The Verdant 360 Blog

There’s no alternative to sustainable development.

How’s that for an opening line. But that’s exactly how this September 2009 article published in The Harvard Business Review, Why Sustainability Is Now the Key Driver of Innovation, opens. The article’s authors Ram Nidumolu, C.K. Prahald and M.R. Rangaswami, make a compelling case that the companies that are early adopters of sustainable business practices are developing competencies that distance them from their competitors. They studied 30 major U.S. corporations including P&G, Cisco, Walmart and Hewlet-Packard. Among their conclusions:

• 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.
• Becoming sustainable is a five-stage process and each stage has it’s own challenges.

Here are the five stages they refer to:

Stage 1: Viewing Compliance As Opportunity

Stage 2: Making Value Chains Sustainable

Stage 3: Designing Sustainable Products and Services

Stage 4: Developing New Business Models

Stage 5: Creating Next-Practice Platforms

The study outlines each stage and discusses the challenges and how innovative corporations have overcome those challenges to be become segment leaders.

Their conclusion- the number of new consumers is projected to double over the next twenty years.  This will place an unprecedented demand on limited resources. Traditional approaches to business will collapse and companies will be forced to develop innovative solutions.

To the authors, “Sustainability=Innovation.”

You can get a copy of the article at: www.hbr.org

Sustainability, Uncategorized C.K Prahalad, Cisco, Harvard Business Review, HP, M.R. Rangaswami, Ram Nidumolu, Sustainability, Sustainable Innovation, Walmart

Professor Rosabeth Moss Kanter thinks so. Professor Kanter, who The Times of London describes as one of the “50 most powerful women in the world” holds the Ernest L. Arbuckle Professorship at Harvard Business School. In a blog post on The Harvard Business Review site, Walmart’s Environmental Game Changer, she expresses the view that by nature of it’s market clout, Walmart has “transformed green standards from nice-to-have, to must-have.”  Walmart’s announcement puts pressure on their suppliers and their competitors. In the process it moves the consumer products marketplace towards a future in which consumers can make comparative buying decisions based on the knowledge of the product’s environmental and social impact. Here is how Professor Kanter describes Walmart’s decision,

Wal-Mart’s unilateral decision to put its purchasing and communication power behind going green also shows that a single company using its unique clout can accelerate public action to reduce greenhouse gases and reverse climate change. By rolling out an environmental labeling program disclosing to consumers the environmental costs of making products sold at Wal-Mart, the $401 billion retail behemoth has transformed green standards from nice-to-have to must-have.

It marks a change in how products will be labeled, how supply chains communicate their activities and in the information that will inform consumers make purchasing decisions. This is how Green To Gold author Andrew Winston describes it in a post How The Wal-mart Eco-Ratings will Save Money, also on the Harvard Business Review.

And this is the larger trend that’s coming. The combination of technology and rising consumer demands is creating a powerful movement toward greater transparency  about how a product is made, where it comes from, how much energy is used, and so on. Consumers are already starting to get a taste of this data — you can already download a number of iPhone apps and/or check websites like GoodGuide.com  to find product sustainability scores. Consumers will certainly want more, and they’ll want more coordination between all the groups starting to collect it. The world’s biggest retailer kicking off this initiative is a good start at harmonizing all these sources.

Sounds like a game changer to me.

-FR

Supply Chain, Sustainability Andrew Winston, Harvard Business Review, Professor Rosabeth Kanter, supply chain sustainability, Sustainability, Wal-mart, Walmart, Walmart's Sustainability Index