Its all about innovation……
In the last post i kind of listed what we typically hear as the drivers of sustainability initiatives at companies. The question that i think is relevant, Should those be the drivers or are they just outputs / results of what should be a more concerted effort to leverage “Sustainability” to innovate in your business.
I spent some time over the last couple of days digging around on this topic and found some pretty interesting stuff.
First a article in the HBR (Sep 2009 Issue) by CK Prahalad (of the Bottom of the Pyramid fame) & M R Rangaswami, titled “Why Sustainability is now the key driver of innovation”. The couple of premises of the article is sustainability help organizations adopting it achieve competitive advantages & shouldn't be looked at as a drag on the bottom line or an administrative burden.
Some interesting excerpts from the article are:
The old way of thinking – Making our operations sustainable and developing “green” products places us at a disadvantage vis-a-vis rivals in developing countries that don't face the same pressures.
The Old way of thinking - Sustainability is a corporate social responsibility initiative, divorced from business objectives.
Based on research of sustainability initiatives at 30 large corporations its identified that –
Sustainability is a mother lode of organizational & technological innovations that yield both bottom line & top line returns.
The quest for sustainability is already starting to transform the competitive landscape, which will force companies to change the way they think about products, technologies, processes, and business models.
By treating sustainability as a goal today, early movers will develop competencies that rivals will be hard pressed to match. That competitive advantage will stand them in good stead, because sustainability will always be an integral part of development.
Journey or Phases Enterprise that adopt sustainability go through:
Stage 1: Viewing compliance as an opportunity
First step companies must take on the long march to sustainability usually arise from the law. Compliance is complicated. Environmental regulations vary country by country, state by state and even by city.Contrary to popular perceptions, conforming to the gold standard globally actually save companies money.The common norm must logically be the toughest.
Stage 2: Making value chains sustainable
Once companies learn to keep pace with regulation, they become more proactive about environmental issues. Many then focus on reducing the consumption of non renewable resources such as coal, petroleum, and natural gas along with renewable resources such as water and timber. The drive to be more efficient extends from manufacturing facilities and offices to the value chain. At this stage corporations work with suppliers and retailers to develop eco-friendly raw materials , components & reduce waste.
Stage 3: Designing sustainable products & services
To design sustainable products, companies have to understand consumer concerns and carefully examine product life cycles. They must learn to combine their marketing skills with their expertise in scaling up raw materials supplies & distribution. As they move into markets that lie beyond their traditional expertise, they have to ream up with nongovernmental organizations. Smart companies that have continued to invest in eco-friendly products despite the recession, look beyond the public relations benefits to hone competencies that will enable them to dominate the markets tomorrow.
Stage 4: Developing new business models
Not just rethinking the customer value proposition and figuring out how to deliver a new one. Successful models include novel ways of capturing revenue & delivering services in tandem with other companies. Some companies have developed new models just by asking at different times what their business should be.
Stage 5: Creating next practice platforms
To develop innovations that lead to next practices, executives need to question the implicit assumptions behind current practices. This is exactly what led to today's industrial & services economy.In like vien, we must ask questions about scarce resources: Can we develop waterless detergents? Can we breed rice that grows without water? etc.
Another was a report titled– “High Level Group on the Competitiveness of the European Chemicals Industry” by the European Commission. This report is a look at the Chemical industry in EU and provide some insights on what the key factors are for the industry moving forward. Here they give clear indications of how sustainability & innovation are two sides of the same coin.
Some excerpts are:
- A sustainable chemicals industry is indispensable to address some of these pressing global issues. The industry continually develops innovations, generated by research in chemistry and other sciences, for a wide range of practical applications. At the same time, it has an important responsibility for the move towards a sustainable use of natural resources, reduction of energy demand, pollution, waste and emission of greenhouse gases, and, last but not least, for the safety of chemical products and their application.
- The European chemicals industry is well placed to provide sustainable solutions. This is one area where European industry has some initial competitive advantages. There appears to be considerable market potential and a positive consumer attitude. Grasping this opportunity requires a positive, proactive and committed stance from the industry
and from policy and public authorities at all levels.
- To achieve sustainable global competitiveness, the European Council singled out knowledge and innovation for growth as one of three main areas for action. The 2002 Barcelona European Council set the goal of raising overall research investment in the EU from 1.9% of GDP to 3% by 2010, increasing the share of private funding from 55% to two-thirds.
- The chemicals industry offers a wide range of innovative products (inorganic and organic chemicals) which either allows environmentally more sustainable energy generation (solar panels), energy storage (batteries depend on chemical products) or energy savings (insulation material and light weight materials which reduce vehicle energy consumption). Numerous initiatives have been launched by governments and the private sector to promote the wider use of energy saving products.
- More innovation is key for a sustainable and healthy European chemicals industry -Industry, in cooperation with governments, should set up topical innovation networks to promote key strategic innovations and foster best practices and exchange of knowledge and experience between them. One such network should deal with ‘energy and climate change’. As part of further strengthening existing networks, the technology platform SusChem should explore opportunities beyond the defined key areas to include innovation leadership issues (‘bringing good ideas to the market’) in a new SusChem+ structure.