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Why Sustainability-Oriented Innovation Is Valuable in Every Context
Why Sustainability-Oriented Innovation Is Valuable in Every Context
Why Sustainability-Oriented
Innovation Is Valuable in Every
Context
Big Idea: Sustainability • Blog • December 08, 2015 • Reading Time: 6 min
Impacts of SOI go well beyond revenue generation.
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This blog post is the second in a fourpost series
(http://sloanreview.mit.edu/tag/sustainabilityoriented
innovationseries/) on SustainabilityOriented Innovation (SOI)
(http://mitsloan.mit.edu/sustainability/focal
area/sustainabilityorientedinnovation). The first post in the
series (http://sloanreview.mit.edu/article/sustainability
orientedinnovationabridgetobreakthroughs/) argued that
SOI breaks conventional tradeoff thinking. In this second post, we
explore different types of SOI and the different ways companies are
using it. The series builds on our published work on Accelerating the
Theory and Practice of SustainabilityOriented Innovation
(http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2629683) by Jason Jay and Marine
Gerard.
Sustainability, sometimes under the banner of corporate social responsibility (CSR), used to be a specialty
practice used by only a few companies, like Nike and CocaCola, to manage risks to their highvalue brands.
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But times have changed, and as we described in our first post, Nike is now using sustainability to drive the
top line by enhancing product development and revenue growth with technologies like Flyknit. Startups like
Liquiglide and its supersurfactant products, unicorns like Uber and its ondemand transportation service,
and large systems integrators like Lockheed Martin with burgeoning renewable energy and energy storage
systems are combining sustainability with revenue generation in various ways. SustainabilityOriented
Innovation (SOI) is the basic enabler of this trend.
Because SOI allows companies to push beyond their usual innovation boundaries and their typical business
protocols, it is expanding the range of businesses that are practicing sustainability and finding new fuel for
their innovation processes. It is also allowing them to reap the benefits of products and services that create
social and environmental good.
The context and intent around SOI influences its final shape and form. Our research has identified three
degrees of sustainability orientation: Sustainabilityrelevant, sustainabilityinformed, and sustainability
driven.
The most common form of SOI in the mainstream corporate world is sustainabilityinformed innovation
(SII). The aim of SII is to meet a welldefined customer need using a design informed by sustainability
considerations. Nike and its Flyknit technology discussed in our first post offer a good example of SII.
Many "green" brands and internal labels, such as Clorox Greenworks and Johnson & Johnson’s Earthward
program, also fit this category. Some companies, like Patagonia, build their whole R&D portfolio around
SII. Since its founding in the 1970s, Patagonia’s mission statement has evolved from "build the best
product" to "use our business to inspire and implement solutions to the environmental crisis."
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With this mission statement in mind, sustainability has become integral to Patagonia’s innovation process,
which has resulted in products such as "synchilla" fleece made from recycled plastic bottles and the recent
Yulex wetsuit (http://yulex.com/2012/11/patagoniaandyulexintroducethefirstalternative
tothetraditionalneoprenewetsuit/) — the first biomaterialderived wetsuit in the surfing industry.
Nike Flyknit and Patagonia Yulex illustrate two
benefits that companies reap through SII. The first is
that sustainability constraints help drive a wider
search for new materials, new processes, and new
designs that can yield higher performance products.
The second is that SII creates possibilities for
differentiation among sustainabilityminded
customers. In this way, it manages risks and
opportunities as customer preferences and regulations
change.
The partnership between Patagonia and Yulex
paired each firm’s core competencies in
SustainabilityDriven Innovation (SDI) is another kind materials technology to enable the creation of
the world’s first sustainable wetsuit. Their SOI
of SOI that innovates with the specific goal of solving a was then shared with the rest of the surf
industry, and now the same environmental
public problem. An example of technologybased technology can be found in almost all brands'
premium wetsuits.
innovation would be renewable energy companies like
Photo by Patagonia/Dylan Lucas Gordon,
SunPower, which are developing highefficiency solar courtesy of Flickr/U.S. Department of
photovoltaic panels to mitigate the air and climate Agriculture
pollution associated with fossil fuels.
Other enterprises, like Sanergy, achieve SDI through
businessmodel innovation. Sanergy is an MIT spinoff established to solve sanitation problems in the
developing world. Knowing that nearly 8 million people in Kenyan slums lacked access to a proper
sanitation, the Sanergy team used $25,000 from the MIT Public Service Center to test their solution
(http://newsoffice.mit.edu/2014/thesurprisingvalueofwaste0214). They installed two toilet
stations and franchised them out to local entrepreneurs, who maintained them and charged for use.
Sanergy safely collected the waste and converted it into fertilizer that could be sold to farmers. The pilot
was so successful that in 2011 the team formed a forprofit and nonprofit business to continue its work.
The forprofit arm developed and sold the toilet stations and waste fertilizer. The nonprofit arm
(http://sustainablenonprofits.org/wp
content/uploads/2015/07/Summer_2012_In_Search_of_the_Hybrid_Ideal.pdf) supported
the franchisees and infrastructure with training and services.
Sanergy’s results (http://saner.gy/ourimpact/bythenumbers) are impressive and include:
installation of 734 toilets
33,000 daily uses
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removal and treatment of 6,028 metric tons of waste
creation of 763 jobs
In addition, local entrepreneurs, 35%–40% of whom are women, are making a profit of at least $1,000 per
year; organic fertilizer made from the waste sells for 30% less than inorganic alternatives; and local school
attendance increased 20% after schools purchased toilets
(http://www.betaboston.com/news/2014/07/16/mitspinoutsanergytargetingclean
sanitationforallofkenyaandbeyond/), which gave parents more confidence to send their children
to class.
The third form of SOI, sustainabilityrelevant innovation (SRI), is the most broadly applicable but the least
discussed. SRI is about discovering and leveraging hidden sustainability benefits after innovation. Zipcar
and the carsharing revolution are a prime example. The practice dates back to the late 1980s in Europe
with the rise of programs like Mobility Switzerland and StattAuto Berlin
(http://onlinepubs.trb.org/onlinepubs/tcrp/tcrp_rpt_108.pdf). Convenience and cost savings
were the original value drivers of the innovation. The success of these programs in providing superior
benefits over owning a car led to wide adoption in the United States and Europe. In addition, membership
exploded once Internet technology made it possible to streamline business operations.
Zipcar rode this wave after debuting in Boston in June 2000, and its leadership quickly realized that this
new business model had tangible sustainability benefits as well. Entering into publicprivate partnerships
with cities like Baltimore (http://www.triplepundit.com/2011/07/studyshowszipcarhaving
positiveimpactbaltimore/) made Zipcar aware that their business was encouraging people to sell their
cars, avoid buying new ones, take fewer trips, drive fewer miles per trip, walk and bike more, and take
public transit more often.
Another positive byproduct of SRI for Zipcar was the unanticipated recruitment of allies for its business.
Cities and universities came to see it as an ecofriendly alternative to car ownership, with the added benefit
of fewer regulatory barriers and lower parking prices.
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These behavioral changes all entailed real social and environmental benefits. Although more research is
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needed around their quantification, better air quality, less traffic congestion, and more physical activity are
highly likely (http://tsrc.berkeley.edu/carsharing). Zipcar stumbled upon these sustainability
benefits as a free and positive side effect of its businessmodel innovation and made it possible for people to
drive within a new sustainabilityoriented context. The result of Zipcar’s SRI activities was nothing short of
industry shaking (http://www.businessinsider.com/rriseofthecarsharingappsposes
threattoautosector201412).
SRI can also grease the wheels for SII and SDI projects. Consider GE’s "Ecomagination" strategy. When it
began, GE focused on identifying the environmental benefits of their existing products, such as more energy
efficient appliances and engines. By marketing these benefits to customers, employees, investors, and other
stakeholders, GE established broader legitimacy of an SOI approach. From that foundation, GE was able to
undertake SII and SDI projects. EcoSwitch (http://www.wired.com/2013/12/geecomagination
kitchengadget/) — a tea kettle, slow cooker, hot plate, and blender combined into one energy efficient
package — is an SII product, and Open Innovation was an SDI project that called for innovators to solve
water scarcity and energy challenges in international communities struggling with those issues.
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Although one form of SOI may have significantly greater scale or impact than another, all three are
beneficial. The sum reduction in GHG emissions from carsharing (SRI, Zipcar) and the GHG emission
reductions achieved by replacing petroleumbased neoprene with efiber in wetsuits (SII, Patagonia) are
both beneficial, even though the former clearly will have a largerscale impact than the latter.
Each of these three SOI variations will have its own area of impact. SIIs will tend to include mainstream
consumption channels and foster shifts in industry impact. SDIs will tend to push the envelope and be very
specific in focus. And SRIs impact will be in discovering and leveraging hidden sustainability benefits after
innovation.
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Whether technological, organizational, institutional, or social innovation, SOI practitioners will benefit by
recognizing the need for an ecosystem of SOI that will accommodate the entire spectrum of impact.
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