You’re sitting across from the decision-maker for a large potential sustainability project. It’s taken months, possibly years, to get here. If your numbers look good, the decision is much more likely to be a positive one for you, for them and for the world.
He’s smart enough to know there are good things about sustainability. Employees clearly like it and feel better working for a sustainable company. It might help with marketing to be seen as good guys. But as to actual, tangible, dollars-and-sense ROI, he clearly perceives sustainability’s value as, effectively, zero. He’s going to make a decision and we have a pretty good idea which way he’s going to lean.
This brings us to Wall # 1: How do you quantify for him these seemingly unquantifiable benefits?
Let’s say for a minute you could overcome Wall #1, that you could quantify these benefits. That would be a big help, but would it be enough to get him to act?
Probably not, if he’s still unaware of the resulting submerged value — the secondary and tertiary ROI created by sustainability. Submerged value can be as high as 80 percent or more of the total business value of the project, which means missing it dramatically undervalues that project.
This leads to Wall #2: How do you raise submerged value to the surface so he can see it?
Now, let’s say you could overcome Wall #2, making submerged value visible and demonstrating that the financial benefits of the project are many times greater than believed. That would be amazing. But would that be enough?
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Maybe not! Not if he doesn’t believe you — not if he says, “No, we’re different. Those numbers you have there, those white papers and industry studies, they don’t apply to us.”
This takes us to Wall #3: Finding a way to get all that now-quantified ROI into a form he can accept as really applying to him and his business. Would* that* be enough?
Yes, that should do it — or at least give you the best chance you’re going to have. It’s a huge amount of work, but adding believable, quantified ROI to all the other benefits of sustainability (personal legacy, happy employees, potential differentiation, etc) gives us sustainability practitioners as good a shot as we’re going to get.
The goal of the whole exercise is to help the client make a great decision. Now, seeing his own numbers generating a strong ROI, you’re already way ahead of where you started. If it comes down to discussing which amount of value for the project is ‘right,’ well — who cares what the exact number is if the decision is a good one?
For example, maybe you came in thinking the ROI would be about half a million, but the client says, “No, that benchmark number is not right for us. The right figure is not 5.5 percent, but only 3 percent.” What do you do? For starters, you don’t argue.
Instead, you say, “Awesome, let’s put it in our calculations and see what happens. Hey, you’re right — it’s only an ROI of 117 percent, instead of 130 percent. Good work!” After all, before the intangible value was quantified and the submerged value surfaced, the client wasn’t including either in his calculations. As John Sterman, one of my MIT professors, was fond of saying, "If the client is not putting a number on something, he’s giving it the only value it can’t possibly have: Zero." And while 117 percent isn’t 130 percent — last time we checked, it was a lot more than zero.
We have now developed a tool designed to manage all three of the walls above. It is incredibly fast and can perform complex valuations in a few minutes. Critically, it's designed do so in a way that puts you on the same metaphorical side of the table as your client. You have the tool, they know their numbers better than you do, and the two of you explore together whether this project would be good for their business.
If not, no harm done. You haven’t had to sweat for days or weeks compiling numbers they will probably reject, anyway. If, however, the numbers look good, the decision is much more likely to be a positive one for you. And for them. And for the world.