Why Sustainability is now the key Driver of Innovation

BY, RUCHIRA PANIGRAHY (UEMF16013)SOUMENDRA KUMAR DALAI(UEMF160019)

Idea in Brief

Sustainable business has three interdependent  objectives : economic, environmental and social. General assumptions for practicing sustainability :

Add costs Will not deliver immediate financial benefits Erode competitiveness

Dilemma : Choice between social benefits of developing sustainable products or processes & the financial cost of doing so

General expected problems : Suppliers cannot provide green inputs and transparency Sustainable manufacturing will demand new equipment and processes Customers will not pay a higher price for eco-friendly products during recession

Idea in brief

Three-legged race : The fight between : Governments and companies Companies and consumer activists Consumer activists and governments

Importance of Sustainable companies: Create financial value. Understand how their actions affect the environment and actively address those impacts. Care about their employees, customers and communities and work to make positive social change.

Idea in brief

Possible Solutions: Tougher regulations Educating and organizing consumers

Importance : The world population is growing at unprecedented rate and putting pressure on already

overstressed natural resources There are growing expectations on business to help solve environmental and social issues from

government, employees, customers and the public It greatly depends on how the individual companies respond to these trends. This will influence

their profitability and longevity.

Stages of Change 

Viewing Compliance as Opportunity

Making Value Chains Sustainable

Designing Sustainable Products and Services 

Developing New Business Models

Creating Next-Practice Platforms

Viewing Compliance as Opportunity

Compliance can be used to induce the company & its partners to experiment with sustainable technologies, materials & processes.

Challenge : To ensure compliance with norms becomes an opportunity for innovation, anticipating and shaping regulations. 

Cases discussed : Ban of Plastic bags in 2007 Ban of Lead solders in 2006 Ban of Hexavaent Chromium (anti-corrosion coating) in 2006 Govt. sponsored recycling arrangements in 2002

Making Value Chains Sustainable

Sustainability is usually focused on reinforcing the brand image, but could lead to cost cutting or to create new businesses.

Challenge : To increase efficiency throughout the value chain Methods to develop sustainable operations :

Supply Chains : Induce suppliers to become environment-concious (Cargill & Unilever) By laying down laws (Unilever & Staples)

Operations : FedEx initiative for reducing its dependence on fossil fuels Workplaces : Work from home facility by IBM & AT&T Returns : Finding innovative uses of returned products. Ex: Cisco

Designing Sustainable Products and Services 

Use of competencies and tools to identify product innovation priorities to score over rivals by being the first to design

Challenge : Developing new products, and modifying existing ones as well as modifying packaging to reflect commitment to sustainability

Important considerations: Companies are startled to discover which products are unfriendly to the environment Clear understanding of the management on how to scale both supplies of green materials and

the manufacture of products Companies must try to move into markets that lie beyond their traditional expertise and team up

with other stakeholders Companies like P&G and Clorox invest in eco-friendly products

Developing New Business Models

Rethinking the value proposition of the business and finding new and innovative ways to deliver value to your customers

Rethinking models with the advent of new technologies and at the same time meeting customer expectations

Simple Rules to follow: Don’t start from the present. Start from the future. Business need to ensure that learning precedes investments Though directional consistency is important, tactical flexibility is critical Building collaborative capacity forming alliances with other stakeholders to enhance value of offering

Creating Next-Practice Platforms

Questioning the logic behind all the current business practices, businesses can break the mould and truly innovate for sustainability

This is about re-engineering, not just recycling and reusing A sustainability focus allows companies to build on their existing competencies to

develop next-practice platforms and new paradigms

SMART GRID: Cisco,HP,Dell, and IBM working on developing this platform Uses digital technology to manage power generation, transmission and distribution

from all type of sources along with customer demand Lower costs as well as more efficient use of energy

Enterprise wide Initiatives

Two enterprise wide initiatives help become sustainable:• When a company’s top management team decides to focus on the problem :

• GE’S business tried to move up the sustainability ladder as CEO Jeff Immelt declared that company would focus on tackling environmental issues

• Recruiting and retaining the right kind of people is important Research suggests that three-fourths of workforce entrants in US regard social responsibility and environmental

commitment as important criteria in selecting employers Companies that try to become sustainable may find it easier to hire an retain talent

Embracing Change

Leadership and Talent are critical for developing a low-carbon economy. Current economic system has placed enormous pressure on the planet while catering to the

needs of only quarter of the people on it. Over the next decade, twice that number will become consumers and producers Companies will have to develop innovative solutions as traditional approaches to business

will collapse Executives have to recognize a simple truth: Sustainability=Innovation