Bob Bechek, worldwide managing director at global management consulting firm Bain & Company, and Jean-Pierre Felenbok, president director and managing partner at Bain Indonesia, discuss sustainability issues for Indonesia.
One of the issues a lot of companies and executives are taking about, especially in a nation like Indonesia, is sustainability. How do you approach that, in terms of negotiating profitability and executing plans for a company, yet at the same time trying to be responsible? Not all your clients are going to be involved in natural resources, but I assume that, in the mindset of executives, one has to think that way. What is Bain’s approach?
Bechek: I think that, generally, reporting requirements and transparency around the range of sustainability issues is growing, and that increase in transparency is a very good thing for the world. Companies, including our clients, in response to that, I think we, in general, encourage them to gain control of what their sustainability agendas are. And again, that word covers a wide variety of areas. There’s an element of what’s in the headlines, which may or may not be the biggest issues for an individual company so not being in a reactive mode to what’s in the headlines, but rather thinking about their impact on communities and the environment and labor practices and the range of issues that are involved here in setting an agenda, we try to put our clients in a better position to be on top of this.
Then, having set an agenda, it’s essentially just a new basis of competition. Consumers care about this, communities care about this. Increasingly investors care, but they’re not quick to want to pay for the changes, of course.
And so, it’s another basis of competition that just requires a lot of innovation and creativity in setting an agenda and problem solve around what can be done on the most important sustainability issues for a firm, a company. That might include packaging or recycling in the industry.
I did a lot of work in high-tech where there’s an enormous amount that can be done, but the issues vary enormously by industry ... and we’re doing a growing amount of work here.
And I think the increase is in, again, transparency, and we’ll see what happens. But the level of disclosure and reporting that clients, at least multinational clients, are expected to do is a good thing for the world.
Do you see clients acting on their own? Or do you see it as a matter of them just trying to meet regulations and be compliant?
Felenbok: I think both. Indonesia is a country that sees the business importance of being compliant. You know, some of the biggest consumer companies have stopped buying from some of the big producers here because the companies believe the producers were not compliant or they were not enforcing compliance in their partners. Recently, the two big paper companies actually made some very strong commitments, which even the likes of Greenpeace and different NGOs [nongovernmental organizations] seem to be taking seriously while monitoring progress.
But we’ve seen, also, cases where some companies have turned over-compliance into a business opportunity as well. Nestle for instance had a big drive to reduce waste and weight in packaging. They had a big program for taking a lot of weight off their Easter egg packages.
That’s great for waste and transportation costs. Actually it reduced their cost of production massively as well.
General Electric had a huge campaign to become greener inside, but they also pushed all of their business units to sink about half of their help transit into some business proposal for their clients.
So, for instance, the division developed a very sophisticated network planning tool, to help regulate and optimize traffic plans to get more people to the train more effectively, thereby reducing congestion on the road and emissions of CO2.
So they are both greener and they also help business compliance.
Often we find, contrary to common wisdom, there is not necessarily a trade-off between being more compliant, or more responsible and sacrificing business. You can do both. In fact you have to think of them as one part. It has to be concurrent with your business objectives.
Bechek: We focus on trying to identify situations that require some kind of transformational change, because our excellence is in driving from the inside all the way through to actual results. That’s our differentiation. In particular, relative to our competitors, the quality of our people, the way we collaborate with clients and the ability to combine insight, at a more strategic level, with the ability to actually make it happen.
But that means we work with companies in every industry virtually everywhere in the world, but they may or may not be the largest companies in a particular industry.
The example Jean-Pierre just gave is not one of the largest companies of that industry, but it’s a pretty extraordinary success story that our people, our reputation and our network of people who help to refer us and help our business is built by creating those kinds of business success stories. As you know very well, sometimes the largest company in a particular industry may not actually be one where we might feel we can make a significant impact.
It doesn’t build our reputation if we hang around the hoop.