"If you're not doing innovation...
Jef Teugels
Responsible Customer Culture Builder Making Sustainability Transitions Smoother
... then you are not doing strategy; you're doing something else." This is a quote from Professor Vijay Govindarajan, and the video above takes you through his reasoning. I enjoyed being in one of his courses, and the quote -and many other pearls of wisdom- struck a chord.
The ruling paradigm is that we must innovate or sink into irrelevance. Yet, many innovations flop; up to 95% of all new product and service launches fail. It's not surprising that 94% of global executives are unsatisfied with their business' innovation performance (McKinsey, 2020). According to Forbes (2019), there are at least five reasons for that:
Organizational Culture
Creating a culture of market-driven innovation is essential, and it's not something that happens overnight. It requires that a company's reason for being and its purpose are visible in everyone's behavior inside your organization and throughout your value chain.?
Misaligned Incentives or Being Stuck in the Status Quo
Why innovate when monetary profits stream in? Many remunerations and incentives lead to preserving the status quo. Especially companies that have an excellent current performance engine become complacent and fail to invest in their future performance engine.
Misreading or Not Reading Your Market
Technology over Solutions
New technologies get adopted when they solve users' problems better than old ones. Too often, technology has priority over the goal of using it. Technology looks for a problem to solve while a problematic situation looks for a solution.
Bureaucracy
Rules and procedures are necessary, especially in an exploitation mindset. Yet, in the exploration mindset required for innovation, they can work against you.
We probably all know the stories of companies that failed to innovate, with Kodak being among the most notorious. For the curious, CB Insights offers an overview of The 164 Biggest Product Failures Of All Time by corporations. It's not only the big ones who can fail at innovation; startups -innovators by definition- fail for two main reasons. The first (38%) is running out of cash or failure to raise new funds; the second (35%) is that there is no market need (CB Insights, 2021).
As if successful innovation isn't challenging enough, we need sustainable innovations. Innovations contribute to environmental and social prosperity as envisioned and defined in the UN's Sustainable Development Goals. In other words, creations within thresholds. But what is Sustainable Innovation?
Sustainable Innovation
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Well, a carton straw wrapped in plastic certainly is not a sustainable innovation. Yet, what innovation truly means remains hard to articulate, even for some of the most outstanding thought leaders on innovation. Nick Skillicorn, Editor, Founder & CEO at Improvised Innovation Consulting, once morphed the definitions of those thought leaders into an ultimate one.
Executing an idea which addresses a specific challenge and achieves value for both the company and customer
While this definition dates from 2016 and clearly does not take sustainability into account, I still prefer the definition of innovation as explained by MIT's Bill Aulet:
Clearly, innovation requires a new creation (invention) and the adoption of it by an economically viable number of customers. The equation for Sustainable Innovation, therefore, can be:
Sustainable Innovation = Invention within Planetary and Social Thresholds + Viable Adoption
Sustainable innovation goes well beyond developing new processes and products that are environmentally responsible. Sustainable innovation is about a company's strategic, systematic, and systemic attitude regarding environmental, social, and economic aspects.
Therefore, Sustainable Innovation requires a change in a company's philosophy and organizational values. Its goal is to create and realize system value known as Triple P or Planet, People, and Prosperity. System value goes beyond economic returns. Creating system value is not about not harming the planet and people but about having a net-positive impact.
Suppose philosophically, you cannot acknowledge a business has a responsibility beyond monetary profit. In that case, you cannot create system value because the economic gains will keep driving all you do.
Sustainable innovation creates something new that improves performance in the three dimensions of sustainable development: social, environmental, and economic. Such improvements are not limited to technological changes. They may relate to changes in processes, operational practices, business models, thinking, and business systems (Szekely & Strebel, 2013).
According to Adams, Jeanrenaud, Bessant, Denyer, and Overy (2016), sustainability-oriented innovation relates to changing philosophy and organizational values and products, processes, or practices to attain the specific purpose of creating and realizing social and environmental value beyond economic returns.
I hope that now it is clear that sustainable innovation refers to a company's strategic and systemic attitude regarding economic, social, and environmental aspects. It does not denote only isolated actions, such as developing a new environmentally responsible process or product.
See you in two weeks!
Regenerative Steward ?UNAKTI? Nature rules, I am Nature. Soil & Skin health.
2 年“System value goes beyond economic returns. Creating system value is not about not harming the planet and people but about having a net-positive impact.” Precisely, nice write up ???
ChangeCultivator, Ideator | 5Ps Econological Thrivability | OD & Regenerative Dynamics, C2Cfacilitator - @econologics @ecoNVERGE @mbrace @CLEANconnect @SLPalliance @PortExpertise @ARTconnectsLIFE @ARTronomy @ARTpreneurs
2 年Excellent write-up Jef Teugels. I also agree with the observation by Jean Létourneau " Pull, less Push!" Times and the growing awareness is growing from producers to marketers and equally important the consumer. Design Thinking as from the very early stages of an idea, involving any (potential stakeholder community representation) will become more and more imperative to ensure success during the actual launch. Considering what matters today and across the expected life-time of a product through close collaboration enables co-creation. "Innovation" or being "innovative" along the way is and will become more essential as the market is becoming more educated and awareness of negative impact is growing. As such "innovation" covers all aspects from idea to realisation and go-to-market, including regenerative material choices, circular options ready during a product or service life-cycle and ensuring longer life-time for the product itself. Also in marketing approach we need to think about how the product will go-to-market as ownership is becoming more and more outdated and any company offering a product needs to consider lowest possible price (but sustainable = therefore not cheapest), long-life, re-use / re-cycle of materials (a-to-z), coinciding with an excellent service (not being able to be refused), ... And along that process, financing the product idea to launch and market-maintaining, is equally important to make it all happen. In conclusion: design thinking and systemic approach to entire cycle will need experienced resources, which are still too thin around to make a true shift happen. Great article to get us started thinking and shifting away from how we have been doing this for many decades. There is a new pool of young people, eager to get the chance to be involved. Let's encourage co-creation and engagement.
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2 年I would more argue that strategy more equates differentiation than it equates innovation. There are many ways to be different without being an innovator, and many ways to innovate that can not differentiate (long). Also the question is - whether real innovation is adaptation to change in the environment, or the change to the environment itself (I hate adaptation views of innovation hahaha) - who defines what innovation is, people inside or outside? In case of the latter there is very little innovation all while there is a lot of strategy (ways to get to the customer first and better) - whether strategy should do the innovation itself or outsource it to a vehicle which is more suited to do it, in case strategy does not equate innovation, just purchasing and incorporating innovation.