A lejeune org design 2012

EIASM 2012

Green Organizational Architecture: What could

it be? Organizational Architecture with Weak or

Strong Sustainability in Mind(OASSIM model)

Albert Lejeune, Ph.D. ESG-‐UQAM [email protected]

13/02/2012

Paper accepted at the EIASM 2012 Workshop on Information and Organizational Architecture, Brussels, Belgium, March 9-‐10, 2012

Green Organizational Architecture: OASSIM Model – A Lejeune Page 2

Table of content

INTRODUCTION 3

THE SUSTAINABILITY PROBLEM IN ORGANIZATIONAL ARCHITECTURE 4

THE THEORY OF SUSTAINABLE BUSINESS 4 ECOLOGICAL INTELLIGENCE AND TRANSPARENCY 5 THE EMERGENCE OF GREEN MANAGEMENT SEEN THROUGH ORGANIZATIONAL ARCHITECTURE 7 THE INFORMATIONAL 'GREEN' PATTERN: THE SUSTAINABILITY REPORTING 9 THE PATTERN OF THE 'GREEN' PROCESSES: TOWARDS TOTAL ENVIRONMENTAL QUALITY 10 THE STRUCTURAL 'GREEN' PATTERN: MOVING TOWARDS BLURRED NETWORKS TO CREATE VALUE 10 THE STRATEGY 'GREEN' PATTERN: THE (NATURAL) RESOURCES-‐BASED STRATEGY 11 THE PATTERN OF ‘GREEN’ CULTURE: TOWARDS A NEW ENVIRONMENTAL PARADIGM (NEP) 12 ARCHITECTURE FOR GREEN MANAGEMENT MANOEUVRABILITY AND ADAPTABILITY THROUGH ORGANIZATIONAL LEVELS 12 BARRIERS TO GREEN MANAGEMENT 14

TOWARD A RESEARCH MODEL 15

WEAK AND STRONG SUSTAINABILITY 16 ORGANIZATIONAL COGNITION 18 FROM BUSINESS MODEL TO THE THEORY OF THE BUSINESS 20 THE OASSIM MODEL: THREE MODES OF LOGIC REASONING ABOUT SUSTAINABILITY 24

CONCLUSION 26

REFERENCES GÉNÉRÉES ZOTERO ERREUR ! SIGNET NON DÉFINI.

REFERENCES (TO BE COMPLETED) ERREUR ! SIGNET NON DÉFINI.

ANCIENTNESS RÉFÉRENCES ERREUR ! SIGNET NON DÉFINI.


Introduction The lack of interest in management science in general and in the discipline of information systems (MIS) in particular on the topic of sustainability is remarkable. Melville (2010) notes only one reference linking IS and sustainability before he even puts out a research agenda in this direction. Even more remarkable is the ignorance of the issue of sustainability shown by the discipline of enterprise architecture. The issue of designing a company guided by the principles of sustainability is not on the agenda. Except for some seminal papers on sustainability-oriented corporate change (Shrivastava, 1995a,b,c; Shrivastava and Hart, 1995; Hart, 1995), it seems to be now more a concern of bloggers or Open Source communities. Research in MIS and organizational architecture is thus lagging behind management practices in sustainability. Yet the issue of sustainability in its three components - environmental, social and economic - exists on the management side but the picture is not easy to read. Companies face new challenges as illustrated in repeated conferences on the threats of climate change, sustainable development laws, new reporting practices and the emergence of the carbon market. Innovative firms turned these challenges into opportunities, e.g. General Electric with its new Ecomagination division.

When organizations become more sensitive to environmental issues, are they deploying corporate architectures for sustainability? What are those architectures? Griffiths and Petrick (2001) answer that they are (1) architectures that capture and use ecological information for strategic purpose, (2) architectures that incorporate employee knowledge for strategic purposes and (3) architectures for rapid response to sustainability opportunities and threats. The Griffiths and Petrick’s (2001) answer is right on the way to reach a definition of a green organizational architecture. But are those architectures expressing a strong sustainability approach?

In fact, following Roome (2012), most of sustainability practices are mainly weak sustainability approaches. Roome (2012: P.620) defines weak sustainability: «Weak sustainability sets out to bring environmental concerns into the framework provided by the structures and systems of business». Weak sustainability characterized more the period of ‘corporate environmental management’ which is for Bansal and Hoffman (2012) the first wave of environmental issues in business management; the two others being ‘corporate environmentalism as strategic management’ and the third, ‘corporate environmentalism as sustainability’. Within the last wave some enterprises or organizations embrace strong sustainability: «Strong sustainability seeks to integrate the company into environmental or socio-ecological systems, so that the patterns of production and consumption to which the company contributes are within the capacity of the Planet to sustain» (Roome, 2012: P. 621). Thus the issue of weak/strong sustainability asks for a revaluation of the sparse contributions to a green organizational architecture: are corporate architectures for sustainability proposed by Griffiths and Petrick (2001) fitting the strong sustainability attitude?


Here comes our research question: how to influence managers’ thinking toward (strong) sustainability when they build an organizational architecture? The purpose of this paper is to integrate the issue of sustainability in the process of viewing an organizational architecture with (strong) sustainability in mind.

Between the introduction and the conclusion, the paper has two main parts: 1. a review of the sustainability problem in organizational architecture and 2. a proposition of a research model (OASSIM that stands for Organizational Architecture with Strong Sustainability in Mind). The first part is organized as follows: A. The theory of sustainable business, B. Ecological intelligence, C. The emergence of green management, D. Architecture for green management, and E. Barriers to green management. The second part, the research model, is divided in three parts: F. Weak and strong sustainability, G. Organizational cognition, H. Logic and sustainability.

The sustainability problem in organizational architecture The issue reintroduces the notion of theory of the business (Drucker, 1994) by presenting the argument that sustainability should be part of the theory of the business in this century. Resource limits of the biosphere (ecological footprint) require that the managers include the biosphere in the task environment to design sustainability-oriented innovation (Klewitz and Hansen, 2011; Hansen et al., 2011). The issue also highlights the growing ecological intelligence developed by consumers and its effect on the transformation of key domains such as organizational culture, strategy, structure, processes and information that are becoming increasingly 'green' due to persisting ISO standards, GRI reporting requirements, regulations, etc. Barriers to the process of ‘green management' are described, from a survey conducted by the MIT (Berns et al., 2009).

The theory of sustainable business

In 1987, the Brundtland Report defines sustainable development as development that meets the needs of the present generations without compromising the ability of future generations to meet their own needs. While the GEO-5 report is being released in 2012, the GEO-4 report, released in late 2007 by the United Nations Environment Programme (UNEP) specifies the nature of problems and opportunities brought to humanity. The whole world lives above its means. The human population is now so large that the amount of resources needed to sustain it exceeds the available resources. And the ecological footprint of humanity - that is to say, the environmental requirements - is 31.9 hectares / person, whereas the biological capacity of the Earth is on average only 15, 7 hectares / person.


Weak and strong sustainability approaches are made of different assumptions (Daly and Walsh, 2010) illustrated by different conceptual frames (Roome, 2012) that must transform the theory of the business (Drucker, 1994). As Daly and Walsh (2010: P. 509) point out: «Drucker argues that the skills and competencies that managers required in modern management are rapidly changing and now operating at a much more fundamental, intellectual and theoretical levels than previously understood. Increasingly, according to Drucker, it will be in this space that a firm’s future competitive advantage will come from and that this must begin the assumption design of the firm». While Shrivastava (2012) puts forth an aesthetics of sustainability, this paper takes a cognitive angle to investigate the problem of sustainable organizational architecture. This cognitive approach is justified as Roome (2012) builds on mental frames to distinguish between weak and strong sustainability. In fact, Roome (2012) identifies six conceptual frames that illustrate the opposition between weak and strong sustainability: (1) mental frame, (2) decision frame, (3) organizational/institutional frame, (4) time frame, (5) values frame and (6) change/innovation frame. The weak/strong sides of these various conceptual frames make the sustainability assumptions more explicit and visible at the root of a theory of the business (Drucker, 1994) and imply the argument that sustainability should be part of the theory of the business in this century.

According to Drucker (1994) a theory of the business is made of the assumptions that «shape any organization’s behavior, dictate its decisions about what to do and what not to do, and define what the organization considers meaningful results. These assumptions are about markets. They are about identifying customers and competitors, their values and behavior. They are about technology and its dynamics, about a company’s strengths and weaknesses. These assumptions are about what a company gets paid for. They are what I call a company’s theory of the business». Now for the proponents of strong sustainability, sustainability should be integrated in a theory of the business. For example, from the electric car to the LEED building, new markets are emerging; the consumers are developing their eco-intelligence while new green technologies are each day questioning the firm learning capacities.

Sustainability requires a new theory of the business, a theory - if we refer to Roome (2012) - seeking to integrate the company into environmental or socio-ecological systems. This requires a new - fundamental, intellectual and theoretical - cognitive space (Daly and Walsh, 2010) where must begin the assumption design of the firm.

By updating its assumptions on the environment, the new theory of the firm must incorporate the principles and concepts of sustainability and opportunities offered by new 'green' products and services valued by customers.

Ecological intelligence and transparency


Indeed, according to Goleman (2009, 2010), it seems that companies no longer have a real choice to change their logic: consumers develop ecological intelligence requiring total transparency of the composition of products and manufacturing processes. For Goleman (2009, 2010), the consumer is now in a position to know the impacts of any purchase on the environment. He gives the example of the website Good Guide (http://www.goodguide.com/) where consumers continually assess the ecological quality of purchased products. For Goleman the expression of ecological intelligence is extending the ability of native naturalists to categorize and recognize patterns in sciences such as chemistry, physics and ecology, using the lens of these disciplines in dynamic systems operating at different scales, from molecules to the planet. This knowledge of how things and nature work includes the recognition and understanding of the myriad ways with which artificial systems interact with natural systems. This new awareness allows us to read the interconnections between our actions and their impact on the hidden planet, our health and our social system. Goleman (2010: Page viii) stresses the fact that Wal-Mart – because of his 2009 book – «is now designing a sustainability index that will use life-cycle-analysis-type data to rate all the products on the store’s shelves».

In fact, the understanding of sustainability is a scientific challenge (Antal and Hukkinen, 2010) which requires an understanding of new concepts such as biosphere, ecological footprint, climate change, sustainability science etc.

«In contrast to the myths and stories of ancient peoples, the underlying knowledge and reasoning of contemporary societies is grounded in science. Of course, not everybody can be expected to mobilize complex, science based belief patterns prior to every environmental management decision. Instead, we deal with our cognitive limitations by condensing real world complexities into simple conceptual blends that capture their pragmatic relevance» (Antal et Hukkinen, 2010, Page 941).

In that vein, in 1999, the U.S. National Research Council (NRC) defined the science of sustainability as place-based science because it aims to address environmental problems, locally. Sustainability science is problem-driven with the aim of creating and applying knowledge to assist decision making to improve sustainability. One of the beliefs of departure is that this knowledge must be co-produced by both researchers and practitioners (Clark and Dickson, 2003).

Ecological intelligence questions the cognitive abilities of consumers and policy makers. Between emotion and reason (Stenning and Van Lambalgen, 2008), the decision maker, with new analytical tools such as LCA (Life-Cycle Assessment), is able to review the logic of the theory of the business.

This approach resonates with FISDev framework Framework for Integrated Sustainable Development (see http://sustainabilityframework.org/). FISDev is a collaborative tool for addressing sustainable development. The purpose of FISDev is to provide an architecture


that organizations can implement to introduce best practices of sustainability in their methodologies.

Figure 1

The FISDev approach (see http://sustainabilityframework.org/, visited summer 2010)

Refering to Figure 1, and building on Shrivastava (2012) who defines Sustainability 2.0, green organizational architecture can be – at first - vaguely defined as an organizational architecture that bring together Sustainability 2.0, Enterprise 2.0 and the Web 2.0 thanks to a new theory of the business based on strong sustainability assumptions.

The emergence of green management seen through organizational architecture

Organizational architecture is a metaphor; it gives shape to an organization through both its formal and informal structure. If organizations can demonstrate characteristics such as agility, quality, reducing greenhouse gases, initiating green innovation, raise execution speed etc., these characteristics are emerging. They arise from microfoundations (Teece, 2007) or individual competences and new ideas that emerge at the micro level of the firm (Ayuso et al., 2006). They result from a pattern, a pattern of arrangement and alignment between organizational domains such as information, processes, culture, people and learning. Thus the practice of organizational architecture consists of dismantling an organization in its fundamental components to understand the emerging characteristics. This architecture requires an understanding of the informal or invisible dimensions (Itami and Roehl, 1991). Indeed, competitive advantage of a company may be achieved through organization contracts that are unclear or through agreements, arrangements and


alignments that are not formalized. These hidden contracts illustrate how employees, values and culture interact; the emergence of the strategy - contrary to its formulation; the alliances and networks; and finally how people, groups and organizations learn about the sources of employee motivation. All these elements have emergent properties.

Figure 2

Organizational domains in the OM approach (Morabito et al., 1999)

Depending on the organization, in a radical or incremental way, green management emerges. Pane Haden et al. (2009) define green management as a process deployed throughout the organization that uses innovations to achieve sustainable development, waste reduction, social responsibility and competitive advantage through continuous learning while integrating environmental strategies and goals to the business goals and strategies.

To deploy this process, managers have to become architects: they design organizational structures, perform process engineering, empower people and develop their skills, exploit the potential of information technology, facilitate learning and make changes at all

Crystallization Stage

Manifest Representation

culture

strategy

structure

process

information


organizational levels. Applying the analysis of life cycle for new products, integrating the total quality approach to pollution control, they invent their green management. In so doing they alter patterns in organizational domains (information, processes, structure, strategy, culture, etc.), each with its crystallization rate and its degree of manifest representation (see Figure 2). So each day, the theory of business of each organization is tested, to emerge through shared understanding, a better alignment, better tools, a variety of perspectives creating friction, multiple opportunities for interaction and a surplus of resources, particularly time to experiment with new ideas (Birkinshaw et al., 2011).

The following sections review the various organizational areas in order of decreasing manifest representation, as amended by sustainability-oriented initiatives.

The informational 'green' pattern: the sustainability reporting

Efforts of environmental activists and committed policy makers led to the creation of the GRI (Global Reporting Initiative), non-profit organization based in Amsterdam since 1997 and created by CERES, Coalition for Environmentally Responsible Economies, an NGO based in Boston and central actor the integration of environmental issues into business activities. The GRI developed guidelines for sustainability reporting that have become over the years a standard for triple reporting: financial, environmental and social. However, some companies began to publish separate environmental reports that complete their annual report. Between 1989 and 1993 there were 70 companies publishing environmental reports compared to 300-400 in 1996 (Etzion and Ferraro, 2010).

It is interesting to note with Etzion and Ferraro (2010) that it is by analogy with the rules for filing a financial statement that the guides have expanded the GRI (see Table 1). According to a KPMG study in 2005, over 40% of firms that claim standards of GRI in their sustainability report, and in 2008 77% of the 250 largest firms in the Fortune 500 used the GRI guidelines. The three main target audiences are the organizations themselves, civil society and investors. This shift in the way of enterprise reporting eventually changes practices. Bloomberg ( http://www.bloomberg.com/ ), a specialist financial news network, is developing its own environmental, social and governance performance metrics (ESG). ESG metrics are now available on famous Bloomberg screens to the world of banking and financial services (Marquis et al., 2010).

In terms of observable organizational pattern (see Morabito et al., 1999), sustainability reporting is an informational pattern that differs from both its apparent high representation - its materiality - and its rapid rate of crystallization. But a company can issue sustainability reports without being transformed by new cultural values that are 'green'. Changes in the informational pattern are faster and more visible than cultural


changes. But all the changes - and consistent alignment over time –depend on the culture, both the national culture and its expression in the organizational culture.

Table 1

Evolution of the principles of GRI sustainability reporting

Source: Etzion and Ferraro (2010: 1097)

The pattern of the 'green' processes: towards total environmental quality

Total quality approaches are designed to eliminate wasted time, effort and material. Pollution is nothing but a form of loss to be eliminated in the pursuit of total environmental quality. This quest for total environmental quality will often have a positive impact on the performance of the firm (Klassen and McLaughlin, 1996). For Christmann (2000) various environmental 'best practices' can positively affect the competitive advantage. At a higher level, the deployment of green management is an organizational process change. As mentioned, Pane Haden et al. (2009) define green management as a process deployed throughout the organization that uses innovations to achieve sustainable development, waste reduction, social responsibility and competitive advantage through continuous learning while integrating environmental strategies and goals to the business goals and strategies.

The structural 'green' pattern: moving towards blurred networks to create value


Following Azzone and Noci For (1998), green management tends to change the general characteristics of company structures. The goal for designers of an organizational structure is for the structure to allow the proper functioning of the (green) learning process. Hence there will be passage of a formal hierarchical structure to a more horizontal structure of teamwork, lateral organization, etc. In the context of organizations' responses to extreme events, Mendonça et al. (2007) point out that despite the progress made in ICT, the role of improvisation, the adhocracy and other emergent phenomena has not decreased in the responses to an emergency. However, new environmental requirements have become a moving target, requiring to implement new programs to develop new skills across an industry (ex: packaging and recycling) to all suppliers and subcontractors. For Azzone and Noci (1998), chains of value creation will become fuzzy supply chains, according to environmental requirements.

The strategy 'green' pattern: the (natural) resources-based strategy

Hart (1995, 1997) defines three types of green strategies (see Figure 3): 1. The prevention of pollution, 2. Environmental product stewardship and 3. Sustainable development. As product stewardship guide the selection of raw materials and product design with the objective of minimizing environmental impact, reducing GHG emissions and other pollutants is the fundamental goal of pollution prevention. For Hart (1995) these two strategies are beneficial in the Northern Hemisphere, whereas real sustainable development avoids the negative links between environment and economic activity between the countries of the South and the North. Whereas in the mid-1990s, only 20% of the population lives in the North, 80% of the economic and industrial activity takes place there: firms should make the link between the consumption of material goods in the North and the degradation of ecosystems in the South (Hart, 1995).

Rather than the ultimate control of toxic emissions (end-of-pipe investments), Hart (1995) proposes the review processes using continuous improvement methods to achieve specific environmental objectives, forming a competitive advantage by combining this capability with the approach of Total Quality Management (TQM). Environmental stewardship product will require an adaptation of the design constraints of the product life cycle (LCA). This requirement can be taken further with the practice of D f E: Design for Environment. This strategy will work even better if external stakeholders may be associated (as in the case of BMW, which plans to facilitate the removal of its products at end of cycle with outside firms for recycling). The third green strategy, sustainable development, requires a leadership that has a strong sense of social and environmental purpose. It requires great moral strength and a leader dedicated to the social process of empowering people. It also requires a shared vision of the future, as demonstrated by Maurice Strong when he took the head of Ontario Hydro by redefining its mission toward renewable energy.


The pattern of ‘green’ culture: towards a new environmental paradigm (NEP)

Corporate cultures can support or destroy competitive advantage. For Branzei et al. (2001), three dimensions define the environmental performance of a company: (1) organizational embeddedness, (2) the ability to take action and (3) responsibility for environmental conservation. These authors suggest that firms go through stages of non-compliance with environmental laws and regulations to a stage of compliance and then move on to environmental excellence and finally to environmental leadership.

Figure 3.

The three green strategies and sustainable competitive advantage according to Hart (1995)

Architecture for green management manoeuvrability and adaptability through organizational levels

The deployment of a green management process will require a new cognitive organization able to change the organizational culture and from there, depending on the speed of crystallization and the materiality of organizational fields, change the strategy, structure, processes and information domains.


These changes in organizational patterns may occur at different organizational scales (see Figure 4): at the organization as a whole, at one of its components or business units, at one service pattern that allows a unit to function or at the information level. It follows from this that an adaptable organization reacts to environmental changes by passing new constraints at lower levels and forces it to change, while an organizational level is manoeuvrable when it allows a better alignment of the components at a particular level.

Figure 4

Adaptability and manoeuvrability of organizational levels

Source: Morabito et al., 1999

The pattern of information is a hard – soft continuum that parts from the data to reach knowledge through information. The generation of knowledge is constrained by the world views of individuals, their abilities and belief system (Yolles, 1999). For Yolles (1999), the world view is centered on the culture and has a cognitive organization (beliefs, values and attitudes).

The degrees of alignment, and therefore manoeuvrability, are ultimately based on the organizational culture (Morabito et al., 1999). A culture that is closed is a culture in which overt behaviors remain unchanged. This leads to a stagnant organization, an organization that has trouble adjusting to a competitive environment through SOI.

Adap

tabi

lity(

verti

cal a

lignm

ent)

Manoeuvrability (horizontal alignement)


The alignment of the fields of culture and organizational learning facilitates the instantiation of additional new business culture contracts (eg, reciprocity and information sharing), which in turn lead to a better alignment between more organizational domains. For de Jong (2010), a psychological contract is a team shared mental model that consists of beliefs about mutual promises between individual team members and agents of the organization. Behavior and the resulting alignments are characteristic of an innovative culture (Schein, 1994). Innovative cultures, inventive organizations, and manoeuvrability are dependent on each other and together form the basis of effective organizations in highly turbulent environments (Morabito et al., 1999). Such an organizational configuration should allow the deployment of green management. These learning organizations are commonly defined and understood as organizations where people continually improve their creative capacity, where exploration is a mandatory behavior, where existing practices are continually questioned and a culture of dialogue always maintained.

Culture changes when the cognitive organization - the beliefs, attitudes and values - change. Further the patterns of knowledge also begin to affect change in the logic models, like the theory of the business, which give the system a capacity of anticipation (Yolles and Dubois, 2001).

The theory of business described by Drucker (1994) is a cognitive organization, made up of beliefs (Dennett, 1979), attitudes and values (Schein, 1994) likely to change the culture. Culture, when it is still fluid and not yet crystallized, has the ability to change patterns in domains such as strategy, structure, processes, and information (see Figure 2).

The implementation of green management tests both the manoeuvrability and adaptability of an organization. If the organization is manoeuvrable, the changes will take place along a continuum in terms of information, for example, in the marketing department. If the organization is adaptable to the changes made on a larger scale, then it changes its strategy and it forces lower levels to change.

Determinant conditions to the achievement of higher levels are ecological values, government regulations and economic benefits. Finally leaders’ interpretations will be influenced by four categories of company stakeholders: regulators, organization, media and communities, and environmental groups and lobbies. Attitudes towards nature are rooted in a set of human values shared by different countries: values, attitudes and beliefs centered on the ecology form the new environmental paradigm (NEP).

Barriers to green management


A survey conducted by researchers from MIT in 2009 in collaboration with the Boston Consulting Group (see # http://www.mitsmr-ezine.com/busofsustainability/2009 pg1 ) defines two major obstacles to the implementation of green management: 1. Lack of understanding of sustainability and 2. The difficulty of modeling a business case for sustainability. The report mentions the following three causes:

• The lack a factual basis • The lack of common definitions and common language • The difficulty of measuring the results of actions and the lack of understanding of

collective actions

In terms of organizational architecture, we can observe weaknesses in the informational domain (Figure 2) that limit the manoeuvrability of the organization, and problems with cognitive organization that do not allow a change of culture.

The lack of basic facts and common definitions of ‘green’ language cannot promote collective action. In return, the lack of collective actions is a learning barrier to the measure of the results of actions, which adds to the misunderstanding.

The MIT report says that 70% of firms do not have a good compelling business case mainly because;

• It is difficult to predict and plan beyond a horizon of 1 to 5 years, while measures of financial performance are quarterly

• It is difficult to identify, measure and monitor the effects of long-term investments • There is a high uncertainty level in the environment

Here the situation is much contrasted between companies hesitant to change and those who view a green future (for example, General Electric (GE) that launched its Ecomagination division). With its Ecomagination division, GE demonstrated both adaptability (forced and directs the organization's strategic choices of the business units to the 'green' imagination) and manoeuvrability when a service such as R&D, for example, begins to apply the principles of open innovation. Sustainability has transformed the culture, strategy, structure, processes and information at GE.

Toward a research model A research model on sustainable organizational architecture must clarify the notion of sustainability and make distinctions between green capitalism, green washing and more


radical sustainable initiatives. Weak sustainability is a common way to bring environmental concerns into the framework provided by the structures and systems of business (Roome, 2012: P.620) while strong sustainability seeks to integrate the company into environmental or socio-ecological systems, so that the patterns of production and consumption to which the company contributes are within the capacity of the Planet to sustain» (Roome, 2012: P. 621). From the point of view of an economist, Nilsen (2010) builds on the opposite definitions of weak and strong sustainability. Thus the Z axis on the Figure 5 is a continuum between weak and strong sustainability.

As mentioned earlier, weak or strong sustainability approaches are made of different assumptions (Daly and Walsh, 2010) illustrated by different conceptual frames (Roome, 2012) that must transform the theory of the business (Drucker, 1994). As Daly and Walsh (2010: P. 509) point out: «Drucker argues that the skills and competencies that managers required in modern management are rapidly changing and now operating at a much more fundamental, intellectual and theoretical levels than previously understood». So the Y axis is the cognition axis. The Y axis opposes two common understandings of what organizational cognition is: organizational computation or organisational interpretation. This distinction between computation and interpretation at an individual level of analysis is classical in the development of cognitive sciences. The model will show that weak sustainability is more connected with computation and strong sustainability with interpretation. To change an organization, the culture has to change first – through new beliefs, values and assumptions - and initiate, by a ripple effect, changes in the other organisational domains like strategy, process, structure, information etc. Organizational cognition will be key to initiate a culture change.

Finally, the X axis is the organizational architecture axis represented as a continuum between business model and the theory of the business. The business model as a mean to calculate a generated value is connected with computation and thus weak sustainability. The theory of the business is made of new hypothesis and assumptions and connected with strong sustainability. The remaining pages of the paper are dedicated to the exploration of this OASSIM model (Figure 5.) for Organizational Architecture with Strong Sustainability in Mind.

Weak and strong sustainability

Like Roome (2012) in strategic management, Nilsen (2010) in economics makes the distinction between weak and strong sustainability. For Nilsen (2010), «Weak sustainable development (Weak) is characterized by the goal to sustain a constant level of consumption or utility. To achieve this goal, nature and capital goods can be substituted with each other. Neither nature nor capital has an intrinsic value, but is an instrumental value to achieve the highest possible level of utility. Weak is often called 'Solow-


Hartwick sustainability' as it is based on the work of Nobel Prize winner Solow and Hartwick (Neumayer, 2003, p. 22). A main challenge is to calculate how big the compensation in capital must be for the loss of natural goods. This is the idea in cost-benefit analysis, a main tool in neoclassical economics also used in environmentally sensitive issues (Pearce & Barbier, 2000; Pearce & Turner, 1990). Weak belongs to neoclassical economics which has dominated the sphere of economics: "Most, but not all, economists are weak sustainabilitists" (Perman, Ma, McGilvray, & Common, 2003, p. 91).» (Emphasis added)

Weak sustainability is connected with organizational computation by a main challenge: the challenge to calculate how big the compensation in capital must be for the loss of natural goods. That challenge can be also linked with the GRI reporting practices.

Figure 5

Cognition

Sustainability

Organizational architecture wea

k

strong

interpretation

computation

model theory

Inductive logic

Deductive logic

Abductive logic


Organizational architecture with sustainability in mind (OASSIM): a research model

Nilsen (2010) continues: «A less common, but increasingly more used theoretical concept is strong sustainable development (Strong) (Nielsen, 2008, p. 114). Strong requires that there must be a restriction on the substitution between the economy and nature, both must be sustained. The restriction on substitution clearly pulls sustainability away from Weak and its homogenous focus on human development, in the direction of encompassing ecological values. Strong has a heterogeneous foundation which makes the qualitative different values of economy and ecology possible.»

From an organizational cognition point of view, strong sustainability requires qualitative interpretation of different values in economy and ecology.

Organizational cognition

For Lant and Shapira (2001), organizational cognition is a continuum from computation to interpretation: «When the metaphor of the computer as a model for human information processing emerged, cognitive research started to focus on information processing. Most of the work in this tradition is consistent with the computational-symbolic representational model of human cognition and information processing» (Lant and Shapira, 2001: Page 2). A common criticism to this approach is that it equates computation with cognition.

Apart from cognitive scientists and philosophers, psychologists have criticized the rational model for not accurately describing how individuals make judgment and choice. If the origin of the computational approach in organizational cognition was influenced primarily by developments in psychology, the interpretive approach has its roots in sociology and, in particular, the sociology of knowledge (Lant and Shapira, 2001). Sustainability requires meaning: meaning is the way of choosing referents. This method fits in the brain and involves the use of mind. The computationalist manipulates symbols according to their shape, hence there is no meaning at this level.

On the one hand, for Byrch et al. (2007: Page 28), the usual sustainable challenge is about weak sustainability: «Despite the debate over its meaning, sustainable development, and the related concept of sustainability, would seem to have more proponents than ever. Many individuals and organisations – in particular government and business organisations – are taking up the “sustainability challenge” and incorporating their own understanding of sustainable development into various aspects of their operations. In simple terms, the definitions adopted and their respective interpretations demonstrate the relative emphasis given to environmental, social, and economic domains by different


groups, and how the concepts of equity, fairness and futurity are applied to those domains».

On the other hand, again for Byrch et al. (2007: Page 28), strong sustainability will require an ‘ecocentric’ worldview instead of technocentric or anthropocentric worldviews. «There is a substantial body of literature that suggests that these varying emphases in turn reflect individuals’ fundamental beliefs about humanity’s proper relationship with nature; that is, their environmental “worldview”. Environmental worldviews which are more biocentric are said to lead to significant sustainable environmental performance – although more research is needed to sustain a clear link as worldviews do not always translate into actions consistent with those underlying beliefs».

The computational approach to sustainability can be equated with an approach that is defined by the use of the digital computer. Malrik et al. (2011) emphasize the birth of a computing ecosystem (Ecosystem Informatics, see Dietterich et al., 2009) and thus define the major areas in the analysis of environmental data: disaster management, climate and climate forecasting, natural resources and engineering approaches that control resources (May and Saitta, 2010). But even the organizational sustainability computationalists have to work on an interpretation of the concept of sustainability and they will quickly reframe it in a dynamic systems approach. Thus, Malrik et al. (2011), data mining experts on sustainability, comment: «According to the United Nations Brundtland Commission, sustainability can be defined as the ability to support the needs of the present population without compromising the ability of future generations to meet their own needs. Sustainability implies a consumption of resources involving little internal or external adverse impact. It is said of a system or process that is sustainable if its inputs and outputs have little negative impact on the environment. /.../ The earth sciences call for global sustainability. The goal is to provide knowledge that can reduce global environmental risks». In a more interpretative approach of the concept of sustainability, things get complicated: there are discourses and paradigms, a literal meaning and a meaning in context (see Figure 6). Semantically, Fergus and Rowney (2005) show that sustainability is understood through the prism of the paradigm of instrumental rationality applied to the conceptual framework of neoclassical economics (see also Nilsen, 2010). For their part, Glavic and Lukman (2007) review the terms related to sustainability and produce as shown schematically in Figure 7. These authors propose a hierarchical classification of terms related to sustainability and their relations on the basis of a layered approach that includes: political sustainability, sustainable systems, subsystems, principles and approaches based on three pillars - society, economy and environment – referred to in the Brundtland Report (1987). The proposed terminology is based on the


use of United Nations Environment Programme (UNEP), the U.S. Agency (EPA), the Organization for Economic Cooperation and Development (OECD) and Journal of Cleaner Production. The study highlights a lot of ambiguities in the use of terms.

From business model to the theory of the business

The business model is traditionally understood as being the architecture of the firm and its partner network, created to market and deliver value and relationship capital and to generate revenue streams and profits (Osterwalder, 2004). The revenue streams and profits as well as the generated value must be computable. Literature in strategic management rarely deals with the design of business models (Zott and Amit, 2010). Yet the business model defines a new unit of analysis involving a holistic (Zott, Amit and Massa, 2011) view of a system of activities that can be specified through the notions of content and structure.

Figure 6.


Semantic framework for sustainable development by Fergus and Rowney (2005)

Figure 7.


Hierarchical classification of sustainability related terms,

Glavic et Lukman (2007)

The integration of sustainability requirements of the business models has been the object of only one publication (Stubbs, W. and C. Cocklin, 2008) while many publications describe the practices of sustainability in management but remain focused - through sustainable development concept – on ethics and social responsibility (Bansal and Roth, 2000).

Kilov (2002: 1) recalls that « Models are created and used for understanding. To achieve that, the modelers together with the stakeholders pick and choose those things, actions, and relationships among them that are of interest to the stakeholders. A model includes only the essential characteristics of the modeled world and suppresses everything else. » In that sense, business models are schema for understanding how a network of


cooperating organizations creates and captures value from technological innovation (Chesbrough, 2006).

On the X axis (see Figure 5.), there is a continuum between business model and theory of the business the same way as model and theories are connected in social research. Following Van de Ven (2007), models are partial representations of theories but do not simply represent operational versions of a theory (Page 143). They serve as mediators between theories and data, or between theory and the world. A research model is an instrument for linking theory with data in terms of function, representation and learning. Following Teece (2010: Page 173), a business model, if it is not a spread sheet or computer model it «might well become embedded in a business plan and in income statements and cash flow projections. But, clearly, the notion refers in the first instance to a conceptual, rather than a financial, model of a business». For Teece (2010), a business model is nothing less than the organizational and financial ‘architecture’ of a business. Coming back to the organizational domains illustrated in Figure 2, financial information has a high manifest representation and lies at the heart of a business model while culture has a low manifest representation and belongs with strategy within the theory of the business.

The first definition of a green organizational architecture is an organizational architecture that brings together Sustainability 2.0, Enterprise 2.0 and the Web 2.0 thanks to a new theory of the business based on strong sustainability assumptions. Following the OASSIM model, the green organizational architecture becomes the set of organizational domains with low manifest representation (e.g., culture and strategy) which, through a better interpretation (new values, beliefs etc.) and enactment (new behaviours) of strong sustainability, influence all organizational domains.

From a conceptual point of view, the business model is a cognitive system whose components interact with other components of the organizational context. For Tikkanen et al. (2005): « By the cognitive aspects of a business model, we refer to the systematic meaning structures or the belief system of a company. The belief system is seen as the driver of decision-making and, subsequently, action.»

Green innovations come from the introduction of the sustainability in a business model. The involved design activity will happen in an organizational context, a social space of representation where a business theory has to be tested. As mentioned earlier, the theory of the firm must be continuously tested (Drucker, 1994). The theory of the business - one that is successful - is a hypothesis. A valid theory that is clear, consistent and focused is extremely powerful.

But today the concept of bio-environment implies a connection with an ecological approach. Foxon (2006), a specialist in climate change, connects the ecological


approach, Simon’s bounded rationality and the theory of the hierarchy - using the work of Kemp (1994) as an example. Within the systems approach to innovation, Kemp (1994) provides a framework for understanding the constraints between the technical and institutional systems within a hierarchy of three levels that Kemp called technological niches, regimes and social-technical landscape. This framework draws on the theory of the hierarchy - developed by Simon and specified later by Ahl and Allen (1996) – and assumes that the higher level has a greater degree of stability and resistance to change than the lower level, because of interactions and relationships between the elements that make up this configuration. The central level is the socio-technical system in which set of technologies and institutions exist and interact. While the existing regime (like the current occidental carbon regime) generates incremental innovations, radical innovations are generated in niches at the lowest level. When the surface is not quite homogeneous, niches appear, providing spaces that are at least partially isolated from a normal market selection, such as specialized sectors of the market, where two different sets of rules apply. These niches provide places for learning and for building social networks that support these innovations, such as supply chains and relationships between producers and users, who define new experiences. The theory of the business here is a learning theory in a niche technology.

The OASSIM model: Three modes of logic reasoning about sustainability

The science of sustainability is a science that is built around problems to solve. In this sense it is related to cognitive science because it looks for a way to help thinking about the environment. Moore (2007) has particularly worked on logical steps by which pressure groups and managers of a city eventually implement all or some aspects of sustainability. For Moore (2007), managers’ logic based on the definitions of sustainable development such as the Brundtland Report (1987) falls into a category of logical deduction, managers who are founding their sustainability initiative in environmental reporting standards are in a process of induction, while managers who trust their common sense , have limited means and say "Let's see and work" work in a logic of abduction.

One of the first approaches to sustainability in urban planning involves the deduction of proposals based on the principles of "Sustainability" as negotiated from 1985 to 1987 and presented in the Brundtland Report.

According to Moore (2007), managers who reason with logical deduction construct idealized models, pre-political and "thin", rather than "dense" as specified in Table 2. These models are static, do not reflect the Bruntland report (1987) and offer only one possible form of democracy: liberal capitalism.


Table 2.

Fine design (thin) Dense design (thick) • Visible attributes • Analysis and Design as in

engineering • Scientific analysis • Formal and mechanical • Structural and modular • Specify / specification • Early Knowledge Binding • Essentially explicit knowledge

• Hidden and essential character • Analysis and Design as in

anthropology • Phenomenon and experience • Intuitive and reflective • Cognitive and integral • Relational Specifications • and psychological • Late Knowledge Binding • Essentially tacit knowledge

Fine vs dense design (Morabito and Sack, 2007)

Inductive reasoning allows reasoning from a local experience; a project is subject to a checklist (checklist) of GRI for companies (see Table 1.) or LEED for buildings. Moore (2007) criticizes the inductive approach lists. First, the paths to sustainability do not exist as ‘ideal-types’, but are challenged in defined urban contexts, so that the same social actors handle the concept or the discourse of sustainable development. Second, inductive logic involves a shift from specific to general. Finally, when measuring local conditions in terms of universal best practices, these local conditions are seen as obstacles to be overcome rather than as opportunities for action. In a way, models and lists referring to sustainability can be useful as heuristic and analytical tools. However, they tend to suppress public speaking required to motivate action in a given location.

In fact, models and lists of sustainability are produced by social scientists who have studied the past through rational methods of deduction (models) and induction (lists). However, planners and urban planners - in the study by Moore (2007) - seem to be much more productive than social scientists, generating sustainable future through the use of abduction as a logic design. Moore (2007) recounts that they worked locally and looking to the future rather than universally and back. Thus, the abduction is, according to Moore (2007), a situated logic by which designers and citizens become responsible for what they learn to visualize.

By integrating the analysis developed by Moore (2007) in the OASSIM model (see Figure 5.), the abduction mode of reasoning fits the search for a new theory of the business by using a strong interpretation of sustainability to redefine organizational domains like strategy and culture. On the contrary, inductive logic characterizes computation of the costs and benefits generated by weak sustainability while ‘greening’


organizational domains like information and process. In the middle, deductive logic can be used on a wide spectrum of more or less manifest organizational domains.

Conclusion

Quoting again Lant and Shapira (2001: Page 1) «March and Simon (1958) viewed organizations as information processing systems consisting of embedded routines through which information is stored and enacted. Some researchers have taken this to mean that organizations are systems that process and code information in a computational manner. That is, the problem that organizations face is one of searching and processing relevant information when such search is costly and decision makers are boundedly rational.» That can be the case with weak sustainability and GRI reporting. Further, «Other researchers interpreted March and Simon to mean that organizations are social entities that enact their world. Some see in these words the element of collective marci». That can be an essential condition to implement strong sustainability.

For Lant and Shapira (2001: Page 1) «These two views separated in the last decade into two distinct branches of cognition research in organizations: the computational approach and the interpretive approach. The computational stream of research examines the processes by which managers and organizations process information and make decisions. The interpretive approach investigates how meaning is created around information in a social context».

This cognitive approach to green organizational architecture generates the following research questions:

1. What is the integration logic at work (inductive, deductive or abductive) when the managers design a SOA (Sustainable Organizational Architecture)?

2. Are the managers applying weak or strong sustainability? 3. Are the managers innovating incrementally or radically? 4. Are the managers designing a (new) business model rather than building a (new)

theory of the business? 5. On what organizational domain(s) are they reasoning (information, process,

structure, strategy or culture)?

Business

A lejeune org design 2012