Recent times have been a catalyst for personal and social re-prioritization, urging reflection on important topics and accelerating social, economic, and technology trends.
This is reflected in anything from expanding the reach of digital tools and online shopping, to the rising importance of mental wellbeing and supporting local businesses. More than ever, it’s important to think about how to support the community, contribute to what’s best for everyone, and also how to build resilience in the face of an uncertain future.
Mirroring these attitudes, the corporate world has witnessed an acceleration of the sustainability agenda. In 2019 the Business Roundtable, a lobbying group of 181 CEOs from the world’s largest companies, announced a commitment to what was quickly termed “stakeholder capitalism”, or operating in the benefit of “customers, employees, suppliers, communities and shareholders.” In 2020 Davos was themed “Stakeholders for a Cohesive and Sustainable World”. If that wasn’t enough, BlackRock’s 2020 statement that its investment decisions will be aligned with sustainability imperatives sent another strong message.
There is a lot to fear about the future - a future of climate change, political polarisation, income inequality and tech-induced job loss. But it is also a future that is yet to be crafted, and it’s up to organizations to play a key role in crafting it.
As a recent report from Bain & Company notes, “as it expands, accelerates and disrupts, the sustainability revolution requires companies to simultaneously tackle the existential challenges and reach for the opportunities.”
And many organizations have already started:
- In food, agriculture giants are rushing to develop more resilient crops, like corn that requires less water to grow and can withstand storms. Microbes have been modified to provide plants with the nitrogen they require as fertiliser and reduce the need for greenhouse-heavy synthetic alternatives.
- In energy, smart meters and energy-monitoring are already making massive inroads in increasing the efficiency in how energy is consumed. When it comes to how energy is produced, renewables are advancing at a fast pace - from flexible plastic solar panels, to using electric cars as batteries to supply energy back to the grid when not in use.
- In consumer goods, selling product concentrates instead of the bulky liquid product improves packaging efficiency and eliminates plastic waste. Smart plastics also tackle the issue of packaging waste, either through potential organic substitutes, or improvements in recycling.
- In cities, waste is becoming a resource, with experiments in using bacteria to transform organic waste into biogas for transportation in Lidkoping, Sweden. Sensors and data analytics allow us to detect anomalies in pollution levels and give policy-makers the tools to identify problem areas or issue alerts.
If the first stage of addressing the sustainability issue is acknowledging that change is needed, the next logical question is “how do we go about it?” Being a more sustainable business is a great aspiration, but achieving it in a structured and informed way is often an uncharted territory. It goes back to participation. As individuals, we’re all affected by the looming challenges ahead and, given the opportunity, many of us could think of ways in which to improve our current environments. Businesses can leverage the power of participation to help tackle the sustainability challenge from the bottom-up.
How can companies use the principles of innovation management to achieve their sustainability objectives?
- Define your sustainability strategy: It is relatively simple to change the plastic cups in your organization’s cafeterias. It takes a bit more effort to evaluate your business model and identify where your organization can make the strongest impact, can be best differentiated, and can achieve long-term growth. As the Bain & Company report points out, “just as digital changed the product landscape with everything from new formats for music to new ways to deliver news, sustainability has opened the door for new products that support reducing waste, minimizing carbon emissions and enhancing wellness.”
- Share purpose and knowledge across the organization: A broader understanding of the environmental challenges and their impact on industries can help place the organisational objectives in context. At the same time, understanding of the innovation process can help employees identify problems to solve and opportunities to explore in the sustainability space. As a recent article by George Serafeim highlights, top-down strategy is not effective if it’s not supported by a culture aligned with sustainability values: “firms able to flatten the hierarchy and diffuse a sense of purpose through the ranks outperformed their competitors.”
- Experiment with ideas: Remember innovation can inhabit all areas of the business and the product cycle, including product development, operations, partner and supplier relations. Therefore, give the employees that know these areas best a safe space to propose ideas and take them forward in a simple and structured way. Innovation is not a linear process. Prepare your employees for a journey of discovery, testing, and refining ideas, but then let them take on ownership and enjoy the process.
- Manage your portfolios: We have seen many cases of organizations focusing on the big bets, a few large-scale projects with the promise to disrupt the business at scale. This is risky and would also be difficult in the current economic climate. Instead, manage your innovation as an investment portfolio, gathering data on how the experiments are progressing as a stepping stone towards investing to scale successful ideas.
- Report on sustainability metrics: ultimately the organization’s sustainability objectives should be aligned with all business functions, and with corporate performance as a whole. To do this, reporting on the right metrics on both sides is key. Peter McAteer describes integrated reporting as the tool, “to capture both the traditional value metrics used in standard corporate reports and what are often called “externalities”, which is the value captured by our communities and the environment.” Providing the same level of visibility on both traditional value metrics and metrics that measure your impact on the wider world makes it clear to your employees and the market what matters to your organization.
In Sustainability is the New Advantage, McAteer summarises the relationship between sustainability and innovation: “If you think of yourself as a sustainability champion, it suggests you have passion for creating a better world or that you see sustainability as an opportunity for innovation.” Sustainability is a necessity, but also a huge opportunity to innovate, collaborate, and position your organization for a better future.
This is a guest post by Tsvetina Chankova, Innovation Director at Pollen8. At Pollen8, they believe sustainability is an innovation challenge. Organizations can leverage tried and tested innovation practices to translate sustainability from strategy to action. In her session as part of our upcoming Innov8rs Connect on Climate & SDG's (12-14 April), Tsvetina will discuss how a structured approach to innovation management can get organizations aligned and galvanized around the sustainability ambition. She will also provide insights and examples of how organizations can tackle three concrete challenges on their sustainability journey: fostering employee engagement, including relevant expertize, and investing limited resources.
