Integrating Sustainability And Innovation

March Experts predict that today's population will increase by another 50% to reach more than 10 billion people by 2050. The demands on both the climate and the world’s diminishing resources are likely to be even more intense as emerging societies move towards a higher standard of living. With increasing numbers of people demanding more from a planet that is already reaching its limit, it is not “rocket science” to work out that sustainability will be an increasingly hot issue, not just in terms of the climate, but also in guaranteeing that we have enough food to eat and enough energy to keep functioning. By now, just about everyone recognizes that we have a problem, but as the recent climate change conference in Copenhagen demonstrated, creating enabling mechanisms and changing behavior and perceptions is not easy.

The Forum for Corporate Sustainability Management (CSM), a research and learning initiative of IMD, was established to help companies integrate social and environmental issues into corporate strategies and processes. The short way of saying it is that we work with a membership of global companies to “get stuff done” in the area of global sustainability. We also facilitate cross fertilization of learning amongst companies and industries. Above all, CSM can work with teams faced with sustainability challenges in companies and, using open innovation and knowledge brokering techniques, help them to “leapfrog” towards solutions. Research indicates that there can be significant barriers to introducing process innovation into any organization. This can be especially true in business, and above all when it comes to process innovation related to sustainability strategies. Management tends to see innovation itself as a “fuzzy” area. Entrenched mindsets, reluctance to introduce change into a system that already seems to be working (“if it ain’t broke, don’t fix it!”) and a tendency to short-term strategic planning, are some of the main hurdles to new ideas.

The most effective way to overcome such obstacles is, not only to build a strong business case for change, but also to organize multiple demonstrations and rehearsals until the new concept is internalized in the organization. Let’s call it “the woodpecker approach.” But even getting to this stage is an arduous task for sustainability managers and others concerned with embedding sustainability in organizations.

CSM research at IMD shows that in most cases even progressive firms do not fully develop and roll out the business case for sustainability to the maximum. Even more important, the current shareholder model places a maximum emphasis on short-term results. Often there is no reward or incentive for a manager to risk disrupting the organization with a new idea whose benefits are not immediately obvious. Most managers are short on time and resources, and are understandably hesitant to add to the workload unless there is a clearly identifiable and immediately tangible (thus quantifiable) business advantage to the company.

Our research also reveals that even in companies that have a direct interest in sustainability, such as the food and beverage industry, which is heavily dependent on raw material from agriculture (affected also by climate change), there is often a disconnect between the company's long term interests and the shorter term interests of powerful business units such as procurement and marketing, which set their own policies with the company.

So how does a change agent — the person or group that is actually trying to innovate —manage to win over the skeptics and move forward with the sustainability agenda? How do you convince a company's management that when it comes to sustainability, it can make business sense to go beyond mere compliance? Our research shows that simply advocating change is not enough. Approaching the key stakeholders in a company requires careful analysis and a highly structured approach.

[This article has been reproduced with permission from IMD, a leading business school based in Switzerland. http://www.imd.org]