Written by: Josh Jacobson
Why is collaboration so difficult?
The longer we work to advance social good through Next Stage, the more we have come to understand that the biggest barrier to achieving success is a seeming inability of people to “play nice with others.”
Such was the topic last week when I appeared as a panelist on an episode of The ESG Show, a digital program hosted by journalist Michael Baxter, founder and Editor-in-Chief of The Techopian. The theme of the episode was ESG as a silo-buster inside the private sector – an examination of how expectations for positive societal impact is requiring companies to rewire how once-disparate business functions work together. I was joined as a panelist by Natalie Runyon, ESG Strategist and Consultant at Thomson Reuters, and Jonathan Ha, Founder and CEO of Seneca ESG.
The discussion was wide-ranging and focused on a number of barriers to implementing cohesive, company-wide ESG strategy including technology, reporting structure, leadership and training. The speed with which this trendline has developed is a complicating factor, as companies are being forced to figure this out on-the-fly.
To date, ESG has largely lived in the Fortune 1000 sphere where publicly-traded companies see alignment to it as a means to drive positive shareholder outcomes. As noted last year on Forbes, “investors globally are embracing ESG Investing on a massive scale” translating to “$1 for every $5 invested” by 2026.
As a risk management topic framed by compliance and regulatory agencies, it can be difficult for companies to see ESG as an opportunity and not a burden. With so much investment on the line, it isn’t a matter of simply checking the box.
The Challenge of Collective Action in the US
My appearance on The ESG Show, a UK-based program, was Next Stage’s first international media engagement since the publication of Profit & Purpose: The ESG Addendum, our recent report highlighting the role of corporate citizenship via the ‘External S.’
In many ways, ESG has already become a dominant topic in European and Asian markets where adoption of strategies aligned to environmental, social and governance materiality has become accepted best practice. This is less true in the US, where the politicization of ESG has muddied the waters and slowed forward progress.
But that’s not the only thing happening here. As we’ve encountered personally through our outreach at Next Stage, even in companies that make ESG a priority, silos abound. Breaking through “established ways of operating” takes much more than company-wide memos and edicts from the C-Suite.
A primary barrier in the US? Our inherent individualism.
Next Stage’s approach to collaboration work is informed by Sociologist Geert Hofstede, whose decades-long research resulted in the identification of six basic issues that society needs to come to terms with in order to organize itself. This 6-D model of national culture suggests that Americans are uniquely defined by their fierce individualism.
In Hofstese’s rating system, the concepts of collectivism and individualism are suggested as opposites, with Americans the most inclined society toward independence in the entire world, and opposed to being interdependent as members of larger wholes.
As a result, efforts to bring people together across differences typically fail to take into account these cultural truths, leaping to collective aims without first addressing underlying barriers to working collaboratively.
How does this apply to a US-based corporation trying to make ESG work? Just try to get the heads of sustainability, DEI, corporate social responsibility and corporate compliance in a room together and see how much they have in common.
A Leg Up for the Middle Market
Next Stage’s private sector work is focused specifically on helping middle market companies thrive in this environment of increased expectations.
It may seem counterintuitive that midsize companies, most often privately held, would need to pay attention to industry pressures primarily felt by publicly-traded corporations. And yet, the middle market plays an important part inside the supply chain for larger companies.
It can be jarring to receive an RFP from a long-time customer that now includes questions related to sustainability, DEI and community impact. These are the business leaders we hear from at Next Stage, where a quick google of these search terms finds companies like ours who are helping to translate these issues into practical implementation plans.
The strategic strength of these midsize companies? Often the lack of already-existing infrastructure. Unlike larger companies that are trying to get pre-existing functions to play nice in a new sandbox, middle market companies are building rather than rebuilding their models.
That means an opportunity to put it together the right way from the start, creating the infrastructure and team cohesion needed to help disparate functions report in and connect strategically to a centralized strategy.
This is a strength of Next Stage which has worked with countless nonprofits to create similar structures, where collective ownership of the 501c3 model creates a challenge of knitting together board members, staff, donors, volunteers, partners and the community served to create shared ownership of goal setting and activities for advancement.
Interested in Learning More?
We are here to help your company navigate a way forward with a specific focus on citizenship efforts – the elusive ‘External S’ in ESG. Here are actions to take:
- Download our recent report, Profit & Purpose: The ESG Addendum and check out its predecessor.
- Watch our launch workshop for the new report where we illuminate the history of this trendline and share action steps for you to follow.
- Get in touch and schedule a free consultation – we are building our next thought leadership report and look forward to learning from your experience.