During my studies at the Richard Ivey School of Business, many of my peers believed business and sustainability were an oxymoron. Numerous students thought investing in sustainable practices meant hurting company profits. Fortunately, professors introduced us to triple bottom line theories, social innovation and sustainability frameworks, which proved that companies can and should integrate environmental and social outcomes into their business strategy. Since that time I have been following the business sustainability world closely. For this post I’d like to offer my perspective on this compelling field including sharing news of an exciting tool called Sustainability-Oriented Innovation.
We are entering a turbulent period of re-thinking how companies can best serve people, planet, as well as profit. Disruptive events like the 2008 financial crisis have opened new dialogues on the role of corporations in society, such as Bill Gates’ call at Davos for Creative Capitalism. A growing number of organizations, like Volans’ Breakthrough Capitalism, are making the case that “business as usual” is insufficient to meet the environmental and social challenges our 21st century world faces. These thought leaders, like John Elkington, are calling upon firms to change the way we do business. Novel frameworks are sprouting forth, such as Corporate Shared Value and Corporate Social Innovation, that encourage companies to re-examine and re-formulate their business strategy.
In partnership with Ivey’s Network for Business Sustainability, Dr. Richard Adams of the University of Exeter designed a thought-provoking framework, Sustainability-Oriented Innovation (SOI), which illuminates the path towards positive corporate change. Through applying SOI, firms can learn how to more directly contribute to the environments that allow them to be profitable.
What is SOI?
Sustainability-oriented innovation, or SOI is a “deliberate change made to products, processes, services, organizations, or wider systems that delivers environmental, social and economic value.” Simplified, SOI means doing something different to improve the well-being of our environment, communities and finances.
Why does SOI matter?
Similar to Corporate Social Responsibility, the impetus to do SOI is driven by tightening regulations, consumer pressure, and risk to company reputation. No longer can corporations ignore being accountable for damaging aspects of their supply chain, as the recent Bangladesh clothing factory collapse illustrated for Loblaws and its Joe Fresh brand. Greater engagement by consumers and the public, accelerated by the higher octane fuel of social media, are making it increasingly impossible for corporations to overlook the social and environmental imperatives underpinning their business models.
Stages of SOI
Importantly, not only does SOI involve incremental change like CSR, but it also reaches organizational and systemic level transformation.
There are three main stages to SOI, diagrammed below:
Stage 1: Operational Optimization
The firm takes a structured approach to incrementally improving sustainability, through tools like ISO 14001 (ie: CSR) Think: Reduce Harm
Stage 2: Organizational Transformation
The firm integrates sustainability into the corporate culture, becoming the status quo. (ie: Supply Chain Management) Think: Create Shared Value
Stage 3: Systems Building
Source: Network for Business Sustainability. 2012. Innovating for sustainability: A guide for executives. London, Canada: Network for Business Sustainability. www.nbs.net/knowledge.
How can SOI assist business?
SOI challenges corporations to drive sustainability more deeply into their strategy. When a firm reviews the above framework, they must consider their purpose for innovating. Are they doing it to reduce costs? Leverage their core competency? Begin collaborative partnerships? Or transform their products into services? Through applying SOI, business leaders can better understand which stage the firm is at (if any), where the firm should be, and how to go about achieving that goal.
The SOI framework is one of an encouraging new set of tools to support next stage corporate sustainability efforts. Although it serves as an excellent starting point, the transition from Organizational Optimization to Systems Building is non-linear and uncertain. Many variables, including a firm’s core competency, committed leadership, competitive environment, suppliers, consumers (think Porter’s 5 Forces), impact the ability for a firm to embed sustainability into its core being.
Want to learn more?
SOI’s third stage “Systems Building” bears notable similarities to Frances Westley’s systems-based work on resilience and social innovation. Westley’s most recent article published in the Stanford Social Innovation Review explains how highly resilient systems support innovation creation.
For more on SOI, visit the Network for Business Sustainability, where you can find the research team’s full report on Innovating for Sustainability. Parallel and complementary cutting-edge research from the Doughty Centre for Corporate Responsibility investigates the role of the Social Intrapreneur as “an extra force for sustainability.” These resources are just a handful of the many that are helping corporations integrate sustainability into their business strategy.
About the author: Devon Krainer is a recent graduate from the Richard Ivey School of Business. Currently working at Social Innovation Generation (SiG), Devon loves investigating and disseminating new ways for business to serve society. Start a conversation with Devon