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Shattering the Trade-Off Myth

The confluence of the quality and environmental movements was a marriage made in heaven: By the late 1980s, it had become clear that preventing pollution and other negative impacts was usually a much cheaper and more effective approach than trying to clean up the mess after it had already been made. The emergence of market-based incentives such as tradable emission permits made prevention even more appealing. Furthermore, the discipline of quality management could be easily expanded to incorporate social and environmental issues. In the early 1990s, this confluence produced a flurry of so-called environmental management system (EMS) approaches and "total quality environmental management" protocols, culminating in the advent of ISO 14001, the environmental equivalent of ISO 9000 for quality.

Community advisory panels and stakeholder dialogues, intended to involve affected parties in company affairs instead of doing battle in court, proved to be a much more effective way to maintain legitimacy and the "right to operate." Indeed, in designing its self-regulation program called Responsible Care, the chemical industry enshrined the principles of pollution prevention and community engagement as part of its product stewardship process. In short, the quality revolution taught us that muda (waste) was the enemy of good management. Pollution and litigation were the ultimate forms of muda.

As social and environmental issues became more deeply embedded in the ongoing operations of enterprises, managers began to see that corporate and societal performance need not be separated. Whereas companies previously sought to first make money through their business operations and then give back to society through philanthropy, now these two agendas could be merged. What had been a virtual firewall separating business from philanthropy was now transforming into a host of new and creative approaches to combining the two through corporate partnerships with nongovernmental organizations, strategic philanthropy, and other forms of social innovation.11

Furthermore, in certain situations, preventing pollution through process or product redesign could actually save money, reduce risk, and even improve products for the firm. An extensive body of research began to document the situations and contexts in which pollution prevention and product stewardship resulted in superior financial performance.12 Not surprisingly, parlaying environmental and social performance into improved business performance required a set of supporting or complementary capabilities, such as employee empowerment, quality management, cross-functional cooperation, and stakeholder engagement. This meant that the greening revolution had not only succeeded in elevating the significance of social and environmental issues, but it also had converted them from expensive problems into strategic opportunities for certain firms with the necessary skills, capabilities, and leadership vision.13

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