How to be innovative in sustainability

Introduction

We hear the term “innovation” everywhere and are made to believe in its importance. For many businesses, innovation means getting together for a brainstorming workshop to come up with ideas out of the blue, in the hope that one of these ideas will stick. But there is more to it than that.

What is Innovation?

Let’s start by understanding what we mean by innovation. Many people think that innovation is all about that “apple falling from the tree moment”, the technology, the ideas, or they need another Steve Jobs on their team because innovation requires some superhuman intuitive ability.

But done properly innovation is simply a process for managing uncertainty and de-risking new ideas. It can be used to modify business models, adapt to change or unexpected events like COVID, and to improve existing products and services.

Because it is a process, innovation can be taught and integrated into any business culture and way of thinking.

For an idea to be innovative, it must also be useful. Creative ideas don’t always lead to innovations because they don’t necessarily produce viable solutions to problems which is why those brainstorming workshops often lead nowhere.

Types of Innovation

Not all innovations are equal. Different types of innovation require different skills, resources, and support. They also need different degrees of autonomy to succeed.

Innovation in business can be grouped into three main categories:

• Efficiency Innovation – these are incremental innovations that improve operational aspects of the businesses business model. They are low risk with low uncertainty, don’t change the business model in a substantial way, can deliver an immediate impact and should occur across all parts of the organisation.
• Sustaining Innovation – These types of innovation are about exploring opportunities to extend the businesses business model, to strengthen the association and deliver additional value to customers. Typical examples of sustaining innovations include new products and services, new distribution channels, or geographic expansion. They are generally low to medium risk and generate substantial gains but can also require considerable investment.
• Transformative Innovation – These types of innovation are the most difficult and explore opportunities outside of the traditional field of an Association. These types of innovations position businesses for the long term and protect them from disruption. They tend to be high risk with lots of uncertainty but also have the potential for the biggest gains. They are best developed by autonomous teams operating outside traditional business units – often these teams will be working in protected spaces like corporate accelerator programs.

Businesses should have a portfolio of projects across all three categories in order to remain relevant whilst protecting themselves from disruption.

The diagram below represents an innovation portfolio moving through the innovation process. A business should have a number of Efficiency Innovations representing low risk continuous improvement. Sustaining Innovations require more effort and resources (the larger the circle the greater the investment) and should be selectively piloted to develop the best ideas. Transformative Innovations have the greatest uncertainty but the greatest potential impact and involve lots of small bets that are validated and de-risked through prototyping and pilots.

The Seven Essentials of Innovation

People can make developing innovative solutions a great deal more confusing than it has to be.

Fundamentally there are seven key stages to developing successful innovations:

Stage 1 – Clarify your mission.

This stage is about identifying what matters most to your organisation.  It is aimed at helping you define and understand your why and your mission – the reason why you do the things you do, or the reason for your business to exist.

Too often organisations waste time and effort pursuing what they believe to be a good idea without ever taking the time to consider if this is moving the organisation forward.  They get wedded to the idea and not the outcome.

Defining your mission clearly allows you to manage your portfolio of innovations.  Ideas that no longer support the mission get retired.

Learn how to create an effective mission statement with our online mini course “How to create a powerful mission statement”.

Stage 2 – Identify the opportunity.

This stage is about identifying opportunities that can help the business deliver its mission.

For efficiency innovations this can be as simple as conducting a five minute after action review following the completion of a task where the team simply asks what did we do well, what didn’t we do well, and what needs to change next time.

For sustaining and transformative innovations we look to understand the ecosystem in which we operate and identify points of influence.

Stage 3 – Identify your market segment.

Once we have identified the points of influence in the ecosystem we can then determine “who” exerts this influence.  These stakeholders then become the target market segment for your idea and we can then begin to understand the market characteristics and needs.

Stage 4 – Develop solutions for your market segment that also delivers your mission outcomes.

In this stage we develop a range of potential solutions for our target market segment.

For businesses that have a social or environmental purpose it is important to understand that the needs of your market segment may not directly align with your mission.

For example, we created an award winning TV Show to drive mainstream demand for sustainable housing.  But the key need of our target market (our audience) was the need for entertainment and to decide if they should renovate or rebuild their home.  So our solution was an entertaining lifestyle TV show called Renovate or Rebuild that meets this need and using the storytelling within the show we educated the audience about the benefits of sustainable homes.  The audience is not watching the show to learn about sustainable housing, that outcome is a consequence of them watching an entertaining TV show about home renovations.

Stage 5 – Make sure it works before you launch.

The number one reason startups fail is that there is no market need for their product.  In other words they created a solution looking for a problem.

To prevent your idea from failing you should validate your solution through prototyping and piloting.

Stage 6 – Design a business model

We usually associate an industry’s transformation with the adoption of a new technology or innovation. But although new technologies are often major factors, they have never transformed an industry on their own. What does achieve such a transformation is a business model that can link a new technology to an emerging market need.

Consider the following:

• Facebook is the world’s largest media company but creates no content;
• Bitcoin is the world’s largest bank, with no actual cash;
• AirBNB is the world’s largest accommodation provider yet owns no real estate;
• AliBaba is world’s most valuable retailer but has no inventory of its own; and
• Uber is the world’s largest taxi company yet it owns no vehicles.

What allows these companies to achieve such large-scale transformation is not a new technology or innovation, it is the business models upon which they are built.

A business model is how a company creates value for itself while delivering products or services for its customers.

This video from our Youtube channel explains the 11 key parts of a successful business model.

Stage 7 – Launch your solution with the right marketing and communications.

You are now finally ready to launch your innovation and now is the time to let people know it is ready. This is where you can employ the latest behavioural science insights through your marketing and communications to make real change happen.

Conclusion

In today’s world, developing successful innovations requires a different approach because no one has ever had to solve the scale of problems we are facing today whether this is climate change, cleaning up the oceans, or addressing inequality. There is also no rule book where we can turn to simply pick a solution off the shelf.

Our seven-stage process draws upon the latest insights from innovation and entrepreneurial thinking and applies it to your innovation challenges to provide you with a disciplined and evidence based framework.

Innovation is not some magic black box from which amazing ideas miraculously emerge.

Innovation is a process for managing risk and uncertainty, it can be taught, it can be learned, and it can be implemented successfully by any organisation.

Need to come up with some ideas to achieve your sustainability or net zero goals? Try our free online mini-course “how to come up with amazing sustainable ideas” to help you get started and become the idea generating machine you were meant to be!