Why Sustainability is now the key Driver of Innovation

1. Why Sustainability is now
the key Driver of
Innovation
BY,
RUCHIRA PANIGRAHY (UEMF16013)
SOUMENDRA KUMAR DALAI(UEMF160019)

2. 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

3. 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.

4. 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.

5. Stages of Change
Viewing Compliance as Opportunity
Making Value Chains Sustainable
Designing Sustainable Products and Services
Developing New Business Models
Creating Next-Practice Platforms

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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