Powering Innovation Through Sustainability
FROM THE CEO
There is no alternative to sustainable development. We live in a time of technological advancement that is unprecedented in its pace, scope and depth of impact. Harnessing that change is the most secure path for the international community to deliver on the 2030 agenda for people, peace and prosperity. Frontier technologies hold the promise to revive productivity and make plentiful resources available to end poverty for good, enable more sustainable patterns of growth and mitigate or even reverse decades of environmental degradation. But technological change and innovation need to be directed towards inclusive and sustainable outcomes through purposeful efforts by governments, in collaboration with civil society, business and academia.
To develop innovations that yield sustainable results, leaders must question the implicit assumptions behind current practices. This is exactly what led to today’s industrial and services economy. Someone once asked: Can we create a carriage that moves without horses pulling it? Can we fly like birds? Can we dive like whales? By questioning the status quo, people and companies have changed it. In like vein, we must ask tough questions: Can we develop waterless detergents? Can we breed rice that grows without water? Can biodegradable packaging help seed the earth with plants and trees? Can I fold my house and move it to a new location? Or change the internal structure of my home without breaking any walls?
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. Just as some internet companies survived the bust in 2000 to challenge incumbents, so, too, will sustainable corporations emerge from today’s recession to defy the status quo. By treating sustainability as a goal today, early movers will develop competencies that rivals will be hard-pressed to match. That competitive advantage will offer superior corporate positioning, because sustainability will always be an integral part of development.
CHIEF EXECUTIVE OFFICER
WITH EMPHASIS ON OUR PERSPECTIVE
The 2030 Agenda for Sustainable Development sets ambitious global goals, demanding unprecedented actions and efforts across multiple interconnected social, economic and environmental issues. Science, Technology and Innovation (STI) must play a central role in the achievement of these goals. The process of creative destruction initiated by technological progress can help to transform economies and improve living standards, by increasing productivity, and reducing production costs and prices.
Sustainability assumes greater relevance in the context of innovation. While it is valid to discuss sustainability as an important driver in value creation, differentiation of products and services will ultimately play a greater role in shaping a company’s prospects in the market. Increasingly, that differentiation is the product of sustainability-driven innovation.
Efforts to drive innovation can either be sustaining, providing an incremental advantage within the current competitive landscape, or they can be disruptive. Both types of innovation are important because they add value to a company, but disruptive innovation opens up new roads that organizations may not have considered. Either type may be driven by sustainability concerns.
Because innovation in business is generally intended to confer an advantage, it can be useful to view innovation in terms of those advantages—foremost among which are cost leadership, quality/performance and speed to market.
-Cost leadership: Calling cards are an example of a sustaining innovation that increased the convenience associated with making long distance or international calls. However, Internet telephony is a disruptive innovation that is redefining the cost equation for the entire telecommunications industry.
-Quality/performance: Compact fluorescent light bulbs (CFLs) are an incremental innovation that use less energy than traditional light bulbs. But new light emitting diode (LED) bulbs are a more significant sustaining innovation. They are even more energy efficient than CFLs, deliver higher-quality illumination, last much longer, are cooler to the touch and contain no mercury.
-Speed to market: DVD-by-mail was disruptive, increasing competitive pressures on local video stores through the creation of a new channel (or, perhaps more accurately, repurposing a channel that dates back to the 1840s). Now on-demand streaming video is giving DVD-by-mail a taste of its own medicine, being disruptive both to DVD-by-mail and the video store models.
Sustainability-driven innovation goes beyond designing green products and packaging solely on their inherent virtue. It entails improving business operations and processes to become more efficient, with a goal of dramatically reducing costs and waste. It’s also about insulating a business from the risk of resource price shocks and shortages. When considered together, these enhancements can deliver business benefits that go beyond the bottom line—whether it’s improving overall carbon footprint, enhancing brand image or engaging employees in a more profound way.
In a constantly evolving world, even a traditional sector such as real estate changes and innovates. In our view, the future of real estate is directly linked with innovation. The startups of today are the potential industry leaders of tomorrow. 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.