I recently had a discussion with someone on radical innovation (RI) and sustainability and he touched upon a goldmine: the importance of systems change in driving RI. I was asking about barriers in driving this type of innovation in business. Amongst the many barriers he discussed is the fact that it will be difficult for a business to be truly radical (whatever the definition…that can be discussed for hours…) when the system (that is the environment in which the business exists – in terms of government, customers, suppliers, regulations etc.) is not moving in the same direction. That is a sort of prerequisite for businesses to be radical – the economic system needs to “be moving in the same direction, even if not at the same pace.”
This leads me to discuss the big elephant in the room for many consumer-facing businesses: sustainable consumption. This was again wisely put by that same individual as “the 1 billion dollar question”. We haven’t figured out really how that’s going to work. A lot of the radical innovation these types of businesses will need to address is sustainable consumption. Much has been done in terms of the manufacturing side, and businesses are increasingly working with their suppliers to deliver (radical) innovations for sustainability but now it’s time to tackle the other side of it. This reminds me of an article I recently read on ‘servicizing’ in the MIT Sloan Management Review (http://sloanreview.mit.edu/the-magazine/2007-winter/48216/sustainability-through-servicizing/) which talks about businesses adapting their business models to more of a service one than a traditional sales/consumption one (like Xerox or InterfaceFLOR have done for instance). The paper provides 3 examples of B2B companies that have done so, successfully, but raises important questions at the end. How does this compare to business-to-consumer instead of B2B? I wish I had the answer to this XXX million/billion dollar question but alas I don’t. Can we start renting material products that people so strongly strive to own? The phone industry could be an example where that sort of model has emerged – though not to its full potential. In many countries, like in the UK, people pay a monthly contract to get access to a state-of-the-art smart phone but people still often keep the phone at the end of the contract. To really maximize the potential of this, we need a better system. One which forces (forcing is probably the wrong word as consumers don’t often like to be forced into something!) people to bring back their old phone and one which then finds how to up-cycle these old phones. And we probably need some modular design to go along with that to avoid people buying an entirely new phone every 6 months but that’s a different story. I feel as though I am going off on a tangent here… The point I am trying to make is that as with all sustainability issues (and here with driving radical innovation), the importance of systems thinking and systems’ change is paramount!