25 May 2017 – Alasdair Marks, Corporate Adviser at Business in the Community (BITC) discusses how organisations need to innovate in order to be sustainable. Alasdair recently attended a Sustainable Leadership Lab, focusing on sustainable innovation. These two-day immersion sessions are designed to co-create workable, practical solutions to key current and future constraints to ‘business as usual’ that increase business resilience, promote social development and/or access new markets.
Five years ago I began a new career in sustainable business. It’s a relatively short period of time but the pace and scale of change in the world is accelerating faster than I could ever have predicted when I started.
Consider trends like the digital revolution, extreme climate change, population growth, ageing populations, social inequality, political instability, consumer values and rapid urbanisation. Put them together and start to understand the complex relationships between them and you realise just how fundamentally and quickly it’s changing our immediate and long-term future. Some of these trends are constraining how business can operate, for example more people consuming scarcer resources that mean linear ‘take, make, dispose’ business models are no longer feasible even in the shorter term. Some – if harnessed – are enablers of commercial and societal success, such as the digital revolution. For example, the prediction that digital solutions could help reduce global oil consumption by 70 per cent and carbon emissions by 20 per cent in 2030. Read our report A brave new world? Why businesses must ensure an inclusive digital revolution to find out more.
Our interest at BITC is in how businesses adapt to and embrace new ways of working in response to this ever-evolving operating environment and how they can maximise opportunities to drive social, environmental and commercial value. I have the privilege of working with many, mostly larger, companies from a range of sectors and it’s given me some great insights and exposure. There is no doubt that the appreciation of the need to change has accelerated and we’re starting to see more ambitious and, dare I say it, transformative approaches. But it’s not yet happening quickly enough to keep up with the pace of change of external factors. Examples that illustrate the commercial risk of this for more traditional companies are everywhere. I happen to be writing this in the week it was announced that Tesla's market value has overtaken that of Ford, its shares rising after announcing record electric vehicle deliveries in the first three months of this year, up 70 per cent on the same quarter last year. Now, Tesla’s sales are of course only a fraction of Ford’s, but the market is clearly excited by the potential. The big question for Ford and other big players in the sector is, are they responding and adapting quickly enough?
There are numerous reasons – internal and external – why the pace and scale of change is slower in some companies than others. A notable one is that innovation for larger, more established businesses can be challenging if such a culture doesn’t already exist. They can be constrained by process or traditional hierarchies and ways of working.
I recently attended a Cambridge Institute for Sustainability Leadership (CISL) Sustainable Leadership Lab, focusing on sustainable innovation. These two-day immersion sessions are designed to co-create workable, practical solutions to key current and future constraints to ‘business as usual’ that increase business resilience, promote social development and/or access new markets. My group focused on consumer textiles (or ‘fast fashion’) with other groups looking at energy provision, health and technology, urban construction and fast-moving consumer goods (FMCG).
We took inspiration from the sessions on the first morning which introduced different types of innovation, key principles and inspiring examples, from MittiCool’s clay fridge to GEs ECG machine; the latter initially developed for India’s rural markets but now being launched elsewhere, including Western economies. A key theme was innovation under constraint. We’ve all heard the phrase ‘necessity is the mother of invention’, that when the need for something becomes essential, you are forced to find ways of getting or achieving it. This made me reflect on my conversations with companies about how they manage their material social, environmental and economic issues. A culture of risk management can be so prevalent and it seems the real danger is that the issues that find their way on to the risk register are seen only as a potential inhibitor to growth. In fact, they must be seen as a catalyst for innovation and potential growth. In a 2013 report by Accenture, Marks & Spencer and Business in the Community (Fortune Favours the Brave) it estimated the size of the market for businesses to engage in social and environmental related innovation at £100bn in the UK alone.
It was hugely helpful to follow a process that started with the issue (or ‘constraint’), generated ideas and spent time developing a commercial solution that addressed the issue. It felt very real, all the groups developed credible potential solutions and the value of co-creating with peers from different organisations and backgrounds, all bringing different perspectives, cannot be underestimated. Look out for the modular ’10 year t-shirt’ and clothes repair workshop coming to a High Street near you!
What’s clear is that all businesses need a long-term strategy to do more with less. The ability to innovate under constraint – to be frugal, agile and inclusive – is quickly becoming the key differentiator for large organisations. So what can companies do to help enable and drive innovation? These are the ones that resonate best with me:
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Develop purpose beyond profit. Products that solve societal challenges will drive innovation – it encourages companies to think big and think positive (see BITCs Purpose Toolkit for the What, Why & How on Purpose).
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Set bold public ambitions that will challenge the business to come up with solutions (Unilever Sustainable Living Plan; O2 Think Big Blueprint).
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Create a culture where innovation can flourish – ideas can come from anywhere in the business. Give employees time and space to experiment and be forgiving of mistakes (3M).
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Take inspiration from and engage with emerging economies (use Jugaad to innovate faster, cheaper, better).
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Large organisations can struggle to be entrepreneurial and small organisations can struggle to scale up ideas. Work together to improve lives everywhere (RBS entrepreneurial hubs; EDF Blue Lab).
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Use and develop networks to explore ideas with people from different organisations.
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Get your people out of the business to experience social and environmental issues first hand – use their insights to drive business strategy (GSK Pulse; BITC Business Connectors).
Blog first published on the BITC website.
