Why sustainability is now the key driver of innovation

Why sustainability is now the key driver of innovation

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  Why Sustainability isnow the key Driver of Innovation BY, RUCHIRA PANIGRAHY (UEMF16013) SOUMENDRA KUMAR DALAI(UEMF160019)
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  Idea in Brief Sustainable business has three interdependent objectives : economic, environmental and social.  General assumptions for practicing sustainability :  Add costs  Will not deliver immediate financial benefits  Erode competitiveness  Dilemma : Choice between social benefits of developing sustainable products or processes & the financial cost of doing so  General expected problems :  Suppliers cannot provide green inputs and transparency  Sustainable manufacturing will demand new equipment and processes  Customers will not pay a higher price for eco-friendly products during recession
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  Idea in brief Three-legged race : The fight between :  Governments and companies  Companies and consumer activists  Consumer activists and governments  Importance of Sustainable companies:  Create financial value.  Understand how their actions affect the environment and actively address those impacts.  Care about their employees, customers and communities and work to make positive social change.
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  Idea in brief Possible Solutions:  Tougher regulations  Educating and organizing consumers  Importance :  The world population is growing at unprecedented rate and putting pressure on already overstressed natural resources  There are growing expectations on business to help solve environmental and social issues from government, employees, customers and the public  It greatly depends on how the individual companies respond to these trends. This will influence their profitability and longevity.
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  Stages of Change ViewingCompliance as Opportunity Making Value Chains Sustainable Designing Sustainable Products and Services Developing New Business Models Creating Next-Practice Platforms
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  Viewing Compliance asOpportunity  Compliance can be used to induce the company & its partners to experiment with sustainable technologies, materials & processes.  Challenge : To ensure compliance with norms becomes an opportunity for innovation, anticipating and shaping regulations.  Cases discussed :  Ban of Plastic bags in 2007  Ban of Lead solders in 2006  Ban of Hexavaent Chromium (anti-corrosion coating) in 2006  Govt. sponsored recycling arrangements in 2002
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  Making Value ChainsSustainable  Sustainability is usually focused on reinforcing the brand image, but could lead to cost cutting or to create new businesses.  Challenge : To increase efficiency throughout the value chain  Methods to develop sustainable operations :  Supply Chains :  Induce suppliers to become environment-concious (Cargill & Unilever)  By laying down laws (Unilever & Staples)  Operations : FedEx initiative for reducing its dependence on fossil fuels  Workplaces : Work from home facility by IBM & AT&T  Returns : Finding innovative uses of returned products. Ex: Cisco
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  Designing Sustainable Productsand Services  Use of competencies and tools to identify product innovation priorities to score over rivals by being the first to design  Challenge : Developing new products, and modifying existing ones as well as modifying packaging to reflect commitment to sustainability  Important considerations:  Companies are startled to discover which products are unfriendly to the environment  Clear understanding of the management on how to scale both supplies of green materials and the manufacture of products  Companies must try to move into markets that lie beyond their traditional expertise and team up with other stakeholders  Companies like P&G and Clorox invest in eco-friendly products
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  Developing New BusinessModels  Rethinking the value proposition of the business and finding new and innovative ways to deliver value to your customers  Rethinking models with the advent of new technologies and at the same time meeting customer expectations Simple Rules to follow:  Don’t start from the present. Start from the future.  Business need to ensure that learning precedes investments  Though directional consistency is important, tactical flexibility is critical  Building collaborative capacity forming alliances with other stakeholders to enhance value of offering
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  Creating Next-Practice Platforms Questioning the logic behind all the current business practices, businesses can break the mould and truly innovate for sustainability  This is about re-engineering, not just recycling and reusing  A sustainability focus allows companies to build on their existing competencies to develop next- practice platforms and new paradigms SMART GRID:  Cisco,HP,Dell, and IBM working on developing this platform  Uses digital technology to manage power generation, transmission and distribution from all type of sources along with customer demand  Lower costs as well as more efficient use of energy
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  Enterprise wide Initiatives Two enterprise wide initiatives help become sustainable: • When a company’s top management team decides to focus on the problem : • GE’S business tried to move up the sustainability ladder as CEO Jeff Immelt declared that company would focus on tackling environmental issues • Recruiting and retaining the right kind of people is important  Research suggests that three-fourths of workforce entrants in US regard social responsibility and environmental commitment as important criteria in selecting employers  Companies that try to become sustainable may find it easier to hire an retain talent
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  Embracing Change  Leadershipand Talent are critical for developing a low-carbon economy.  Current economic system has placed enormous pressure on the planet while catering to the needs of only quarter of the people on it.  Over the next decade, twice that number will become consumers and producers  Companies will have to develop innovative solutions as traditional approaches to business will collapse  Executives have to recognize a simple truth: Sustainability=Innovation