Taticchi, P. y Copper, D. (2019).

Mott MacDonald : making sustainability strategy

business strategy (part A) (12 p.) London : Imperial College Business School . (072496)

Mott MacDonald
Making Sustainability Strategy
Business Strategy (Part A)
Strategy

January 2019
Abstract

In 2013, Mott MacDonald was a leading global engineering consulting firm for the infrastructure
industry, headquartered in the UK. Davide Stronati was their new Global Sustainability Leader.
As he entered head office in London on 20 July, Davide anticipated the hours ahead with
excitement. The Group Board would meet shortly to discuss the path they would be taking with
their sustainability strategy. Davide had done extensive groundwork and prepared three
possible scenarios. Would the Board embrace his radical vision of sustainability as core to
business strategy, or would they choose to keep things as they were?

This case is for educational purposes and is not intended to illustrate either effective or
ineffective management of an organisational situation. The situations and circumstances
described may have been dramatized or modified for instructional purposes and may not
accurately reflect actual events.

Copyright © 2019 The Authors. All rights reserved. No part of this case study may be reproduced,
stored in a retrieval system, or transmitted in any form by any means, electronic, mechanical,
photocopying, recording or otherwise without written permission of Imperial College Business
School.

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Introduction
As he entered the lift of Mott MacDonald’s global head office in London on 20 July 2013, Davide
Stronati anticipated the hours ahead with excitement.

The Group Board would meet shortly to discuss the path they would be taking with their sustainability
strategy. Davide had done extensive groundwork and proposed three different scenarios. Whatever
the outcome, it would be his hand on the tiller going forward.

Mott MacDonald was a leading global engineering consulting firm for the infrastructure industry,
headquartered in the UK. Davide Stronati was their new Global Sustainability Leader.

He’d been working around the clock for eight months to sketch out Mott MacDonald’s sustainability
future, since coming back from secondment with Anglian Water, one of Mott MacDonald’s clients.

He remembered very clearly his first meeting with Chairman Keith Howells on 20 November 2012. His
secondment with Anglian Water had been a resounding success. He was instrumental in making the
water provider a sustainability leader in the industry. Keith challenged him to turn Mott MacDonald into
the Anglian Water of engineering consulting.

Redesigning Mott MacDonald’s sustainability strategy was a challenge of an altogether different

magnitude for Davide. He was facing his first real test in his new role on that unusually warm day.

Would the Board embrace his radical vision of sustainability as core to business
strategy, or would they choose a seemingly safer path?

BACKGROUND
A Visionary Sustainability Leader
Davide Stronati had been working in sustainability for nearly 10 years when he joined Mott MacDonald
in 2006. He had trained as an environmental engineer, and had previously worked for the Italian
Ministry of Environment, where he had led negotiations between the Italian Government, the Italian
regions, and the European Commission. His vision for sustainability and engineering had taken shape
after an MPhil in Sustainability at the University of Cambridge - MIT Institute. Sustainability for Davide
was about driving change at the core of organisations in order to create lasting value. To do this
required leadership and a willingness to challenge people; to hold a mirror to decision makers.

In 2009, Davide was seconded to one of Mott MacDonald’s clients, Anglian Water, as Carbon
Manager. Leveraging his outsider position within the company, Davide had the opportunity to
demonstrate and test his vision for sustainability, with the goal of driving change in the wider
infrastructure industry.

Studying and working in sustainability, Davide had observed that organisations were good at creating
‘sustainability visions’, less so at ensuring these visions were owned and acted upon.

“Often, there is a business strategy and a sustainability strategy, which are separate
and proceed on separate tracks. The sustainability strategy therefore systematically
underperforms, and remains largely a matter of grand pledges, glossy reports, and no
fundamental actions.”
Davide Stronati, Global Sustainability Leader, Mott MacDonald

As Davide saw it, in order to make carbon reduction pledges meaningful, Anglian Water had to review
its business strategy substantially. It had to think of carbon less as an issue to report to various
stakeholders, and more as a variable in the business model that could deliver real value to the

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organisation. By reducing carbon in both operations (OPEX1) and the construction of infrastructure
assets (CAPEX2), Anglian Water could potentially save millions of pounds. This called for setting
ambitious sustainability targets and control systems; not with the goal of producing a ‘sexy’
sustainability report at the end of the year, but to radically transform the business.

To deliver this, Davide worked with the Board to ‘shock’ the system by setting a carbon reduction
target of 50% for projects capital carbon (carbon related to the construction of assets) and 20% for
projects operational carbon (carbon related to the operation of assets).

He developed a plan that encompassed tools, people, and processes. Anglian Water set a carbon
budget for the next five years and for the next 700 projects, and introduced a new bespoke carbon
accounting tool for Anglian Water assets. The commercial agreement was amended to include
promises on carbon, as well as time, budget, and quality.

For this to work, the vision had to be owned and practiced by everyone in Anglian Water. He set out to
win over functional managers, together with the Head of Asset Management and directors in key
projects.

“People always represent the greatest barriers, but the most impactful enablers too.
Functional managers rarely take ownership and responsibility for sustainability goals,
and often do not engage with or prioritise corporate sustainability strategies, not
appreciating their potential impact. They often lack the skills and the ambition to
embrace change and innovation.”
Davide Stronati, Global Sustainability Leader, Mott MacDonald

Anglian Water’s shocking carbon reduction plan met with initial resistance, but also motivated some of
the engineers to be more innovative and ambitious. As an outsider, Davide was able to present a clear
vision, empathise with other innovation-driving outsiders, and galvanise internal stakeholders.

Engineers at Anglian Water ultimately embraced the direct relationship between cutting carbon and
cutting costs. By 2015, Anglian Water had saved in excess of £100 million GBP across its main capital
delivery programme, won multiple awards, and was heralded by the British Government as an
example of transformative and inspiring practice for the whole infrastructure industry (see Exhibit 1).

“Anglian Water is an organisation at the forefront of efforts to adapt to climate change, is

actively adapting, and is an exemplar organisation for others that need to adapt.”
Lord Henley, ex-UK Department for Environment, Food and Rural Affairs

Sustainability in the Infrastructure Industry

By the beginning of the second decade of the 21st century, approaches to sustainability had changed
substantially, across businesses and industries. Some companies still saw sustainability as a cost of
doing business, others as a compliance requirement and risk management tool. For a few pioneering
companies, however, sustainability was a key driver of competitive advantage.3

1
In accounting standards, operational expenditure (OPEX) refers to expenditure incurred
through normal business operations. See: Michal J. Jones, Accounting, 3rd Edition, Wiley and Sons,
London, 2013
2
In accounting standards, capital expenditure (CAPEX) refers to funds used to acquire, maintain and
physical assets. See: Michael J. Jones, Accounting, 3rd Edition, Wiley and Sons, London, 2013
3
Steve Kennedy, Gail Whiteman, Jan van den Ende, “Radical Innovation for Sustainability: The Power
of Strategy and Open Innovation”, in Long Range Planning, Volume 50, Issue 6, 2017, Pages 712-
725, ISSN 0024-6301

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Approaches to sustainability ranged from being project-oriented, looking to express good intentions; to
quality-oriented, looking for operational efficiencies; to strategically-oriented, looking for critical business
opportunities involving complex networks of strategic relationships, activities, and significant change.4

In 2012, the infrastructure industry was ripe for transformation in terms of sustainability, with pressure
coming from various stakeholders. In utilities, energy, buildings, water, and transport, the synergies
between sustainability outcomes and commercial outcomes (e.g. value of properties and costs) were
clear, and had the potential to deliver substantial value. Asset managers, however, needed help to
connect the dots, to spell out the vision of sustainability that was most relevant and appropriate to their
industry, and to embed it in their business strategy.

Consultants, as ‘outsiders’, were well placed to facilitate this transformation.

The sustainability consulting industry was projected to grow steadily to reach a predicted value of $1
billion USD by 2019.5 It encompassed a wide range of sectors and services, and catered for companies
at different points in their sustainability journeys. Services offered ranged from technical advice,
materiality analysis, stakeholder engagement, investor relations, and sustainability reporting. Rarer was
the offering of sustainability strategy and change management services (see Exhibit 2).

In the infrastructure consulting industry, in which Mott MacDonald operated, a number of firms offered
specific sustainability services, such as waste and energy management. Few, however, had adopted
sustainability as a core variable, embedded in their value proposition to clients across all their services.

Mott MacDonald: Business Strategy

Mott MacDonald positioned itself as a global engineering management and international development
organisation. It was employee-owned and had a global workforce of around 16,000 people.
Approximately 20% of Mott MacDonald employees were shareholders (see Exhibit 3).

Following industry trends, in 2015, Mott MacDonald would conduct a review of its global business
strategy.

“Mott MacDonald is currently going through a period of change, which was prompted by
the aggregation of our competitors into larger and larger groups. We were asking
ourselves: is big better? I think the conclusion we’ve come to is that being bigger isn’t
better, but being better is better.”
Jol Bates, Head of Transportation, Mott MacDonald

The objective of the new strategy was to become more focused and efficient in areas of competitive
advantage. The success of this strategy was predicated on understanding the present and future needs
of clients (client focus), and offering an integrated service, which leveraged the skills, experience, and
problem-solving abilities of different sectors and geographies across the firm (connected thinking).

Managing Director Keith Howells was appointed Chairman a few years prior to this, in 2011, with a
mandate to lead the company into and through this period of change (see Exhibit 4 for his biography).

“At the end of the day, just about everything we do is about improving people’s lives: the
economic dimension, the social dimension. Whether we are improving someone’s
commute to work or improving working environments, or building schools or hospitals, or
sanitation and power – it all serves the end purpose”.
Keith Howells, Managing Director, Mott MacDonald

THE BIG DECISION

4
D. Kiron, G. Unruh, N. Kruschwitz, M. Reeves, H. Rubel, A. Meyer Zum Felde, “Corporate
sustainability at a crossroads, progress toward our common future in uncertain times”, in collaboration
with the Boston Consulting Group, MIT Sloan Management Review, 2017
5
Verdantix, Sustainability Strategy & Sustainability Research - Sustainability Reporting, 2015

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The Groundwork
Following his conversation with the Chairman on 20 November 2012, Davide knew he had a complex
task ahead of him. He had the success of Anglian Water under his belt, but tackling sustainability at
Mott MacDonald would be on a different scale. Anglian Water served 20% of England and Wales; Mott
MacDonald was a global business with over 15,000 projects and 16,000 employees.

Until then, Mott MacDonald, as others in the industry, had engaged with sustainability in a traditional
way by offering environmental services and environmental expertise at the level of project design. It was
not a core part of business strategy.

To persuade the Group Board to adopt his vision of sustainability strategy as being at the centre of
business strategy, Davide needed a thorough understanding of Mott MacDonald’s market and business
development opportunities. Mott MacDonald sold ideas, ingenuity, and solutions. Understanding the
problems, aspirations, and needs of clients was essential. Client focus became the key to Davide’s value
creation story.

To ensure buy-in, ownership, and leadership across countries, sectors, and people, he also needed to
understand the challenges, wishes, and aspirations of his colleagues. Only by developing a strategy
that mirrored what leaders and colleagues wanted, could Davide ensure sustainability strategy would
resonate at every level of the organisation.

For a period of eight months, Davide set out to canvass the Chair, the Managing Director, and the
Director of Business Development. He spent time listening to the views of regional heads and leaders
across different sectors. He surveyed clients and their sustainability challenges, needs, aspirations, and
successes. He understood that helping clients to connect the dots between sustainability gains and
value would enable Mott MacDonald to impact the whole infrastructure industry. By the summer of 2013,
Davide was ready to hold a crystal ball to the Mott MacDonald Group Board.

A Tale of Three Options

On 20 July 2013, Davide entered Mott MacDonald’s boardroom with a slim deck of slides describing
three possible scenarios.

Scenario 1 – One of the Pack

This scenario was the status quo option. Sustainability would remain as it was in the organisation. It
would be one of many services provided (as a separate division of service), fundamentally detached
from the company’s core offering and business strategy. Sustainability would strictly pertain to the
environment, and encompass a suite of separate environmental services aligned with demand trends
in the industry.

Scenario 2 – Industry Leader

Scenario 2 was more ambitious. The vision in this case entailed embedding sustainability in all of Mott
MacDonald’s work and divisions over a five-year period, moving beyond the concept of sustainability as
solely environmental in focus. The company would become a leading global partner in advancing
sustained economic, social, and environmental wellbeing. This vision called for all of Mott MacDonald’s
16,000 staff members to take ownership of sustainability goals and to embrace innovation and
organisational change. It also entailed adopting a more complex and ambiguous definition of
sustainability, tailored to clients’ individual needs and business strategies.

Scenario 3 – Sustainability Leader

Scenario 3 would take Mott MacDonald even further: a recognised leading partner beyond its own
sector, focused on achieving sustainable development, and being recognised first and foremost for its
sustainability outcomes. To Davide, this meant putting Mott MacDonald on a par with recognised leaders
such as Unilever or Patagonia. In this scenario, the Chairman would advocate and operate in
international forums such as the United Nations, influencing the global public agenda, becoming the
‘Paul Polman of infrastructure’.

The Board discussed the various options extensively, with concerns (naturally) being raised around the
more ambitious sustainability strategies. Parties emerged with different views.

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Their arguments are presented below.6

Conservatives in favour of Scenario 1:

“Davide, you achieved impressive results at Anglian Water, but that was a less complex,
single-service organisation, where the gains from a ‘strong’ sustainability approach can
be more easily quantified. This is a more complex organisation.”
Board member, Mott MacDonald

“Delivering a suite of sustainability services, separate from the rest of the business, gives
us a clearer understanding of the revenue contribution of sustainability to Mott
MacDonald. An integrated approach would make quantifying the bottom line benefits of
sustainability more challenging.”
Board member, Mott MacDonald

“Our industry is a conservative one, how would this new focus be received externally by
traditional constituencies?”
Board member, Mott MacDonald

Reformists in favour of Scenario 2:

“I agree we should be an industry leader, but Scenario 3 is uncharted territory. How much
is it going to cost, and what is our return on investment in this scenario?”
Board Member, Mott MacDonald

“I think we can achieve Scenario 2, but I am not sure we can be sustainability leaders
outside our industry. At the end of the day we are a B2B company, not B2C like
trailblazers in this area. This is an important difference we can’t underestimate.”
Board Member, Mott MacDonald

“Scenario 2 is a great place to start. There is so much we can do in infrastructure, starting

by expanding what sustainability means. Moving beyond a narrow definition of
sustainability as ‘environmental services’ will enable Mott MacDonald to tailor its
sustainability offering to clients’ needs, developing stronger, more value-adding
relationships with clients.”
Board Member, Mott MacDonald

Changemakers in favour of Scenario 3:

“We should be aggressive on this; this would contribute to business development and
upskill all employees to better respond to the need of clients.”
Board Member, Mott MacDonald

“It would engender company loyalty and boost retention, especially among younger
employees, who are increasingly motivated by a sense of purpose and worth in their daily
achievements.”
Board Member, Mott MacDonald

“Scenario 3 would allow us to tap into a wider range of positive social, environmental, and
economic outcomes, such as employment, social cohesion, and community
development. An ambitious sustainability strategy would encourage innovation and
ingenuity, and foster entrepreneurship and solution sharing.”
Board Member, Mott MacDonald

The Group Board continued to examine the pros and cons of the different scenarios,
taking into account business opportunities and risks, whether Anglian Water’s success

6
The quotes are representative of arguments in favour of different scenarios, but are not verbatim
quotations of Mott MacDonald Board members. The quotes have been introduced to support learning
and have been dramatized for instructional purposes. They do not accurately reflect actual events.

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was relevant, and the challenges associated with implementation. Finally, they were
poised to make a decision…

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EXHIBITS
Exhibit 1 – List of Awards Received by Anglian Water

2013, Business in the Community Platinum Big Tick Award

2013, National Business Awards, Future Champion

2013, European Smart Metering Awards, Innovation of the Year – Winner, in collaboration with Green
Energy Options

2013, Greenbuild Awards, Behavioural change category – Winner in collaboration with Flagship Housing
Group

2012, Environment Agency and Waterwise UK Water Efficiency Award, Potting Shed – Winner

2012, Environment Agency and Waterwise UK Water Efficiency Award, Tap Into Savings – Runner up

(Source: Anglian Water, Our Plan 2015-20, available at https://www.anglianwater.co.uk/about-us/our-

plan-2015-to-2020.aspx. Last accessed 18 November 2018)

Exhibit 2 – Types of Sustainability Consulting

(Source: Matt Loose, “The Growing Consulting Industry Associated with Sustainability”, presentation at
Imperial College London, May 2016)

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Exhibit 3 – Mott MacDonald

A) MOTT MACDONALD KEY FACTS (2013)

Mott MacDonald is a global engineering management and international development organisation. It is

employee-owned, with a workforce of 16,000 people worldwide, 20% of whom are shareholders.
Operations are split into five regions: EUNA (Europe, North Africa, and Russia), NASA (the Americas),
MESA (the Middle East and South Asia: India, Pakistan and Bangladesh), APNA (Australia and Asia),
and GDNA (Africa and International Development). It offers transport, energy, built environment,
international development, water, and advisory services. It annually wins and manages 15,000 projects
in 150 countries. Its turnover is around $2 billion USD per year: 50% from EUNA, 20% from NASA, 9%
from MESA, 10% from APNA, and 11% from GDNA. In terms of structure, Mott MacDonald has an
Executive Board, regional leadership, and 19 units.

B) MOTT MACDONALD GROUP BALANCE SHEET AS OF 31 DECEMBER 2013

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C) MOTT MACDONALD GROUP PROFIT AND LOSS AS OF 31 DECEMBER 2013

(Source: Mott MacDonald Report and Financial Statements, 31 December 2013,

https://www.mottmac.com/article/3430/report-and-accounts. Last accessed 18 November 2018)

Exhibit 4 – Keith Howells Biography

Keith Howells became Group Chairman on 1 January 2011, after 40 years with the Mott MacDonald
Group.

Keith has had a long and varied career since he joined Sir M MacDonald & Partners (one of the founder
members of the Mott MacDonald Group). He initially built experience in the water sector, leading major
projects in over 20 countries, including Nigeria, Iraq, Pakistan, Nepal, Hong Kong, China, and India, as
well as the UK. Keith ran Mott MacDonald’s water and environment business from 1997 to 2002, before
becoming Group Managing Director in 2004, where he directed the firm’s expansion into North America,
Africa, Australasia, and South America.

In addition to his role at Mott MacDonald, Keith was elected Chairman of the UK’s Association for
Consultancy and Engineering for its centenary year in 2013, is a member of the Confederation of British
Industry’s Construction Council, and sits on the advisory board of the Cranfield School of Management.
He has also served on the UK Government’s National Infrastructure Plan Strategic Engagement Forum
and in the Construction Industrial Strategy Advisory Council.

(Source: Mott MacDonald website: https://www.mottmac.com/careers/keith-howells. Last accessed 18

November 2018)

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Authors
Contact details
Dr Paolo Taticchi, OMRI
Imperial College Business School, South
Kensington Campus, London SW7 2AZ
E: p.taticchi@imperial.ac.uk
Diana Copper
E: dianacopper@gmail.com
Imperial College Business School
Mott MacDonald
Biography
Paolo performs scientific research in performance measurement
and management, business networks, and corporate sustainability.
These research activities have been documented in many books,
chapters, journals, and conference papers. He is the editor and co-
author of the books Business Performance Measurement and
Management: New Contexts, Themes and Challenges and
Corporate Sustainability, published by Springer. Paolo teaches
management courses at both undergraduate and graduate level,
and is a regular speaker on international MBA and EMBA programs
in Europe, Africa, Asia, and the Americas.
Diana completed an Executive MBA at Imperial College Business
School in 2018. She has 15 years’ experience working in sustainable
development for international organisations, national governments,
and civil society in Europe, Africa, Asia, the Caribbean, and the
Pacific. Diana is currently Head of Portfolio Management at the
Commonwealth Secretariat, where she leads on organisational
strategy, learning, and change. She holds a Masters in Gender and
Development from the London School of Economics and a Masters
in International Relations and European Policy from LUISS, Rome
and Sciences-Po, Paris.
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