by David Cooperrider and Chris Laszio
INNOVATION IS A PRECONDITION TO thrive. And innovation, like any discipline that grows and changes, must have a new frontier. So ask this leadership question: If you could choose any one pathway for revitalizing your innovation agenda and deeper culture of innovation, what would you choose? What is innovation’s new frontier?
When I, David, met Peter Drucker in March 2003, I was excited to share insights from 2,000 leadership interviews into business as an agent of world benefit and share stories of business as a force for peace in high-conflict zones, as a force for eco-imagination and clean energy, and as a force for the eradication of extreme poverty.
Drucker listened patiently as I spoke about the sustainability revolution in concrete terms. I named Honda’s new auto factories that have achieved zero waste and are fast eliminating the concept of waste, millennium development villages eradicating poverty through profitability, buildings that generate more energy than they use, low-cost biodegradable packaging, smart grid strategies, and more. Examples also came from large industry-leading stars: Toyota, for example, dramatically out-performing GM, or countries such as Denmark leading the way in energy independence as well as measures of national well-being. I spoke of industries completely redefining themselves—for instance, waste management discovering that some $9 billion worth of reusable materials might be found in the waste carried to landfills each year.
After listening with patience to each account, 93-year-old Drucker smiled and said, “Well, I wrote about it years ago: Every social and global issue of our day is a business opportunity in disguise.”
But how? More managers are asking this, as they’re feeling ill-equipped or blindsided by a world filled with competing demands. Indeed, few companies are failing to go green or grow socially responsible in some way. But some are doing it better than others.
Companies fall into two groups. The first see sustainability as a sideline obligation—something to be bolted on. The second group is being strategic and innovative (like Toyota years ago when the “long shot” Prius was on the drawing board) and sees sustainability as a defining feature of a long-term market shift—a world of increasingly depleted resources, radical transparency, and rising expectations. These companies realize that intangible assets like brand value, community trust, license to operate, access to capital, and consumer passion require more than a narrow focus on shareholder value creation. Also needed is stakeholder value creation. We refer to a combined focus on stakeholder and shareholder value as sustainable value. Michael Porter has articulated this as shared value.
Imagine factories designed to produce more cost-competitive clean energy than they need so that they sell the surplus to the community—it is being done. Imagine Wal-Mart creating a sustainability index for every supplier it works with and every product it displays—it is being done. Imagine asking a design firm to design a new gym shoe that appeals to young people, has buzz, wins on human rights practices, produces net zero carbon emissions, creates no landfill waste, and in addition, can be planted in the backyard after its useful life and will turn into a regenerative tree. You know what the designers will answer. They will say it’s already being done! The Dutch company OAT calls them “shoes that bloom.”
Chris created the concept of embedded sustainability: the incorporation of environmental, health, and social value into the core business with no trade-off in price or quality (no social or green premium). Embedded sustainability inspires innovation—producing new sources of value at six progressive levels: 1) risk—mitigating failure such as BP’s 2010 Deepwater Horizon oil spill; 2) efficiency—reducing energy, waste, and materials; 3) product—creating differentiation and passionate customers; 4) market—entering or creating blue ocean markets; 5) brand—protecting and enhancing brand and trust; and 6) business context—shaping industry standards, rules, even the playing field. This is our six sources of sustainable value model for making sustainability equal innovation.
Suppose your company is doing many good things, but you want to embed sustainable value into operations, supply chains, and customer solutions, as something integral and catalytic. You want strong buy-in to move from incremental to breakthrough change. You want deep value creation pouring out in all directions from the six-sources model.
Leverage the Large Group
The UN Global Compact US Network consists of over 6,000 corporations working to embed sustainability in their business practices and share strategic practices. High engagement of the whole system of stakeholders is the number one success factor for change at the scale of the whole. And the large group methodology is now soaring in the sustainability domain because of its whole-system capacity to inspire and unite strengths across silos, specializations, and stakeholder separations.
The Appreciative Inquiry (AI) summit is the best large-group method to achieve change. An AI summit is a large group planning, designing, or implementation meeting that convenes internal and external stakeholders to work on a task of strategic and creative value. Everyone is engaged, as designers, across all relevant and resource-rich boundaries, to share leadership and take ownership for making a big opportunity successful. It’s surprisingly easy when using the 4-D cycle—Discovery, Dream, Design, and Deployment—to create the innovation and change agenda together.
Although the AI summit brings together diverse stakeholders, the process can flow naturally. Natural positivity is unleashed when we collaborate beyond the artificial separations, and it is often easy when the right six conditions are created: start with your strengths; involve the whole system and bring in the meaningful outside; make your summit task-focused; move beyond dialogue to design thinking; real prototypes build momentum; and ask for all six sources of value creation without trade-off in price or quality—with no social or green premium—just innovation.
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