1new Sustainable Innovation

(c) Martin Charter (2004)

BCSD - TAIWAN30th September 2004

Taipei, Taiwan

Professor Martin Charter Director

The Centre for Sustainable Design

Martin Charter & Associates

Sustainable Innovation

(c) Martin Charter (2004)

No common understanding - Products (Eco-innovation – Fussler et al)- Technologies- contaminated land remediation- air pollution- monitoring and control- waste management- recycling- noise and vibration- energy management- consultancy

Sustainable Innovation

Terminology

(c) Martin Charter (2004)

Type 1:Productimprovement

Type 2:Productredesign

Type 3:Functioninnovation

Type 4:Systeminnovation

Time (years)

Eco-

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y im

prov

emen

t/or

gani

satio

nal c

ompl

exity

Eco-efficiency curves

5 10 20

20 Sustainable level

(c) Martin Charter (2004)

• Product/services/technologies• Process• Organisational

Sustainable Innovation

Types

(c) Martin Charter (2004)

Barriers to sustainable innovation

Background• Weak understanding and knowledge over how to integrate

sustainability into innovation policies • Lack of clear drivers for sustainable innovation• A focus on eco-efficiency and dematerialisation will not

deliver sustainable innovation• To move towards higher levels of sustainable innovation (systems)

will require long-term, strategic change in societies• Existing focus on incremental improvements or (eco)re-design,

rather than functional or system innovation• Limited uptake of sustainable product/eco-design outside

of transnationals• Value and supply networks are increasingly geographically

disparate

Sustainable Innovation

(c) Martin Charter (2004)

Barriers to sustainable innovation

Markets• Green often seems to suffer from a poor perception • Most markets are still dominated by price• Green markets are still niche markets• Lack of green mass markets • Awareness:action gap • There is a wide variation of awareness of sustainability/

environmental issues • B2C customers tend to be wedded to ownership • Developing countries lack good quality information• 3 billion people live on less than $2 per day

Sustainable Innovation

(c) Martin Charter (2004)

Barriers to sustainable innovation

Organisational• There is a lack of senior level vision and commitment to sustainability • Nervousness over taking a pioneering or leadership role on

sustainable innovation• Sustainability is not seen as area of business opportunity• Green is generally seen as a threat-based, compliance agenda• Sustainability issues are rarely included in the corporate strategy,

business development and/or the ‘opportunity search’ process • There is a lack of awareness of sustainability/environmental

awareness amongst key business functions • Organisational systems and procedures are often inflexible • Product designers and design consultancies still have a poor

understanding of sustainability

Sustainable Innovation

(c) Martin Charter (2004)

Barriers to sustainable innovation

Entrepreneurship and funding 1• Poor linkages between experts, investors, entrepreneurs and

inventors • Lack of sustainable innovation catalysts • Academia has not been successful at transferring radical

concepts (e.g. functional, systems) of sustainable innovation• Need for bridges between inventors, investors, entrepreneurs and

academia • Little recognition of sustainable innovation opportunities amongst• successful entrepreneurs

Sustainable Innovation

(c) Martin Charter (2004)

Barriers to sustainable innovation

Entrepreneurship and funding 2• Sustainable technologies/product/services are not viewed as

major opportunities by investors:- business concepts/technologies often seen as too risky- financial returns often not seen as significant enough to justify

investment- not enough successful entrepreneurs with track-records in the

area• Inventors/entrepreneurs: lack of start-up funding and business

skills

Sustainable Innovation

(c) Martin Charter (2004)

Barriers to sustainable innovation

Marketing• Weak interaction between marketing and sustainability/

environmental professionals • Marketing's role in the product development/innovation process

differs from company to company• Sustainability/environmental are rarely involved in the innovation

process.• Green product failures due to a lack of involvement of marketing

skills and tools• Green is integral to the brand/product/company • Responsible products/brands from responsible companies

Sustainable Innovation

(c) Martin Charter (2004)

Opportunities for sustainable innovation 1• ‘Producer responsibility' laws in Europe and Japan may stimulate

series of new (sustainable) business concepts • Emerging opportunities for sustainable/greener technologies/

products/services in B2G markets e.g. Japan• A smarter use of demand and supply-side government policy tools

may start to create opportunities (e.g. Integrated Product Policy (IPP))• Various companies exploring new business models in attempt to open

up the market of the 3 billion people who live on less than $2 per day

Sustainable Innovation

(c) Martin Charter (2004)

Product-Service-Systems (PSS)

Sustainable Innovation

(c) Martin Charter (2004)

PSS: strategiesProduct - oriented services• Service integration e.g. additional functionality• Product extension e.g. upgrades and repairs

Use - oriented service (selling function)e.g. leasing or rental of computer and office equipment

Result - oriented service• Product-substituting service e.g. virtual answering machine• Vertical integration e.g. downloadable music

Source: www.suspronet.org

Sustainable Innovation

(c) Martin Charter (2004)

Opportunities for sustainable innovation 2 Product Service Systems (PSS) are a promising new businessdevelopment approach that may help create more sustainable solutions. However, - Business do not recognise the terminology of PSS- PSS are not developed in a systematic and structured manner - PSS often means a closer focus on:

- customer needs- maintaining good customer relations

- PSS will require a shift in corporate culture from ‘product-orientation’ to ‘service-orientation ‘

- Sustainable PSS solutions are likely to industry/need specific- Defining the sustainable/environmental performance is complex

due to lack of good quality lifecycle data and information- PSS does not always deliver sustainability benefits- There are a lack of successful sustainability-driven PSS cases

Sustainable Innovation

(c) Martin Charter (2004)

Opportunities for sustainable innovation 3

Organisational: lessons from Philip’s approach to eco-design management 1• Focus on the eco-design management process• Product-level environmental considerations should be left to Business

Units (BUs) to determine • Clear demarcation of responsibilities of:

- Corporate - BUs

• Both Corporate + BUs need a shared vision of the proposed outputs of the process e.g. Green Flagship products

• Systematic and continuous integration of environmental considerations into the Product Creation Process (PCP)

• Sell the commercial benefits of eco-design in the language of different business functions

Sustainable Innovation

(c) Martin Charter (2004)

Opportunities for sustainable innovation 4

Organisational: lessons from Philip’s approach to eco-design management 2• Mechanisms to share and communicate information/knowledge

throughout global value or supply chain or networks• More mature eco-design management systems are likely to produce

more eco-innovation

Organisational: lessons from SC Johnson’s approach to eco-design management• Innovation tends to be frequent e.g. month-to-month and incremental• Internal branding of sustainable product/eco-design programmes e.g.

Greenlist ™• Institutionalise sustainable product/eco-design programmes through

integration into existing processes

Sustainable Innovation

(c) Martin Charter (2004)

(c) Martin Charter (2004)

(c) Martin Charter (2004)

• Product/services/technologies• Process• Organisational

Sustainable Innovation

Types

(c) Martin Charter (2004)

Action plan• Senior level commitment• Director with responsibility• Project director• Taskforces: technology/product/service; process; management• Define ‘opportunity zones’• Complete research + pilots• Selection process• Launch sustainable innovation culture• Develop strategy, programmes, responsibilities• Implementation, monitoring and control

Sustainable Innovation

(c) Martin Charter (2004)

(c) Martin Charter (2004)

Contact DetailsProfessor Martin CharterDirector

The Centre for Sustainable DesignTel: 00 44 1252 892772Fax: 00 44 1252 892747email: mcharter@surrart.ac.ukweb: www.cfsd.org.uk

Martin Charter & AssociatesTel: 00 44 1252 722162Fax: 00 44 1252 722162email: martincharter@compuserve.com