Corporate innovation used to be about digitising an off-line business. Then it became about trying to capture new fast-growing startup-style business ideas, like direct to consumer and influencer marketing. The next wave — and possibly the most crucial one — is all about sustainability.
Indeed, the quest for sustainability is already starting to transform the competitive landscape, which will force companies to change the way they think about products, technologies, processes, and business models. The key to progress, particularly in times of economic crisis, is innovation. By treating sustainability as a goal today, early movers will develop competencies that rivals will be hard-pressed to match. That competitive advantage will stand them in good stead because sustainability will always be an integral part of development.
Sustainability is the innovation challenge of our generation
Just look at IKEA, the global furniture store. Their aim is to be a fully circular and climate-positive business by 2030. One of the steps towards this has been the announcement of a furniture buy-back scheme. IKEA will buy back unwanted furniture from customers and sell it back in store second-hand, cutting back on landfill waste.
With big names like this setting the tone, corporate customers are increasingly asking for innovation consultancies to help with sustainability transformations, says James Haycock, UK managing director at Idean, the global design studio. There is a recognition that a new generation of customers is demanding that companies do better.
Moreover, the coronavirus pandemic has hugely accelerated the trend. The break with “business as usual” creates a unique opportunity to rethink things and do them entirely differently.
But how do we actually do this day-to-day?
1. You need to change mindsets not just projects and systems.
To make a sustainability transformation work, you need a deep mindset-level change in the company. Forum for the Future’s Le Grand outlines four different corporate mindsets, which all have responded differently to the coronavirus crisis: these are a) those who want to retreat and protect their own, b) to those who welcome more authoritarian control, c) to those who see more chaos and uncertainty to d) to those who see the crisis as a springboard for change. Start by addressing this most basic mindset level to bring people along on the journey, she says.
2. Remember what you learned from pushing digital transformation.
CEOs talked about “burning platforms” when they proposed digital transformation plans to their companies 10-15 years ago. It was seen as a do-or-die moment, where businesses would either transform or be overtaken by the competition. It is the same for sustainability and leaders should use the same strong arguments. Customers — particularly younger ones — simply won’t support unsustainable businesses anymore. Environmental destruction and inequality are already taking a toll on business, from supply chains to growth prospects.
3. Make sustainability someone’s job.
If you want people to take sustainability seriously, put it into their job descriptions. This is what IKEA did — all country managers now have sustainability in their title and are held responsible for sustainability targets as much as they are for trading profit and loss.
4. Sign up to science-based targets and get people excited about sustainability.
To show your company is serious about sustainability, you need to measure progress against targets and make these transparent and easy to verify. A good place to start is to join Science Based Targets, a non-profit organisation run by the CDP, the United Nations Global Compact (UNGC), World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). Likewise, you can create an in-house team to share your target progress and some tips on how to be more sustainable in the company.
Leadership and talent are critical for developing a low-carbon economy. The current economic system has placed enormous pressure on the planet while catering to the needs of only about a quarter of the people on it, but over the next decade twice that number will become consumers and producers. Traditional approaches to business will collapse, and companies will have to develop innovative solutions. That will happen only when executives recognize a simple truth: Sustainability = Innovation.