Sustainability has different variations of its definition depending on what field it is being used in. It can be applied to almost anything in life. In business terms, corporate sustainability has become a buzzword in companies both large and small. Sustainability is most often defined as meeting the needs of the present without compromising the ability of future generations to meet theirs. Even though there is not an ‘official’ definition, most leaders agree that sustainability has three fundamental pillars: economic, environmental, and social.
Sometimes these pillars are referred to as ‘the triple bottom line’ or ‘the Three Ps’ because informally they are referred to as people, planet, and profits.
Companies tend to focus more on the environmental pillar. Over the past few years, organizations have fixated on being eco-friendlier. By having a beneficial impact on the environment, companies have realized that their financial statements have been more positive. For example, IKEA invested in sustainability throughout its business operations. It starts with their supply chain, where the Swedish furniture-maker has sourced close to 50 percent of its wood from sustainable foresters and 100 percent of its cotton from farms that meet the ‘Better Cotton standards’.
This directive reduced the company’s use of water, energy, chemical fertilizers, and pesticides. By doing this, IKEA was able to cut down on their carbon footprint as well as cut costs.
The social pillar ties into a company’s support of its employees, stakeholders, and the community it operates. Companies need to maintain this support. Treating employees fairly and being a good neighbor and community member is key to accomplishing the second pillar.
Verizon is a company that supports its social and community efforts. They do volunteer grants, matching gifts, disaster relief and recovery programs, and cause collection efforts where employees donate time, money, and material goods to maintain support from the community and employees.
Lastly, the third pillar is economics. For a company to be sustainable, they need to be profitable. However, the economic pillar has to be harmonious with the other two pillars. Economic sustainability defines strategies that encourage the utilization of socio-economic resources. The goal is to promote the use of resources efficiently and responsibly that will provide benefits and profitability long term. A profitable business is a stable business.
Sustainable innovation is a process where sustainability considerations (environmental, social, financial) are integrated into company systems from idea generation through to research and development and commercialization. This applies to products, services, and technologies, as well as new business and organization models. Sustainability innovation provides new ways to deliver goods and services that are explicitly designed to create a healthier, more reasonable, and affluent global community. There is plenty of opportunities for innovation due to improvements to existing products, processes, and service delivery to introducing new opportunities in ‘green’ energy.
The ‘4 Ps’ framework can be used to classify the different types of activities being led by sustainable innovation. The ‘4 Ps’ framework includes a product which is what is offered, the process of how something is created and delivered, the position of the target, and paradigm, which is how something is framed. There is a ‘journey’ towards full sustainability that involves three scopes that reinforce a change in the approach. These dimensions treat the problem and then work with the systems that the problem originated from.
There are three stages in the evolution of sustainable innovation. These stages explore the possibilities from simple compliance and “doing what we do better” innovation to an examination of new business opportunities. The first stage is ‘operational optimization’ and the objective is compliance with regulations or optimized performance through increased efficiency. This stage is all about “doing the same things better”. The organization actively reduces its current environmental and social impacts without altering its business model. An example of this would be for a company to use renewable energy or reduce packaging. The second stage is ‘organizational transformation’. Organizations create disruptive new products and services by viewing sustainability as a market opportunity. They focus on “doing good by doing new things”. The outcome is to create shared value. Oftentimes, organizations focus less on creating products and more on delivering services. This can cause organizations to have a lower environmental impact. The third and final stage is called ‘systems building’ which involves the intimate, interdependent collaborations between many disparate organizations that create positive impacts on people and the planet. The objective is “doing good by doing new things with others”. System builders perceive their economic activity as being one with society. The move from the second stage, ‘organizational transformation’ to ‘systems building’ requires organizations to have a radical shift in their mindset. Overall, business leaders can use the framework to identify their current approach to sustainability innovation within their team, within their division, or across their entire organization.
Sustainability-driven innovation is much more than just being eco-friendly. It requires companies to improve business operations and for processes to become more efficient. Their goal is to reduce costs and waste. With the future constantly shifting, organizations need to keep up and keep a competitive advantage by being sustainable. In turn, this will allow organizations to drive innovation. Sustainability is a balancing act. Organizations need to balance their design and delivery to guarantee social, economic, and environmental aspects. Sometimes, this can seem limited because gaining economic profit may be difficult at first. To break down that wall, organizations need to think outside of the box and be innovative.
Sustainability can be a major source of innovation, growth, and competitive advantage. Innovation and sustainability are two factors that drive profitability. “The combination of innovation, sustainability, and profitability are powerful,’ said Grete Bridgewater, Director, Environmental Services for Canadian Pacific. ‘If research can unlock the potential in our organizations to view our business models differently and encourage sustainable innovation in a meaningful way, then we will learn, adapt and lead change.” Innovating for sustainability involves making intentional changes to organizational products or processes that produce environmental and/ or social benefits as well as economic value. Considerable opportunities increase operating efficiencies, reduce costs, and explore how a product or company can fit into a ‘green’ economy. Over the years, companies and organizations have come to realize that they could save money through better environmental management and this could be used to boost their external credentials.
A company can run into some problems when it comes to being both sustainable and innovative. First, very few companies have had to find growth while facing declining resource stocks. In the past few years, international markets, capital and labor markets, and computing and communications technologies all have expanded. Through this expansion, few companies understand how to use innovation to drive growth. Second, big organizations like Microsoft, Amazon, Google, and Facebook all had their best growth years simultaneously with growing markets. These are called greenfield markets, they are often small and young. On the other hand, brownfield markets pose challenges for organizations because they are often large and over time have established practices and technologies, competitors, deep-rooted business relationships, and extensive government regulations. It makes it more difficult for organizations to be sustainably innovative in this market. Another challenge organizations face is balancing scale, reliability, and cost. When bringing a new product to market, there is always the risk of the product growing, getting it right, and maintaining costs. Finally, the obstacle organizations face is the pressure for short-term payback. Organizations need to think of things long-term if they want to be economically feasible and socially responsible. It may take time for organizations to see a return on their investment, but the results will be worthwhile.
Entrepreneurs make a living off designing, creating, launching, and running new businesses. They need to be innovative if they want to succeed. An entrepreneur’s role is to be a visionary and problem solver. Entrepreneurs create new businesses that produce new products and services. They create new jobs and contribute to the overall financial needs and development of community life. Business leaders are now looking at social issues as new markets and successful social-minded enterprises as potential investments.
Governments are now investing significant time and energy to help entrepreneurs and business leaders create their visions and see their business models come to life. This assistance is giving them the knowledge to reach consumers and make economies profitable. It is also bringing exit opportunities. This is important because sometimes entrepreneurs see their exit strategy as a transition into the next major stage. They do not necessarily want to abandon their business, but they want to continue to grow into a new role.
Today’s sustainability trends indicate a need for extreme innovation from entrepreneurial start-ups. Entrepreneurship can be understood as innovativeness, risk-taking, proactiveness, or pursuing the attainment of the greatest profit. Entrepreneurs are innovators because they are open to taking risks regardless if they are going to succeed or fail. They also have an openness to new ideas.
According to the Journal of Security and Sustainability Issues, sustainable entrepreneurship is a concept related to the ability to find new opportunities, and the ability to realize and create economic, ecological, and social value. This concept is a mixture of conventional entrepreneurship and social entrepreneurship. It combines two dimensions of economic goals and social-ecological goals, creating a viable economic performance of business creativity. Conventional entrepreneurship focuses on meeting minimum socio-ecological conditions defined by policy and law. Social entrepreneurship is focused on environmental and social problems. This concept aims to contribute to social development, guaranteeing the economic feasibility with social intentions.
Entrepreneurship is perceived as a three-dimensional interface. According to the Journal of Security and Sustainability Issues, this means that creators can discover new opportunities, use existing resources to exploit discovered opportunities participate in a global society, and prepare for global competition. Sustainable entrepreneurship in the context of globalization has a positive impact on both the individual level and the social level.
Sustainable entrepreneurship in the context of globalization is affected by the increase in quality of life and by the behavior of consumers. Recently, consumers are considering newer concepts of goods and services that also maintain socio-economic, environmental, and respect for ethical values. Due to this change, entrepreneurs are encouraged to balance their benefits with public benefits. It is the only way they can be sustainable in the future.
In conclusion, as the trends of the world continue to change, entrepreneurs have a substantial opportunity to capitalize on new markets, products, and ideas. Sustainable innovation cuts down on waste, packaging, pollution, and overall costs. This concept is making entrepreneurs and businesses more profitable and creating other long-term benefits. Ban Kai Moon, a South Korean diplomat said, “Sustainable innovation is the pathway to the future we want for all. It offers a framework to generate economic growth, achieve social justice, exercise environmental stewardship, and strengthen governance.” It is key to maintaining a healthier, economic, and social environment.