Tag Archives: sustainability

The Triple Bottom Line Framework

The Triple Bottom Line Framework

GUEST POST from Dainora Jociute

Money, money, money. It wasn’t so long ago that it was always sunny in the rich man’s world. But today, things just aren’t that easy, and talking about money isn’t enough.

Businesses cannot thrive and survive in a competitive environment with only one bottom line – profit.

United Nations Global Compact report points out that such issues as poverty, an uneducated workforce, and resource scarcity will, and already is, causing issues for business growth. In addition, both investors and potential talents are looking deeper than just the company’s financial success before they commit. So, next to Profit, business’s effect on People and the Planet are just as crucial measurement indicators.

“Poverty, conflict, an uneducated workforce, and resource scarcity for example, are also strategic issues for business success and viability.”
– UN Global Compact

And what do you get once you combine all three? Planet, People, and Profit are often referred to as the three pillars of sustainability. However, for a business to define sustainability, to have clear and reachable goals, and in return to have a fitting strategy to reach those goals can be challenging.

This is where the need and benefits of the triple bottom line framework become most evident.

What is the Triple Bottom Line Framework?

The term triple bottom line (TBL) was coined by John Elkington, corporate environmentalist, and author back in 1994. It isn’t exactly a new concept and we had plenty of time to see it being tried on by different companies like Patagonia, Unilever, Novo Nordisk and so many more. It is evident that the triple bottom line approach works.

So, what exactly is TBL?

Many like to argue that it is just another accounting tool. Yet in Elkington’s own words, it is a sustainability framework that examines an organization’s social, environmental, and economic impact. It measures a business’s environmental efforts (“planet account”), social well-being (“people account”), and a fair economy. It can be implemented by a business, a non-profit organization, or a governmental institution. It is flexible and adaptable.

Decades before the triple bottom line, the dominant belief was that the only responsibility a business has is to generate profit. It was set in place by economist Milton Friedman and his shareholder theory. With TBL, Elkington challenged the status quo by proposing accountability to all stakeholders and not just shareholders.

In addition to helping with planning sustainable growth, the triple bottom line can act as a reporting tool, thus, it focuses on long-term results and not just one-off campaigns to gain some publicity – can an organization sustain a just economy, environmental resources, and human capital?

Once we shift our attention from quarterly reports to a span of multiple years,

sustainability is no longer just a “to-do” list, but an opportunity that will rejuvenate business in an economy that does not exploit natural resources and social systems.

Triple Bottom Line 3 Areas

The Three Pillars of Sustainability

The triple bottom line goes hand in hand with the 1987’s Brundtland Report and the three key areas of development established by it: environmental conservation (Planet), economic development (Profit), and social sustainability (People).

Yet the definition of sustainability is a little bit more complex than that.

It is natural, that once you think of sustainability, your mind might wander to emissions, deforestation, climate change, and other related issues. For the longest, environmental changes have been the most reported and the most talked about topic. And for a good reason. The environmental pillar or Planet is considered to be the most important component of sustainability as it contains the social and economic systems within it.

But just like there wouldn’t be people without a planet, there wouldn’t be a business without people, and there wouldn’t be prosperity without business. All three areas are tightly interconnected and initiatives to address one often overlap with the other area, and naturally, when everything is so tightly knit, trade-offs are inevitable.

Sometimes decisions must be made to accommodate people at the cost of the environment OR decisions must be made to solve one environmental issue at the cost of another. A good example here would be an effort to reduce the consumption of single-use plastic bags by offering paper bags instead. Paper bags are easier to recycle and even if they do end up in a landfill, the lifespan of paper is drastically shorter than plastics. However, paper bag production is resource-heavy, consuming “four times more energy than plastic bags”.

Trade-offs make it impossible to talk about sustainability without considering all the pillars equally. Implementing the triple bottom line helps a business to form a holistic view of it.

Sustainability strives for:

  • Viable environmental-economic impact: business is executed with the environment and resources in mind, when possible, looking for green solutions or giving back, i.e., reforestation work.
    Trade-off: green business solutions can be intrusive and negatively affect private property (i.e., wind turbines in neighboring lands).
  • Bearable socio-environmental impact: education and awareness allow people to make environmentally conscious decisions, curb consumption and develop healthy habits that directly impact the environment.
    Trade-off: minimal consumption and complete protection of the land stalls economic growth.
  • Equitable socio-economic impact: people have an opportunity to work and earn a fair wage, and business strives to increase the general welfare of the people and increase the standard of living. This generates economic opportunity for both businesses and individuals. Corporate taxes also play a crucial role here – it is thanks to taxes that an organization contributes to supporting various societal programs.
    Trade-off: new business ventures can create more jobs but increase consumption of nonrenewable materials.

Planet

Planet bottom line focuses on an organization’s environmental impact, both positive and negative. Sustainable innovation (or on the environmental scale – eco-innovation), helps an organization to place its focus on the environment, by improving its production, manufacturing, marketing, and also all the in-house functions.

Impact on the planet can be created by such efforts as choosing natural and/or locally sourced materials, upcycling waste, using recyclable components, reducing unnecessary travel time, or saving energy usage.

Positive environmental impact can seem grandiose and nearly impossible to achieve. Not every organization is equally equipped to take drastic measures and pursue such efforts as reforestation, ocean clean-up, or full refurbishment of manufacturing facilities. Thus, while many regulations and recommendations exist, there is no one-size-fits-all approach to sustainability. Reporting and measurement really depend on such variables as the organization’s industry, location, size, and financial capabilities.

In addition, pursuing this bottom line can put the business in limbo, forcing it to decide between faster or more sustainable goods delivery; lower-costing or ethically sourced materials, and so on. These and similar initiatives can seem costly and counterproductive to what a business should be doing – generating profit. Yet like with most things in life, sustainability is not just black or white and it would not be a prevailing topic if there wasn’t true profit to be gained.

Benefits of The Planet Bottom Line

Besides the obvious emotional benefits of saving the earth, just feeling good while doing good, and complying with regulations there are practical reasons why you should pursue Planet bottom line:

  1. Satisfying consumer demand: GreenPrint’s 2022 Business of Sustainability Index indicates that demand for sustainable services and products is growing with 69% of respondents saying that “a product’s environmental friendliness is important to their purchasing decision” and 78% agreeing that they are interested in buying from environmentally friendly businesses.
  2. New business opportunities: a shift towards net zero is creating demand for new green solutions. A recent report by McKinsey indicates that reaching net zero by 2050 requires “investments amount to $9.2 trillion per year, of which $6.5 trillion annually would go into low-emissions assets and enabling infrastructure”.
  3. Cost reduction: in another report McKinsey notes that environmentally focused initiatives can “improve operating profits by up to 60%”, by reducing unnecessary waste as well as the usage of water or raw materials, that due to growing scarcity, are becoming more and more expensive.
  4. Improved brand image: knowing that consumers are seeking environmentally friendly products and services, it makes sense to invest in and report on sustainability initiatives. It improves the brand’s image which can lead to increased sales. In addition, nowadays, stakeholders can easily hold an organization accountable for action or inaction, thanks to the speed at which information spreads on social media. Even the smallest misstep by a brand can be rapidly broadcast to millions, causing damage, and leading to lost revenue.
  5. Minimizing regulatory risks: Staying within safe lines of regulations keeps your organization from fines and penalties. Plus, it’s typically easier and less expensive to take such measures proactively, than it is to do so when your hand is forced.
  6. Competitive edge: by excelling at and advocating for an environmental cause, an organization can put pressure on its competitors and use the achievement as a competitive advantage.

Initiatives to Consider

As mentioned earlier, pursuing The Planet bottom line does not necessarily mean making big and drastic changes. Environmentally positive impact-creating initiatives that you can consider are:

  • Recycling opportunity in-house and limited use of materials (i.e., unnecessary printing).
  • Reducing travel, remote work opportunities, and/or public transportation benefits.
  • Partnerships with green businesses and buying locally manufactured goods.
  • Optimizing and reducing energy consumption.
  • Seasonal company-wide green initiatives (i.e., day to collect trash or volunteer).
  • Becoming an ambassador of an environmental cause and advocating for it.
  • Creating an option for customers and employees to donate instead of receiving material gifts.
  • Workshops and training to educate and bring awareness on environmental issues and how the organization can positively impact it.
  • Find innovative ways to be more effective or efficient in your operations by involving employees.

The bigger picture will always be comprised of smaller bits and pieces and while the above-mentioned initiatives might seem small, put together they can make an impact. That’s why giving your employees a voice and engaging the whole organization is so important. While it might sound like a big and complex feat, right tools, such as Viima can simplify the process allowing you to run idea challenges on sustainable innovation and development topics.

Reporting

Now, while environmental initiatives are important on many different levels, from a business point of view, they should contribute to profit generation. Thus, once your Planet bottom line initiatives are in place and running, it is crucial to report on them either on your website, or in your annual business or sustainability report.

The Non-Financial Reporting Directive (NFRD) came into effect back in 2018 requiring public interest companies with more than 500 employees to report on how they are dealing with sustainability matters. In 2024 we will see an additional directive on Corporate Sustainability Reporting which will apply to large companies that meet 2 of the following 3 criteria: more than 250 employees; more than €40 million net turnover; more than €20 million on the statement of financial position.

But reporting should be considered by small organizations too as talking about your achievements beyond the mandatory reporting will positively affect your brand image, it will increase transparency, and improve your reputation.

Reporting and measurement of positive impact can be quite difficult, especially if it is a voluntary initiative and is not based on any regulation-implied requirements. Below is a list of KPIs to consider:

  • Information on electricity consumption.
  • Information on fossil fuel consumption.
  • Information on waste management.
  • Change in land use/land cover.
  • Reduction in greenhouse gas emission.
  • Amount of waste generated and, when relevant – amount recycled.
  • Amount of ethically sourced materials.
  • Information on volunteering or charitable work done.
  • Information on new local, sustainable partnerships.

People and the Triple Bottom Line Pexels

People

People of the triple bottom line encompasses all the people included in or affected by a business.

It goes far beyond just the small circle of shareholders. This category includes (but is not limited to) employees, suppliers, wholesalers, customers, local or global communities within which the business operates, and future generations. Some people like to emphasize the future generations by separating it into the fourth sphere and adjusting the framework’s name to quadruple the bottom line. Yet in J. Elkington’s views, the future generations are simply an inseparable part of society, and it fits just perfectly in the People category.

There are certain aspects of this bottom line that might be regulated by local or regional governing bodies. For example, local labor law might indicate a specific number of working hours per week, how long lunch breaks your employees are eligible to take or what kind of health insurance the company must provide. However, as with all things sustainability, social responsibility extends beyond the bare minimum – it is a business’ voluntary and proactive way of recognizing its impacts on stakeholders.

The People aspect is an organization’s social impact or social responsibility. And as earlier cited UN Global Compact states, “social responsibility should be a critical part of any business because it affects the quality of a business relationship with stakeholders”.

Benefits of The People Bottom Line

Social initiatives might not be seen as profitable in the short run, but on a bigger scale, doing what is right and doing good positively affects the company’s standing amongst its competitors. For example, such initiatives can positively affect the following:

  1. Employee retention: Companies that invest in their employees’ satisfaction end up saving resources in the longer run. Time and money spent searching, hiring, and training employees can be invested in different opportunities. In addition, people that want to stick around in a company indicate good organizational health and improve brand image.
  2. Attraction of top talents: More and more routine work is being automated, and value is starting to be increasingly created by fewer people of higher talent creating systems, processes, and technology (=innovations) that drive value. Thus, attracting these top talents is increasingly important, but more and more of these people are these days motivated by factors such as the purpose and mission of the organization beyond just compensation, career growth, etc. more traditional factors.
  3. Customer loyalty: Companies willing to walk that extra mile, give to societies or contribute to positive impact will reap the benefits of a better brand image, and in line with their customers’ social values they will naturally have a chance to retain old and attract new customers.
  4. Raising capital: Socially responsible investing is constantly growing and the opportunity to attract investors depends on the organization’s sustainability achievements, the social aspect and how your organization treats people are always on the list of things to be evaluated.
  5. Avoiding risk: Strong commitment to social initiatives will eliminate work-disrupting and reputation-damaging risks. Any mistreatment of an employee or other community member can cause a severe backlash that will affect the organization’s profitability. In addition, the business’s focus on social responsibility in return creates supply chain security.
  6. Expanding the market: If most people can’t afford to buy your services, the size of your market dramatically increases if you are able to a) lower the prices of your products by decreasing costs, and/or b) by helping improve the income of said people. Combining both can be a powerful way to grow the business and create a more positive impact all around you.
  7. Source for innovation: As mentioned in our earlier article social issues need to be addressed and this in return can create business opportunities – “more than 80% of economic growth comes from innovation and application of new knowledge.” People-centric innovation (social innovation) enables the business to tap into that growth and reap benefits.

Initiatives to Consider

There are a lot of organizations that go far beyond the basic in-house social needs and are willing (and are financially capable) to give back to communities with charity work, donations, education grants, and various volunteering and community engagement initiatives.

However, not every company is capable of running such initiatives. Smaller-scale improvements like supporting your employees in setting up home offices with recycled or new equipment can be a great morale boost. In return, it creates comfort for people to work from home, reducing time spent commuting and/or using cars, leaning toward the Planet bottom line. With sustainability, every small effort counts.

  • Paid internships for students.
  • Organizing educational projects for externals (i.e., coding academy for students, job searching training).
  • Skill training and learning opportunities for employees.
  • Internal anti-racist training.
  • Employee surveys or feedback to keep everyone in the loop.
  • Salary transparency.
  • Employee stock plan.
  • Volunteering work within the nearest communities.

Reporting

Topics to report on and how your organization’s initiatives affected them can be:

  • Demographics of your employees and partners (i.e., working with small or minority-owned businesses).
  • Vacation days collected and used to see whether employees are rested and not overworked.
  • The average difference between wages and finances needed for minimum living standards in the area.
  • Average commuting time.
  • Average employee benefits.
  • Information on diversity of employees.
  • Job safety KPIs (i.e., reported incidents, corrective actions taken).
  • The number of new jobs created.
  • Hours spent on employee or external communities’ training.
  • Information on second-tier suppliers (i.e., where and how your first-tier suppliers are sourcing materials).

Dubai Skyline Unsplash

Profit

Profit by default seems to be the most analyzed and the best-understood segment of all the three covered in this article. By definition, profit means “money that is earned in trade or business after paying the costs of producing and selling goods and services”.

TBL is not meant to discount profit in any way – rather incorporate it into the other two legs of sustainability: investment in social initiatives or environmental projects relies directly on profit and a company that does not do well financially cannot contribute to the other areas – social and environmental impact.

Profit refers to the influence that the organization is creating on the whole environment within which it operates: ethical means to earn a profit; cooperating with and supporting ethical partners; fair wages and full taxes paid.

Profit as a component of TBL is pretty straightforward, yet there are certain aspects that might be confusing. And it seems to arise from a two-sided view of Profit: the philanthropic take with emphasis to give back to society as a charity, and pure profit to satisfy shareholders.

However, when talking about sustainability and the triple bottom line, these two sides are inseparable. The company can stay in business and drive value for the People and the Planet only if it makes a profit.

The triple bottom line’s Profit is a cycle: a business that makes a profit can then invest in innovation, creating a positive impact on the Planet and the People; can then pay taxes that in return will be used for social good; can then grow to create jobs for People and so on.

Key Points

Conclusion

The triple bottom line like other sustainability-oriented initiatives can seem quite idealistic in a world still strongly focused on profit.

But as McKinsey report over the past 5 years, investment into sustainable funds has been on a rise and even if current environmental, social, and governance (ESG) frameworks are far from perfect, ESG considerations are becoming more important in companies decision making. In addition, investing in sustainable innovation does result in stronger economies, higher living standards, and more opportunities for individuals.

There are no better words, to sum up this article than John Elkington’s words:

“To truly shift the needle, however, we need a new wave of TBL innovation and deployment. None of these sustainability frameworks will be enough, as long as they lack the suitable pace and scale — the necessary radical intent — needed to stop us all overshooting our planetary boundaries.”

The challenge here is that businesses still must satisfy shareholders and to deliver the value they have to make tradeoffs. There’s no one golden rule on how to satisfy all three areas of TBL equally, it is a continuous, balancing act, and decision-making should be based on long-term goals. But the fact is, that decisions must be made, and it is the best time to go beyond planning and start implementing.

This article was previously published in Viima’s blog.

Image Credits: Unsplash, Viima, Pexels

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Is Now the Time to Finally End Our Culture of Disposability?

Is Now the Time to Finally End Our Culture of Disposability?Quality used to mean something to companies.

A century ago, when people parted with their hard-earned money to buy something, they expected it to last one or more lifetimes.

Durability was a key design criteria.

But, as the stock market became more central to the American psyche and to executive compensation, the quality of available products and services began to decline in the name of profits above all else.

.

Ford Quality is job oneThere was a temporary consumer revolt decades ago that resulted in companies pretending that quality was more important than profits, but it didn’t last long. In the end, Americans accepted the decline in quality as outsourcing and globalization led to declining prices (and of course higher profits) and fewer goods carrying the “Made in the USA” label, quickly replaced by Japan, China, Mexico, Vietnam, Bangladesh and the rest.

An Inconvenient TruthAround the turn of the century we had the birth of the Cradle-to-Cradle (C2C) movement followed a few years later by Al Gore’s An Inconvenient Truth. Perhaps people were beginning to wake up to the fact that our planet’s resources are not infinite and our culture of disposability was catching up to us.

But these movements failed to maintain their momentum and the tidal wave of stores stocking disposable goods continued unabated – dollar stores and party stores spread across the country like a virus. States like New York began shipping their garbage across borders as their landfills reached capacity. Unsold goods began being dumped on the African continent and elsewhere (think about all those t-shirts printed up for the team that didn’t end up winning the Super Bowl).

Is now the time for the winds to shift yet again in favor of quality and sustainability after decades of disposability?

Will more companies better embrace sustainability like Patagonia is attempting to do?

People have been complaining for years about the high cost to repair Apple products and the increasing difficulty of executing these repairs oneself. Recently Apple was FORCED by shareholder activists to allow people to repair their iPhones. Here is their press release that tries to put a positive spin on what they were pressured into doing.

This is the moment for shareholder activists and governments around the world to force companies to design for repairability, reuse and a true accounting of the costs of their products and services inflict upon the populace and the planet. The European Union and Mexico are working together towards this not just because the planet needs this, but because The Circular Economy Creates New Business Opportunities.

Meanwhile, Toyota recently announced that starting this year (2022) in Japan that they will retrofit late-model cars with new technology if the customer desires it. The company aims to let motorists benefit from new technology without having to buy a new car. The LoraxToyota calls this “uppgrading” and defines it as retrofitting safety and convenience functions, like blind spot monitoring, emergency braking assist, rear cross-traffic alert, and the addition of a hands-free tailgate or trunk lid. Remodeling will also be an option and will include replacing worn or damaged parts inside and out, such as the upholstery, the seat cushions, and the steering wheel.

Are these two companies voluntary and involuntary actions the beginning of a trend – finally?

Or will the culture of disposability continue unabated until our natural resources are exhausted?

Do we truly live in the land of the Lorax?

Image credits: Wikimedia Commons, OldHouseOnline

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Technology Not Always the Key to Innovation

Technology Not Always the Key to Innovation

Humans love technology and often we make the mistake of thinking that technology is the only path to innovation.

But there are many examples that prove this is often folly…

The wine industry offers a couple of great examples.

Alternative Wine Innovation Opportunity #1 – Barn Owls

Some vintners in Napa Valley, California are eschewing potentially harmful high-tech rodenticides in favor of fluffy little barn owls to control the local rodent population and to reduce damage to the vineyards. Low-tech or no-tech sometimes provides more sustainable solutions than seemingly convenient high-tech solutions.

Alternative Wine Innovation Opportunity #2 – Music

Mozart in the Vineyard…

A winemaker in Tuscany, Italy has taken to the airwaves to improve the quality of his wines, installing speakers around his vineyard that caress his vines with Mozart during the growing process and the barrels of juice during the winemaking process.

One of the primary benefits of the continuous music is said to be a decrease in the use of insecticides because pests like crickets are forced to leave the area because they can communicate with each other. The music is also said to operate in similar frequencies to running water, causing the grapes to grow better the closer they are to the speakers.

One of the most brilliant parts of the clip is the part where the vintner lets it slip that he has partnered with Bose on the project.

Creating a win-win partnership with a company that might benefit from helping to fund an alternative approach is a great way for an entrepreneurial innovator to reduce the risk and the cost of their experiment.

It is also a great way to work with the partner to create equipment fit for purpose that will ultimately perform better than off the shelf components and for the partner will represent solutions they can use to open up a new market.

Conclusion

Technology is not always the path to innovation, but it is easy to forget this.

It is easy to take shortcuts and not spend enough time finding problems worth solving and to not carefully define the right problem to solve.

Technology is seductive and marketers are skilled at making a technology-based solution seem like the easiest solution or even – the only one. But often, if we keep our minds open and our field of vision spread wide, we may notice low-technology solutions that solve the problem either better or in more sustainable ways or in ways with additional benefits.

So keep your eyes and ears, and all of your other senses, peeled for all potential solutions, not just the high technology ones.

What Will the Smart Home of the Future Look Like?

What Will the Smart Home of the Future Look Like?

GUEST POST from Art Inteligencia

In recent years, the concept of a smart home has become increasingly popular. From voice-activated virtual assistants to interconnected devices, the technological advancement in home automation has revolutionized the way we live. With rapid advancements in artificial intelligence and the Internet of Things (IoT), it is intriguing to speculate about what the smart home of the future will look like. In this article, we will explore two case studies that offer a glimpse into the potential future of smart homes.

Case Study 1: The Connected Oasis

Imagine walking into a home where everything is interconnected, and your every need is anticipated. This vision of the future smart home is epitomized in the concept of the “Connected Oasis.” One example of this is showcased through the collaboration between Samsung and BMW. The companies are working on integrating their respective technologies to create a seamless experience between the car and the home.

Using artificial intelligence and sensors, the smart home of the future can recognize when the car is approaching and prepare everything accordingly. As you near your home, the lights automatically turn on, the temperature adjusts to your preferred setting, and the door unlocks as you approach it. Once inside, your smart home assistant greets you with personalized suggestions based on your daily routine and preferences. The smart home can even sync with your car, automatically setting GPS directions based on your calendar events or providing traffic updates as you prepare to leave.

Case Study 2: Sustainable and Energy-Efficient Living

With growing concerns about climate change and environmental sustainability, the future smart home is likely to prioritize energy efficiency and sustainable living. The GreenSmartHome project, developed by researchers at the University of Nottingham, envisions a home that utilizes renewable energy sources, maximizes energy efficiency, and encourages eco-friendly practices.

This smart home incorporates various features such as smart thermostats, solar power generation, and energy management systems. By analyzing data from smart sensors and weather forecasts, the home can optimize energy usage by controlling heating, cooling, and lighting systems. The smart home can also provide real-time feedback on energy consumption, offering homeowners insights to reduce their carbon footprint.

Furthermore, the GreenSmartHome integrates waste management systems, promoting recycling and composting practices. It even has a smart garden, where irrigation systems are automatically adjusted based on weather conditions and moisture levels in the soil, ensuring efficient water usage.

Conclusion

The smart home of the future holds vast potential, with a focus on enhanced convenience, interconnectivity, sustainability, and energy efficiency. From the Connected Oasis, where homes and cars seamlessly communicate, to the GreenSmartHome promoting eco-friendly practices, these case studies offer a glimpse into what we can expect from the future of smart homes.

While these concepts may seem like science fiction today, advancements in AI, IoT, and sustainable technologies suggest that these visions are within reach. As technology continues to evolve, the smart home of the future will likely become an integral part of our lives, shaping the way we interact with our homes and the environment.

Bottom line: Futurists are not fortune tellers. They use a formal approach to achieve their outcomes, but a methodology and tools like those in FutureHacking™ can empower anyone to be their own futurist.

Image credit: Pixabay

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A Simple Idea to Save Oil

Sometimes the simplest ideas are the best.

Here is a great marketing campaign from S-Oil in South Korea which took the challenge of finding ways to decrease oil consumption in South Korea and turned it into a marketing campaign:

In this case the solution highlighted in the video is one potential solution of many to the challenge of decreasing oil consumption, and is focused on reducing the amount of oil consumed searching for a parking spot.

The one thing I didn’t understand was why “HERE” was in English instead of Korean characters… (NOTE: I had to replace the video and the new one is in English)

But anyways…

What simple solution is hiding under your nose?


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Are You Investing in an Innovation Culture?

Are You Investing in an Innovation Culture?

Innovation is everywhere.

You can’t go an entire commercial break during the Super Bowl or a State of the Union address (okay, sorry, both American examples) without hearing the word innovation pop up at least once or twice. Companies have added innovation to their company values and mission statements in accelerating numbers. Some organizations have implemented idea management systems. And others are willing to spend large sums of money on design firms and innovation boutique consultancies to get help designing some new widget or service to flog to new or existing customers. Based on all of that you would think that most companies are committed to innovation, right?

If you asked most CEOs “Is your organization committed to innovation?”, do you think you could find a single CEO that would say no?

So, why do think I’m about to make the following statement?

90+% of organizations have no sustained commitment to innovation.

When it comes to fostering continuous innovation, most organizational cultures stink at it.

Let’s look at some data, because anyone who is committed to innovation (and not just creativity) should love data (especially unstructured data from customers):

  • Over the last 50 years the average lifespan of a company on the S&P 500 has dropped from 61 years to 18 years (and is forecast to grow even shorter in the future)1
  • In a worldwide survey of 175 companies by Hill & Knowlton (a communications consultancy), executives cited “promoting continuous innovation” as the most difficult goal for their company to get right. “Structurally, many companies just aren’t set up to deliver continuous innovation.”2
  • 84% of more than 2,200 executives agree that their organization’s culture is critical to business success3
  • “96% of respondents say some change is needed to their culture, and 51% think their culture requires a major overhaul.”3

So what does this data tell us?

For one thing, it helps to reinforce the notion that the pace of innovation is increasing.

For another thing, it doesn’t exactly scream that organizations are as committed to building an innovation culture internally as their words externally say about being committed to innovation.

Why is this?

Well, as fellow Innovation Excellence contributor Jeffrey Phillips once said:

“When it comes to innovation, ideas are the easy part. The cultural resistance learned over 30 years of efficiency is the hard part.”

And when you get right down to it, most employees in most organizations are slaves to execution, efficiency, and improvement. And while those things are all important (you can’t have innovation without execution), organizations that fail to strike a balance between improvement/efficiency and innovation/entrepreneurship, are well, doomed to fail.

This increasing pace of innovation along with the lower cost of starting/scaling a business and the always difficult challenge of building a productive culture of continuous innovation, is the reason that the lifespan of organizations is shrinking.

So if it isn’t enough to talk about innovation, or to invest in trying to come up with new products and services, shouldn’t more organizations be also investing to making sure their innovation culture doesn’t, well, stink?

The obvious answer is… (insert yours here)

So, if your innovation culture stinks, I encourage you to come join me at Pipeline 2014 and attend my keynote session on exploring five ways to make it smell better:

“Our Innovation Culture Stinks – Five Ways to Make it Smell Better”

It’s a free virtual event on June 6, 2014.

I look forward to seeing you there!

Sources:
1. Innosight/Richard N. Foster/Standard & Poor’s
2. Hill & Knowlton Executive Survey
3. Booz & Company Global Culture and Change Management Survey 2013


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World’s Worst Logo?

World's Worst Logo? -  Definitely Needs Updating

Every time I see this logo I cringe.

If there is one logo in the world that is definitely in desperate need of updating, it is the logo of Sherwin Williams.

My stomach turns at the site of the earth dripping with paint and the slogan “Cover the Earth” only makes it worse.

Is there anyone out there that would actually like to see the earth covered in paint?

Especially paint that looks like blood?

Sherwin Williams, I implore you, please update your logo as soon as possible to reflect the changing world we live in, where people are concerned about toxicity and where sustainability and being green are increasingly important.

If you could do it before Earth Day on April 22, 2012 that would be even better.

You may not realize the negative logo your logo is having on your business because your stock price is moving up and to the right, but imagine how much better it might be doing if you updated your image to reflect your surroundings?

Come on Sherwin Williams, you can do it!

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Innovation Comes in Many Forms

Innovation Comes in Many FormsInnovation comes in all different forms, and there is more than one way to boost profits in organizations.

Layoffs are not the only way to improve the bottom line when times get tough. Often asking the right questions can uncover new revenue sources in areas that previously had only been seen as a source of costs.

There is an article in Fast Company from 2007 when I wrote this article that talks about ways that companies are greening themselves. I highly recommend that every entrepreneur and manager read it. It’s not a hippie and granola, look at us aren’t we great type of article but instead highlights loads of different ways that organizations are becoming green. This article highlights lots of different ways that organizations are improving their bottom lines, while greening themselves at the same time.

There are many reasons why trying to make your organization more environmentally responsible has the potential to improve the bottom line:

  1. It focuses the organization on identifying and eliminating waste
  2. Creating new directions for the waste your organization produces:
    • Are our waste products of value to someone?
    • Can we recycle or otherwise use our waste products for something useful?
  3. Could we produce our products closer to our customers?
  4. Could we source our inputs closer to our factories?
  5. Could we change how we package our product to reduce the amount of raw materials needed?
  6. Could we somehow distribute our products in reusable containers?

Finally, there is no escaping the fact that becoming more environmentally responsible as an organization will either gain you additional sales now or prevent you from losing sales in the future. as the standards of government and corporate procurement departments begin to shift towards purchasing from more environmentally responsible vendors.

So, what does your organization have to gain from trying to identify areas of environmental opportunity?

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