Question: What are the principles of sustainable business?

Diversity: The firm needs a diverse set of resources, people and investments to be resilient.
While diverse investments are seen to draw on resources and absorb managerial attention, a
single line of business, single sources of revenues, or people with similar mindsets can expose
the firm to greater risks. Firms can no longer simply ‘stick to the knitting.
Modularity: Matrixed organizations are often seen as facilitating knowledge flows. However,
such organizations are not only resource intensive, they expose the whole organization to
shocks as they reverberate through the organization. Organizations need to be less
interdependent, and focus on modularity (keeping functions separate), so they can be insulated
from shocks.
Openness: Resilient firms must know what’s going on outside their boundaries. These firms can
sense issues on the horizon. They are constantly monitoring the external environment, and
drawing scenarios of possible futures. They expect not only to react to those potential futures,
but also help to shape them. The link between the organization and the external business and
natural environment is vital, permeable, and malleable.
Slack resources: In an era of just-in-time production, slack or spare resources are often seen as
costly and wasteful. However, innovation and adaptation requires both financial and creative
investments, and the space to change direction. Firms that can ride storms must allow for a
little more time to accommodate new ideas, scenarios, and shifts in thinking. Slack resources,
both assets and capabilities, are always considered as very important to shape a sustainable
business model.
Matching cycles: Firms often think about optimizing performance and getting more from less.
But, this thinking puts firms on a treadmill, doing the same thing faster every day—and, it has
them bumping up against resource constraints. Resilient businesses think, not about constant
growth, but rather about cyclical processes: cycles of growth and contraction, cycles of
production, and cycles of consumer purchase patterns. Understanding the rhythms of business
and the environment will allow the firm to synchronize with them meaningfully, and not
overreact to what is likely just a cycle.