Sustainability Drives Innovation

Mon, Sep 21, 2009

4. Leadership, Management

Can you get support within your business for sustainability initiatives? Tough going.

Can you get support for innovation efforts? Much easier.

Would it be easier to get support for your sustainability efforts if you told your manager that one of the leading business gurus said, in the most prestigious business journal, that “smart companies now treat sustainability as innovation’s new frontier”?

In the September 2009 Harvard Business Review, C.K. Prahalad along with Ram Nidumolu and M.R. Rangaswami suggested that “sustainability is a mother lode of organizational and technological innovations that yield both bottom-line and top-line returns.”

And the editor in his note wrote about the article “The lead article in this issue?s Spotlight on Sustainability and Innovation makes the audacious claim that companies won?t innovate successfully?and as a result won?t grow?unless they throw themselves whole hog into green initiatives.”

That’s a powerful endorsement. This is after all an article in the leading business research publication, written by one of the top strategy consultants in the world.

The authors suggest in the article that sustainability is a way to look at a business to reduce cost and to generate new revenue from better products, and, enable them to create entirely new businesses.

The article speaks to some significant opportunity in improving the supply chain. (I think this is a better opportunity than saving on energy costs for many companies.) The authors suggested that some tools could be used to look at ways to reduce waste throughout the supply chain. This includes tools as simple as life-cycle assessment, which is a much underused purchasing tool.

The authors suggested in my favorite part, that to really generate value from your sustainability efforts – as with any good innovation process – participants need to look beyond existing paradigms. This starts with a careful questioning of the key assumptions of your business. The innovation process when it comes to sustainability is akin to zero-based budgeting, where budgets are not based on the prior year’s but based on a totally new look at the business. Start from a point in the future, and then work backwards.

This innovation look could cause a manufacturer to question the entire concept of process waste and identify ways to reduce the waste, or to perhaps find new uses for the waste. There are enormous opportunities to improve packaging to eliminate waste and increase sales. This innovation push should also cause a company to strike new relationships with vendors and suppliers.

Got an innovation story to share? We’d love to hear it!

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