What I Learned About Sustainability At REI, Part 5:
Systems Over Silos

This is the fifth of five posts in the series about what I learned in my time leading sustainable business strategy at REI (read part one). It was a privilege to be part of a significant transformation at the co-op and I hope sharing these posts will help others accelerate their efforts, or at least avoid the same errors.

One of my big lessons was that collaboration is a key personal skill and organizational competency. First, it helps us gain a broad view of the company and the environment in which it operates; secondly, it helps implement lasting changes that will improve the economic, environmental and social performance of the organization. In short — it helps prevent silos from getting in the way.

Traditionally, to be successful at business, we’ve been trained to break down complex problems into pieces that we can optimize. For example, organizations are segmented into functions such as Marketing, Operations and so on. We find experts in these areas and charge them with improving efficiency, reducing costs and driving performance by doing their part well. The term “silo” has been coined to describe the thinking that forces people to view a very narrow perspective of their role, their function or their company. There is constant pressure to optimize one’s own area, sometimes even if it turns out to be to the detriment of others. Amory Lovins has said, “To optimize a part of the system is to pessimize the whole system.”

From a sustainability point of view, most of the time negative environmental and social consequences are so far out of our silo, that we don’t even know they exist. Collaboration becomes critical first to gather the perspective of others in order to see a fuller picture and then to be able to work together on better solutions.

The idea of systems thinking is not just a euphemism for seeing the big picture. It is a sophisticated school of thought and literature that is very helpful. Founding thought leaders include Checkland and Bethany and current leading practitioners include Peter Senge. For an excellent practical guide to use systems thinking tools in a business setting I recommend Bob Doppelt’s Leading Change Toward Sustainability.

In my experience there are three kinds of collaboration needed for success in sustainable business:

Internal collaboration — Breaking down internal silos can be very hard but very rewarding. At REI our waste metrics showed that implementing commercial food waste composting could reduce waste to landfill at HQ by many tons and cut costs because composting was cheaper than trash hauling. However, we had to overcome the barrier of sorting which was needed to eliminate contamination with plastics. Collaboration lead to the idea of switching all the plastic items (forks, cups, etc) to slightly more expensive compostable versions. But then the barrier was that the purchasing department had to increase “their” costs in order for the Facilities dept. to save. It took multiparty collaboration and some innovative budget rule breaking to make the change happen.

External collaboration — Companies are generally pretty good at working with outside suppliers but sustainability requires more. For example working though cost barriers and holding the tension to inspire the innovation needed to create new products and services. The flip side is the challenge vendors face when they bring great answers to questions that the company hasn’t asked yet.

Hyper-collaboration — Crafting mutually beneficial solutions with partners where there is no obvious buyer-seller relationship (competitors, NGOs, government, academia). This is the highest mark of a company working in new “system” ways. They are actively thinking of themselves as part an ecosystem and creating new value.

A good example at REI was working with a non-profit called Salmon Safe, as well as people from academia and even neighboring companies to develop an environmental management system for our headquarters campus. Far beyond compliance with local water and waste management regulations, Salmon Safe helped REI implement a system that avoided environmental risks, eliminated a number of challenges, reduced the long-term cost of site management and compliance risks and receive positive PR and community support for the work. The result was a system that works for our business and the salmon in the river that runs past the property. This level of hyper-collaboration would have never been possible without systems thinking.

The personal and organizational skills to collaborate across silos and create holistic, systems solutions are probably the most important skills the sustainable business change agent can help an organization develop. It leads to amazing results where companies create value by helping to solve some of society's biggest challenges.

This post first appeared on Kevin Hagen's blog on June 12, 2013.