Sustainability most ‘powerful opportunity’ for profitable innovation in 2021
There is no doubt that in the post-Covid-19 world, we have entered a new era for business, and sustainability is now a key component of any company’s competitive advantage.
In essence, sustainability today should be on any leader’s radar, as the most powerful opportunities for profitable innovation are embedded in their ability to understand the challenges it presents, and to accurately address them.
Many businesses are already discovering this, through what can be referred to as the ‘Sustainable Business Model Innovation’ (SBM-I).
They are innovating business models – building on and expanding beyond their core assets and capabilities – to address significant environmental and societal challenges in their local contexts. In this way, they create new sources of value and competitive advantage for their business.
Among the numerous examples of this is a Northern European oil and gas producer which has transformed to become one of the largest offshore wind developer cleaning products manufacturer and has sought to own the whole cycle by scaling up its in-house plastic recycling to create distinctive, greener packaging at a stable cost.
Businesses also cast their net wise when it comes to stakeholder engagement, partnering with non-profits, governments and other corporates including their competitors. The Maersk McKinney Moller Center for Zero Carbon Shipping, offers a good case study, bringing together different stakeholders in the shipping industry to come up with sustainable solutions to reduce the environmental impact of the global shipping industry.
Link to drivers of value and competitive advantage
Any new business model must be tested, improved and refined to ensure that it yields environmental and social benefits, as well as creating value and business advantage for the company.
Business advantage can come in many forms:
- differentiating your brand and making it more competitive
- reducing the risk of commoditisation by making your product or service hard to imitate
- attracting new customers and leveraging network effects; and harnessing wider business ecosystems
- increasing returns to shareholders while not sacrificing environmental/societal benefits
Scale the business model innovation
Realising the full potential of a new sustainable business model only comes when it is rolled out at scale, across your own operations, your suppliers, customers and your broader stakeholder networks.
There are three key ways to drive scale:
- Join forces with other organisations, within and across sectors, to pool resources, plug capability gaps and unlock new markets. One global cosmetic brand shared its learnings and methodology on sustainable packaging across its sector, thereby driving industry-wide transformation.
- Harness digital technologies to create new, more cost-effective distribution channels to customers that were previously underserved or not able to buy your products at all
- Develop a culture that attracts and engages new people to your organisation and your products
The best response to the challenges of sustainability issues is to seize the opportunities it presents to your business to turn them into sources of competitive advantage. The race to sustainability is on and it will take a rigorous innovation approach.
This article is sponsored by Boston Consulting Group.
Source Business GreenAugust 16, 2021