Full Summary of Organising Sustainable Innovation 2021
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Organizing Sustainable Innovation
Instelling
Vrije Universiteit Amsterdam (VU)
This is an extensive summary of all the course material of the course Organising Sustainable Innovation 2021. It includes lecture notes of all lectures (expect the guest lectures), summaries of all mandatory Hargadon chapters and of all the assigned articles.
- the development of new products or processes that consume fewer environmental
resources, foster the health of individuals and communities, and are financially viable for
producers and consumers
- creating organizations capable of innovating time and again at a pace they can sustain
Sustainability and innovation overlap in distant and specific places
- Not all sustainability requires innovation and innovation is not always sustainable
Cycles of innovation have a long fuse and a big bang: “things take longer to happen than you
think they will, and then they happen faster than you thought they could”
- The speed and scope of the big bang depend on the events of the long fuse
The impact comes from the interactions of many independent elements that seem to
converge suddenly
Elements have emerged that are setting the stage for rapid changes within and across
industries over the coming decades:
- Shifting consumer preferences
- Bolder policies at federal, state and local levels
D EVELOPMENTS TOWARD SUSTAINABILITY
We now have accepted theories and standards for modelling and measuring the impacts and
risks associated with sustainability
- Reaching consensus on sustainability metrics enables businesses to account—as both
assets and liabilities—for their relationship with the natural environment
New technologies have emerged and evolved
- Clean energy technologies have improved to the point of competing evenly with
traditional (carbon-intensive) energy sources
- Connected energy monitoring systems for home and business
- Connected city and smart grid technologies
,- The Internet provides the means for radical transparency (whether your company wants
it or not)
Incidents that used to go unnoticed now trigger rapid public outcry and policy
responses
What customers value influences what problems will be solved by these new technologies:
- They define what markets want and are willing to pay for
- Many corporate buyers are now conscious of and calculating their environmental
footprint when buying corporate stuff
- Market preferences are redefining what will no longer be tolerated
The real shifts in consumer preferences will come from younger consumers who are just
now acquiring purchase power
The voices of investors are most important: they care less about ethics than about liabilities
- Stock prices and the costs of capital become closely connected to a company’s long-term
exposure to sustainability issues, so investors prefer more sustainable companies
In summary: developments across science, technology and markets converge in policy
makers taking bolder steps toward sustainability
R EQUIREMENTS TO SUCCEED IN INNOVATION
Organizations need to have the right capabilities for innovation
A “capability” (strength, a skill, competitive advantage) of the organization: when people,
practices, tools, organizational structures, resources, IT systems, and incentive schemes
support one another to accomplish an activity (e.g. innovation, low-cost manufacturing, or
safety)
- In relatively stable times, you need the right capabilities to compete effectively
- When conditions are changing, you also need the right capabilities to innovate
effectively: “dynamic capabilities”
The right capabilities for innovation are specific to the strategic objectives of each
company and the particular challenges it will face in pursuing those objectives
Organizing for sustainable innovation requires identifying those capabilities that match the
challenges that sustainability presents for your company
L ESSONS LEARNED FROM W ATT ’ S STORY
1. The idea is nothing without the right capabilities to bring it to the market
,- Inherent scientific, engineering, and financial limitations and uncontrollable shifts in
market trends or regulatory factors can cause failure
- With the right capabilities you can foresee many of these flaws and shifts
2. Where you want to go dictates what you need to get there
- The mix of capabilities each company needs to pursue innovation is unique
- Understanding where and how you need to innovate, in turn, helps you determine the
challenges you’ll face in getting there
3. There is a set of common capabilities for the pursuit of sustainable innovations
- Nexus work: building new networks by seeing and connecting the emerging elements of
the long fuse (the relevant technologies, people, resources, and organizing principles), in
circumstances where there is little structure, little precedent and few established
relationships
- The capability of knowing the relevant issues in science and policy, recognizing how
those issues are evolving and guiding the path of that evolution in ways that enable
sustainable innovation
- Recombinant innovation: reduce uncertainty and achieve scalability by assembling
innovations from existing technologies and resources
- How to harness the power of design to introduce revolutionary technologies in ways that
require only evolutionary changes in consumer understanding and behaviour
- The capability of companies to include business model innovation with new products or
processes in order to maximize the value proposition to consumers and other partners
and the profitability of the offering
NIDUMOLU ET AL.
A DVANTAGES OF SUSTAINABILITY FOR FIRMS
Executives act as though they have to choose between the social benefits of developing
sustainable products/processes and the financial costs
- Not true:
Lowers costs because companies reduce the inputs they use
Additional revenues from better products/new businesses
They key to progress (especially in economic crisis) is innovation
Early movers have competitive advantage
F IVE STAGES OF CHANGE
1. Viewing compliance as opportunity
, - It’s smart to comply with the most stringent rules, even before they are enforced -> first-
mover advantages in terms of fostering innovation
- Enterprises that focus on emerging norms gain more time to experiment
Companies in the forefront of compliance spot business opportunities first
- Companies that enforce a single norm (the toughest) at all their manufacturing facilities
worldwide benefit from economies at scale and can optimize supply chain operations
2. Making value chains sustainable
- Once they keep pace with regulation, they become more proactive about environmental
issues: many focus on reducing the consumption of non-renewable resources
- Initial aim is creating a better image, but often also reduces costs or creates new
businesses
- Induce suppliers to become more sustainable by offering them incentives
- Carbon management, carbon and energy footprint analysis and life-cycle assessment
help identify the sources of waste in the supply chain
- For a sustainable supply chain you need operational innovations that lead to greater
energy efficiency
- Encourage employees to work from home: higher productivity and job satisfaction
- Instead of scrapping returned products, try to recapture some of the lost value by
reusing them: better for costs and for reputation
3. Designing sustainable products and services
- Executives realize that their business can score over rivals by designing sustainable
products
4. Developing new business models
- Ask at different times what the business should be
- Explore alternatives to current ways of doing business
- Understand how companies can meet customers’ needs
differently
5. Creating next-practice platforms
- Executives need to question the implicit assumptions
behind current practices: question the status quo regarding scare resources to change it
- E.g smart grid: use digital technology to manage power generation, transmission and
distribution from all types of sources along with consumer demand -> lower costs and
more efficient use of energy
I NITIATIVES THAT HELP
Two initiatives help companies become sustainable:
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