Sustainable Value Cycle Solutions€

“Innovation and Value Creation”Ellen MacArthur Foundation webinar 24 April 2012

Invention or Innovation ?

Invention:The creation of an idea or a method

Innovation:The use of a new idea or method

Where does innovation take place?

Technical environmentJet engine, Digital revolution, nuclear fusion, synthetic fibre (Nylon)

Business ModelAmazon, MacDonalds, Zara, EasyJet, Dell

System LevelHarley Davidson, Facebook, Google, Ford

Where does innovation take place?

Technical environmentJet engine, Digital revolution, nuclear fusion, synthetic fibre (Nylon)

Business ModelAmazon, MacDonalds, Zara, EasyJet, Dell

System LevelHarley Davidson, Facebook, Google, Ford

Henry Ford’s real legacy

Ford’s vision was a car for every home….

"I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one – and enjoy with his family the blessing of hours of pleasure in God's great open spaces”

Personal mobility

"Companies cannot grow through cost reduction and re-engineering alone... Innovation is the key element in providing aggressive top-line growth, and for increasing bottom-line results."

Davila et al. ”Making Innovation Work” (2006)

? Innovation Value Creation

Revenue and business growth

Innovation Business

Drivers for InnovationRe

sour

ces

• Historical issue

• Materials• Labour• Water• Fuel• Crisis/war

Tech

nolo

gy • 1950-70s• Mass

production and manufacturing

• Consumption• Push to

consumer

• “company is King”

Cons

umer

/Mar

ket

• 1980-00s• Marketing/

Brand driven• Experience• Consumer

Insights

• “customer is King”

Socia

l

• 2005+• People/network

driven• Transformation• Co-creation

and content

• “Customer is my best friend”

“..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..”Source: HBR, Sept 2009

“It is more intriguing that outperformance on revenuegrowth is correlated with superior creation of stakeholder value”Source: “The granularity of growth”, McKinsey Quarterly, 2007

..but something else is changing

The additional drivers for innovation

Drivers InnovationStakeholder

value creation

Revenue and business growth

CostTechnologyConsumer needs

Resources/wasteSocial Environmental

Traditional

Holistic

…a formula for business success

Current economy

Resources

“We can't solve problems by using the same kind of

thinking we used when we created them”

– Albert Einstein –

Albert Einstein Gene Simmons - KISS

Circular Economy

The only sustainability strategy that should be considered is one that is integral with the business and does not compromise it; a systems approach.

..a cyclic process of innovation, value creation and value recovery.

.. a "Value Cycle"

Design for Value Innovation

Stakeholder value

creation

Revenue and business growth

From concept to reality

1. Communicate the concept simply2. Design “value”products for the system3. Use “Trustful and Recoverable” materials4. Consumer is my best friend

Create

Recover

Collect

Source

1. Value Cycle concept

Design injectionpoint

2. Design “value” products for the system

Great product Added value

• Deliver on brand promise• Designed for recycling & value recovery• Defined periods of use

€

Source

Content

Usage

Source

Content

Usage

3. Use trustful and recoverable materials

• Managed/renewable source• 100% known & evaluated content• Known use scenario• Technically recylable• Commercially recoverable• Second life target product• Safe end of life

Select and retain materials value

4. Consumer is my best friend

Your design

Health and happiness

Do more good, not less bad

The result

• Great products• Delighted consumers• Lower costs through better design• Return on materials investment• Eimination of toxins and waste• Materials and chemicals (risk) management• Brand image enhancement• Improved employee engagement

Multi stakeholder value creation

Maximising Value

• Brand promise• Social & Ethical

positionBran

d• Primary function• Primary proposition

Product

• Additional value• Supporting

argument

Product discriminato

rs

Value Cycle design

Case study… Desso AirMaster

• Brand promise: “Creativity, Ambition, Flexibility, Cradle to Cradle”

• Social & Ethical position: Cradle to Cradle company & productsBran

d• Primary function: floor covering• Primary proposition: high quality, durable, trending designs

Product

• Additional value: improves indoor air quality• Supporting argument: C2C certified, take back & recycling

ProductDiscriminat

or

Not just a one off

60% accousitc damping

+10dB sound reduction

More Innovation..

• Light reflecting carpets• Aviation carpeting

2006 2008 2010

9%

4.5%

<1%

Desso profitability (EBIT)

The ValueInternal value

• New consumer value spaces/ideas• Innovative and critical designs• Materials risk and flow management• Reduced data set of materials• Reduced BoM• ROI from materials recovery• Employee engagement

External value• Brand enhancement• Superior primary function• Additional functionality

(descriminator)• Supported sustainability program• Option to certify or label• Delighted consumers• Market and business growth

Sustainable Value Cycle Solutions€

“Value creation in sustainability”

Staff training Strategic advice Interim expert management• Workshops• Coaching

• Specialist competences• Partner selection & engagement

• Materials development• Supply chain development• Ideation for innovation

Preferred Materials Program

Consumer Lifestyle -C2C and resource effectiveness team

Corporate Sustainability office CL Board of management

Sustainability Innovation Manager

Andy Hall