Innovating for sustainability
“Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It's not about money. It's about the people you have, how you're led, and how much you get it.”
- Steve Jobs
Big business can no longer restrict itself to incremental improvement. A few companies are starting to recognise this by setting ambitious goals – for instance, to reduce environmental impacts by a factor of three or four over a 10-year timeframe. To the cynics, this is a convenient way to gain credit for vision while postponing short-term action. But for those inside leading companies, it is clear that the most challenging goals will only be achieved through a paradigm shift that creates new revenue models with social and environmental benefits.
Responding to sustainability challenges demands that sustainability thinking is embedded in the whole product or service development process. Innovation pipelines should identify sustainability benefits alongside financial returns so that ideas that challenge traditional revenue models are not stifled at birth.
Innovation pipelines are a human process. The people who generate new ideas need an awareness of the sustainability challenges facing the world. Meanwhile, those evaluating and commercialising ideas need to give weight to environmental and social impacts alongside consideration of profit potential. That takes investment in recruiting, training and incentivising staff.
This process will only work if CEOs and boards are prepared to empower staff to test and bring forward new products and services that don’t fit the current business model. It is only when these new ideas are up and running that most CEOs and boards come to appreciate their value.
Collaborate to innovate
Sustainable innovation will increasingly be achieved through collaboration. Companies have long used market research (collaboration with customers) to develop new products and services. Leading companies are now looking for partnerships with individuals and companies outside their sectors to achieve a 1+1=3 effect.
Partnerships that use new technology to create mutually beneficial market positions enable companies to share risks and achieve scale. Whether it’s energy companies collaborating with electronics companies, or food and beverage companies collaborating with utility companies, if solutions to the problems that face the world can be developed through working together, the resulting revenues will be such that both parties will be satisfied with a share.