Main points: Organizing Sustainable Innovation
Week 1: Introduction to Sustainable Innovation, Capabilities, and Crafting an Innovation Strategy
Bansal, P., & DesJardine, M.R. (2014). Business sustainability: It is about time. Strategic Organization,
12(1), 70-78.
Sustainability = meeting the needs of the present without compromising the ability of future
generations to meet their own needs and aims to secure intergenerational equality.
Sustainable business = the ability of firms to respond to their short-term financial needs without
compromising their ability to meet their future needs.
Sustainability requires trade-offs across time, between exploitation and exploration.
Exploitation = What can we change now to be different?
Exploration = What can we do differently in the future?
Short-termism = decisions and outcomes that pursue a course of action that is best for the short term
but suboptimal over the long run for society and firms.
Humans have a bias for immediate gratification and temporal discounting, we prefer to consume less
now than wait for more later. Urgency and uncertainty exacerbate this bias, since people want more
rewards now and future rewards are obscured. Short-termism is a viscous circle.
Hyperbolic discounting = the tendency for people to increasingly choose smaller-sooner rewards over
larger-later rewards.
Dynamic systems theories = shift the lens to the bigger picture, so that the temporal effects become
more salient as the feedback mechanisms within and between levels of analysis come into view.
Market measures that look far into the future use discount rates so that future earnings are valued
less than present earnings, whereas sustainability scholars aim to give equal or more value to the
future.
1
, Nidumolu, R., Prahalad, C.K., and Rangaswami, M. R. (2009). Why Sustainability Is Now the Key
Driver of Innovation, Harvard Business Review. 87(9): 56-64
The fight to save the planet is a three-legged race, in which you move forward with the two untied
legs but the tied third leg holds you back.
Although both legislation and education are necessary, they may not be able to solve the problem
quickly or completely to be sustainable.
By treating sustainability as a goal today, early movers will develop competences that rivals will be
hard-pressed to match. Enterprises need to go through five distinct stages of change:
1. Viewing compliance as opportunity
a. Compliance is complicated, environmental regulations vary by country, state, region
and city. It’s smarter to comply with the most stringent rules, and to do so before they
are enforced. This yields substantial first-mover advantages in terms of fostering
innovation.
b. Companies need to turn antagonistic regulators into allies by leading the way and
companies in the vanguard of compliance can naturally spot business opportunities
first.
2. Making value chains sustainable
a. Become more proactive about environmental issues and make sustainable changes in
the supply chain, operations, workplace and returns.
3. Designing sustainable product and services
a. Business can score over rivals by being the first to redesign existing products or
develop new ones and while designing understand the consumer concerns and
carefully examine product life cycles.
4. Developing new business models
a. Successful models include novel ways of capturing revenues and delivering services in
tandem with other companies. Developing a new business model requires exploring
alternatives to current ways of doing business as well as understanding how
companies can meet customers’ needs differently.
5. Creating next-practice platforms
a. Sustainability can lead to interesting next practice platforms, such as the smart grid.
Two enterprise-wide initiatives help companies to become sustainable:
1. When a company’s top management team decides to focus on the problem, change happens
quickly
2. Recruiting and retaining the right kind of people is important.
Smart corporations follow these simple rules in their effort to become sustainable:
• Don’t start from the present but from the future
• Ensure that learning precedes investments
• Stay wedded to the goal while constantly adjusting tactics
• Build collaborative capacity
• Use a global presence to experiment
2
Week 1: Introduction to Sustainable Innovation, Capabilities, and Crafting an Innovation Strategy
Bansal, P., & DesJardine, M.R. (2014). Business sustainability: It is about time. Strategic Organization,
12(1), 70-78.
Sustainability = meeting the needs of the present without compromising the ability of future
generations to meet their own needs and aims to secure intergenerational equality.
Sustainable business = the ability of firms to respond to their short-term financial needs without
compromising their ability to meet their future needs.
Sustainability requires trade-offs across time, between exploitation and exploration.
Exploitation = What can we change now to be different?
Exploration = What can we do differently in the future?
Short-termism = decisions and outcomes that pursue a course of action that is best for the short term
but suboptimal over the long run for society and firms.
Humans have a bias for immediate gratification and temporal discounting, we prefer to consume less
now than wait for more later. Urgency and uncertainty exacerbate this bias, since people want more
rewards now and future rewards are obscured. Short-termism is a viscous circle.
Hyperbolic discounting = the tendency for people to increasingly choose smaller-sooner rewards over
larger-later rewards.
Dynamic systems theories = shift the lens to the bigger picture, so that the temporal effects become
more salient as the feedback mechanisms within and between levels of analysis come into view.
Market measures that look far into the future use discount rates so that future earnings are valued
less than present earnings, whereas sustainability scholars aim to give equal or more value to the
future.
1
, Nidumolu, R., Prahalad, C.K., and Rangaswami, M. R. (2009). Why Sustainability Is Now the Key
Driver of Innovation, Harvard Business Review. 87(9): 56-64
The fight to save the planet is a three-legged race, in which you move forward with the two untied
legs but the tied third leg holds you back.
Although both legislation and education are necessary, they may not be able to solve the problem
quickly or completely to be sustainable.
By treating sustainability as a goal today, early movers will develop competences that rivals will be
hard-pressed to match. Enterprises need to go through five distinct stages of change:
1. Viewing compliance as opportunity
a. Compliance is complicated, environmental regulations vary by country, state, region
and city. It’s smarter to comply with the most stringent rules, and to do so before they
are enforced. This yields substantial first-mover advantages in terms of fostering
innovation.
b. Companies need to turn antagonistic regulators into allies by leading the way and
companies in the vanguard of compliance can naturally spot business opportunities
first.
2. Making value chains sustainable
a. Become more proactive about environmental issues and make sustainable changes in
the supply chain, operations, workplace and returns.
3. Designing sustainable product and services
a. Business can score over rivals by being the first to redesign existing products or
develop new ones and while designing understand the consumer concerns and
carefully examine product life cycles.
4. Developing new business models
a. Successful models include novel ways of capturing revenues and delivering services in
tandem with other companies. Developing a new business model requires exploring
alternatives to current ways of doing business as well as understanding how
companies can meet customers’ needs differently.
5. Creating next-practice platforms
a. Sustainability can lead to interesting next practice platforms, such as the smart grid.
Two enterprise-wide initiatives help companies to become sustainable:
1. When a company’s top management team decides to focus on the problem, change happens
quickly
2. Recruiting and retaining the right kind of people is important.
Smart corporations follow these simple rules in their effort to become sustainable:
• Don’t start from the present but from the future
• Ensure that learning precedes investments
• Stay wedded to the goal while constantly adjusting tactics
• Build collaborative capacity
• Use a global presence to experiment
2
