January 28, 2010
All of a sudden, companies are waking up to the fact that sustainability can drive innovation.
Innovation is one of those evergreen topics forever featured in business school reviews, classrooms, and business magazines. The link to sustainability, however, is new, and is steadily replacing old thinking that saw corporate responsibility mainly as a way to keep a company’s reputation out of trouble.
Companies looking to get this right need to think about innovation for sustainability in three ways: products, processes, and business models.
Sometimes the most familiar products offer the most radical opportunities for change. An executive at a large beverage company told me recently that they are thinking about selling packets of soluble powder instead of shipping their drinks around the world in cans and bottles. This would reduce energy and carbon emissions, as well as packaging. In the meantime, we still have bottles and cans. So another company, Coca-Cola, is taking on that issue: The company’s new “PlantBottle” is made of recyclable plastic comprised of 30 percent renewable, plant-based material such as sugar cane.
Business models are also changing to meet the challenge. Enter Best Buy, which is asking itself what business it’s in, and charting a path that leads from selling DVD players to selling and servicing small electronic vehicles. Kal Patel, the company’s executive vice president of emerging business, explained to me that Best Buy sees this as a path of simultaneous continuity and discontinuity. The continuity is in providing quality servicing: sort of a vehicular version of the Geek Squad. The discontinuity is in turning the back of Best Buy’s familiar blue buildings into service bays, remaking the company’s physical footprint.
Business process is also ripe for an overhaul. Maersk Line, which operates one of the world’s largest fleets of container ships, has pioneered the logistics industry’s answer to the slow food movement: “super slow steaming.” By running ships at speeds as low as 10 percent of top capacity, Maersk saves US$1 million, 3,500 tons of fuel, and 10,000 tons of carbon-dioxide emissions per ship every year. To make this work, of course, Maersk and others have to convince their customers, the world’s largest manufacturers and retailers, that speed to market is not the most important value it delivers.
Even Detroit, which has recently earned a well-deserved reputation for poor innovation, shows signs of change. Ford Motor Company Executive Chairman Bill Ford now speaks about a future that relies on a mix of car ownership, public transportation, and car sharing—a far cry from the mass production system his great-grandfather Henry created to establish the model of private vehicles.
One of the keys to innovation for sustainability is opening up the process of product, process, and business model design to a wider community, something that technology and growing comfort with stakeholders makes more possible than ever. I participated in a project at the World Economic Forum with Indian design students who mastered efficient water use much more quickly than their counterparts from the United States and Europe. So part of the solution lies in getting the right people around the table.
While the path here is increasingly clear, there are two cautionary notes to remember.
First, real innovation is disruptive. No one gets very far by sloshing some green paint on our current economy. But by reimagining products, processes, and models, transformation is possible.
Second, innovation and sustainability don’t automatically link. As Patrick Whitney, the dean of the Illinois Institute of Technology’s Institute of Design, put it to me last spring: “When innovation meets sustainability, it’s usually a train wreck, because it just promotes more consumption.”
But more and more, leading companies are looking for ways to reduce consumption and increase value. That’s the path we need to follow, and innovation has a crucial role in getting us there.
Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.