When the Wall Street Journal recently published a ranking of The 100 Most Sustainably Managed Companies in the World, I was initially hesitant to dive in. While corporate “sustainability reports” have become mainstream, their variance in rigor and focus has risked diluting the meaning and intention of the term. Too often, sustainability has been—like beauty—in the eye of the beholder.

Fortunately, the WSJ report has taken a broad and rigorous approach to sustainability. It assessed 5,500 publicly traded businesses on a range of sustainability metrics. These included business model and innovation; external social and product issues; employee and workplace issues; and the environment. The underlying assumption was that these metrics reflected how well a company’s leadership and governance had prepared it for long-term success and shareholder value creation.

As I perused the list, two observations emerged. The first was the range of industries represented: high tech hardware, medical equipment, power and utilities, industrial machinery, oil and gas, chemicals, software, electrical equipment. Sustainably managed companies exist in many sectors. The common thread is that these companies think broadly about, and manage with an eye to, sustainability.

The second observation was the sheer number of companies—including the top and second most sustainable companies—that ServiceMax is proud to count among our customers and partners. Which raises an intriguing question: is there a connection between sustainably managed companies and how they approach service?

The Link between Service Transformation and Sustainability

Below are three characteristics that I would argue are common to companies that are both sustainably managed and transformational service leaders.

1. Business Model Innovation

Companies that constantly evaluate and anticipate the need to change their business models are motivated to innovate and try new approaches. Such new approaches could well include servitization, outcome-based service, and the shift in service mindset from a cost center to a growth driver. That in turn could entail investments to digitally transform service businesses.

2. Data Transparency and Visibility

Companies that have learned to embrace transparency have actually found it beneficial to report sustainability data. Better data uncovers new business opportunities, such as potential new revenue streams or productivity or safety improvements. This, too, can support the evolution of a company’s approach to service.

3. Leadership

CEOs who see a business case for sustainability recognize that their companies’ environmental, social, and governance practices will impact their long-term success. Schneider Electric, a ServiceMax customer cited in the report, began setting sustainability targets—regularly renewed and tied to bonuses—in 2005. Notes chairman/CEO Jean-Pascal Tricoire, “Your business should go in the direction of the mega trend. If your business is going against sustainability, you’re bound to fail.”

Schneider Electric is an excellent example of how a company can, by combining business model innovation, data focus, and leadership, create a virtuous circle between sustainability and service. In tandem with its sustainability push, Schneider has transformed its service business into a revenue driver. More specifically, its focus on data led to an awareness of and improvements in “asset coverage”—accurate data on as-maintained equipment. By investing in digital service capabilities, Schneider has improved its asset coverage fivefold, to more than 8 million assets; increased aftermarket sales and customer satisfaction scores; and improved technician productivity and safety. (Read more about Schneider Electric’s story here.)

Service Transformation Goes Hand in Hand with Sustainability

There is growing investor interest in companies that are viewed as sustainability leaders. As the Schneider Electric experience demonstrates, service transformation can be both cause and effect of ensuring that your enterprise is built for long-term success. An openness to business model innovation, a focus on data, and strong leadership will only tighten that connection.


ABOUT Seth Dunn

Avatar photoSeth Dunn is the former director of industry development, power & utilities, at ServiceMax. Prior to ServiceMax, Seth held a variety of commercial, policy, marketing, and product roles at GE’s Renewable Energy business. Prior to GE, he researched energy and environmental issues for the Worldwatch Institute. He holds BA, MEM, and MBA degrees from Yale University.