We Need to Grow to Become Sustainable
To many environmentally and socially conscious people, business growth is the root of evil.¬† Stop growing, they argue, and we will more quickly reduce the amount of energy and water we use, shrink our carbon footprint, improve our health and stop the exploitation of labor around the world. You can read tweets every day that call the expression ‚Äúsustainable growth‚ÄĚ oxymoronic and efforts to achieve such an equilibrium unattainable.
But the opposite is true. Businesses that grow will make the world‚Äôs future state more sustainable than it is today. Enlightened executives have figured out that to survive, their companies need to deal with the environmental and human resource limitations in their own operations. And to thrive, they must address the sustainability needs of their customers ‚Äď both consumers and businesses ‚Äď who have the same constraints.
Those business leaders that ‚Äúget it‚ÄĚ and lead their company with sustainability in mind will outperform those that don‚Äôt. They will be profitable and grow while other, less sustainably minded companies will decline and die. Through that basic market mechanism, with selective public policy encouragement, we will become a more sustainable world.
Companies realize there are costs to be saved, markets to be created, and revenues to be gained by advancing sustainability. Indeed, sustainability is being heralded as the ‚Äúnew frontier‚ÄĚ of innovation in places like the Harvard Business Review and in publications from the executive offices of Global 1000 companies.
Much is underway in supply chains and internal operations to cut resources, waste, emissions and costs. Capital is flowing into new companies to create wind and solar markets through existing venture models. Stimulus funding is supporting policy objectives around the world.
The best companies are focusing now on adding new revenue through sustainability based innovation along one of three paths:
Innovate For Sustainability: With all the initiatives businesses are taking to improve resource efficiency and the changes consumers are making to adopt more environmentally conscious habits, there is a large and growing opportunity for companies to innovate for the sustainability needs of customers.
Siemens, for example, has developed an ‚ÄúEnvironmental Portfolio‚ÄĚ of products and solutions that make ‚Äúa direct and verifiable contribution to environmental and climate protection.‚ÄĚ The portfolio, which produced ‚ā¨23 billion of revenue for the company in 2009, includes turbines, lighting, trains, automation and many other products across nearly all of Siemens‚Äô businesses. For consumers, P&G has followed an innovate for sustainability path with it popular coldwater detergent that helps customers save 80% of energy costs expended in each load of wash.
Innovate In Sustainability: Companies that innovate in sustainability design products and services that use superior environmental or social approaches to improve product performance, lower costs or meet unserved needs. Makers of LED lights, for example, have met the unserved desire for a bulb that never needs replacing, eliminating the high maintenance costs in industrial applications and the general inconvenience at home. The solution comes from technology which makes the bulb many times more energy efficient than incandescent and fluorescent bulbs, is mercury free and provides high quality light.
Eastman Chemical developed its Tritan copolyester to address the market demand for a plastic that was heat resistant and durable enough so that baby and sports bottles could be run through dishwashers without degrading.¬† To improve performance, Eastman eliminated bisphenol-A (or BPA), central for years to plastics used in these applications, but just beginning to be scrutinized for potential health risks at the time the company created this innovation.
Innovate with Sustainability: Many companies don‚Äôt have existing markets or products to innovate for and have limited competencies or assets to innovate in sustainability. At these companies and at those that want to accelerate their growth from sustainability, innovating with others outside the company using a range of collaborative and contractual methods has been a useful path.
GE has demonstrated a range of innovate with approaches, including having acquired their now $7 billion/year wind turbine business for $200 million in 2002 and committing to invest the same amount to a host of ideas coming through an online challenge competition they started in 2010 .
Companies should be aware that innovation that is primarily about sustainability and sacrifices product performance or increases costs will not drive revenue or profit growth.¬† Instead, innovating for, in and with sustainability will put you on the path to revenue growth.
Steve Goldstein, managing partner of Growth Advisors, has worked with companies to turn sea changes in technology, society and economics into game-changing innovation, advantage and growth. He has helped major corporate clients across a range of industries grow and transform their businesses, strategies, operations and organizations. As a catalyst, strategy advisor and implementation partner, Growth Advisors helps companies innovate around the sustainability imperative. They work with companies to develop sustainability strategies, systematically innovate, drive business change, and ultimately grow revenue and profit.
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