INNOVATION focuses on Agility as a way of staying in touch with important stakeholders beyond the company. The main purpose of co-creating strategy implementation on the level of industry and stakeholder context is to find answers to the questions:

  • How do we become part of a learning environment towards sustainability together with important stakeholders?

  • How do we leverage our networks with key stakeholders to stay adept with sustainability needs?

Co-creating strategy implementation with societal and global trends in mind means to stay up-to-date with trends and developments that may potentially impact the company’s strategy and performance. Most importantly this contributes to the company’s ability to respond to new knowledge generation around sustainability issues. This is best reflected in the design principles WHOLENESS with focus on Mutual Support as a way of relating to the global context and the design principles HUMANITY with focus on Mindfulness as the company’s ability to measure and report progress publicly. The main purpose of co-creating strategy implementation on the level of societal and global trends is to find an answer to the questions:

  • How can we enact and adjust sustainability strategies in support of a local to global movement towards sustainability?

  • How can we show and report our progress in response to the global sustainability challenges?

6 The Pathways Ahead

The importance of companies changing into drivers for global sustainability cannot be underestimated. The world is currently experiencing massive changes in many areas of human existence: scientists call the emerging era the Anthropocene,Footnote 7 because the influence of human interventions is already so great that they are affecting the entire balance of the biogeosphere (Steffen, Broadgate, Deutsch, Gaffney, & Ludwig, 2015). It is thus clear that ending poverty, addressing climate change, tackling civil and cross-border conflict, ensuring food security, meeting health challenges, dealing with environmental degradation as well as inequality and inequity cannot be done by adhering to strategies from the past. It has become evident, that in order to transform the world toward sustainability the role of companies as much as the economic system needs to alter, from focusing solely on GDP growth to aiming for the wellbeing of people and planet. Of note is that the rules of the game have changed. Existing systems (business, politics, finance, etc.) have been developed with a worldview stemming from linear thinking. Yet, it is becoming more and more apparent that we live in an interconnected global environment driven by exponentially growing technologies that are disrupting human and other lives like never before. This requires radically different ways of delivering wellbeing to all people on this planet whilst regenerating the ecosystems that we are close to tipping out of balance. To get there, companies need to become sustainable world-makers together with a wide range of other societal stakeholders. Accelerating transformations towards sustainability is going to be the work of millions of institutional actors, activists, change agents, game-changers, and ordinary people who need to invigorate human competencies for leading transformative change collectively. Co-sensing, Co-designing, and Co-creating strategies for transformative change needs to become the day-to-day management approach of companies.