Organizational Change
HP's Living Progress Embodies a Holistic Approach to 21st-Century Business

There has been much talk lately about the need to find a replacement for the term “sustainability.” Critics claim it’s too vague and takes attention away from what should be a more forward-thinking message focused on good business. Others argue that eliminating the term would cause some to miss the point because it has yet to become engrained enough in the dominant business culture. Patagonia founder Yvon Chouinard argues that “responsible” is a more accurate term since there is no such thing as a truly “sustainable” company. Other companies have embraced the term “corporate social responsibility” (CSR).

As a former English major and an MBA in Sustainable Management, debates about nomenclature excite me, especially when it involves systems thinking and business. I recently had the opportunity to talk with executives at HP about “Living Progress” — the company’s newly renamed approach to simultaneously drive the advancement of human, economic and environmental goals. It signifies a more sophisticated HP — one that views its place in society as a growth strategy, and one that is becoming more vocal once again about sustainability.

During the past few years, HP has worked with agencies and companies such as FSG to think more holistically about its business strategy and its place in society. The strategy was influenced in large part by the work of Michael Porter and Mark Kramer on “creating shared value.”

According to Gabi Zedlmayer, VP & Chief Progress Officer for HP Corporate Affairs: “We wanted to get the idea of shared values across, and emphasize that ‘Living Progress’ is not a campaign, an initiative or program. It’s an approach … a framework for how we do business and how our people and technology come together to solve society’s toughest challenges.”

Zedlmayer says that when they looked at the framework of global citizenship, it was very much rooted in the DNA of the company since being founded by William Hewlett and David Packard in 1957. The phrase “Living Progress” takes inspiration from the past, but the language is representative of a more modern view of business in the 21st century.

Prior to the reorg, the teams were split between Government and Sustainability and Social Innovation. According to Zedlmayer, the newly created team is better aligned since the initiatives HP drives through human, environmental and economic progress require collaboration across the organization and with local governments. “Usually our work is done with government and non-governmental organizations (NGOs) because that is the only way to drive change,” she says. She stressed that in order for “Living Progress” to be successful it will require everyone’s involvement, which is why it is not housed under Corporate Affairs or any single department.

Tony Prophet, SVP of Operations Printing and Personal Systems, is one of Zedlmayer’s colleagues working to drive human, environmental, and economic progress throughout HP’s supply chain. He sees “Living Progress” as something that pervades the operations of the business, and he feels that leadership at HP “puts a high premium on environmental and social issues, balancing them alongside business needs and shareholder value.”

Managing scarce resources — which take a variety of forms and sizes, such as freshwater, clean air, and labor — is part of Prophet’s responsibility to the company. “If you are a good steward with any scarce resource, you win in the long term and you probably win in the mid term,” he says.

Prophet led HP’s Go West strategy, which resulted in the company migrating part of its operations from coastal China further inland to Chongqing. Up until 2010, HP had used mainly coastal factories. This was common practice among tech companies, since manufacturing grew up in Shanghai and Hong Kong — cities ideally located for exports. The challenge was a shortage of locally based labor, which at the time was causing huge migratory labor flows, resulting in workers traveling long distances from inland China to jobs in coastal cities.

According to Prophet, by 2010 two-thirds of HP’s labor supply was not from indigenous provinces, which meant that workers were migrating seasonally and forced to work far away from their homes and families. The situation was stressful for workers who did not receive the same rights as workers from the local province, and who were not accustomed to local dialects and cuisine outside of their home provinces.

In 2010, he spent a lot of time in China speaking with disgruntled factory workers, which affirmed the decision to move operations west. HP worked with the Chinese government, which has been looking for ways to create jobs for people moving from agrarian lifestyles into urban cities for several years.

According to Zedlmayer, “The Go West strategy incorporates all three elements of human, economic and environmental. We need to build resiliency into the supply chain and realized that if we located all of our factories in one area of coastal China, it was a risk to us. It was also challenging for migratory workers who were traveling far distances to get to work, separated from families, and paying higher prices in coastal cities. It was not a way for them to thrive.”

There were additional economic incentives provided by the Chinese government, and developing factories in inland China simultaneously provided a better way of life for local workers. Prophet says that approximately 80 percent of its workers at the new facility are from Chongqing or the surrounding province. HP’s decision to invest in Chongqing has opened up doors for other companies — including Acer — to follow its lead by moving manufacturing inland, increasing economic growth for the region. That sums up the economic and human goals. What about the environmental goals?

Moving manufacturing to inland China brought with it some logistical challenges to overcome. HP worked with the Chinese government to develop a new rail route to ship products from Chongqing to markets in Europe, which resulted in a reduction in carbon emissions and lower costs. When compared to air transport, shipping by rail costs the company one-third the price. It also saves time: Shipping products by rail takes approximately 3 weeks — less time than the 35 days required to transport products by sea from Shanghai.

“It’s a great example of how you can drive better health, better economic and better environmental outcomes all at once,” Zedlmayer says.

Her advice for companies who want to take on a more holistic approach to the way they do business: “It needs to be a part of the company strategy and culture… not something written on a sheet of paper but brought to life everyday and with every action of the company.”

Good advice, indeed.