Sustainable or profitable? Why should you have to choose?!
For far too long, it has generally been assumed that innovators must choose between sustainable developments and profitable ones. CEOs of startups and large companies alike are, more often than not, convinced that the more environmentally-friendly they become, the more they will have to spend. They also fear that going “green” will cost them their competitive advantage, as similar companies in developing countries do not face equal demands for sustainable products.
However, in today’s day and age, sustainability can lead to profitability. True, doing so will require businesses to rethink how they conceive, produce, and market their products. It won’t be easy, but as sustainable development practices and finished products necessarily have the future of our planet and people in mind, such a mindset should always be the driving force behind any new innovation.
Going green reduces costs
Contrary to popular thought, sustainability is not a synonym for altruism. Sustainability-driven innovation is all about making the most of available resources (and cutting back where possible), without ever inhibiting productivity. This entails strategizing on how to make business operations and processes more efficient and identifying key areas where improvement is needed, in order to reduce costs and waste and drive up your ROI.
Facebook, Google, and Amazon are among the world’s greatest technology movers and shakers. They’re also some of the largest energy consumers in the United States. But by committing to securing 100% of their power for their data centers from renewable resources such as wind and solar, an estimated 10% was cut off each of their enormous tech utility bills, freeing up more money for them to pursue additional innovative projects.
The doors are opened to the entire value chain
As a practice, sustainability creates a new way of thinking, enabling companies to extend their gaze beyond their small domain and discover ways of making the entire value chain far more efficient. This is true whether they’re thinking about existing areas of their business, such how to make the supply chain run smoother, or new, unchartered territories, such as its energy emissions.
Doing so enables company members to examine their business practices, processes, and products from new vantage points, leading to ideation that takes the whole picture into account, including what truly creates value for the business and its customers.
For example, American retail giant Walmart introduced technology that reduces the energy emitted by its large trucking fleets when idling on the road, as well as software that indicates which routes can be taken to travel more efficiently. The result: significant reductions in gasoline purchased and consumed, and even greater reductions in carbon dioxide emissions.
Better products that lead to new revenue streams
Finally, when companies are motivated to conceive and adopt new, more sustainable ways of thinking and running their businesses, they can improve their understanding of each innovation’s cross-functional purpose. This, in turn, fosters a working environment that leads to the development of better, more valuable products and services, unlocking new revenue streams and upsell opportunities, they previously did not enjoy.
When Nike sought to come up with a more efficient shoe weaving process, reducing over 3.5 million pounds (1588 tons) of waste in just 8 years, they discovered that they were able to market their new shoes as more than just reclaimed trash. Nike Air VaporMax shoes are marketed as a way to save the future of sports, by helping to keep playing fields “safer” from climate change. And while this specific product has not yet been released for public consumption, it’s hefty price tag already indicates that the sporting goods company is aiming high and seeking to penetrate the upper echelons of society with this product.
Studies have shown that companies that innovate with sustainability in mind are more likely to succeed, due to the reasons highlighted above. But for sustainability to truly drive innovation, new startups and veteran companies alike must align their businesses’ objectives with those sought out by their potential new and existing consumers, in every market they wish to penetrate. That means knuckling down, coming up with all-encompassing strategies, and viewing sustainability as the value-adding framework that will drive your product forward, from ideation to conversion.