Organizations around the world are seeking ways to reduce their environmental impact - be that by reducing energy consumption, eliminating harmful emissions or ensuring supply chain partners meet a predefined green standard. The question has moved from “Should my company move forward with a green plan?” to “How can I execute and measure my green plan’s effectiveness?” In this article, I will focus on linking business strategy to green goals and measurement, the tools available to successfully plan a program and how the daily activities of three common roles are impacted once green becomes a part of the corporate culture.

A Green Plan Linked to Goals and Measurement

In many cases, a gap exists between an organization’s strategic plan and the daily operational execution of those plans. The time and frequency of reporting is a simple example of this. A strategic plan is typically updated on an annual basis and looks forward for two, three or five years. On the other side, you have short-term tasks and budgets guiding daily activities that are typically planned annually and reported against on a monthly or weekly basis. So you have objectives set forward for five years, such as to reduce energy consumption 30 percent against your 2008 level, and a monthly budget that may or may not actually achieve the objectives in the strategic plan. If your goal is five years out, how do you know where you should stand in year two? To answer that question a direct line-of-sight between strategy and an individual’s activity execution is essential.

Strategic direction and objectives, business processes, people, responsibilities and technology all must be aligned by activity to provide that line-of-sight and ensure organizations know where they stand on tactical execution at any point in time. Starting with a specific pain, in this case to reduce energy consumption, gets the ball rolling. Working toward and being able to quickly expand beyond your starting point is what exponentially adds value to your business.

As companies implement green plans, it quickly becomes apparent that many do not have the tools in place to monitor and measure progress beyond a high-level benchmark. To be truly successful, visibility into more specific levels, such as a specific individual’s or even an asset’s performance, is essential. For example, a company with 10 locations is missing its quarterly energy reduction estimates by five percent each month. A quick glance at a dashboard informs the person in charge of operations that the Colorado facility is the culprit. With a simple call, the Colorado plant manager identifies a faulty warehouse door allowing warm, outside air to enter the building, causing an increase in air conditioning. The ability to identify problem areas in real time helps ensure that the company will meet its overall green goals.

As a company embarks on this journey, there are several considerations to take into account as a green program is developed and executed:

  • Strategy: Direct the focus and actions of the organization by linking your green plans to operational plans, performance measures and people. Understand how the actions of operating units and individuals contribute to the success of the program, from business events to the source of energy reduction in a given period. Additionally, take into consideration to what degree the plan has been implemented and how well. This will help identify, while the plan is in execution mode, why some actions are more successful than others.
  • Planning: Model your business and test multiple scenarios to help prepare realistic financial and operational plans that will enable the organization to achieve program success. Entrusting a small group of people to create plans for the organization is one method of planning. A best practices approach is to enable many people from across the organization to collaborate, allowing the company to benefit from a variety of perspectives and a wealth of experience. Additionally, this information can be used for budgeting, forecasting, reporting and analysis.
  • Budgeting: Allocate resources and ensure they are aligned to strategies and plans. Budgeting should be a collaborative and meaningful process that reflects the real-world needs of an organization. Relying on spreadsheets for budgeting typically results in a static annual budget that is outdated before it is approved, one that is not linked in any visible or measurable way to a corporate green plan and cannot be updated easily as conditions change. An automated budgeting process allows for more analysis and less data entry.
  • Forecasting: Create statistically accurate forecasts to help manage the program’s performance expectations, and make tactical adjustments on the fly to achieve desired performance goals. Prepare what-if operational scenarios to quickly see which plans best achieve the desired outcome for your green initiatives. Measure and check the statistical reliability of a forecast or plan to help reduce the risk of adopting an errant course of action.

Tools for Success

Gathering and delivering information when and where it is needed is key to any program’s success, and performance management tools provide this foundation. Utilizing a single database, performance management tools extract and load data from across the enterprise and provide executives and managers the ability to view information in real time. Advanced tools provide role-based analysis, which delivers information specific to each employee’s responsibilities within the company. This capability dramatically reduces the burden departments place on IT with custom report requests. Now, this information is available on demand so employees can make faster and better decisions. This role-specific information, delivered in the form of home pages complete with dashboards and data, delivers information to the desktops of decision-makers on as frequent a basis as needed - even daily - enabling companies to move beyond performance measurement to performance management.

New Initiative Impact

New corporate initiatives, such as green initiatives impact employees differently. To ensure success, each department, employee or location, must be provided the proper insight into their segment of business. In the following three examples, I will highlight how adding green as a corporate initiative impacts the roles of vice president of finance (Jim), vice president of operations (Mary) and plant manager (Bob).

Vice President of Finance

“How much is this green initiative going to cost us?”

The vice president of finance initially approaches the company’s decision to implement a green program with skepticism. Jim is focused on the costs associated with such a program and how the company will monitor compliance and closer outside scrutiny. To gain buy-in from senior leadership, the program champion, Jane, has set a specific objective to reduce energy consumption in five years by 30 percent of 2008 levels and move toward carbon neutrality within the decade. She points to the fact that a reduction in energy will directly lead to a reduced energy bill, which will offset any additional costs of her second proposal to be carbon neutral.

As the company experiments with different scenarios during the planning phase, Jim will need to immediately assess the financial implications and how several variables can alter the outcome. Additionally, as the number of green programs throughout the industry increase and more government agencies become involved, the scrutiny placed on claims will increase. Jim will want to be assured his team has access to accurate information to speed the reporting process.

Vice President of Operations

“I know going green is the right thing to do, but how much more work is this going to create for operations?”

The vice president of operations must account for several areas of the business at once and ensure all run like clockwork. Mary is now faced with a new challenge of balancing green practices, which have the capability to increase service levels and reduce costs. The implementation of a green corporate policy will impact the Mary in several ways. For example, she will require complete visibility up and down the supply chain to ensure outside vendors meet the company’s new green policy, she will require insight into the performance of the company’s physical assets to ensure they are maintained and operate as efficiently as possible, and she needs to ensure day-to-day operations are well within any forthcoming government requirements.

The addition of new responsibility adds another set of data points to collect and analyze. Previously, Mary would have to sift through data provided by several internal and external sources to identify where an issue manifested. Through tools that provide role-specific insight, however, the issue is immediately identified and a resolution quickly developed.

Plant Manager

“How is green going to affect our efficiency and delivery times?”

Bob monitors the company’s plant performance and metrics with a keen eye on safety, optimized production, production schedule and cost control. Adding a green component to this list adds complexity and a new way to approach plant operations. It becomes a balancing act between efficiency and environmental responsibility.

Traditionally, Bob depended upon information from direct reports, provided either weekly or monthly, on department/section status of plant operations. As accountability and the demand for more immediate information increases, as well as the addition of new responsibilities such as green initiatives, plant managers will need to rely on technology to make sense of data and allow them time to conduct analysis. Access to daily information on the efficiency of equipment, labor utilization, supply chain activities, inventory levels and maintenance allows Bob to maintain a strategic approach to his job. In the drive toward green, Bob is on the front line. He has access to goal progress down to the asset level, and through dashboards driven by role-specific analysis, he can now monitor the plant’s contribution toward the corporate green goal.

The economic environment is tough, and companies that continue to invest in technologies that drive efficiencies and improve performance will leapfrog over companies that wait idly. Whether it is a green initiative or just a cost reduction plan, you must have a plan, a goal and a means to measure and, more importantly, manage the success of your program.

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