The CEO’s Journey to Sustainability

The CEO’s Journey to Sustainability

Imagine a journey. A journey that in many ways echoes the Hero’s Journey – the pattern of narrative identified by the American scholar Joseph Campbell that appears in drama, storytelling, and psychological development. This time the story concerns the CEO, and more specifically Jochen Zeitz, the former CEO of Puma and among other things Founder of the Zeitz Foundation for Intercultural Ecosphere Safety and Co-Founder, together with Sir Richard Branson, of The B Team, a not-for-profit initiative that puts people and planet alongside profit. But Zeitz’ story is also a journey that can be modelled and lived by other CEOs the world over – that of sustainability and its development, within the company or organization, from challenge to opportunity to necessity.

Stefan Gröschl, together with fellow researchers Patricia Gabaldón and Tobias Hahn, studied the journey of Jochen Zeitz – research that culminated in the publication of their findings in the Journal of Business Ethics. Moving on from previous research into cognitive development in the field of management, Gröschl and his colleagues explored how the changes in a leader’s mindset relate to his/her views and actions on sustainability. Taking Jochen Zeitz as their focus of study, they illustrate that Zeitz’ increasingly complex cognitive patterns during his time as CEO of Puma were associated with his development of an understanding of – and response to – sustainability that went beyond narrow business concerns. By juxtaposing key events and experiences in the biography of Zeitz with the evolution of his views and initiatives on sustainability, Stefan Gröschl and his colleagues identified how his cognitive complexity and his stance on sustainability co-evolved.

Cognitive complexity describes the number of distinctive attributes underlying a person’s thinking and how they are connected: this gives the beholder a picture of the world and provides a framework for judgement and decision-making that leads to action. Where do these attributes come from? An initial answer lies in our culture – that is, the values and identity handed down to us from, for example, our family, nationality, religion, social status and profession. But as we live and grow, our experiences, both personal and professional, add themselves on to the framework, connect, and continue to shape our perceptions, decisions and actions. In the field of management, past research has shown that managers take strategic decisions based on selective interpretations of their organizational context through their cognitive frameworks – a process of reducing complexity and structuring ambiguous signals that is called ‘sensemaking’.

In the case of CEO Jochen Zeitz, Stefan Gröschl and his colleagues identified six different cognitive lenses that emerged over time, indicating an increased level of differentiation of Zeitz’ cognitive pattern: business, cultural diversity, Africa, norm-breaching, environmental consciousness, and spirituality and philosophy. In short, the experiences and contexts Zeitz lived during his time as CEO at Puma contributed to an increasing awareness of sustainability and how it could be linked to business not only for increasing profits but for the necessary good of society and the environment.

The journey to sustainability

When Zeitz came to Puma, the company was struggling and in his first few years as CEO his approach was primarily driven by conventional business and management techniques in an attempt to reduce costs and turn the company around. At a time when the German economy was experiencing rising unemployment, Zeitz cut the German workforce numbers at Puma by a drastic 50%, moving most of the production facilities to low-cost countries in Asia. Despite criticism that Puma was losing its ‘made in Germany’ identity, Zeitz forged ahead regardless to continue to focus on restructuring, investing and developing growth.

However, it was in the process of turning around Puma from a €100m loss-making organisation to a €3bn profit-making business that Jochen Zeitz came to realise that financial success came at a cost to the environment. Traveling across Asia in the early and mid-1990s, he was shocked into realization by the poor working conditions of his suppliers’ employees and the environmental damages these suppliers caused. As a reaction, Zeitz implemented a code of conduct in Puma aimed at improving the working and environmental conditions in Puma’s suppliers, and with growing environmental consciousness in both Germany and outside Europe, Puma stepped up its sustainability-related activities. In the early to mid-2000s the company terminated partnerships with 35 suppliers for non-compliance with Puma’s environmental standards. In parallel, Puma also expanded its auditing to cover all Puma licensees and supported or joined several sustainability-related working groups and NGO initiatives.

But it was also the coming together of Zeitz professional and personal life that gave additional impetus to his sense of sustainable issues. He visited Africa in 1989, fell in love with the country, and bought a farm. Over the next fifteen years or so Zeitz committed to developing sustainability initiatives such as the creation of the Foundation of Intercultural Ecosphere Safety in Kenya to develop sustainable projects that would bring together the ‘4Cs’: wildlife conservation, community, culture and commerce in Africa.  Another example included the setting up of a sustainable tourism business Long Run. His experience in Africa confronted him with – to paraphrase Zeitz – the negative sides of business from an ecological point of view, making him realize that it was it was time to change the way he conducted business.

Altogether, Zeitz’ understanding of sustainability and its meaning for doing business evolved when he connected his experiences from running his farm in Kenya with his meetings and discussions with Anselm Grün, German monk and lecturer on spirituality. Accordingly, Zeitz started to combine business aspects with sustainability arguments in his strategic thinking and as all the threads of his experiences came together, Zeitz saw it as the moment for the environment to be valued in the same way as business and economic growth. One such illustrative example is that of the introduction of Puma’s Environmental Profit and Loss Account (EPL), widely acknowledged as the first comprehensive EPL to be applied by a company.

CEOs and sustainability: Reach out and grasp

In terms of practical implications, Gröschl and his colleagues’ study underlines the role of cognitive complexity for the transition toward more sustainable business practices. In particular, their findings emphasize the need to encourage leaders to develop their cognitive structures through life experiences and to consider aspects of sustainability that go beyond narrow business considerations. In much the same way as CEOs develop and foster a global mindset for the management of international corporations, the adoption of proactive sustainability initiatives could well make CEOs develop ‘sustainable mindsets’ – all too important for companies on the front line of sensitive environmental and social issues.

With acknowledgements to the Council on Business & Society

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