The document discusses barriers and opportunities for sustainable innovation. It identifies four types of innovation - product, process, organizational, and system innovation. Barriers include a lack of understanding, weak markets for green products, and organizational challenges. Opportunities include new business models serving developing markets and product-service systems that focus on customer needs. The document proposes an action plan around senior commitment, research, and launching a sustainable innovation culture.

1. Sustainable Innovation
BCSD - TAIWAN
30th September 2004
Taipei, Taiwan
Professor Martin Charter
Director
The Centre for Sustainable Design
Martin Charter & Associates
(c) Martin Charter (2004)

2. Sustainable Innovation
Terminology
No common understanding
- Products (Eco-innovation – Fussler et al)
- Technologies
- contaminated land remediation
- air pollution
- monitoring and control
- waste management
- recycling
- noise and vibration
- energy management
- consultancy
(c) Martin Charter (2004)

3. Type 4:
System
20 Sustainable
innovation
level
Eco-efficiency improvement/
Type 3:
Function
organisational complexity
innovation
Type 2:
Product
redesign
Type 1:
Product
improvement
5 10 20
Tim (years)
e
Eco-efficiency curves
(c) Martin Charter (2004)

4. Sustainable Innovation
Types
• Product/services/technologies
• Process
• Organisational
(c) Martin Charter (2004)

5. Sustainable Innovation
Barriers to sustainable innovation
Background
• Weak understanding and knowledge over how to integrate
sustainability into innovation policies
• Lack of clear drivers for sustainable innovation
• A focus on eco-efficiency and dematerialisation will not
deliver sustainable innovation
• To move towards higher levels of sustainable innovation (systems)
will require long-term, strategic change in societies
• Existing focus on incremental improvements or (eco)re-design,
rather than functional or system innovation
• Limited uptake of sustainable product/eco-design outside
of transnationals
• Value and supply networks are increasingly geographically
disparate
(c) Martin Charter (2004)

6. Sustainable Innovation
Barriers to sustainable innovation
Markets
• Green often seems to suffer from a poor perception
• Most markets are still dominated by price
• Green markets are still niche markets
• Lack of green mass markets
• Awareness:action gap
• There is a wide variation of awareness of sustainability/
environmental issues
• B2C customers tend to be wedded to ownership
• Developing countries lack good quality information
• 3 billion people live on less than $2 per day
(c) Martin Charter (2004)

7. Sustainable Innovation
Barriers to sustainable innovation
Organisational
• There is a lack of senior level vision and commitment to sustainability
• Nervousness over taking a pioneering or leadership role on
sustainable innovation
• Sustainability is not seen as area of business opportunity
• Green is generally seen as a threat-based, compliance agenda
• Sustainability issues are rarely included in the corporate strategy,
business development and/or the ‘opportunity search’ process
• There is a lack of awareness of sustainability/environmental
awareness amongst key business functions
• Organisational systems and procedures are often inflexible
• Product designers and design consultancies still have a poor
understanding of sustainability
(c) Martin Charter (2004)

8. Sustainable Innovation
Barriers to sustainable innovation
Entrepreneurship and funding 1
• Poor linkages between experts, investors, entrepreneurs and
inventors
• Lack of sustainable innovation catalysts
• Academia has not been successful at transferring radical
concepts (e.g. functional, systems) of sustainable innovation
• Need for bridges between inventors, investors, entrepreneurs and
academia
• Little recognition of sustainable innovation opportunities amongst
• successful entrepreneurs
(c) Martin Charter (2004)

9. Sustainable Innovation
Barriers to sustainable innovation
Entrepreneurship and funding 2
• Sustainable technologies/product/services are not viewed as
major opportunities by investors:
- business concepts/technologies often seen as too risky
- financial returns often not seen as significant enough to justify
investment
- not enough successful entrepreneurs with track-records in the
area
• Inventors/entrepreneurs: lack of start-up funding and business
skills
(c) Martin Charter (2004)

10. Sustainable Innovation
Barriers to sustainable innovation
Marketing
• Weak interaction between marketing and sustainability/
environmental professionals
• Marketing's role in the product development/innovation process
differs from company to company
• Sustainability/environmental are rarely involved in the innovation
process.
• Green product failures due to a lack of involvement of marketing
skills and tools
• Green is integral to the brand/product/company
• Responsible products/brands from responsible companies
(c) Martin Charter (2004)

11. Sustainable Innovation
Opportunities for sustainable innovation 1
• ‘Producer responsibility' laws in Europe and Japan may stimulate
series of new (sustainable) business concepts
• Emerging opportunities for sustainable/greener technologies/
products/services in B2G markets e.g. Japan
• A smarter use of demand and supply-side government policy tools
may start to create opportunities (e.g. Integrated Product Policy (IPP))
• Various companies exploring new business models in attempt to open
up the market of the 3 billion people who live on less than $2 per day
(c) Martin Charter (2004)

12. Sustainable Innovation
Product-Service-Systems (PSS)
(c) Martin Charter (2004)

13. Sustainable Innovation
PSS: strategies
Product - oriented services
• Service integration e.g. additional functionality
• Product extension e.g. upgrades and repairs
Use - oriented service (selling function)
e.g. leasing or rental of computer and office equipment
Result - oriented service
• Product-substituting service e.g. virtual answering machine
• Vertical integration e.g. downloadable music
Source: www.suspronet.org
(c) Martin Charter (2004)

14. Sustainable Innovation
Opportunities for sustainable innovation 2
Product Service Systems (PSS) are a promising new business
development approach that may help create more sustainable
solutions. However,
- Business do not recognise the terminology of PSS
- PSS are not developed in a systematic and structured manner
- PSS often means a closer focus on:
- customer needs
- maintaining good customer relations
- PSS will require a shift in corporate culture from ‘product-
orientation’ to ‘service-orientation ‘
- Sustainable PSS solutions are likely to industry/need specific
- Defining the sustainable/environmental performance is complex
due to lack of good quality lifecycle data and information
- PSS does not always deliver sustainability benefits
- There are a lack of successful sustainability-driven PSS cases
(c) Martin Charter (2004)

15. Sustainable Innovation
Opportunities for sustainable innovation 3
Organisational: lessons from Philip’s approach to
eco-design management 1
• Focus on the eco-design management process
• Product-level environmental considerations should be left to Business
Units (BUs) to determine
• Clear demarcation of responsibilities of:
- Corporate
- BUs
• Both Corporate + BUs need a shared vision of the proposed outputs of
the process e.g. Green Flagship products
• Systematic and continuous integration of environmental considerations
into the Product Creation Process (PCP)
• Sell the commercial benefits of eco-design in the language of different
business functions
(c) Martin Charter (2004)

16. Sustainable Innovation
Opportunities for sustainable innovation 4
Organisational: lessons from Philip’s approach to
eco-design management 2
• Mechanisms to share and communicate information/knowledge
throughout global value or supply chain or networks
• More mature eco-design management systems are likely to produce
more eco-innovation
Organisational: lessons from SC Johnson’s approach to
eco-design management
• Innovation tends to be frequent e.g. month-to-month and incremental
• Internal branding of sustainable product/eco-design programmes e.g.
Greenlist ™
• Institutionalise sustainable product/eco-design programmes through
integration into existing processes
(c) Martin Charter (2004)

17. (c) Martin Charter (2004)

18. (c) Martin Charter (2004)

19. Sustainable Innovation
Types
• Product/services/technologies
• Process
• Organisational
(c) Martin Charter (2004)

20. Sustainable Innovation
Action plan
• Senior level commitment
• Director with responsibility
• Project director
• Taskforces: technology/product/service; process; management
• Define ‘opportunity zones’
• Complete research + pilots
• Selection process
• Launch sustainable innovation culture
• Develop strategy, programmes, responsibilities
• Implementation, monitoring and control
(c) Martin Charter (2004)

21. (c) Martin Charter (2004)

22. Contact Details
Professor Martin Charter
Director
The Centre for Sustainable Design
Tel: 00 44 1252 892772
Fax: 00 44 1252 892747
email: mcharter@surrart.ac.uk
web: www.cfsd.org.uk
Martin Charter & Associates
Tel: 00 44 1252 722162
Fax: 00 44 1252 722162
email: martincharter@compuserve.com
(c) Martin Charter (2004)