As we look back on the tremendous pace and variety of innovation over the past 20 years, two main driving forces stand out: In the 1990s, new technology tended to drive business innovation, while today, sustainability oftentimes does a good part of the driving.

To unpack this statement, we recognise two types of sustainability through innovation:

  • Firstly, we can contain our input costs and ensure the survival of our planet, species and way of life by adopting sustainable new resource models (e.g. solar energy, water and waste recycling, alternative work sourcing, etc.) and pursuing ‘greener’ outputs (e.g. electric cars and large-scale digitisation).
  • Secondly, by taking more environmentally-friendly products or services to market or doing business in new ways, we can ensure our own commercial sustainability – and not merely by saving costs, but by attaining competitive advantage.

CSR or business objective?

While most business owners agree that sustainability innovations can generate savings, and 48% report having changed their business model to incorporate sustainability (2012), few agree that it can bring competitive advantage.

Harvard Business Review (HBR) reports that US and UK CEOs resent having to make sustainability improvements when international rivals don’t have to play by the same rules. For example, their suppliers may not be able to provide visibility into their supply chains; sustainable manufacturing requires new equipment and processes; and their customers may not pay more for eco-friendly products during a recession.

By logical extension (and the article doesn’t make this point), why would CEOs in unregulated countries make such improvements when they don’t have to?

Consequently, most executives treat sustainability as a form of corporate social responsibility (CSR), driven by compliance and divorced from business objectives.

Learn from the leaders

Yet there are many examples of companies that succeeded from pursuing innovation that was considered neither necessary nor immediately profitable.

Having studied the sustainability initiatives of 30 large companies, HBR found that sustainability is “a mother lode of organisational and technological innovations that yield both bottom-line and top-line returns”.

To begin with, being green lowers input costs. In addition, it can generate additional revenues from better products or enables the creation of new businesses. Furthermore, proactive innovation beyond the minimum legislated sustainability requirements, can reduce time consuming compliance oversight by turning antagonistic regulators into supporters.  As a result, many smart companies today treat sustainability as innovation’s new frontier.

While specific examples and the journey of innovation that most companies go through are beyond the scope of this article, we highly recommend reading the full HBR article here.

At which stage of innovation maturity are you?