Written by: Alfred A. Marcus
The concept of sustainability is an evolving one driven by many factors. While business organizations face risks if they ignore the social, political and regulatory shifts that accompany the movement toward sustainability, they also have the opportunity to significantly differentiate themselves from competitors by creating new business models to address sustainable challenges. Reimagining sustainability as a central strategic issue is, however, easier to talk about than to do. After more than twenty years of attempts to achieve sustainable innovation in various business organizations, it is now apparent that plans often go awry. Even the most sophisticated technologies, the best business models, and the leadership of powerful, inspiring, energetic, and frequently highly capable individuals do not always lead profitable outcomes. The path to sustainability has not necessarily been paved with gold, though many hoped it would be.
My book asks to what extent competition between companies can encourage innovations in sustainability that have the potential to solve some of the world’s major challenges. Using a series of case studies, it pits closely-related competitors against each other to examine the progress and obstacles to the evolution of sustainable innovations in energy efficiency, solar power, electric vehicles and hybrids, wind energy, healthy eating, and agricultural productivity. It analyzes the investments of venture and corporate venture capital firms Khosla Ventures and KPCB and Intel and Google. It delves into the efforts of Tesla Motors and Better Place to bring about a revolution in personal transportation, and the challenges Toyota and General Motors confront in commercializing hybrids and that Vestas and GE confront in commercializing wind power. The book explores the movement to healthy food by cereal companies General Mills and Kellogg’s and by beverage companies Pepsi and Coke. It depicts the battles between Whole Foods and Walmart for the world’s palate and the efforts DuPont and Monsanto have made to revolutionize agriculture. By examining the experiences that particular businesses have had with sustainable innovation, my book reflects upon lessons learned and encourages readers to think carefully about the challenges that lie ahead.
The need for sustainable innovation is compelling. Since the articulation of this idea more than twenty years ago, many business organizations have taken up this call in whole or in part. A sorting out process of what works and what does not work has taken place. In some instances, sustainability does make good economic sense. Nonetheless, the premise that companies can serve the planet and people while providing good returns to shareholders does not pass every test. It is not enough for the leaders of an organization to declare their commitment to sustainability as implementing a sustainability strategy is a huge test. A primary challenge is the implementation of sustainable innovation. The processes of variation, selection, and retention act like a funnel. Uncertainty is high. Competition is intense. Experimentation is rife. Selection is subject to shifting conditions and changes in business models. Chance and timing influence the results. So do political and institutional biases. The outcomes are not necessarily optimal as innovations gain significant footholds, even when they are not as efficient as alternatives.