How Sustainability Transformations Quietly Lose Their Edge
MIT Sloan Management Review ·
Gillian Blease/Ikon Images Corporate sustainability is facing headwinds. Net-zero pledges are being quietly walked back. Regulatory pressure is loosening in some parts of the world. Shareholders are demanding stronger business cases. Inside companies, sustainability leaders sometimes spend more time defending their function than expanding it. The familiar question “Where is the value?” has returned with […]
Gillian Blease/Ikon Images
Corporate sustainability is facing headwinds. Net-zero pledges are being quietly walked back. Regulatory pressure is loosening in some parts of the world. Shareholders are demanding stronger business cases. Inside companies, sustainability leaders sometimes spend more time defending their function than expanding it. The familiar question “Where is the value?” has returned with a sharper edge, often accompanied by an implicit either/or framing: profit or purpose.
In most organizations, sustainability transformations don’t dramatically fail. Rather, they lose their edge. Goals get softened; ambition narrows. The original aspiration is often still in the strategy deck, yet the day-to-day decisions begin to look like the ones the company would have made regardless of its sustainability plans. Understanding why this happens in corporations is difficult because the process often unfolds gradually and becomes visible only much later. The same tension between commercial viability and sustainability ambition plays out more quickly and visibly in early-stage sustainable or social impact ventures, where teams face similar pressures to reconcile profit and purpose but have less room to postpone difficult choices.
Over more than two years, in real time, we tracked six startups targeting sustainability or social impact, from the first idea through to either reaching proof of concept or collapsing. The research was published in Strategic Entrepreneurship Journal . 1 We expected to find that the difference between success and failure came down to strategy, market timing, or capital. What we found instead points to something less obvious, and potentially useful for managers leading sustainability transformations in established companies.
The conventional explanation for sustainability transformations losing momentum is that conviction wavers under pressure, such as the impetus to make quarterly numbers. There is some truth in this, but it overlooks how often the retreat is structurally encoded long before the pressure arrives.
In our study, three of the six ventures we followed ended in collapse. The founders rarely identified a specific moment of compromise that led to failure. The CEO of a failed mental health venture traced it to the team’s early idealism: “We have a very new product, which was launched with very high standards and high idealism, without saying ‘we grow on the go’ and [starting] with a simple, small product to make money first.” The realization that there was no viable business model came late. By the time it arrived, the venture was past the point where it could simplify its approach.
Strikingly, the same fate awaited a second team that, on the surface, took the opposite approach. Where the idealists committed too completely to achieving an ambitious sustainability impact, the pragmatists committed too completely to developing a business case before anything else. One of the pragmatic-minded founders told us, “Frankly speaking, we want to become rich with it. I also want to have my island in the Maldives.” The team agreed early to scale first and add social impact later, but they never got to the impact piece. The sequential plan (first survive, then pursue purpose) turned out to be one stop on a multileg trip. The second leg never happened.
Both companies failed, and in both, the team was internally aligned. The problem was that everyone shared a single, one-sided way of framing profit and purpose, with no one to push the alternate view.
The pattern that distinguished the ventures that built viable, mission-aligned business models from those that didn’t was not primarily strategy, market, or money. It was how the team thought.
The teams that struggled, whether they were idealistic or pragmatic, treated profit and purpose as a trade-off. They tended to think in either/or terms, which led them to tackle first one goal, then the other. In contrast, the teams that built durable models held the two objectives in tension, maintaining both/and thinking (a paradox mindset ). 2 They didn’t resolve the tension; they worked through it, decision by decision. They were slower to commit to a fixed business model, developed simpler early prototypes, and were more willing to engage stakeholders whose feedback complicated their plans. From the outside, the second group of companies sometimes looked indecisive. But taking time to reason through their decisions turned out to be the source of their later flexibility.
Why does this matter for established companies pursuing sustainability transformation? Research on corporate sustainability has long argued that managers’ cognitive frames shape how they perceive and respond to sustainability tensions. 3 Our findings suggest that this is not just specific to individual managers but also a property of their teams. The cognitive composition of the team running a sustainability transformation, typically a small group reporting to the C-suite or with a C-level member at its core, is the corporate equivalent of a founding team. They make the early structural decisions that determine the transformation process. They define what the sustainability function does and doesn’t do. They set the metrics and ambition level. They choose the language. And whatever logic dominates their thinking gets imprinted into the organizational architecture they build.
This early founding logic is what most companies underestimate. In our cases, the early choices the teams made based on how they thought (what to commit to, how complex to make the offering, which trade-offs to accept) became increasingly hard to reverse as their venture moved forward. Each implementation step locked in the assumptions of the previous one. The way these early conditions get baked into the structure and persist is what management researchers call structural imprinting . 4 By the time financial pressure or stakeholder feedback signaled that the model wasn’t working, the team had less room to maneuver than they had realized. The structural lock-in was already in place.
The same dynamic often plays out in corporate sustainability functions. The KPIs chosen and the targets set in the beginning often frame what counts as progress for the coming years. The reporting structure that’s set up can influence which conversations happen and which don’t. The team that’s assembled affects what gets noticed in the first place. Most of these early decisions feel small at the time. They are not. And all of these small, early choices are, to some extent, a function of how a leader thinks: either/or or both/and.
In principle, both ends of the spectrum are dangerous. A purely idealistic transformation team can over-engineer the program, refuse useful compromises, and produce something the rest of the business cannot absorb. A purely pragmatic team can quietly hollow out the more aspirational ambition until what remains is business as usual, just rebranded.
The gravity in most established companies pulls in one predictable direction. The ambient pressure is to soften, defer, and de-prioritize the purpose part. With sustainability under sharper economic and political scrutiny, and with the regulatory and reputational tailwinds of the late 2010s replaced by harder questions about return on investment, the dominant internal voice is the one asking for the business case. That voice is not wrong to ask; the questions are legitimate. But if it is the only voice within the transformation team, the early imprinting tilts toward pragmatism. And pragmatism, once imprinted, doesn’t tend to course-correct toward purpose. Our data on the sequential “first survive, then pursue purpose” path suggests that the second part doesn’t reliably arrive.
The implication is that stronger conviction at the top alone is not enough to protect against drift. Divergent thinking, conflict, and productive friction within the team driving the work are also needed.
Drawing on the patterns we saw in the ventures that managed to get off of failing paths, we identified three practical implications for sustainability transformation leaders and the teams driving them.
1. Select team members for cognitive friction, not consensus. The most viable teams in our study held real tension internally. They were not comfortable, but they were productive. One health-tech CEO described a recurring debate between a psychologist on the team who insisted that the assessment instrument they were offering needed to be more rigorous, and a colleague who insisted that it didn’t matter as long as it sold. Neither of them was entirely right, but together, they kept the model honest.
That means a critical question to ask when assembling a sustainability transformation team is “Does this person disagree to some extent, productively, with the rest of the team about what we are here to do?”
2. Build in reality checks before pressure forces them. In our research, the teams that managed to find alternatives to failing paths almost always did so because of input they had not asked for. A new colleague joined and reframed an assumption. An accelerator coach pointed out that the commercial model didn’t work. A stakeholder responded to a prototype in a way the team had not expected. These interventions could be considered because they came before structural lock-in had narrowed the team’s choices.
Corporate transformation teams likewise should create opportunities for reality checks that don’t depend on a crisis to surface. They should consult standing advisory groups and customer or stakeholder panels early, while they are still developing plans, rather than going to them only later to seek approval. These interventions might feel inefficient when things are going well, but they could be the inefficiencies that buy flexibility later.
While it can seem like more governance, these reality checks add the kind of friction that an external-pressure event would otherwise force on the sustainability team under worse conditions (often when it is too late).
3. Keep early architecture simple enough to flex. The teams in our study that survived shared a pattern: While they embraced complex both/and thinking, they were strikingly cautious about complexity in the beginning. They prototyped simply. They committed late. They added scope only when stakeholder feedback warranted it. In contrast, the teams that failed (both idealists and pragmatists) went big early. They built elaborate offerings before they understood what worked. In other words, the teams that could hold the most complexity in their thinking were often the most disciplined about keeping their early moves simple.
For corporate sustainability functions, this translates into a heuristic: Build the simplest version of the program in the first place that still credibly addresses the core mission. Resist the urge to ship a flagship initiative that bundles five priorities into one. Each priority that’s added early constrains the next decision that can be made.
The pressures on corporate sustainability won’t ease in the near term. But the three levers we learned from observing early sustainability and social impact ventures (selecting team members for cognitive friction, building in early reality checks, and keeping initial architecture simple) can facilitate both/and thinking in a transformation team when pressure pulls toward either/or — either profit or purpose. Taking team composition and its internal dynamics seriously from the start helps a transformation keep its edge.