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Dr. Raynor teaches finance at the State University of New York at Delhi, and is periodically a visiting professor at Universidad Catholica Santo Toribio De Mogrovejo in Peru. He has worked on a number of projects in other areas of Latin America, and was also a visiting professor in China. He is especially interested in international trade and labor issues, and has previous private sector experience in the banking industry.

Sustainability is not a new term, but it has been used with increased frequency lately. This is especially so in areas where economic activity has slowed, markets have matured, and other factors have diminished growth potential. The focus often shifts to survival, and how to maintain current operating levels or market position until better times return. Properly managing organizations in turbulent environments becomes critical for long-term survival.

At the heart of sustainability is the meshing or synchronization of short and long-term corporate goals. Historically, they frequently conflict with each other, which was discussed here at BNWW five years ago in a more stable economic environment. When the economy was much more robust, many organizations did not have to prioritize long-term sustainability. If there were enough customers, markets, growth, etc., to be tapped, then maximizing immediate income and return on investment (ROI) was just too enticing. Other firms often followed the industry leader to maintain competitive position and market share.

The economy looks much different today, and many firms study various options to adjust to a stagnant environment. We routinely hear about restructuring decisions that often include mergers, facility closures, consolidations, etc. At the same time, other companies conclude they must grow and expand into new markets to survive.

While expansion might sometimes be appropriate and a way to compensate for sluggish operations, there are also dangers of doing so in a down economy. In fact, if it means jeopardizing your core business, it can be a disaster. A May 4 New York Times article titled "A Lender Gets Caught In The Currents" summarizes it well by discussing "...the perils awaiting any firm that jumps into seemingly lucrative new arenas at the expense of focusing on markets that it knows and understands best".

Without a sustainability plan, determining the optimal balance between a conservative and an aggressive response to demanding economic changes is hard. On the conservative side, it is often better for an organization to enhance their current market niche, and stay within their zone of expertise. If significant resources are diverted to areas where the firm lacks knowledge and experience, traditional "bread and butter" markets can suffer. These "safe" areas are the firm's foundation, and are needed to get through stormy times. If the firm's resources are overly committed to expansion elsewhere, the foundation may be neglected and begin to crumble.

On the other hand, staying within current markets or playing it "too safe" may not be enough. However, that is the point of having a sustainability plan. A good sustainability plan with a strategic vision will put the firm on a "glide-path" that does not put short- and long-term goals in conflict. Taking enormous risks between an aggressive response and a conservative approach is not necessary. A good strategic sustainability vision is developed in advance of economic turbulence, not in response to it.

In many ways, those suddenly finding enlightenment with sustainability now simply did not take long-term planning into account. As noted above, firms often got by without sustainability plans when economic times were good. Sometimes this was intentional: many organizations involved in the sub-prime mortgage meltdown for example, knew the day of reckoning would come sometime.

In other cases, there was just too much money to be made in the short-term. Outrageous CEO pay, stock options, golden parachutes, etc., made many decision makers rich very fast. So rich, they did not have to worry about sustainability or long-term survival of the firm. Greed and grabbing enough wealth so that one could retire before a collapse or cleanup would occur became the priority of many. In these cases, there was a lack of incentive for sustainability plans to work. Organizational culture permitted short-term excesses to occur, and did not allow internal checks-and-balances to function.

While corporate accounting and financial scandals have taken center stage for much of this decade, there is room for increased optimism. Various organizational stakeholders are becoming more vocal about sustainability. Also, if short- and long-term goals of one stakeholder group are not aligned with short- and long-term goals of a different stakeholder group, constructive conflict can develop.

A good example of constructive conflict regarding sustainability is Exxon and its corporate investors. A May 19 article in the Guardian said the following: "Exxon is facing a rebellion from its investors...The firm has refused to follow rival oil companies in committing large-scale capital investment to environmentally friendly technology...Exxon maintains that present green technologies are not financially viable. But critics on Wall Street and in the City fear that the company's reluctance to explore alternative energy will prove to be bad business judgement in the long run..."

Individuals in businesses always have had to struggle with balancing short- and long-term goals. What has changed however, is the importance of sustainability in a challenging globalized economy. It has much more significance now, because, increasingly, short- and long-term goals are harder to separate.

Articles by Dr. Raynor:
Employee Value: An Accounting Paradox
Globalization and the Offshore Outsourcing of White-Collar Jobs
Outsourcing Jobs Off-Shore: Short and Long-Term Consequences
Global Outsourcing and the Disappearing Middle Class
Globalization, the U.S. Military and the Catholic Framework for Economic Life
Globalization and Outsourcing In a Flat but Unbalanced World
Higher Education Reform: Use Institutional Research to Enhance Quality and Control Costs
Ranking Colleges and Placing a Value on Degree Worth
The Good Business
Facing foreclosure? Remember That Your Lender REALLY Doesn't Want Your House
Why a Second Stimulus Plan Should Target the Auto Industry
Abuse of Credit Reports and Scores
Sustainability and Allocation of Resources

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