EMBRACING ‘product & portfolio’ DIVERSITY 3/4
This article is the third article as part of the series ‘Embracing Diversity’. In the first article we talked about a solid foundation. In the last article we covered one of the three domains: workforce diversity. This blog will cover the second domain: product & portfolio diversity.
If your organization is focussed on selling physical products, sustainability can be increased by ensuring the dominant natural resource used is extracted from artisanal and small-scale mining (ASM). Ensuring that there is less chance that the entire mine gets depleted by using large scale mining (LSM) methodologies. A great example who is taking their natural resources serious is the sustainable smart phone company Fairphone. By staying within the environmental boundaries, the environment does not get exploited as easily by the production and extraction of the operation of their phones. This means that the environment can recover before further resources are extracted. It can also be decided to produce a variety of products made from different types of resources to diversify the portfolio and become less dependent on one resource. From a social sustainability perspective, this will also reduce pressure from local operations and local communities, this way we ensure that these communities can keep operating within the boundaries of their environment.
If an organization is dependent on a service-related product, a diverse portfolio and a variety of internal projects can increase the sustainability and business performance of the organization. Taking dependencies and risk aversion into account, an organization is safer when it is flexible in the way it is working and can adjust quickly to the rapidly changing environment and market. Take ‘investing’ for example: a successful investor will have always ensured to diversify their portfolio to maintain a sustainable and financially beneficial outcome.
What to do
If you as part of your organization would like to increase the level of ‘product & portfolio’ diversity, I recommend paying attention to the following:
- Origin of natural resources. What your products are made from and where those resources come from maintains your responsibility as an organization. Choose your suppliers wisely. Ensure to go visit the mines and factories that provide you with their resources. Knowing how they work and how they treat their people as part of the exercise.
- Educate on innovation. With this rapidly evolving market, new technologies of new production methods are being designed and innovative ways to offer services are provided. Stay up to date with the trends in your industry to make sure you are being part of the front-runners with one or multiple of your products/services.
- Local resources. Local products and services increase your flexibility to adjust your portfolio quicker and therefore move towards more diversity. From a sustainability perspective, reducing the travel distance of your products reduces the impact on the environment. From a social sustainability perspective, it is supporting local communities who empower local operations which in return supports the environment.
When increasing product and portfolio diversity, you will notice that there will be a lot of ripple effects with positive repercussions. These benefits may include:
- Reduced risks of resource availability. Not being dependent on one singular resource will increase the resiliency and flexibility of your organization.
- Lower environmental footprint. The environment can only handle as much pressure. Once we go over the ecological boundaries, the land cannot regenerate itself anymore. Diversifying your resources helps to reduce and perhaps even stop exploitation. Meaning you can keep enjoying the resources you need.
- Long-term operational system. Knowing that you have the flexibility to switch easily to new resources will ensure that you can maintain your operating system (more in the next blog). Externalities that have an influence on your resource dependency will not hit your organization as hard.
- Healthy contribution to (local) environments and communities. By diversifying your portfolio, and only extract resources within the environmental boundaries will support the health of the soil, biodiversity, and environment in general. Sourcing resources locally, will have a direct impact on the environment. Therefore, you and other people tend to protect these resources and areas more carefully when operations are within sight. At the end, we are empathetic beings. Same counts for communities.
- Broader market segments and target group. Diversifying your portfolio means that you most likely tap into different markets. By tapping into different markets, the target group is broadened too. Now the playing field gets extended in which you operate and therefore increases your resiliency.
Hope you enjoyed and got some useful guidelines on how to increase the diversity in your organization. To create that solid foundation, we have one more element, stay tuned for the last domain: operational diversity.