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How Purpose Drives Sustainable Innovation in Leading Companies

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

purposegraph

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, remember and share
  • The ability to engage with and seek the assistance of the company’s supply chain/suppliers around a higher goal (collaboration was discussed at the last breakfast entitled “How to Collaborate for Sustainable Innovation”)
  • The ability to collaborate with peers around non-competitive aspects of the purpose
  • Brand trust (if the purpose is noble) so companies can help customers make more informed purchasing decisions – assisting with the take-up of innovative new products and services

Inspiring Examples

Lifebuoy Soap’s purpose is to save lives by improving health and hygiene. Staff connection with this purpose has led to a range of innovative initiatives and partnerships that are both improving health in developing and emerging nations as well as increasing sales. The latest innovation in formulation is the addition of Activ Naturol Shield (ANS). ANS provides better protection against bacteria that cause stomach infections, typhoid and cholera, as well as combatting skin and eye infections.  Lifebuoy with ANS is helping grow the whole brand, with worldwide sales up 15% in 2014.

Africa Drive exists to improve health in Benin, Africa by safely transporting patients on time for treatment and improving road safety (Benin has a road fatality rate of 27.7 deaths per annum per 100,000 people[1]). One of its innovations was the establishment of the Baobab Express, a bus line with well-maintained vehicles and trained drivers which runs to a regular schedule, providing the community with a reliable, comfortable and safe transport system.

Unilever’s vision is to double the size of its business while reducing its environmental footprint and increasing its positive social impact. To do this, Unilever developed the Sustainable Living Plan – its blueprint for sustainable business. Through engaging with staff and suppliers, the Sustainable Living Plan has resulted in resource efficiency innovations which save the company £200M (with limited investment), simplify the business, and set the market standard for others to follow.

Interface, the world’s largest maker of carpet tiles (a more sustainable alternative to broadloom carpet) has a mission to reduce its environmental footprint to zero by 2020 (“Mission Zero”). This is driving innovation at every level of the company in new product development, materials sourcing, energy procurement and manufacturing processes. Net-Works is an example innovation project which collects and recycles discarded fishing nets from delicate marine environments for use in carpet tiles and other nylon products, creating a revenue stream for poor fishing communities. To celebrate the program, Interface has designed a successful new line of carpet tiles (called Net Effect) drawing inspiration from the sea and creating a strong marketing benefit from Net-Works.

 

The Need for Enablers

Purpose alone is not sufficient for successful innovation. Also required are a range of structural ENABLERS:

  • A switch to focus on inputs, as well as outputs.purpose_alone For example, resource use and intellectual property are inputs which can and should be managed and which lead to outputs like profits
  • Metrics to measure progress
  • Senior executive action – to demonstrate commitment to the purpose
  • Acknowledgement of the risks involved with innovation and forgiveness of failure
  • Local decision-making and staff empowerment to enable staff to act
  • Dedicated funding for innovation projects
  • A stage gate process to support innovation projects with resources, allocate funding and overcome barriers
  • Transparency to build trust and provide proof of the value created to allay the concerns of sceptics and bring along financially-focussed investors
  • A well-designed customer/consumer communication programme that helps them to connect with the purpose and make informed choices without preaching about the achievements of the company.

Purpose-led Innovation in B2B versus B2C

Consumers appreciate and engage well with purpose and purpose-led innovations in products and services. However, B2B customers’ decision-making includes financial responsibility and long-established purchasing processes that rarely account for the broader social and environmental aims of a supplier.

Therefore, companies selling to B2B customers need to be aware of the range of financial and non-financial decision criteria of each customer and have a proposition and brand that appeals to all of its target segments.

What Next?

Lavery Pennell Sustainable Innovation Breakfasts bring together action-oriented corporate decision-makers who share a belief that business can be more sustainable and profitable, to discuss how to transform business. We welcome new attendees; contact Greg Lavery at greg.lavery@laverypennell.com.

More useful insights on sustainable innovation, including the summaries of previous breakfasts, are available at laverypennell.com.

 

ABOUT LAVERY/PENNELL

We believe that business can and should be more sustainable and profitable. Lavery/Pennell exists to make this possible and valuable.  We have identified billions of dollars of value for some of the world’s leading companies, both through revenue growth and cost reduction – and established disruptive new startups including Rype Office and Rype Guides.

 

[1] WHO. “Global Status Report on Road Safety 2015” (PDF) (official report). Geneva, Switzerland: World Health Organisation (WHO). Accessed on 27.1.16 at http://www.who.int/violence_injury_prevention/road_safety_status/2015/en/