In a recent edition in the Harvard Business Review, Ram NiduMolu (Founder and CEO of InnovaStrat), C.K. Prahalad (Paul and Ruth McCracken Distinguished University Professor of Strategy at the University of Michigan’s Ross School of Business ) and M.R. Rangaswami (Founder of the Corporate Eco Forum and the co-founder of the Sand Hill Group) wrote an article on “Why Sustainability is Now the Key Driver of Innovation”. The article talks about how, being eco-friendly and sustainable, lowers costs and drives innovation. It goes on to say that in the future, only companies which make sustainability a goal will achieve competitive advantage, which means that rethinking business models as well as products, technologies and processes is the need of the hour.

As I was reading the article, I realized how emerging companies, both in developed and developing economies can use “the five steps to sustainability” mentioned in the article and lower costs from day 1. The article takes several organizations and describes how they were able to drive innovation, gain competitive advantage and cut down costs by adhering to gold standards for sustainability. Talking about supply chains, it says how responding to people’s concerns about destruction of rain forests and wetlands, MNCs such as Cargill and Unilever have invested in technology development and worked with farmers to develop sustainable practices in the cultivation of palm oil, soybeans, cacao and other agricultural commodities, which in turn has improved crop yields and seed production.

Companies like FedEx, which consumes 4 million gallons of fuel every day, are also becoming eco-friendly and working on new methods to save fuel. Following a lot of pioneers, FedEx has recently converted its energy-saving expertise into a stand alone consulting business which it hopes will become a profit center. “Work from home” is another key policy which is saving costs and increasing employee satisfaction.

By creating environment-friendly value chains, companies are linking sustainability initiatives to business results. Designing sustainable products and services, developing new business models and creating next-practice platforms for the future are key steps towards sustainability. Amidst all this, the lesson to learn for both SMEs and start-ups is to start looking at sustainability as a key driver of innovation and pave the path for a cleaner future!

Advertisements