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How Purpose Drives Sustainable Innovation in Leading Companies

At the 19 January Lavery/Pennell Sustainable Innovation Breakfast, leaders from Unilever, Marks and Spencer,  Interface, Virgin, HCT, AB Sugar and the WBCSD shared insights into how purpose is driving successful sustainable innovation. This note summarises the discussion. The Value of Purpose Purpose is the reason why companies do what they do – not to make profit (which is a result of the company’s actions) – but the true problem that they are solving and the core of the company’s business. Purpose can create value for businesses by addressing increasing expectations of staff (who more-and-more choose to work for organisations who share their beliefs), consumers (buying from authentic brands that they trust) and communities (who provide a licence to operate). This was illustrated in the findings of a 2014 Deloitte survey which showed significantly higher growth expectations and staff engagement levels in companies with a strong sense of purpose (see Figure 1). Figure 1: The Impact of Purpose And purpose can and should drive innovation, with a sustainability-related purpose driving sustainable innovation. How Purpose Drives Innovation To fuel and encourage innovation, a company’s purpose provides: A compelling reason to strive for improvements that connects with the hearts and minds of staff (especially if the purpose is sustainability-related) Focus – which is vital for corralling creative effort A long term aim – enabling multi-year R&D initiatives A stretch target – requiring and empowering all staff to contribute their ideas Senior executive support Alignment reaching from the top to the bottom of an organisation around shared intentions – in part because purpose provides a simple end goal that is easy to understand,...

How to Collaborate for Sustainable Innovation

Sustainable innovation often requires collaboration to access the skills required and value on offer, but is it not easy. ‘How to Successfully Collaborate for Sustainable Innovation’ was the subject of the 14 October Lavery/Pennell Sustainable Innovation Breakfast in London, which brought together corporates, startups, financiers and not-for-profit organisations (including BP, Balfour Beatty, Interface, Virgin and the BBC). The discussion is summarised below. Why Collaborate? The rationale for collaboration is clear (as discussed at the July innovation breakfast), and includes: Many sustainable innovations are beyond the delivery capacity and capability of any single organization, such as those requiring scale, varied skill-sets, or significant funding. By their nature, some sustainable innovations require peers to work together. An example is the aviation industry in relation to noise reduction, fuel efficiency and alternative fuels. Other innovations are only viable if value is added by different types of stakeholders, such as companies working with not-for-profit organisations to combine beneficial products with credibility and market access. Speed is becoming ever more important for innovation; large companies traditionally do not do fast/agile well – collaboration can help address this. Figure 1 shows the types of value that different partners can bring to an innovation project. Figure 1: Different Parties Bring Different Strengths to Sustainable Innovation   Collaborative Innovation Approaches Recent Lavery/Pennell research identified 11 innovation approaches used by a range of companies[1]. Eight of these approaches involve collaboration (see Figure 2). Good practice companies use most of these 11 innovation approaches, but many acknowledge that they do not do all of them well. Figure 2: Innovation Approaches used by Leading Companies   Inspiring Examples Several successful...

Circular economy creates office furniture savings

You can now buy as-new remade office furniture for less than half the new recommended retail price, thanks to the circular economy. Used and recyclable have limits While used office furniture has always been an option, it has traditionally involved compromising on quality. And some manufacturers produce furniture that can be recycled, but this does not usually provide cost savings for buyers. Remanufacturing is better Remanufacturing involves none of the quality compromises while bringing substantial cost and environmental savings. Here is how Rype Office, an award-winning furniture company using Circular Economy principles, does it: Rype Office takes the long life components of used furniture, like steel frames which last for hundreds of years, and rebuilds the rest of the piece around them. Modern precision equipment and the latest resurfacing technologies produce high quality pieces that look like new – a real alternative to expensive new furniture. Those long life components are the most expensive and environmentally harmful to make new, so the cost is reduced by half and the environmental footprint by more than two thirds. High quality furniture at a good price For example, the remanufactured Orangebox G64 shown below (a leading ergonomic chair still in production having sold 1.3 million) is indistinguishable from new. Rype Office sells it for £240 compared to the new recommended retail price of £600. End of life savings too Consistent with the principles of the Circular Economy (as espoused by the Next Manufacturing Revolution, the Ellen MacArthur Foundation, and The Great Recovery), Rype Office offers to lease its furniture or buy it back furniture at the end of each life. This saves customers...

Revenue growth from resource efficiency

Resource efficiency is traditionally associated with cost reduction. But leading companies have also used non-labour resource efficiency to drive sales. Watch this webinar recording to hear how Kyocera successfully do this and how your company can too. The Next Manufacturing Revolution conservatively estimated additional profits worth £325M p.a. from revenue growth from resource efficiency through: • Improved product performance • More efficient delivery models such as ‘servicising’ • Collaborative consumption business models Quantifying these additional revenues can boost the economics of resource efficiency and should be included in sustainability-related business cases. In this webinar, Dr Greg Lavery from Lavery Pennell, lead author of the Next Manufacturing Revolution, presents the revenue growth opportunities available from resource efficiency and how to succeed followed by Tracey Rawling-Church, Head of CSR at Kyocera Document Solutions UK, presenting Kyocera’s...

Radical Strategy: Disrupt before you are disrupted

The traditional response to earnings downturns is to hunker down and defend the status quo. But if the downturn is caused by a structural disruption this is the wrong response. This discussion presents a better response that finds opportunities within challenges – and describes what it takes to capture them. How does your company respond to a downturn in earnings? The traditional approach is to reduce headcount (often middle management), shrink non-operating spending, reinvest some savings in advertising and exhort the salesforce to sell more great product; e.g. Coca Cola, late February 2014. But what if the downturn has been caused by a growing trend that will eventually undermine your business (i.e. a structural disruption)? Then the traditional response to an earnings dip is unhelpful – cutting the company’s ability to respond to a disruption and reinforcing the company’s commitment to the current course. Instead, when these sorts of disruptions occur (and ideally before), it is time for open-mindedness to new ideas and allocation of resources to respond with a better business model. We call this sort of step-out thinking ‘Radical Strategy’ because it steps beyond the incremental improvements/optimisation of the existing business model – where most corporate strategy work is focused. Consider some of the disruptive business model types that are emerging – and which are very difficult to answer by optimising existing approaches: Distributed production – local production of raw materials including food and energy – e.g. farmers markets; rooftop solar photovoltaics Peer to peer networks – directly connecting producers/providers and customers/users cutting out the ‘middleman’- e.g. Zopa Product aggregation and comparison – Where comparable products are...

Creating Value Through Innovation

Innovation is often poorly understood and rarely harnessed to unlock the full value potential available within companies. In this discussion, Nick Pennell and Greg Lavery present the value of innovation and how to capture it, reflecting on their recent work in the field. Innovation is simply about harnessing good ideas and seeing them through their development and implementation across a company. Done properly, such ideas can increase revenue, reduce costs, improve competitive advantage, improve company sustainability – and in doing so lift staff productivity and morale through seeing their ideas come to life. An effective innovation process must follow three principles: Inclusivity: best practice innovation companies (e.g. 3M, Google) make innovation part of everyone’s job description; after all, good ideas can come from anywhere and everywhere. Strategic fit: Innovation priorities must fit with the corporate strategy and vision. We have seen numerous examples where priorities for innovation are not set clearly, leading to sub-optimal cost and resource allocation.  Linked to this, motivating staff participation often works best where innovation is connected to both the corporate strategy and a ‘higher purpose’ – this is where a sustainability lens can be invaluable. Tightly defined innovation brief:  big picture, ‘blue sky’ thinking has its place early in priority setting, but results occur much more quickly if staff are focussed on solving well-defined challenges. Applying these themes, we recommend that companies adopt an innovation cycle which includes four key processes: Priority setting to ensure that the whole organisation, including senior management, share the same innovation goals. The bigger the organisation, the more important this is to ensure that parts of the organisation do...