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Strategic Innovation for Sustainability: Five Lessons I’ve Learnt

By 1st February 2019 June 19th, 2019 No Comments

I’ve been working with companies to enhance their sustainability performance and positive social impacts through sustainable product innovation for 12 years. Here are five lessons on what is required to turn good intentions into great, sustainable products and services.

View sustainability as an integrated part of your mainstream innovation activities

I started this career working with manufacturers in the electrical and electronic equipment sector. At that time, many companies were struggling to keep up with new EU regulations on product recycling and the use of hazardous chemicals. However, I was able to find a few progressive companies that realised that the increasingly stringent environmental legislation was becoming the new norm and that the only way to benefit from this was to take a more pro-active approach to managing the sustainability impacts of their products, rather than a reactive, compliance-driven approach.

A common feature of those pro-active companies was the view that sustainability is an integrated part of mainstream innovation activities. Hence, their sustainability performance was becoming a new dimension of business performance and used as a competitive advantage or a unique selling point.

Companies that fail to make this change and continue to view sustainability as a tick-box exercise are destined to suffer with every new piece of legislation that is introduced.

One example of the needed mindset shift can be seen in the Corporate Social Responsibility reporting of Philips – a recognised leader in sustainable product design. Philips stopped publishing a separate ‘Sustainability Annual Report’ in 2008 and made it part of it’s general Annual Report. A small change, but one that was indicative of the change in mindset .

Sustainability must be strategic

During a collaboration with UN Environment and the Technical University of Denmark (DTU), we developed a practical approach to enable companies to enhance their sustainability performance. Speaking to sustainability practitioners from countries around the world,  we realised that sustainability needs to be embedded in the business strategy of the company. If this can be done, it shows that the CEO and senior management take the issue seriously and are willing to make a long-term commitment to running their company more sustainably.

The right business model can unlock step-change improvements in sustainability performance

I found time and time again that companies get excited when talking about developing a new more sustainable business strategy, but then get stuck when thinking about the practical changes needed. The problem is their current business model not aligning with their new business strategy.

There is often a limit to what can be achieved by optimising your existing business model – if you are delivering the same product in the same way to the same customers, you’re unlikely to change the world.

To make step-change improvements in sustainability performance you need to find a business model that: aligns with your strategic goals; offers unique value to your customers; and is achievable with the resources, partners and competencies of the company. Many companies are experimenting with new, more sustainable business models, including circular economy principles and those that focus on the provision of services rather than one-off product sales.

Look for the hotspots and opportunities across the product lifecycle

One common mistake I’ve seen is companies focusing all their sustainability improvement efforts on the wrong issues. To make sure you are addressing the most important issues, you need to systematically consider every phase of the lifecycle of your product and identify the positive and negative impacts that your business has on society in each phase.

I previously developed simplified lifecycle assessment tools that enable designers and engineers to quickly identify the biggest environmental impacts or ‘hotspots’ of a product over its lifecycle. Applying hotspot analysis tools is an important step in the process, but you also need to think about the opportunities that exist to enhance the positive sustainability impacts that the company can have.   A comprehensive view of where in the product lifecycle your products currently do the most harm, and where they can do the most good, is the key to developing a sustainability strategy and business model.

Engage the value chain

Another challenge that companies often face is how to address important hotspots that occur in phases of the product lifecycle that are beyond their direct control. For instance, for canned tuna, the biggest sustainability hotspots include the fishing activity, the impact on tuna stocks, by-catch problems, and concerns about worker welfare aboard fishing vessels. These are major, industry-wide problems difficult for one canned tuna producer to address. To address these big hotspots, we need to engage with the rest of the value chain, including the fishermen, policy makers, and even competitors, to develop an agreed approach that works for everyone.

Every company faces a unique set of challenges and it is a constant battle to stay on that path of sustainability and make progress. Ultimately, I am hopeful that many more companies will find their path and begin to realise the business and societal benefits of sustainable product innovation.