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Towards Sustainability Oriented Innovation - Insights from the Sustainable Innovation Lab (SusIN Lab)
Bettina von Stamm*Innovation Leadership Forum, Old Rectory, North Wootton, Norfolk PE30 3RD, United Kingdom.E-mail: [email protected] * Corresponding author
Dorothea ErnstPreviously Dorothea Seebode, CelViva, Am Tivoli 25, 52070 Aachen, Germany.E-mail [email protected]
Sally JeanrenaudBusiness School, University of Exeter, Streatham Court, Rennes Drive,Exeter EX4 4PU, UKE-mail [email protected] Abstract: Innovation has been high up on the agenda of commercial, not-for- profit and government organisations alike and is considered to be key for our future. More recently companies have begun to wake up to the fact that current business models based on abundance are no longer sustainable - a fact that international sustainability research has emphasised for quite some time. This paper will introduce some experiences and lessons learned from case studies shared in the SusIN Lab, an initiative of the University of Exeter. Three workshops and a conference were held between 2012 and 2013, exploring the 3-level NBS model of Innovating for Sustainability in a multi-stakeholder setting: (1) Operational Optimisation, (2) Organisational Transformation, and (3) Systems Building. The SusIN Lab methodology provided an active learning environment, and confirmed that innovating for sustainability is generating new forms of value and competitive advantage for companies. Further research is required to understand the dynamics of innovating for sustainability at different levels; to help populate and generate a maturity model; and to help guide thinking related to large scale system transformation urgently required for a sustainable future.
Keywords: sustainability-driven innovation; experiential learning; operational optimisation; organisational transformation; systems building
1. IntroductionInnovation has been high up on the agenda of commercial, not-for-profit and government organisations alike and is considered to be key to our future. Knowledge on this topic has expanded rapidly over the past decades - a quick search on amazon.co.uk reveals that over 400 innovation related books have been published in 2013 alone.
International sustainability research has long drawn attention to the urgent challenges such as climate change, loss of biodiversity, water and energy security, declining resources, population growth, poverty and growing social inequalities (WCED 1987; Meadows et al, 2004; WWF 2012). Many of these ‘crises’ are interdependent, develop faster than most policy makers could have predicted, and have profound implications for business.
This paper was presented at The XXV ISPIM Conference – Innovation for Sustainable Economy & Society, Dublin, Ireland on 8-11 June 2014. The publication is available to ISPIM members at
www.ispim.org.
1
Current business models, based on abundant raw materials, cheap labour and endless consumption, are inadequate for securing our future. While some companies are beginning to wake up to this reality, attempts to align innovation and sustainability agendas are only emerging slowly.
The aim of the paper is to share questions, examples and learnings from the first phase of the SusIN Lab, an initiative of the University of Exeter Business School which ran from December 2012 to September 2013.
2. BackgroundSustainability, defined in the Brundtland Report (1987) as “meeting the needs of the current generation without compromising the ability of future generations to meet their own needs,” has become a growing concern. In more and more organisation have discussions around sustainability and sustainable development found their way into boardrooms. To accelerate the move from talking to action, understanding is needed of how sustainability thinking and acting can drive innovation and create value, and how sustainability considerations can be embedded into an organisation’s DNA.
There are rich bodies of literature to help us understand innovation and sustainability yet when it comes to . insights on what sustainability driven innovation means, looks like, and how it might be managed we tend to draw a blank. This is not least due to the fact that in most organisations the homes for 'innovation' and 'sustainability' have very different roots and reporting lines; very rarely is responsibility for these two topics in the hands of one and the same person or department. While sustainability issues have been taken up mainly through corporate philanthropy and corporate social responsibility, generally functions located at an organisation's headquarters, innovation has been the responsibility of marketing or R&D, depending on the industry, more often than not located within individual business units.
Relevant publications that bring these two domains together have only started to emerge over the past few years, such as, for example, Seebode, 2011; Seebode et al, 2012; Adams et al, 2012.1
One of the reasons is that the protagonists of sustainability have often blamed today's market-centric economic model in general and business as a major actors in particular for the planet's ecological and social problems. It is argued that while business has helped deliver enormous prosperity, it rarely takes into account the costs of its activities for nature and people (the so called 'negative externalities'); environmental degradation and a growing divide between rich and poor are considered to be unwanted byproducts (Sukhdev 2012). Commercial organisations on the other hand have viewed environmental and social considerations mostly as a matter of compliance, a cost, and a burden. It is only recently that sustainability challenges have been seen as positive opportunities to improve supply systems, engage consumers, generate new forms of value, and contribute significantly to an organisation’s overall success.
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1 In 2012 the Canada-based Network for Business Sustainability (NBS) commissioned researchers from the Business School, University of Exeter to undertake a systematic review of the ‘innovating for sustainability’ literature . The study involved a review of 127 articles from the academic and practitioner literature and focused on the period between the two earth Summits 1992-2012. The resulting report 'Innovating for Sustainability presented a 3-phase framework which was used to structure the SusIN Lab events.
3. MethodBased on the assumption that in order to move towards sustainability-driven innovation different management competencies and organisational capabilities are needed, the first phase of the Sustainable Innovation Lab (SusIN Lab) brought together a highly diverse group of different stakeholders (large and small companies, representatives of government and NGOs, academia as well as consultants and other amplifiers2), exploring questions such as,
• Innovating for sustainability, sustainability-oriented innovation, sustainability driven innovation, what do these terms actually mean?
• What management tools, processes and frameworks are available that can be used in the context?
• Which new methods and approaches are required?
• What are next steps / questions to be addressed in order to move forward?
Over a 10 months period 4 events were held: 3 workshops (December 2012, March, June 2013) and a concluding conference (September 2013). Each event attracted between 25-45 participants from a wide range of backgrounds. All events followed the general flow of:
• Experiential learning: experiencing challenging aspects of sustainability driven innovation;
• Sharing practical examples: around 3 case studies from different types of organisations;
• Conceptualising: offering frameworks and insights from academia; • Harvesting: an exercise or group discussions to address pertinent questions, distill
shared knowledge, or identify next steps and challenges.
The sequence of the three SusIN Lab workshops was guided by a 3-level framework introduced in the NBS report “Innovating for Sustainability. A Systematic Review of the Body of Knowledge” (Adams et al, 2012). The framework and a brief introduction to its 3 levels are shown below.
Figure 1: NBS Framework (Adams et al, 2012)
This paper was presented at The XXV ISPIM Conference – Innovation for Sustainable Economy & Society, Dublin, Ireland on 8-11 June 2014. The publication is available to ISPIM members at
www.ispim.org.
3
2 An overview of participating organisations and case studies can be found in Appendix I.
Operational Optimisation (Workshop 1) - is characterised by the approach Eco-Efficiency. Its innovation objective is compliance and efficiency or it’s about doing the same things better. The outcome is relatively reduced harm. Its nature is incremental improvements with respect to ‘business as usual’.
Organisational Transformation (Workshop 2) - is characterised by the approach of creating New Market Opportunities. Its innovation objective is to create novel products, services or business models or in other words it’s about doing good by doing new things. It creates shared value for multiple stakeholders and requires new business processes next to the establishment of systemic relationships to multiple stakeholders. It is likely to involve radical innovation drawing on a much more ‘open’ approach. In this context new models of innovation are emerging such as frugal innovation, resource-constrained innovation, reverse innovation, jugaad innovation (e.g. Govindarajan & Trimble, 2012; Radjou et al, 2012).
Systems Building (Workshop 3) - is about the conscious creation of Societal Change. Its innovation objective is about creating novel products, services or business models that are impossible to achieve alone but need collaboration of several actors. It’s about doing good by doing new things with others. The expected outcome is net positive impact. In this context new approaches as environmental and social enterprises, co-creation, eco-system innovation, closed loop or circular economy are emerging.
The conference brought together examples from all three levels, hence creating the bigger picture and enabling participants to understand the different steps as an integral journey.
4. Case Studies and Lessons This section will first introduce one case study for each of the three levels of the framework after which we will share some key insights and lessons learned, again at each level of the framework.3
Level 1: Operational Optimisation - Lafarge & WWF 4, 5 The Company
Lafarge is the world’s biggest cement, aggregates, and concrete producer. It operates in more than 60 countries; it has 65,000 employees, 1,570 production sites and in 2012 achieved sales of 15.8 billion Euros. Lafarge is the world’s biggest cement producer and in 2000 had a CO2 footprint that contributed 2% of global emissions, roughly twice those of Switzerland. In 2001 Lafarge agreed to a reduction of 10% by 2010, taking 1990 levels as the baseline. In 2012 Lafarge committed to become a ‘net positive’ company.
The Journey
In late 1999 Lafarge approached WWF International asking for their collaboration on a project “to plant a tree for every employee” to mark the new millennium. In 2000 WWF convinced Lafarge to enter a five-year partnership to help restore forests worldwide through
4
3 For the full workshop reports, please visit the initiative’s website (http://business-school.exeter.ac.uk/research/areas/topics/management/susinlab/).
4 See also Jeanrenaud, J-P and Jeanrenaud S. (forthcoming, 2015): Sustainable Business: The One Planet Approach. Chichester: Wiley.
5 More information about the partnership between WWF and Lafarge can be found on the Lafarge website:http://www.lafarge.com/wps/portal/2_3_4_1-Partenariats_Globaux
their Forest Reborn Initiative. Later that year, the agreement was extended to include two new work-streams on Persistent Pollutants and Climate Change: • To reduce CO2 from cement production in OECD countries by 10% (double that called
for under the Kyoto Protocol) below 1990 levels by 2010 and; • To reduce emissions globally by 20% net per tonne of cement produced, using the
same benchmark and timeline.
For the first time a large multi-national company in a heavy industrial sector had set such ambitious targets. Some senior managers doubted that the targets could be achieved within the timeline. Following the press conference announcing the targets, other companies, such as their major competitor Holcim, quickly followed suit. In 2002, Lafarge’s CEO was also asked to co-chair WBCSD’s newly founded Cement Sustainability Initiative (CSI).
The next step was to find ways of reducing emissions across their operations. Several strategies were adopted including: improvements in kiln energy efficiency; the use of biomass and waste as fuels (14% of fuel mix in 2012); product innovation of lower carbon cement solutions, e.g. the product ‘Aether’, which performs like Ordinary Portland Cement while achieving up to 30% reduction in CO2 emissions.
Progress towards the targets was independently monitored and annually verified by Ecofys.6 The results were then audited and assured by Ernst & Young and published in the company’s sustainability report.
By 2009, Lafarge had exceeded both targets a year ahead of time. 2011 two new targets were announced:• 33% reduction per tonne of cement by end-2020 below 1990 levels;• The development of sustainable construction solutions by 2015, consisting of 10 new
ranges of innovative products and solutions; and involvement in the design and delivery of 500 energy efficient construction projects around the world.
In 2012 Lafarge made a commitment to becoming a restorative or ‘net positive’ company, which gives back more to society and the environment than it takes. Lafarge is collaborating with Accenture and WWF to develop the concrete goals, milestones and metrics that will help achieve this goal.
Level 2: Organisational Transformation - PhilipsThe Company
Royal Philips NV (Philips), founded in 1891, is a global corporation and an internationally recognised brand name. It is a diversified health and well-being company, focused on improving people’s lives through meaningful innovation in the areas of Healthcare, Consumer Lifestyle and Lighting. Headquartered in the Netherlands, Philips posted 2012 sales of EUR 24.8 billion with an EBITA of 6.1%. Approximately 118,000 employees realise Philips’ sales and services in more than 100 nations.
The Journey
Between 2006 and 2011 Philips went on a consciously designed journey towards sustainability-driven innovation, resulting in a new vision for Philips early 2012: 7
This paper was presented at The XXV ISPIM Conference – Innovation for Sustainable Economy & Society, Dublin, Ireland on 8-11 June 2014. The publication is available to ISPIM members at
www.ispim.org.
5
6 Ecofys is a sustainable-innovation focused consultancy specialising in the energy sector (www.ecofys.com).
7 The Journey of Philips has been written up by Dorothea Ernst in 3 teaching case studies which can be found on www.innovation-portal.info.
“At Philips, we strive to make the world healthier and more sustainable through innovation. Our goal is to improve the lives of 3 billion people a year by 2025. We will be the best place to work for people who share our passion. Together we will deliver superior value for our customers and shareholders.”8
Philips’ legacy of innovation dates back to its foundation in 1891. In 1914, Philips Research was established to fuel the company with innovative technologies complemented since the mid 1920s by Philips Design’s aesthetic and human perspectives. Putting people at the centre of their business activities, Philips’ founding fathers embedded sustainability at the heart of their company since its start. From the beginning of the 20th century Philips employees benefitted from schools, housing and pension schemes. The company’s ongoing commitment to social and environmental issues is reflected in its participation in the Club of Rome’s “The Limits to Growth” dialogue and the following establishment of its first corporate environmental function in 1971.
However, until 2006 innovation and sustainability agendas at Philips had been pursued independently. The timeline below captures the different steps of the Philips’ journey, from aligning sustainability and innovation and creating a shared understanding, to embedding it into all aspects of the organisation: its processes, measures, positioning and vision in 2012. The whole journey was orchestrated by an internal change agent whose position was newly installed at Philips Research in 2006, and ended mid 2011.
Figure 2: Philips’ Journey 2006-2011
There was little sustainability expertise in the innovation organisation and the internal sustainability network had little knowledge about innovation. Hence, the first thing to do was to understand what lived under the notion of sustainability at Philips. Stuart Hart’s sustainable value framework helped to clarify the definition and served as mapping tool for the in 2006 running sustainability activities - which at that point in time turned out to fall predominantly under the category of “Operational Optimisation”. One of the results of the workshop was the emergence of a common and shared definition.
sustainable innovation and then embedding it fundamentally into the overall organisation: its processes, measures, positioning and vision in 2012. The whole journey was orchestrated by an internal change agent whose position was newly installed at Philips Research begin 2006 and ended mid 2011. There was little sustainability expertise in the innovation organisation, so the first thing to do was to understand what lived under the notion of sustainability at Philips. Stuart Hart’s sustainable value framework helped to clarify the definition and served as mapping tool for the in 2006 running sustainability activities.
29
SustainableValueInternal External
Today
TomorrowStrategy: Clean technology
Strategy: Product Stewardship
Strategy: Sustainability Vision
Strategy: Pollution Prevention
supply chain auditing
NSBI: Smile, Woodstove
ISO 14001
EcoVision III: green operations
EcoVision III: green sales
Health & Safety
EES Eco-Design
Legislation (Reach,
ROHS, etc.) compliance
Sustainability internet
Sustainability board, officeSustainability departments
HR
R&D
Marketing
DesignCommunications
Supply chain management
Business management
Sustainability KPIs,Policies, guidelines, etc.
Philantropy
StakeholderDialogue
Sustainability Annual Report
These predominately fell under the category of operations optimization. The internal Philips sustainability network had little or no knowledge about innovation. In a workshop end 2006 a common definition emerged. Begin 2007 the WWF Living Planet report 2006 offered a very powerful graph clarifying the global sustainable development challenge also inviting to see this challenge as a massive disruptive innovation opportunity.
Ecological
footprint
Human
Development
Index*
Source: WWF Living Planet Report 2006 *HDI = life expectancy + education level + purchasing power
Which innovations support
sustainable development?
The big picture in a nutshell
Dr.D.Seebode - Sustainable Innovation Lab - Workshop 1 - London, 12/12/2012
Three things about this graph are particularly useful, (a) it shows that a country CAN be in the sustainable space, (b) there is not the one ’right’ solution that fits for all but proper context understanding is required (c) it does not make sense to play the ‘guilt game’ since everyone needs to contribute to solve the overall challenge. In a way the graph also answered the question as to what innovation supports sustainability - anything that helps moving countries into the grey box. Three general for innovation directions were identified:
Developed economies (15%) - shift to sustainable consumption & focus on clean tech, Emerging economies (44%) - leapfrog to mindset of sustainable consumption & build with clean tech,
Developing economies (41%) enable development by creating work & build with affordable clean tech. Responding to the credit crises late 2008the World Business Council for Sustainable Development initiated the Vision 2050 project. It also was rooted in the WWF-sheet, therefore Philips joined. In 2010 (WBCSD 2010), it stated the goal for sustainable innovation: “In 2050 some 9 billion people live well, and within the limits of the planet”. The report also provided a pathway-map from today to the desired future. This was great news since the report could be used internally to point out, it is not only Philips who is talking about sustainable innovation, it is becoming a new paradigm for businesses worldwide. Although Vision2050
Quadrants of operational excellence or “operations optimization”
Quadrants of innovation excellence or “organisational transform. & systems building”
Figure 3: Stuart Hart’s Sustainability Value Framework (2005)
Begin 2007 the WWF Living Planet report 2006 offered a very powerful graph clarifying the global sustainable development challenge also inviting to see this challenge as a massive disruptive innovation opportunity (see Figure 4).
6
8 Source: http://www.philips.com/about/company/missionandvisionvaluesandstrategy/index.page
Quadrants of innovation excellence or
“organisational transform” & systems building”
Quadrants of operational excellence or “operations
optimisation”
Three things about this graph are particularly useful, (a) it shows that a country CAN be in the sustainable space, (b) there is not the one ’right’ solution that fits for all but proper context understanding is required (c) it does not make sense to play the ‘guilt game’ since everyone needs to contribute to solve the overall challenge.
In a way the graph also answered t h e q u e s t i o n a s t o w h a t i n n o v a t i o n s u p p o r t s sustainability - anything that helps moving countries into the grey box. Three general for innovation directions were identified:• Developed economies - shift to sustainable consumption & focus on clean tech,• Emerging economies - leapfrog to mindset of sustainable consumption & build with
clean tech,• Developing economies - enable development by creating work & build with affordable
clean tech.
Responding to the credit crises late 2008, the World Business Council for Sustainable Development (WBCSD) initiated the Vision 2050 project. It also was rooted in the WWF-sheet, therefore Philips joined. In 2010 the WBCSD stated the goal for sustainable innovation: “In 2050 some 9 billion people live well, and within the limits of the planet” (WBCSD, 2010). The report, which also provided a pathway-map from today to the desired future, was useful to Philips internally as it demonstrated the increasing urgency in the business community to move towards sustainable innovation, a new paradigm for businesses worldwide.
Although Vision2050 provided a recognisable framework, it still did not provide starting points for concrete innovation projects. Therefore Philips developed its own ‘manual’ with an internal version inviting to build a Philips-specific pathway map for sustainable development 2050 as well as an external version clarifying the emerging understanding of what sustainable innovation is all about (Seebode 2011).
One important shift in perspective introduced in this document is the insight that it all starts and ends with individuals. Consequently the triple-P model for sustainable business of overlapping circles that had been replaced by the nested model in 2002 was expanded by a fourth P, the person.
“If we do not add the individual in the centre nothing will change at all; it is each of us, as individuals in our different roles as professionals, citizens, private persons who make daily decisions on how sustainable we live.” (Seebode, 2012)
sustainable innovation and then embedding it fundamentally into the overall organisation: its processes, measures, positioning and vision in 2012. The whole journey was orchestrated by an internal change agent whose position was newly installed at Philips Research begin 2006 and ended mid 2011. There was little sustainability expertise in the innovation organisation, so the first thing to do was to understand what lived under the notion of sustainability at Philips. Stuart Hart’s sustainable value framework helped to clarify the definition and served as mapping tool for the in 2006 running sustainability activities.
29
SustainableValueInternal External
Today
TomorrowStrategy: Clean technology
Strategy: Product Stewardship
Strategy: Sustainability Vision
Strategy: Pollution Prevention
supply chain auditing
NSBI: Smile, Woodstove
ISO 14001
EcoVision III: green operations
EcoVision III: green sales
Health & Safety
EES Eco-Design
Legislation (Reach,
ROHS, etc.) compliance
Sustainability internet
Sustainability board, officeSustainability departments
HR
R&D
Marketing
DesignCommunications
Supply chain management
Business management
Sustainability KPIs,Policies, guidelines, etc.
Philantropy
StakeholderDialogue
Sustainability Annual Report
These predominately fell under the category of operations optimization. The internal Philips sustainability network had little or no knowledge about innovation. In a workshop end 2006 a common definition emerged. Begin 2007 the WWF Living Planet report 2006 offered a very powerful graph clarifying the global sustainable development challenge also inviting to see this challenge as a massive disruptive innovation opportunity.
Ecological
footprint
Human
Development
Index*
Source: WWF Living Planet Report 2006 *HDI = life expectancy + education level + purchasing power
Which innovations support
sustainable development?
The big picture in a nutshell
Dr.D.Seebode - Sustainable Innovation Lab - Workshop 1 - London, 12/12/2012
Three things about this graph are particularly useful, (a) it shows that a country CAN be in the sustainable space, (b) there is not the one ’right’ solution that fits for all but proper context understanding is required (c) it does not make sense to play the ‘guilt game’ since everyone needs to contribute to solve the overall challenge. In a way the graph also answered the question as to what innovation supports sustainability - anything that helps moving countries into the grey box. Three general for innovation directions were identified:
Developed economies (15%) - shift to sustainable consumption & focus on clean tech, Emerging economies (44%) - leapfrog to mindset of sustainable consumption & build with clean tech,
Developing economies (41%) enable development by creating work & build with affordable clean tech. Responding to the credit crises late 2008the World Business Council for Sustainable Development initiated the Vision 2050 project. It also was rooted in the WWF-sheet, therefore Philips joined. In 2010 (WBCSD 2010), it stated the goal for sustainable innovation: “In 2050 some 9 billion people live well, and within the limits of the planet”. The report also provided a pathway-map from today to the desired future. This was great news since the report could be used internally to point out, it is not only Philips who is talking about sustainable innovation, it is becoming a new paradigm for businesses worldwide. Although Vision2050
Quadrants of operational excellence or “operations optimization”
Quadrants of innovation excellence or “organisational transform. & systems building”
provided a recognisable framework, it still did not provide starting points for concrete innovation projects. Therefore Philips developed its own ‘manual’ with an internal version inviting to build a Philips pathway map for sustainable development 2050 and an external version clarifying the emerging understanding of what sustainable innovation is all about (Seebode 2011). One important shift in perspective introduced in this document is the insight that it all starts and ends with individuals. Consequently the triple-P model for sustainable business of overlapping circles that had been replaced by the nested model in 2002 was expanded by a fourth P, the person.
Source: B. Giddings, B. Hopwood, G. O’Brien, Environment, Economy and Society: fitting them together in Sustainable development, Wiley Interscience, 2002
Economy
Person
Addition of “Person”: D.Seebode, Sustainable Innovation, Philips, 2011 “If we do not add the individual in the centre nothing will change at all; it is each of us, as individuals in our different roles as professionals, citizens, private persons who make daily decisions on how sustainable we live.” In 2011 Philips identified three next steps for its sustainable innovation journey: Reframe early 2012 sustainability became part of Philips’ vision and by 2025 they want to have
provided benefits to 2.5 billion people; Crossing the chasm – currently mainstreaming is happening through consistently translating the
corporate sustainability targets into function specific language, targets and related metric Collaboration is building on its open innovation skills and expanding them to collaborating with a wide
range of organisations. Systems Building Case 1: Solar Century (512 words)
Figure XX shows the physical potential of renewable energies whereby the large orange cube represents the potential of the sun,the small red square in the bottom right corner the current annual Global Primary Energy Consumption - lots of potential there! Here some of the challenges Solarcentury faced in dissemina-ting its products:
• Installation of solar panels posed a challenge to the building process: electrics needed to be done first, then the specialist would have to return later to connect the panels
**** Solarcentury Ltd. is a solar energy company with special expertise in the build environment. It designs and supplies solar energy solutions for built environments. It offers its own proprietary solar building products such as photovoltaic (PV) panels, PV mounting systems, and solar inverters. The company serves government and industry customers; and schools and homeowners. Solarcentury Ltd. was founded in 1998, is based in London, UK, with offices in Italy, The Netherlands Solarcentury is a growing company of over 120 people. The diverse team is made up of designers, engineers, project managers, consultants, logistics and support staff.
This paper was presented at The XXV ISPIM Conference – Innovation for Sustainable Economy & Society, Dublin, Ireland on 8-11 June 2014. The publication is available to ISPIM members at
www.ispim.org.
7
Figure 4: The WWF Sheet (2006)
Figure 5: From triple to quadruple P
In 2011 Philips identified three next steps for its sustainable innovation journey:• Reframe - early 2012 sustainability became part of Philips’ vision and by 2025 they
want to have provided benefits to 2.5 billion people;• Crossing the chasm - currently mainstreaming is happening through consistently
translating the corporate sustainability targets into function specific language, targets and related metric
• Collaboration - is building on its open innovation skills and expanding them to collaborating with a wide range of organisations.
Level 3: Systems Building - InterfaceThe Company
Interface, Inc. is the world's largest manufacturer of commercial and residential carpet tiles. It was founded in United States in 1973; has an annual turnover of US $1billion, and is represented in 130 countries globally. In 1994 the bold sustainability ‘Mission Zero’ goals were set, promising to eliminate any negative impact of the company on the environment by 2020. Since then, the company has radically improved energy efficiency, reduced greenhouse gas emissions, eliminated waste, improved water efficiency, as well as cultivated a passionate culture of sustainability amongst its employees, which has saved the company millions of dollars. However, Interface is moving beyond operational optimization and organizational transformation and beginning to explore wider systems building approaches for net positive impacts on people and planet.
The Journey
The journey started in 1994 with founder Ray Anderson announcing “Mission Zero”, setting the audacious goal of reducing any negative environmental impact to zero by the year 2020. Anderson’s view was that without it the company might not move much at all - which is in stark contrast to how ambitions are set in most other organisations: by looking backwards, measuring what is easy to measure, choosing a low-risk strategy, and targets that seem achievable; an approach that tends to cement existing mindsets and the status quo.9
Mission Zero Achievements to Date
Achieving Mission Zero was different and required fundamentally re-thinking the products from scratch. The company had achieved some significant results by 2012:• Non-renewable energy use per unit of production is down 61% since 1996;• GHG (greenhouse gas) emissions per unit of production are down 41% since 1996• Energy use per unit of production is down 39% since 1996• 36% of energy used is from renewable sources• 49% of total raw materials are recycled or bio-based• Water intake per unit of production is down 81% since 1996• Waste sent to landfill per unit of production is down 91% since 1996• European absolute GHG emissions down by 74% since 1996
8
9 For a biography of Anderson see Anderson, R. & White, R. (2009): Confessions from a Radical Industrialist. Profits, People, Purpose - Doing Business by Respecting the Earth. New York: St. Martins Press.
Figure 6 on the right shows the global warming impact of carpet tiles by different aspects and stages of its life cycle. It can be seen clearly that the yarn used for the production of a carpet tile i s w i t h 4 5 % t h e b i g g e s t contributor to the tile’s material footprint. Unless the whole life cycle of products and i ts ingredients are considered there will never be the possibility to reduce its negative impact, meaning that the product needed to be redesigned from scratch - not something that many organisations are happy to engage with.
Looking at the single item with the biggest impact, the yarn, meant to challenge the product essence. This happened via three avenues:
1. Reduce yarn used: newly developed microtuft products use 350g versus 700g of yarn; in 2012 these products accounted for 14% of total sales;
2. Increase usage of recycled yarn: in March 2013 100% recycled yarn was available in over 368 colours;
3. Invent a new yarn.
An impressive reduction of 41% in kg CO2 equivalent in carpet tiles could be achieved since 1996 illustrating just how important it is to identify the appropriate lever. The ultimate ambition is to create a ‘circular’ supply chain for products, i.e. all materials used in the manufacture and use phase are recycled for re-use at the end of their use life.
Other ways to shift from the least to the most sustainable products are: • Glue manufacturers: TacTiles - rather than gluing the entire tiles to the floor which
generally causes damage to the substrate as well as consuming large quantities of glue, Interface has developed TacTiles which have an adhesive in each of the four corners of the tile; 30 million tacTiles are sold each year which equals 20% of products sold globally.
• Zoning furniture: Zoning - using the full flexibility and design capabilities of carpet tiles to create all kinds of zones within open spaces.
Embracing Wider Systems Building
More recently Interface has been pioneering a ‘restorative economy’ approach, intended to increase its net positive impact on society while still growing the business. This continues to involve reducing the impact of its carpet tiles, but in ways that give back to people and the planet. This engages more deeply with a systems change agenda by thinking about the role of business in society, and collaborating with communities, suppliers, NGOs and other actors.
Interface launched its Net-Works initiative in the Philippines in 2012, which helps clean up the environment and generates income opportunities for the poor in commercially viable ways.
This paper was presented at The XXV ISPIM Conference – Innovation for Sustainable Economy & Society, Dublin, Ireland on 8-11 June 2014. The publication is available to ISPIM members at
www.ispim.org.
9
Figure 6: Total Life Cycle Impact
Interface has started working with poor coastal fishing communities to recycle fishing nets into new yarn for its commercial carpet tiles. Discarded nylon nets are very damaging to the marine ecosystem: they continue to trap fish and other marine life, and undermine local fisheries. Poor communities receive payments for collecting up and cleaning the nets, and this supports livelihoods and local development projects.
The disused fishing nets become part of the supply chain for Aquafil’s innovative Econyl Regeneration system, which uses non-virgin nylon-6 resources, such as carpet waste, fishing nets and industrial scrap. These are recycled into new carpet fibre which yields the durability required for commercial carpet, thus reducing the environmental footprint associated with making the yarn from virgin oil.
Interface is undertaking this restorative economy initiative in collaboration with The Zoological Society of London (ZSL), Project Seahorse Foundation for Marine Conservation, and the yarn manufacturer Aquafil.
According to Ramon Arratia, Interface’s Sustainability Director, working with a range of stakeholders is a key to fostering systems building approaches for long-term sustainability. For example:• Retailers: working with retailers to ‘choice edit’ the products made available to
customers; phasing out unsustainable products and retailing only those from sustainable sources.
• Governments: lobbying for changes in policies that set bold emissions reduction targets, ban unsustainable products and landfill waste, and tax the ‘bads’ rather than the ‘goods’.
• Standard Setters: developing trustworthy labels that guide consumers to make sustainable choices.
The case studies of Lafarge & WWF, Philips and Interface are just examples for each of the three levels of the framework, during the workshops and conference many more were shared (von Stamm, 2012, 2013a, 2013b).
The next section will share some key requirements as well as key challenges for each of the three stages.
Requirements and ChallengesWorking at each of the three levels of the framework brings with it its own requirements and challenges which are outlined below.
Operational Optimisation - Key Requirements
1. Set clear sustainability goals and record progress. Many companies involved in operational optimisation set ‘stretch targets’ relating to carbon dioxide emissions, water, etc. of initially environmental later also social impact. Progress towards these targets is regularly and independently monitored and reported publicly.
2. Strategic partnerships help to find appropriate entry points to the journey. Some companies, e.g. Lafarge and Interface, have formed partnerships with NGOs to help them set targets and monitor progress. Partnerships with NGOs often catalyse the development of a shared sustainability agenda that delivers triple bottom line benefits.
3. Business case for sustainability. The business case for sustainability oriented innovation needs to be developed, e.g. through making the cost savings in reducing energy, waste, and other resources explicit, improving customer satisfaction, etc.
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Operational Optimisation - Key Challenges
1. Different ‘languages’ - many words have context-specific meaning yet when we use these words we often assume shared understanding; to speak with George Bernhard Shaw: “The problem with communication ... is the illusion that it has been accomplished.”
2. Different values - different stakeholders will have different considerations that are closest to their heart; there is a lovely German saying which liberally translated runs “what seems like a nightingale to one might be an owl to another.”
3. Different expectations - what a ‘successful’ outcome looks like is likely to vary from constituency to constituency.
Organisational Transformation - Key Requirements
1. Embed sustainability across the company. Organisational transformation goes beyond the cost savings generated by eco-efficiency measures. It implies embedding sustainability into the company vision, mission, operations, customer relations, metrics, and significantly within organisational culture.
2. Role of individual change agents. An individual, often an informal leader who is the personification of the desired change within the organisation is essential to drive and support consistent change over time. This involves understanding organisational contexts, psychologies, politics and the ability to build and leverage relationships of trust between people next to good functional expertise. These people are pretty good at doing many things, rather than excelling at one; they are bridge builders and translators.
3. Persistency and patience: it’s a long term Journey. Organisation transformation does not happen overnight. It involves a long term process and plenty of experimentation. Successful companies allow for creativity and learn from ‘failures’. Companies tend to be inspired or provoked by others in their sector, or through sustainable business platforms, such as the WBCSD, Clinton Climate Initiative, WWF One Planet Living.
Organisational Transformation - Key Challenges
1. Identifying actions, and associated metrics, that truly make a difference.
2. How to maintain momentum and not get stuck at the Operational Optimisation level.
3. Identifying ways to engage everyone in the organisation in a meaningful way in the transformation.
Systems Building - Key Requirements
1. System Solution Providers. When it is realised that long term value creation depends on the health of the overall system in which they operate, companies begin to take a helicopter view and envisage radically new system solutions to societies’ big challenges such as energy, mobility, food supply, etc.
2. Experiential learning and co-creation. No one company can enable large scale systems change on their own. It requires the active collaboration between business, investors, regulators, retailers, city planners, tradesmen, software designers, etc. Experiential learning, as embedded in the SustIN Lab workshop flows (experience – share – conceptualise – harvest/embody), helps to develop new collaboration and co-creation skills.
3. New Business Models. Systems builders seek business models that operate within nature’s budget, are in sync with natural systems, and at the same time serve social
This paper was presented at The XXV ISPIM Conference – Innovation for Sustainable Economy & Society, Dublin, Ireland on 8-11 June 2014. The publication is available to ISPIM members at
www.ispim.org.
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needs. This widely involves valuing nature’s services, recycling, circular economy and closed loop initiatives, producing on demand, building new markets, new forms of ownership, sharing, and value creation, new financing, pricing and valuation models.
Systems Building - Key Challenges
1. Identifying, understanding and engaging all parts of the relevant system.
2. Having the courage to start without seeing a clear path, and having the shared patience and stamina to continue.
3. Establishing trust, respect, a shared vision and mutual benefits for a group of highly diverse stakeholders.
The overarching lessons from the 3 workshops plus conference can be summarised as follows: while innovating for sustainability can occur at any level within a company, including on the factory floor, it is successful in the long term only where there is CEO and senior manager understanding and commitment and meaningful and relevant goals at the individual level. Budget holders play a particularly important role as resources need to be redirected into new activities, especially those that cross budgetary boundaries.
In addition to the key requirements and challenges at each of the three levels of the framework already been identified above, some overarching themes, relevant for all three levels are:
Vision and direction are essential in order to truly moving forward, as are BHAGs - big hairy audacious goals - that inspire and push people beyond what they thought possible.
It is essential to identify appropriate, meaningful measures for the individual as well as the organisational level. Successful change depends on winning over individuals, one by one which may require customised, easily understandable language.
Without boundary-spanning collaboration, be it inside the organisation, across organisational and national boundaries, organisational transformation and systems building will not be possible.
The further we proceed on the path towards sustainability, the more important it becomes to be able to ‘let go of individual egos’ and move from a mindset of ‘consumption’ to one of ‘contribution’.
5. ConclusionThis paper has provided an overview of the insights from the SusIN Lab, an initiative to explore the emerging concept of sustainability driven innovation.10 The structure for the flow of the events was provided by the NBS framework which introduces three levels of sustainability driven innovation: (1) Operational Optimisation, (2) Organisational Transformation, (3) Systems Building. From the case studies shared in the SusIN Lab it became clear that embracing sustainability-driven innovation creates benefits for organisations at each of the three levels (cost savings, new products, services and business models, new partnerships and business opportunities) and is hence creating considerable competitive advantage. While the three levels do not necessarily need to be approached in sequence, there is a ‘natural flow’ from Level 1 trough to Level 3 as Operational Optimisation is what we already know how to do and are hence most comfortable with.
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10 Insights for each of the three stages will be shared and discussed in more depth in additional papers to follow.
Engaging in Systems Building is new to almost all of us which means that we cannot rely on past experiences but have to develop new tools, frameworks and mindsets. If we want to bring everyone along, this can only happen collaboratively.
With its set-up and participants the SusIN Lab embraced some of the principles that support a move towards sustainability: involving and engaging diverse stakeholder from industry, academia, NGOs and government on a facilitated journey of,
- ‘experiencing’ - to create shared ground and common understanding, - ‘sharing’ - to disseminate leading practice, lessons learned,- ‘conceptualising’ - sharing tools, methods and frameworks, and- ‘harvesting’ - synthesising the day, eliciting questions and challenges and
identifying next steps.It became clear that a shared experience / experiment for all participants at the outset of each event was critical for creating the openness and understanding that is necessary to move beyond considerations for the individual towards a systems perspective.
From the case studies and discussions it became clear that a conscious, deliberate effort is required to engage individuals, organisations and societies in this journey. Current mindsets and structures bias against embracing the wider systems approach that is required to move towards sustainability. Hence a key challenges in moving forward it how to achieve the shift from a focus on individual needs and desires (be it an individual, an organisation or a nation) to the consideration of the needs and desires of the wider system - which from the perspective of most (commercial) organisation is a question of how to formulate a good business case.
Building on the insights of the first phase of the SustIN Lab a maturity grid is currently being developed that will guide managers and practitioners to easily identify entry point for their specific sustainable innovation journeys.
6. ReferencesAdams, R; Jeanrenaud, S; Bessant, J; Overy, P; Denyer, D. (2012): Innovating for Sustainability. A Systematic Review of the Body of Knowledge. Network for Business Sustainability. Retrieved from nbs.net/knowledgeGovindarajan, V; Trimble, C. (2012) Reverse Innovation: Create Far From Home, Win Everywhere, Harvard Business Review PressHart, S. (2005): Capitalism at the Crossroads: Next Generation Business Strategies for a Post-Crisis World, Pearson Prentice Hall, 1st editionMeadows, D. H.; Randers, J; Meadows, D.L. (2004): The Limits to Growth. The 30-year Update. Revised Edition. London: Earthscan. http://lib.exeter.ac.uk/record=b1770979~S6 Radjou, N; Prabhu, J; Ahuja S. (2012) Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth, Jossey-BassSeebode, D (2011): Sustainable innovation. PhilipsSeebode, Dorothea (2012) CleanTechNRW International Summit "Liveable NRW 2030", 12 September 2012, Düsseldorf Seebode, D; Jeanrenaud, S. Bessant, J. (2012): Managing Innovation for Sustainability. R & D Management. 42 (3): 195-206Sukhdev, P. (2012): Corporation 2020. Transforming Business for Tomorrow's World. London: Island Pressvon Stamm, B (2012) SusIN Lab Meeting Notes - Operational Optimisation
This paper was presented at The XXV ISPIM Conference – Innovation for Sustainable Economy & Society, Dublin, Ireland on 8-11 June 2014. The publication is available to ISPIM members at
www.ispim.org.
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von Stamm, B (2013a) SusIN Lab Meeting Notes - Organisational Transformationvon Stamm, B (2013b), SusIN Lab Meeting Notes - Systems BuildingWorld Business Council for Sustainable Development (2010): Vision 2050: The new agenda for business. Geneva: WBCSD. Available on-line at: http://www.wbcsd.org/web/projects/BZrole/Vision2050-FullReport_Final.pdfWCED (1987) "Our Common Future" ('The Brundland Report') (1987) World Commission on Environment and Development; Oxford Paperbacks, UK. WWF (2006) Living Planet Report http://awsassets.panda.org/downloads/living_planet_report.pdf WWF (2012) Living Planet Report. Available on-line at: http://wwf.panda.org/about_our_earth/all_publications/living_planet_report/2012_lpr/
7. AppendicesAppendix I List of participating organisations
Participants in SusIN Lab Workshops & ConferenceParticipants in SusIN Lab Workshops & Conference100% Open LandmarcAkenham Lark ConsultingAkzoNobel Leyton ConsultingAllianz Marks & SpencerAnatello Monash UniversityBiome NHS Sustainable Development UnitBridgelight Novo NordiskCambridge Consultants One Planet MBACanon Open UniversityCarbon Prophet Ordnance SurveyCDP PhilipsCentral St Martins Planetary Boundary InitiativeCranfield Reckitt BenckiserEDF Energy SAB MillerEuromed ShellGearing Group SolarCenturyGearing Up StropheGreen Recycling Technology Strategy BoardInnovation Exchange The Climate GroupInnovation Kinetics The Green Economy CoalitionInnovation Leadership Forum True PriceIntellect, UK Technology Trade AssociationTSBInterface tyfKaliris UnipartKent City Council University of Exeter Kent County Council Virgin UniteKingfisher Working PlanetLaing WWF
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Appendix II SusIN Lab Announcement
Announcement:
Sustainable Innovation Lab - Exploring The New Innovation Agenda An Initiative of
We are delighted to welcome you to the Sustainable Innovation Lab, an initiative of the Business School, University of Exeter.Over the course of a year we are inviting you to explore and discuss the new innovation driver: SUSTAINABILITY. The challenges we are facing at the economic, environmental and social levels are making innovation more necessary than ever before - but not just any kind of innovation! WHAT IF ...
Any innovation today, be it around products, services, processes or business models, was driven by one common goal, the big idea: In 2050 some nine billion people live well and in the limits of the planet?!
The role of business in society would change; co-creation and cooperation leading to multi-stakeholder value creation became the new competitive edge?New strategies, ways of thinking and working, tools and measures required to implement sustainable innovation were already there, waiting to be found and applied?
These are questions we would like to explore with you, developing insights, approaches and tools as we go along.
Do join us on this exciting and necessary journey and put the following dates into your diary - and sign up with us sooner rather than later as places for the workshops are limited:Thursday 13th December 2012! Workshop 1: What is Sustainability-oriented InnovationThursday 21st March 2013 ! Workshop 2: Who plays which roles in Sustainability-oriented InnovationThursday 20th June 2013 ! Workshop 3: How to make Sustainability-oriented Innovation a RealityThursday 12th September 2013! Conference: Pulling it all together; hosted by Ordnance Survey in their HQ (built on sustainability principles) in Southampton
We envisage that all three workshops will be hosted by companies in London - Marks & Spencer have already expressed an interest. Might your organisation be interested too?
Much looking forward to hearing from you, and to welcoming you to our kick-off meeting 13th December,On behalf of the Steering Committee,
Confidentiality Agreement Page 4 4. Other provisions 4.1. Without the prior written consent of MARS, the Contracting Party shall not use the
name, trademarks or trade names of MARS or the Associated or Dominant Companies of MARS (or any name or mark which are or may be perceived to be similar to such an extent as to be misleading as to a name or make the rights to which are attributable to MARS or the Associated or Dominant Companies of MARS, or which benefit from renown / recognition of this name or mark on the market) nor refer to the business connection with these entities following from the fulfilment of the Agreement, unless required by statutory law or the performance of the Agreement.
4.2. If any of the provisions hereof ceases to be effective, it shall not influence the
effectiveness of the remaining provisions. The Parties shall replace the provision which has ceased to be effective with a new provision which to the maximum extent reflects the business purpose of the ineffective provision.
4.3. For the avoidance of doubts, the Parties agree that this Agreement shall remain in
force irrespective of the cessation of the Business Relationship between the Parties. 4.4. Any amendments to this Agreement require written form under the sanction of nullity. 4.5. This Agreement shall be governed by Polish law. Agreement has been drawn up in two identical counterparts, one for each of the Parties. In witness whereof, the parties have signed this Agreement on the day first written above. On behalf of the Contracting Party: On behalf of MARS: ] [signature]
Dr Bettina von Stamm, Director & Catalyst, Innovation Leadership Forum
Steering Committee:Prof John Bessant, Director of Research and Professor of Entrepreneurship and Innovation, University of Exeter Business School
Dr Sally Jeanrenaud, Senior Research Fellow - Sustainable Development, University of Exeter Business School
Dr Dorothea Seebode, Sustainable Innovation Expert, Author of the Philips publication on “Sustainable Innovation”
This paper was presented at The XXV ISPIM Conference – Innovation for Sustainable Economy & Society, Dublin, Ireland on 8-11 June 2014. The publication is available to ISPIM members at
www.ispim.org.
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