Are you dead yet?

That question is about your business, not you personally.

One irrefutable lesson from previous transformative megatrends is that they aren’t victimless. In the first 30 years of the digitalization era – measured from the rise of the commercial internet – countless companies, business units, research activities, sales channels, and jobs have disappeared. Kodak, the once-iconic American camera and film company, often tops the lists of companies that fell victim to digitalization, supposedly because it had the emerging technologies but missed the emerging trends.

Willy Shih, a former Kodak executive who is now a professor at Harvard Business School, uses one word to describe that standard explanation: “wrong.”

In his 2016 article for Sloan Management Review, he explained that Kodak’s failure came about because it didn’t find a way to dismantle one of the most successful and lucrative ecosystems of the 20th century: the film development business. Pursuing a radical restructuring – which its Japanese competitor Fuji successfully accomplished – “would have meant walking away from a great consumer franchise,” Shih writes. “That’s not the logic that managers learn at business schools, and it would have been a hard pill for Kodak leaders to swallow.”

In other words, companies that win during a transformative megatrend follow radical approaches, not by-the-book logic. They place big bets on emerging technologies and trends while simultaneously figuring out a way to exit – and often destroy – their legacy business. This kind of radical thinking combines commercial creativity and creative destruction. Both will be necessary as companies solve the existential question of sustainability: How can you profitably serve the essential needs of your customers in more affordable, less wasteful ways at scale?

Answering the existential question of sustainability

We said in the third edition of our newsletter that the Demand Revolution is more about how consumers are changing and less about how the climate is changing. The existential question we are posing is therefore focused more on whether your business will survive the sustainability megatrend and not whether the planet and its people will survive climate change.

Achieving all four outcomes defined in the question – profitability, affordability, less waste, and scale – will require radical solutions, not incremental ones or supply-side fixes. What do we mean by radical solutions? Let’s look at two day-to-day activities:

New ways to drink a beverage: Beverage companies like to tout their efforts to find better ways to recycle cans and bottles or use alternative materials. But these solutions are incremental and face practical limitations. A radical idea would not be to develop a better can or bottle, but rather to eliminate containers entirely. Let consumers mix drinks at home with their own machines or fill their personal containers on the go.

The challenge is the extent of creative destruction. Fortune Business Insights estimates the size of global market for beverage containers at around $145 billion. Then there is the cost of the entrenched distribution systems – trucks, warehouses, labor – that support the delivery of pre-packaged containers. Shifting to a container-free world would require a compelling value proposition for consumers and a creative go-to-market strategy combined with a strategy for adapting or winding down that massive ecosystem.

New ways to wash clothes: Consumers are accustomed to laundry detergent in powder or liquid form. The containers take up a considerable amount of retail space – never mind in-home space – and are also expensive to ship because of the package size and weight. What if laundry detergent came in sheets instead of powder or liquid? They would be easier to ship, easier to store, and easier for smaller local retailers or other channels to stock a wide variety of options.

That niche market already exists and, admittedly, the current versions of laundry sheets have some quality issues that offset the other advantages. The challenges, again, are not only the investment into improving the solution, but also the extent of creative destruction required. Statista estimates the size of the global laundry detergent market at around $160 billion in 2024. If innovations lead to laundry sheets that outperform liquids and powders, how will companies remake an ecosystem that large?

These are only two of many examples. Any industry is fair game if a competitor finds a solution that removes steps or removes waste from the value chain in ways that provide a clear consumer benefit at scale.

So why do companies spend more on reporting than innovation?

Finding a way to replace containers, rethink laundry detergents, or solve any similar day-to-day problems for consumers will require considerable investment. Where are companies currently focusing their sustainability investments? A global report from the IBM Institute for Business Value found that companies are spending 43% more on sustainability reporting than they spend on sustainability innovation. The report implies that companies might be “hitting targets but missing the point.”

They are missing several points in our view. First, they are overlooking the ticking clock on their business model. If radical change doesn’t come from within or from legacy competitors, it will come from sustainability natives the way that new companies and digital natives won the long game in the digitalization megatrend. Amazon, Alphabet (Google), Meta (Facebook) and Nvidia currently have a combined market capitalization of over $8 trillion, yet none of them existed before 1993.

They are also overlooking the pent-up demand from consumers for sustainable solutions. They are missing the sentiment of consumers that we described in the first edition of our newsletter . Consumers “don’t need lectures, and they don’t need scare tactics. They don’t need pretty green packages or a grand ESG purpose statement.?They need affordable, useful, less wasteful products at scale.?They are looking to companies to provide them with solutions that will leave them with the confident belief they are making a difference and contributing to a better tomorrow,?for themselves?if not for society.”

In the absence of sustainable solutions, consumers are applying their own creativity to find ways to live more sustainably. A growing number of them are reducing their physical footprint instead of tying up their scarce capital by buying goods they rarely use. A report by creditkarma released earlier this month revealed that nearly three in five Americans (58%) who rent or lease goods and services say they now live a “rent-first lifestyle.” The survey showed that renting has expanded beyond residences and cars and now includes clothing or accessories (9% of survey respondents), electronics (8%), and furniture (7%). Those numbers may seem small right now, but the more important finding is the set of drivers behind these trends: the desire for flexibility, savings, experimentation, and less waste.

Let’s get back to the question in the headline. By asking “Are you dead yet?” we want to start an open, honest, and necessary discussion about the creative destruction that will overtake nearly every industry as sustainability becomes a strong and transformative megatrend. We also know that no company will have an appetite for creative destruction unless its leaders have a strong business case for long-term sustainable and profitable growth. Creating that business case – and defining the innovations that will make it happen – does not start with compliance objectives and incremental supply-side efficiencies.

It starts with the wants and needs of consumers.

Will you be bold enough to listen to what consumers are saying about sustainability and develop scalable solutions that meet their needs? Or will you concede the initiative to companies that will follow a new paradigm of innovation and lock you out of the most lucrative opportunities?

Please click here to pre-order your copy of The Demand Revolution: How Consumers Are Redefining Sustainability and Transforming the Future of Business. The book is scheduled for publication by MIT Press on October 8.