Month: July 2023

You have heard of the Corporate Sustainability Reporting Directive or its acronym, CSRD. You know that it has something to do with the EU which means that you haven’t paid it much attention. It’s far away.

However, this could be a mistake. This new standard for disclosure reaches into some unlikely places for all companies who do business with the continent. In this article, we’ll look at the impact on your corporate strategy.

Recently, the European Commission reaffirmed its commitment to “Net Zero 2050.” Inspired by the Paris Agreement, their goal is to be climate-neutral by 2050 – an economy with net zero greenhouse gas emissions. Lest the world relax, an interim target was set to reduce emissions by at least 55% by 2030.

CSRD makes it plain that big companies must play their part in accomplishing these goals. As such, they are required to report their progress annually via certain templates. But what does this have to do with a large company in Jamaica?

Well, your firm may not have a European subsidiary. And it might never reach the E40m turnover or 250 employee lower limit for inclusion. However, it may have wholesale customers on the continent. If so, it will probably be required by them to report on your conduct as a member of its supply chain.

But this is already happening.

Last week, I browsed Booking.com for a holiday stay in Ocho Rios. Now, there’s a new badge for each property to earn: a “Travel Sustainable Level”. According to the website, the programme was “introduced in 2021 to provide travelers with transparent and credible information to make more mindful choices for their trips.”

In other words, the intent of CSRD is already being realized. It seeks to give stakeholders knowledge about each large company’s progress on goals such as Net Zero 2050.

This new standard is likely to be seen by some as a nuisance. But for others, particularly in the area of strategic planning, there lies an opportunity.

How CSRD Can Help Shape Your Strategy

Essentially, the new standard mandates your company to tell the world how its strategy for topics related to Environment, Social and Governance (ESG) are faring. It expects you to address this explicitly in your short, mid and long-term strategic plans.

However, if you are like most companies, you don’t have anything more than a five-year list of tactics. But you aren’t alone. As a result of upheavals since the 9/11 Terrorist Attack, firms have argued that they don’t have time for long-term thinking.

Instead, their energies have focused on basic survival…short-termism.

CSRD says that if you continue to indulge in this dangerous practice, you will be required to highlight this fact to your stakeholders in your ESG disclosures.

While this sounds like a threat, some are seeing it as an opportunity, or at least an excuse to do the right thing.

The Optimal Response

In essence, your company has two choices to meet the directive.

1) The Compliant Low Road consists of sticking to an approach of only keeping short-term business tactics. This means that you will need a separate strategic plan for all matters ESG-related.

While some firms have hired sustainability professionals to do this very task, some are calling it out as a form of greenwashing. Said differently, it’s probably just a way to be compliant without making fundamental changes.

2) The Transformational High Road means crafting mid and long-term strategic plans for your business, if they don’t currently exist. Ideally, they should reach as far as 2050 to be completely aligned with the Net Zero aspiration.

If your company already has a written long-term strategic plan, then this may just be an exercise in adding a few different dimensions. The CSRD is actually developed for companies like yours. The adjustment should be easy.

However, if it’s never had an interwoven short/long-term strategic plan, this might be the perfect moment to begin. You do have some time before this becomes a requirement.

But your free paper is being burned up. The SEC in the United States and the IFRS are expected to recommend similar reporting standards, in line with existing requirements for financial disclosure.

It’s not too late to start getting your company ready. Schedule time to prepare the right kind of interwoven short/long-term strategic plans.

As you do so, be prepared to answer the questions raised by CSRD. Even if the process you follow is sound, these may not be central concerns. But they will fit in with the thinking the EU Commission wants you to do.

When the time comes to complete the forms required for your CSRD reporting, you’ll be ready.

The original article was published in the Jamaica Gleaner.

Your business offers a product or service. Regardless of how well your offer sells, you wonder whether or not you are leaving money on the table. In other words, are you charging the best price possible?

This question is often left to opinions, chance, or comparisons with competitors. These choices unfortunately indicate the lack of a defined philosophy.

Alex Hormozi’s book, $100m Offers, provides a simple way to think about the challenge of setting prices. If you have a sense that your company should reconsider its thinking, keep reading.

Your Business Should Charge As Much As Possible

Here in Jamaica, we equate high prices with robbery. Those who list exorbitant prices are disparaged as thieves. Unfair. Rapacious. Wicked.

However, part of being a successful leader means transcending such sentiments. A company is not a charity. It must do what it can to become sustainable so that customers, employees, shareholders, suppliers and even tax authorities can benefit in the long term.

As such, Hormozi argues that companies should charge whatever they can, subject to their customers’ willingness to say “Yes”. Unfortunately, only a few organisations perform this balancing act effectively.

In this context, being “fair” is beside the point. It’s definitely a juicy argument for verandah conversation, but not a strategic consideration. What matters more is customer behaviour, not popular sentiment.

For example, many think that the new Krispy Kreme donut craze is ridiculous. However, should the naysayers’ sentiments be considered in the pricing of the product? Or should the company pay more attention to those who drive by, wishing the line were shorter?

Hormozi argues that every enduring organization charges a big multiple of its unit costs. A company spends pennies to make a donut. But it’s not unusual. Internet service. Concert tickets. Hotel rooms. Restaurants. They all offer highly marked-up products or services.

Your company should be no different, he explains.

After setting guilty thoughts aside, he recommends you focus on “value” – the only thing an actual customer cares about.

Value is Primary

The author quickly establishes a fact we all know: customers exchange their hard earned money for value. But it’s not a fixed quantity of anything. Instead, they focus on *perceived* value.

For example, the volume of metal, rubber, glass and other materials in a Kia is about the same as a Porsche. Yet, the desirability of each could not be more different.

But that’s an everyday observation. More importantly, how does your company increase the value it offers customers? Hormozi’s book shines when it introduces a new formula.

Customer’s Perceived Value = Their Dream Outcome x Likelihood of Achievement / Waiting Time x Effort*Sacrifice

Above the line are the items most companies focus on, including your competitors. At first, they prioritize the dreams and aspirations your customers are trying to fulfil. It could be a pleasure they seek, or a pain to be avoided.

Unfortunately, you may be in a sector in which all the players are promising big things. So no-one is responding to hyperbole.

The other item above the line measures the confidence of your customers in accomplishing their outcome with your offer. In other words, a teacher who is famous for gaining government scholarships for PEP will provide more perceived value than a first-timer to the classroom.

These two items in the equation are taught in Marketing 101. However, the biggest differentiators in your niche are probably lying quietly below the line. They sit outside the control of marketers.

Focus Below the Line

As you see from the equation, maximising value means lowering the items underneath the line. The first, the time delay, is the gap between the moment when the customer pays and the moment when the first benefit is experienced. When you lower this interval, value increases.

To illustrate, back in 2001, cell service via Cable and Wireless took weeks to provide. Then came Digicel with its immediate availability, and it quickly became the market leader.

If your offer must take a while to deliver the final outcome, Hormozi recommends that you set up quick wins along the way. This helps customers see and feel progress.

The other item to be decreased below the line is the effort and sacrifice the customer needs to invest. In the book, the author lists liposuction as a means to lose weight, compared with the typical remedy of diet and exercise.

The personal changes required by the latter are considerable. Why? It’s hard to transform one’s habit patterns, attitudes, scheduling, grocery shopping and more. By comparison, for those who can afford it, liposuction only requires a week or two of soreness.

Increasing value for your customers means focusing on each item separately. Do this in your next strategic planning retreat and your prices could be transformed.