How to Build Sustainable Innovations
U+, in partnership with the ILO Institute, is excited to bring you highlights from ILO’s Weekly Virtual Gatherings. Recently, we discussed the role of innovation in shaping sustainability policies for large firms.
The scope of a genuine sustainability program can be daunting, and the payoffs—beyond public relations and corporate culture—might seem remote.
Most firms aren't even measuring their impact in the same way, particularly when we address environmental impact. One company equates carbon footprint with emissions from operations, ignoring emissions from the sourcing of fuels (like natural gas), while another excludes the environmental impact of its outsourcing contractors, and still another includes carbon release from all the food served in all its offices (a huge contributor to environmental impact, and seldom included in corporate sustainability goals).
"There's no common scorecard, no agreement on what we mean by the key goals we're solving for, and that's preventing real collaboration and accountability," says ILO president Peter Temes, building on lessons from University of Chicago economist Lars Peter Hansen, a Nobel laureate who recently spoke to ILO members at an institute roundtable.
Energy giant BP rebuilt its brand a dozen years ago around its sustainable energy goals—but failed to include the practices of key contractors in what they were counting. And when a contractor cut corners, the worst off-shore oil spill in memory erased every gain, and then some, that their other efforts had begun to realize.
In contrast, Shell set important ten-year goals for carbon-emissions reduction, but then super-charged their implementation by linking executive bonuses to hard-nosed annual progress measures. Temes observes that "incentives that you can feel personally in terms of dollars and cents go a long way."
Firms in every industry, public and private, ought to keep the fundamentals of good innovation management in mind as they shape and work toward sustainability goals:
- Be brutally honest about what you're trying to achieve, and craft clear measures that make sense across the organization.
- Engage your supply chain and other partners. They know things about how you operate that you don't, and most likely are eager to invest in keeping you in their ecosystem. Walmart super-charged the corporate sustainability movement 15 years ago by working with their vendors to implement new, environmentally sensitive packaging standards that are now standard. They could not have done this alone, and have had vastly more impact changing their suppliers' practices than they ever would have achieved acting alone.
- Many small experiments help reveal the best ways to improve how you operate.
- Fewer, bigger experiments are seldom more likely to work than many small ones; they only increase the cost of failure when failures inevitably come.
- Create practical incentives at the individual and at the group levels to get folks aligned with the mission.
- Make sure your variable compensation has a strategic "bogey" built in. That means giving more success points or dollars for the achievements that are tightly aligned with your sustainability goals. Never accept the idea that "a dollar is a dollar is a dollar." Dollars earned by sticking tightly to your strategy are more valuable over time than other dollars; get every member of your team to hold themselves accountable for that.
The U+ method can efficiently and effectively lead the development, implementation, and improvement of innovations in any sector. To date, we have used this method to bring 90+ products to market, creating over $1 billion in value for Fortune 1000 companies. Check out U+ success stories here.
Get 20 minutes with Sean, the Managing Partner of U+ Americas, to learn more about how U+ can help your company innovate successfully.
Launched in 2005, ILO is a membership organization for large companies, government agencies and not-for-profits, bringing senior executives leading innovation together for knowledge sharing and community building. ILO has completed more than 300 best-practice research reports, focusing on emerging challenges and opportunities. To learn more about ILO, membership benefits, and how to join, visit www.iloinstitute.net.
Check back next week as we’ll be releasing new insights from weekly events with leading innovators from across the globe.