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Drafting the strategy for a sustainable business: the theory of change with EADA Business School Barcelona (webinar)

Friday - May 3, 2024

This is a transcript from the Webinar that took place on May 2nd, you can view it here:

Welcome, everybody, to this webinar. I hope that you join in to hear more about EADA’s program about sustainability, drafting the strategy of a sustainable business and the theory of change. So, what that is all about, we’re going to hear in the next 45 minutes or so, as we have a great panel of speakers lined up for you.

Without further ado, let’s go over to the presenters. And we’ll start with the introduction of the admissions team, Mar and Zanetta. Welcome!

Hello, thank you, Luuk. Hello, everyone. My name is Zanetta. I’m the admission advisor for our master full-time in Sustainable Business and Innovation. And my colleague, my name is Mar. I’m admissions manager for the online programs of the Alavisens School. And we are happy to be here and answering your questions and giving you also information, you know, that regarding admission process, regarding the program. So, yeah, we’re here to, let’s say answer all your questions.

Great, thank you. And also, we have the program director with us, Federica.

Hello, everybody, very good to see you. Well, not to see you, but hopefully to interact with you.

Great, thank you for being there and I’ll put on the slides and we go ahead. Thank you.

Thank you, Luuk. So we have approximately 25 minutes to start talking about the theory of change and ideally link it to a lot of questions regarding sustainability. I already want to say that this is an enormous topic so I am pretty sure that you will get to the end of this presentation with a little bit of eagerness to know more. It won’t be complete but I’m very happy to respond to your questions and we can exchange the email and we can keep the conversation going. It’s a bit of a weird question, but it’s the first question that I remember I was made when I started studying business in the PhD a million years ago. And the more I thought about it, the more I realized how compelling it is. And I would like to ask you if you can use the chat to give me your answers.

And the question is, why do you think firms exist in the first place? What are they for? Why do we have them? Why do we need them?

I don’t know if you can feel brave enough und… I’m feeling good. Shout! To create jobs? Awesome! It’s a nice air. I see someone else who is willing to share. There is no, I mean there are some right answers and some completely wrong answers, but it is a question that has been explored for decades in business and so answers could be more or less technical. Economy, I would love to have a verb attached to that. Foster the economy, destroy the economy, or push the economy. Provide solutions to problems. That’s my dream, thank you.

Exactly, those are some great insights. The question of why firms exist is indeed fundamental to understanding the purpose and function of businesses in society. Now, let’s delve deeper into the concept of sustainability and how it relates to the theory of change.

Sustainability, in its essence, is about meeting the needs of the present without compromising the ability of future generations to meet their own needs. It encompasses environmental, social, and economic dimensions, often referred to as the triple bottom line. In the context of businesses, sustainability involves integrating environmental and social considerations into decision-making processes to create long-term value for all stakeholders.

The theory of change, on the other hand, is a conceptual framework used to understand how and why social change occurs. It involves identifying the desired outcomes, mapping out the pathways to achieve those outcomes, and analyzing the factors that influence the process of change.

When we apply the theory of change to sustainability, we’re essentially asking questions like: What are the underlying causes of environmental degradation and social inequality? How can businesses play a role in addressing these challenges? What strategies and interventions are needed to drive positive change?

There are various models and approaches to implementing sustainability initiatives within businesses, such as corporate social responsibility (CSR), sustainable supply chain management, circular economy practices, and stakeholder engagement. Each of these approaches contributes to the overarching goal of advancing sustainability and creating a more equitable and resilient society.

In conclusion, the theory of change provides a framework for understanding how businesses can contribute to sustainability by identifying the root causes of social and environmental issues and implementing strategic interventions to drive positive outcomes. By integrating sustainability principles into their operations and decision-making processes, businesses can not only mitigate risks and enhance their reputation but also contribute to the well-being of society and the planet.

Indeed, the exploration of various tools for strategy development, such as the theory of change, opens up new avenues for businesses to align their objectives with societal and environmental needs. The theory of change encourages a shift in perspective from solely focusing on competitive advantage and profit maximization to identifying how companies can contribute to addressing pressing social and environmental challenges.

Instead of starting with questions like “How can we outperform our competitors?” or “How can we increase our market share?”, the theory of change prompts companies to ask, “What problems can we solve with our resources and capabilities?” This shift in mindset encourages businesses to take a proactive approach to social and environmental responsibility by identifying specific issues they are uniquely positioned to address.

For instance, a company in the education sector might recognize its potential to contribute to reducing educational inequalities by providing free or more accessible educational resources. By aligning its business objectives with societal needs, such a company can create value not only for itself but also for the communities it serves.

Moreover, the theory of change emphasizes the interconnectedness of societal issues and the need for systemic solutions. While individual companies may not be able to single-handedly solve complex problems like climate change or economic inequality, they can play a role in driving positive change within their spheres of influence.

By adopting a theory of change approach, businesses can become catalysts for broader social and environmental progress, contributing to the achievement of sustainable development goals. This shift towards a more holistic and purpose-driven approach to strategy development is essential for businesses to thrive in an increasingly interconnected and interdependent world.

Embracing the theory of change requires businesses to assess their impact beyond financial metrics and consider their role as agents of positive change in society. This approach fosters a deeper understanding of the interconnectedness between business activities and societal well-being, leading to more responsible and sustainable practices.

Furthermore, the theory of change encourages collaboration and partnerships among businesses, governments, non-profit organizations, and other stakeholders to address systemic issues collectively. By leveraging their resources and expertise, companies can amplify their impact and drive meaningful change on a larger scale.

Ultimately, the theory of change offers a valuable framework for businesses to align their strategies with broader social and environmental objectives, leading to more inclusive, resilient, and sustainable outcomes for both business and society. As businesses continue to navigate increasingly complex challenges, the theory of change provides a roadmap for purpose-driven innovation and growth that benefits all stakeholders.

Things are becoming more expensive, they are becoming more scarce, people have difficulty accessing them, And this creates further inequalities because not everybody can access these resources. And then the bottom line is that even if we go for a world where everything is sustainable and we use renewable resources, we cannot think of infinite growth as a path to go on because our finite planet cannot provide the resources for it.

That is why it’s so important to go back to the questions, why do firms exist? And should they really exist in the way they exist now? I don’t think so and I think that Jaula agree with me, given her comments. Which means I will not spend too much time on this but It is an important model that I would like you to think about when you start studying sustainability.

That is, firms should, and managers within firms, should understand how to develop their business within the planetary boundaries. I am giving you the link to this picture that was created by Kay Raworth. It is about doughnut economics, a beautiful new theory that is reimagining what economics should look like in a world that considers that we live in a planet made of finite resources and so considers the eight boundaries that shape our planet.

And she suggests that all businesses should not operate below the social foundation that is Each company should grant some level of well-being for the people who work in it, but also in terms of the services that are provided to society, to citizens and customers. But this should not be made at the expense of the people who work in it.

of our planet and the resources be them the climate boundaries the soil boundaries we cannot exploit the soil so much that it stops being fertile we cannot fish so much that there are no fish in the sea and and this ultimately will affect life on earth so we have to reconnect business to the planet and rethink about economics and business within those boundaries.

Which is not something new. The bad news is that so far it was not the mainstream, but the good news is that it is becoming, and it is becoming dominantly one of the views that are now pushed by regulators and by a lot of companies. So. To think about businesses in a different way, we also need new tools.

I don’t know if some of you are familiar with the tools, if they have ever studied strategy or business, but I would like to ask you, The people in the chat that I see are increasing. Have you ever studied strategy? Is there one thing about how business is made that you think is not very coherent? Maybe going against the planetary boundaries?

I see you. Oh, I see my friends are typing. Anything? Yeah, so you started business? Uh-huh. And there. The best in strategy? I’ve been teaching strategy for many years and I also realized that I have to make a lot of changes in the tools that I suggest to my students to use when they want to design a good strategy.

How do I help people understand that business goes beyond profit? So these are much bigger questions.

But then even if you start from a big question, the theory of change helps you to narrow it down.

So. I’ll show you some pictures of how the theory of change may look like because it’s not only nice because of the thinking process it has but also how it looks like.

So it has to look like a process. Usually you start with the problem, you test the assumptions of that problem and you go on with what could be the actions, the outputs, the outcome and then the final impact. I have a couple of changes. One is about material poverty and how to reduce poverty.

And if you see, there’s always a beginning. What can I contribute? What activities I can make?

What are the outcomes and what are the impacts?

Careful, because an outcome is not an impact. Impact is a change in…A certain indicator, it could be the level of pollution, it could be behaviors of people. Outcome is just a product, the end of a process.

For example, if you start your master’s in EADA, I tell it all the time and people get very depressed because you may get a diploma, but the diploma is simply an output. You’re not changing the world just because you have the output. The diploma tells you that you have attended all your classes, you have been good at school, you have studied, but…

The impact is what do you do with that diploma?

Will you be able to join a company that was not sustainable at all and will transform it? Will you become an entrepreneur and create a company that saves millions of lives on the planet? That is the impact and I am going to be here hopefully to check what is happening to some of our students.

And we will actually have one joining us quite soon. So you can test, I will test your impact and if you want you can make questions to her as well.


Theory of change. This example of theory of change is very nice because I really like the theory of change that B-Lab has put into place.

B-Lab, for those of you who don’t know it, is an organization, it’s a global organization that is active all over the world. And they are the ones that provide the certification for B-Corps. B-Corporations are those organizations that want to be the best. Not only in the world but also for the world.

So they put into practice also environmental, social, governance indicators and they strive to rethink the role of business in society. EADA has a strong connection to BILAB Spain and they have a beautiful theory of change.

Hear more about this topic by watching the full webinar here:

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