Article by Leonie Hirschmann and Susan T. Jackson
The European Commission’s most recent survey on business enterprises and community innovation indicates that among medium-sized enterprises in Europe, more than 50% identify as business process innovators, and only 40% as product innovators. A global corporate survey revealed that nearly 7 out of 10 companies report sustainability as a top motivator for their boards. Yet accusations of green-washing and blue-washing – when companies misrepresent their environmental and social actions and impacts as positive and farther reaching than in reality – seem to grow everyday. As much as 42% of green claims alone were found to be erroneous or deceptive. How, then, can innovation and sustainability work together?
What is sustainable innovation?
Whether traditional or sustainable, businesses undertake a wide range of innovation activities and processes to develop new ideas into products, services and processes. Sustainable innovation practices take the process further by bringing positive environmental and social goals in at the design phase – bringing in the principles of sustainable development so often left out of traditional innovation management.
Stages of a sustainable innovation process
Typical innovation processes include several phases from ideation to prototyping to testing and product launch. If we look more closely at innovation frameworks, such as design thinking, the stages allow for great opportunities to develop solutions based on sustainability challenges. However, these solutions require the right mindset and capacity along all of these phases – we need a holistic perspective on how specific factors influence each other and where the actual needs are.
Innovating business models
Innovating your company's business model to become more sustainable opens up opportunities to many benefits, including competitive advantages. Developing sustainable business model innovation takes thoughtful engagement. It means making changes to how your company operates so that you maximize positive outcomes while minimizing negative ones. Moreover, integrating sustainable innovation into business models can help protect businesses from political, social and economic risks, for example, through cost reductions and increased productivity.
Innovation management
Different innovation management strategies aim to integrate innovation and sustainability into business models. For example, the concept of circularity is when companies reconfigure their processes to establish new connections between production, consumption, and resources. This reconfiguration is a transformation from a take-make-waste linear model to a circular model that focuses on three factors that transform how we do business and lead our lives: eliminate waste and pollution; keep products and materials in circulation; and regenerate nature. Circularity is driven by green process innovation that can contribute to profitability as well as reduce negative externalities a linear approach promotes. Circular transformation helps establish new infrastructure and provides alternatives in production, waste management, and after-sales activities. Social business innovation similarly takes a holistic approach with a focus on how social concerns and business are integrated. This integration enables transformative social practices and co-creation processes that promote social and eco-system well-being at the same time.
Moving forward with sustainable innovation
Sustainability and innovation go hand in hand in an ever-increasing regulatory environment. Moreover, regulation can enable innovation, for example by providing rules that limit wasteful practices. Beginning in January of this year, aiming to reduce environmental waste Germany began implementing new rules for takeaway food and beverages that mean restaurants and others in the sector must offer reusable packaging. Due to this new rule, companies and restaurants that innovate on takeaway packaging will be better placed than those that lagger. Some food providers have already implemented a deposit system for their packaging. In an effort to use waste as a resource and a move toward a circular economy, the EU Parliament voted earlier this year in support of stricter laws on exporting waste. The rules aim to promote circular innovation. Innovation ecosystems that currently center on universities and other research organizations would benefit from incorporating a wider range of partners including businesses. This kind of collaboration could help support commercialization of sustainable ideas and foster business creation.
Opportunities abound with a sustainable innovative mindset and thinking outside the box.
LIST
Momentum Novum has a proven approach for future-proofing your business model:
Leadership
Innovation
Strategy development
Transformation
Reach out to learn what LIST can do for you.