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Innovation in a Carbon Constrained World

| On 13, Sep 2009

Kady Srinivasan

Hello everyone! This is my first post on RealInnovation.com and I am very excited to be a part of this dynamic community. I focus on Sustainability in my work and am starting a series of posts on Sustainability Innovation – an area that is as exciting as it is undefined. So here goes..


Almost everyone following management literature is aware of Sustainability and the potential impact of climate change on communities, ecologies and economies. A few mature companies have started to work towards leveraging Sustainability considerations and creating new market spaces. Many others still focus on cost savings as the predominant value out of sustainability programs. Beyond cost savings and short term opportunities, there is a world waiting to be discovered and innovated in the Sustainability space


What is carbon constrained?


The popular definition of sustainability is a triple bottom line focus – environmental, ecological and social. In reality however, Sustainability has started to narrow down to become a solution to overcome a very pressing issue – carbon and resource constraints in businesses. With EPA recently declaring Green house gases as potentially harmful to the environment, regulation will follow and along with it – a price on carbon. Businesses that want to stay competitive will need to carefully navigate this new landscape of regulations to comply and minimize costs.
However, cost reduction is only one side of the story. Cost reduction in most cases will not make you competitive. What causes true differentiation is an unrelenting focus on innovation. Sustainability innovation presents some of the most exciting and promising opportunities for growth and value to your stakeholders and communities.


What kind of innovation?


For many companies, innovation in green products and services are stemming out of the need to service a “green” consumer base, the opportunity to save costs on landfill or the opportunity to leverage strong public sentiment. The introduction of green cleaners, the recycling of computer equipment and the lowered sodium snacks are illustrations of these strategies. Most of these build on existing products and services and reengineer these to the extent of reducing resource intensity or “materiality”. This is a tremendous first step for the industry in the adoption of sustainability and companies are already seeing tremendous results on both top and bottom lines.
However, these initial forays into green product and service innovation are still largely incremental in nature. Very few companies have started to completely redesign their products or services to create truly disruptive innovation that not only anticipates demand but also anticipates constraints the environment, government and society will place on it. One shining example of a company that has achieved such a disruptive innovation is Xerox. With “Zero Landfill” as the only constraint, engineers completely redesigned photocopiers with the result that since 1991 Xerox has diverted 1.9 billion pounds of waste from landfills and has saved the company more than $400million per year in manufacturing and component costs  . Interface is another example of a company that has produced disruptive innovation. In order to reduce landfill, Interface changed its model to focus on leasing carpets instead of selling them to customers thereby innovating an entirely new business model.


In my next and succeeding posts, I will focus on the enabling structures that will make Sustainability Innovation a reality in today’s world. In the meantime, I look forward to hearing your comments on this new and exciting area..