Open sustainability innovation

Open Sustainability innovation is the use of open innovation in the development of sustainable products, services and initiatives.

This approach to marketing for companies may prove to be advantageous as it is not point of sale based, but rather offers consumers information they have previously never been exposed to. Creating a basis for more long term conversational relationships. As a result of this conversational relationship between companies and consumers ideas about the importance of sustainability and how people relate to this through consumption can arise. By offering an open communication way of marketing to consumers, companies may ultimately gain a competitive advantage based on trust and disclosure. Thus not only will open sustainability innovations promote the use of sustainable products and services, it will actually create a snowballing effect to other companies who will have to adopt new sustainability practices in order to remain on the market.^[1]

How to put open innovation in a sustainability context

The key to open innovation is the integration of the consumers’ ideas into the process of innovation. This means that the creation of the innovation should come largely from the consumer’s input and ideas. Or the marketing strategy shows the consumer any externalities that the product may incur to the environment or compare it to other products on the market that are less sustainable. In any case, it is important to remember that these initiatives are largely conversational. The company must be willing to give much more information to the consumer than was ever really accepted in conventional marketing and the consumer must play a part by bringing in his own ideas and feelings. This entails that the issue of trust is not uni-lateral, the consumer gains trust from the company because of the interaction, but the company must first trust the consumers in order to spend the money, time and knowledge on their open strategy. ^[1]

History

As the world is becoming a more globalized society and more and more people are adopting the western consumption patterns, there has been a coinciding concern for the impact on our environment incurred by the production, distribution, use and disposal of consumer goods. As a result of this awareness, there are more and more consumers who take sustainability as an important factor in their consumer intent and behavior. Thus it has become beneficial for companies to also not only adopt sustainable practice but also to involve these concerned consumers in that practice. The first companies to adopt sustainable open innovation in their marketing strategies acknowledged that only providing more sustainable products and services, but leaving out a communication about those new practices would not be enough to encourage the rest of the market to be more sustainable. By opening their new practices to the consumer, they put themselves on a platform where others would have to do the same or face failure in the market. “There were some early developments in key industries during the 1980s and 1990s when the major players in the electronics industry collaborated with the goal of eliminating CFCs as a solvent in electronic assembly processes; and the quest for low emission vehicle technologies created some unprecedented levels of information sharing between the ‘Big Three’ car manufacturers. However, such collaborations were a long way from truly ‘opening up’.” This example represents the position that any kind of open sustainability innovation incurs on the market. Rather than seeking out a new product or new advertising scheme, companies look to each other as leaders in the industry, and customers, in turn have the opportunity to understand what they are really consuming. ^[1]

Sustainability Innovations

Sustainability innovations play a crucial role in the process of developing successful sustainability marketing strategies. Passively heated houses, solar cells, organic food, fair trade products, hybrid cars and car sharing are just some vivid examples of sustainability innovations. Sustainability innovation is an outstanding way for acquisition of both competitive advantage and differentiation. If the aim of sustainability marketing is to transform the society to a more sustainable one, innovations should not be restricted just to technological innovations. At a first step, in many markets sustainability innovations presuppose so called soft innovations in social practices, finance and business relationships. The innovation is not necessarily a new product or a product advancement, but also entails brand new ways to communicate products, new ways to operate focus groups or using internet tools to have idea generating systems in order to learn from the consumers. In the last years, sustainability performance of products and services has experienced continuous improvements. The above mentioned examples of sustainable products became produced at lower cost, in a more resource efficient way and satisfied the increasing consumer concerns about sustainability issues. For example, especially in the last decade e.g. fuel efficiency improvements in cars, increased use of recycled materials in packaging and growth in fairly traded commodities and organic foods has been witnessed by consumers, non-government organizations, policy makers and companies alike. Nevertheless, some critics exist about these kinds of product improvement, emphasizing that they are only capable of achieving certain level of eco improvement and also in many cases the potential gains already exist or are known to the manufacturers. ^[1]

Product improvements vs. radical changes

In most companies there is a power struggle between the Quality Management departments and the environmental management departments because though the environmental people want to make changes to products in order for them to be more economically efficient, the Quality people do not want to sacrifice the efficiency and product qualities that are already enjoyed by the consumer. These quality management systems, however have a very big challenge moving into a more sustainable minded consumption world, because they have based their innovations on gradual continuous improvement, and they align their development with the status quo of the industry. This may prove to be a barrier because the changes needed to reach more sustainable products and services is quite radical, hence this struggle as stated before. This kind of deficiency can be sorted out by complementing environmental management systems by other kinds of systems and approaches that favour new discoveries of alternative approaches and nonstop searching for more radical, ”step change” solutions to sustainability challenges. ^[1]

Eco-efficiency curves

Step change solutions contain “as a series of waves or types of innovation that can deliver increasing levels of eco-efficiency until a sustainable global economy can be established” ^[2]. Each wave is I shown as an S-curve in this model and these S-curves are similar to the conventional product life cycles depicted in conventional models. It shows that over time the eco-efficiency or environmental benefits of products actually decreases over time. Thus moving along in time, the new curves and their very radical new approaches over ride the ones of the older curves. The model follows four steps of sustainable design innovation and change.^[1] Following are the four steps:

Product improvement: Changes made to an existing product that improve pollution prevention and other environmental impacts of the product. For example and improvement on fuel efficiency, less use of water, or lowering the amount of pesticides used to grow food.

Product redesign: The concept of the product stays exactly the same and certain aspects are tweaked, or re-designed. This could be that the product components are made from a different material, or they add certain new parts so that the product will be more energy efficient over longer periods of time.

Function innovation: This means that a change is made within the product so that it still has the same result, but the way in which it comes to that result is changed.

System innovation: This is a change in the infrastructure of companies or organizations, meaning they provide the same kind of service but have a changeover to some other way of providing these ways of service.

Open Innovation

Whereas classical marketing is characterized by a uni-directional, sender – receiver relationship, in present times, marketing has changed. Open innovation re-conceptualizes marketing into a bi-directional relationship, based on processes of reciprocal learning. Companies open up their Research and Development departments in order to let new stimuli of information and knowledge flow in, as well as to allow insights to flow out. ^[1]

Combination of Open Innovation and Sustainable Innovation

In order to be able to stand the huge competition prevailing in such markets, Porter and van der Linde identified the general importance of green innovations for a company’s competitiveness. ^[3] In 2010, the Greendex survey confirmed Porter’s and van der Linde’s emphasis on green innovations by identifying an increased environmentally oriented consumption behavior and an articulated desire by consumers to see less talking and more action to tackle environmental problems, from businesses and governments. Greendex is a quantitative consumer study of 17,000 consumers in 17 countries, in companionship of National Geographic and GlobeScan. Probands are interviewed regarding their energy use and conservation, transportation choices, food sources, the relative use of green products versus traditional products, attitudes towards the environment and sustainability, and knowledge of environmental issues. This study aims at a quantitative measurement of consumer behavior and at promoting sustainable consumption. ^[4] With regard to a company’s marketing strategy on sustainable products and services, McDonagh elaborated four principles: “Ecological trust”, “Ecological access”, “Ecological disclosure” and “Ecological dialogue”.^[5]

Open Sustainability Innovations in Practice

With open innovations and sustainable mindsets only recently becoming more popular within big companies, open sustainability innovations are not yet that often observed. Open Sustainability Innovation can be seen applied by companies in their Sustainability Marketing campaigns. In contrary to traditional marketing laws where point of sale, advertising and the product are the main drivers, Sustainability Marketing requires firms to “build and maintain sustainable relationships with customers, the social environment and the natural environment.” ^[1]

It involves these 4 characteristics

• Customer Cost
• Customer Solution
• Communication
• Convenience

An example of a company following the trend to share knowledge regarding sustainability innovations is Facebook. The social networking service started the ‘Open Compute Project’^[6]to share methods with the entire industry about their new energy-efficient data centre in Oregon, and therefore provides public access to all specifications and mechanical drawings of the facility and servers. According to Facebook, the building is 38% more efficient to build and run than similar data centers.^[7]

References

1. ^ ^{a b c d e f g h} Belz, Frank-Martin; Ken Peattie (2010). Sustainability Marketing. West Sussex: John Wiley & Sons Ltd. ISBN 978-0-470-51922-6. 
2. ^ Brezet, Han (1997). Eco-Design: A promising Approach to Sustainable Production and Consumption. Paris: United Nations Environment Programme (UNEP). 
3. ^ Porter, Michael E.; Linde, C. (1995). "Grenn and Competitive: Ending the Stalemate". Harvard Business Review 73 (5): 119–134. 
4. ^ "Greendex". http://environment.nationalgeographic.com/environment/greendex/. Retrieved 01.07.2011. 
5. ^ McDonagh, Pierre (1998). "Towards a theory of Sustainable Communication in Risk Society: Relating issues of sustainability to marketing communications". Journal of Marketing Mangement 14: 591-562. 
6. ^ "Open Compute Project". http://opencompute.org/. Retrieved 01.07.2011. 
7. ^ Report to Congress on Server and Data Center Energy Efficiency, U.S. Environmental Protection Agency ENERGY STAR Program. 02.. http://www.energystar.gov/ia/partners/prod_development/downloads/EPA_Datacenter_Report_Congress_Final1.pdf.