This week, I am sure that you are reading this along with the many other blogs that mark the 40th anniversary of Earth Day. For 40 years, as Americans, we have aspired to change the world through enhanced environmental consciousness, policy making, and technological innovations that drive sustainability. In the U.S. we have lurched forward, sputtered badly, recovered, then stopped all together, then jumped forward again. So our choices and actions moving forward in this new “green economy” have not been entirely without influence or challenges, from ourselves and from nations afar. The only certainty is that it’s our own actions that can shape the path of our own organizations, communities and markets.
Disruptive technology and disruptive innovation are terms used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically by being lower priced or designed for a different set of consumers. http://www.claytonchristensen.com/disruptive_innovation.html. Christensen’s’ theory, featured in both “The Innovators Dilemma” and “The Innovators Solution” provides a prescription for a small entrant with less resources to compete with and beat a large incumbent. A quick look at the Disruptive Innovation model is at http://www.youtube.com/watch?v=DaKgMcFP4Mo
Disruptive innovations either create new markets or reshape existing markets by delivering relatively simple, convenient, low-cost innovations to a set of customers who are ignored by industry leaders. Historically, companies that dominate an industry have had little interest in pursuing these types of innovations because profit margins are often lower and the innovations don’t address the needs of those companies’ best customers. http://www.innosight.com/documents/diprimer.pdf
What does this have to do with “sustainability”? I had the chance to participate in a recent Leadership Summit here in Portland, hosted by the University of Oregon. The goal of the summit was to vette business and sustainability leaders in Oregon/SW Washington are as to how the U of O Center for Sustainable Business Practices could serve as a catalyst for innovation and bring sustainable solutions to the marketplace in Oregon and beyond. One goal that the Center has is to seek innovative approaches that can break the endemic boom-bust cycle that Oregon and many western states have often found themselves in. Never mind that there are tax related issues or brittle governance, or well intentioned but ineffective public-private partnership infrastructures that add to the fiscal malaise.
The discussion that ensued was interesting and of particular note because of the many references to disruptive technology. From this dialogue, it became clear that collaboration- finding ways to harmonize research, policy, manufacturing and service – is vital to a stable, sustainable economy. It was generally agreed that in order to support meaningful job growth, an educated community and sustained economic performance, two things must happen: 1) all parts must be working together and 2) there needs to be a policy/governance, educational, and public-private infrastructure that supports disruptive technology and innovation.
A book that I have been reading, The Silver Lining, A Playbook for Uncertain Times, by Scott Anthony, provides some answers as to how communities and organizations can move forward to realize opportunities in their markets. This 10-point checklist synthesizes The Silver Lining‘s key messages and provides practical guidance for leaders. Each item links to a blog post describing the item in more depth.
Does your organization:
- Recognize today’s transformation imperative?
- Have a handle on the future potential of innovation?
- Have a process to prudently prune its innovation portfolio on a regular basis
- Have clear consensus on the 1-3 top growth opportunities?
- Always ask, “How does the customer define more?” before asking people to do more with less?
- Match technological experiments (“can we?”) with strategic experiments (“should we?”)?
- Constantly search to share the innovation load to de-risk innovation?
- Have a plan to “love the low end” in existing and emerging markets?
- Run an innovation factory with systems and structures to make innovation repeatable?
- Have a plan to help leaders transform themselves?
Finally, I want to share with all of you a seminal piece which I recently purchased from the Harvard Business Review (HBR) and that I “tweeted” about last fall http://bit.ly/2yfirf. Please read this! Authors Nidumolu, Prahalad, and Rangaswami have found that the quest for sustainability can unearth organizational and technological innovations that yield both top-line and bottom-line returns. That quest has already begun to transform the competitive landscape. The authors found that companies on the journey to sustainability go through five distinct stages of change:
- viewing compliance as opportunity
- making value chains sustainable;
- designing sustainable products and services;
- developing new business models; and
- creating next-practice platforms.
By going through these key stages of change, the study found that “sustainability isn’t the burden on bottom lines that many executives believe it to be. In fact, becoming environment-friendly can lower your costs and increase your revenues. That’s why sustainability should be a touchstone for all innovation. In the future, only companies that make sustainability a goal will achieve competitive advantage. That means rethinking business models as well as products, technologies, and processes.”
This research was for me transformative and insightful, and offers compelling reasons for embedding sustainability into operational practices and strategic business strategies.
Whether you read Anthony, explore Christensen’s ideas or the review the HBR article, history shows us that innovation flourishes, no matter how dark the times. You can either reflect on this time in our economic recovery as the beginning of the end or a jump-start to transform your business or your market space. It all depends on your actions, so get innovative now!