Innovation Strategies and Paths to Ensure Future Sustainability of a Business
Discuss why business models, strategy and innovation are important and how they are related.
When an organisation is established, it must employ a certain business model which will describe the mechanisms in use as well as the delivery and design of the value created. It will define how an organisation delivers value to customers, attracts customers so that they can pay for the value and these earnings to be converted to profits (Teece,2010). Therefore, it reflects how a management plans to deliver the needs of the customers by first understanding what the customer wants so as to make profits. For this reason, this essay focuses on understanding why business models, strategy and innovation are important and how they are related.
Business sustainability involves business models and decisions made by the management that are focused on the social and environmental concerns (Casadesus-Masanell, 2010). Innovation in an organisation is very important as it can help you to prepare for the future. For this reason, organisation should look into the innovation for sustainability concept. Innovation for sustainability is defined as an organisation making changes to its products or processes so as to produces economic value and environmental/social benefits(Utterback,1994).
Product innovation.
This is where products are introduced (Osterwalder, 2005) or made better for the satisfaction of the customer. These are usually technological advancements which could be responding to changes in the customer requirements. Product innovations usually results to a greater demand.
They include:
Developing a new product.
Improving a product’s performance.
Introducing a new feature to an existing product.
This includes improving the skills, technologies and facilities that are used in the production and delivering of a product (Boons and Freund,2013). They can include training of employees so as to improve their skills, changing the technologies used in the production like the machine parts and coming up with better software solutions (Chesbrough and Rosenbloom,2002).
This involves changing how a product or service is brought into the market. This is a very radical, risky and transformative innovation (Morrie et al.,2005). They include companies like uber and Spotify
Innovation for sustainability of a business can be mapped along 3 dimensions. They include:
- Innovation focus. This defines whether the innovation is focused on technology or people.
- How the firm relate to the society. Is it focused on itself or does it view itself as part of the organizational ecosystem?
- How much an innovation is used in the firm. Is it an innovation for a specific unit/department or is it integrated or part of the organization’s DNA?(Baden and Haefliger,2013)
Businesses can use ideas to check their processes so as to achieve innovation for sustainable business.
This involves usual things in better ways while observing the regulations. In this stage, the organization reduces its impacts on the environmental while still using the same business model (Amit and Zott, 2012). Here innovations are done increasingly while addressing one issue at a time. Business in this stage focus on technology to reduce impact and maintain business as usual while optimizing its processes(Baden and Mangematin,2013). Innovations examples include:
Categories of Innovation
Waste diversions.
Use of renewable energy.
Pollution control.
Energy efficient learning.
Flexible work hours.
Consolidating facilities.
Reduced paper consumption and production levels.
Reduced raw materials use.
Hybrid electric fleet vehicles.
Multiuse delivery boxes.
Reduced packaging.
Getting rid harmful or deadly materials.
Optimizing the size of the products to take advantage of the shipping levels.nAnd many more.
This level focuses on creating new things with the aim of doing good. Organizational transformers believe that coming up with new products and services help create employment hence upgrade the people’s standards of living (Baden and Mangematin,2013). They produce innovation s that are technological and sociotechnical. Innovations examples will include:
Products and services that benefit people.
New products that change the consumption levels and habits of people.
Replacing products with services e.g. leasing, instead of selling.
Preferring electronic services to physical services.
Providing services which have social benefits.
This refers to creating new things as a way of doing good but with the involvement of others. It involves collaboration between many organizations so as to create positive impacts on the community and the world (DaSilva and Trkman, 2014). These innovations include:
- B Corporations. These are organisations that are forced by law to give benefits to the society.
- Industrial symbiosis. This is where organisations have a circular economy in which what a firm produce as waste is used as a resource by another firm.
Business development refers to the processes and activities that are concerned with the analysis for business growth opportunities and supports strategies put in place for the growth of the business. It aims for a big number of clients or customers, better technologies and employees who are greatly skilled. Business development process therefore has to cover all the operations of a company for there to be development and improvement (Achtenhagen et al., 2013). Its basis is to create a long-term value and favourable image in the eyes of all the stakeholders. Business development involves discovering networks that will help in growth.
There are many ways that an organisation can come up with to ensure innovation for sustainability. They include:
Setting up efficiency targets and policies. For example, reduce energy consumption by 25 per cent in 20 years’ time.
Coming up with sustainability development goals(SDGs). It is important to have sustainability goals added to the existing technological specifications.
Have a revised business model. Go back to your business model. Reframe it so that it can allow for innovations. Revisit it and the model of governance so that it can be based on the triple bottom line. This concept allows that organisation to consider the needs of all stakeholders too.
Cross-company collaborations. Opportunities should be created for the employees so that they can collaborate across functions. This strengthens the employees’ awareness and the commitment to the sustainability awareness. It also spreads the innovation practices.
Product Innovation
Collaborations with knowledge institutions. The business can work with the experts in campuses to compensate for inadequate resources and technical skills.
Customer insights. Work with the customers, interact with them so as to know more about their need and expectations. Know their concerns with respect to sustainability of your products and services, functionality and satisfaction. Get to understand and know the consumer groups for product line development and product uptake.
Greener supply chain. An organisation should make it its responsibility to ensure that the environmental performance of its supply chain is improved. For example, Have a code of conduct for the suppliers you work with requiring the products they supply to be sourced using environment friendly practices. Have high specifications and request suppliers to come up with written confirmation that they meet the set requirements.
You can use tools like Environmental Management Systems(EMS) and the Life Cycle Analysis (LCA) to help in the product and process innovations. These could be as simple as checklists or as complicated as cross company programs.
Come up with methods of production that would use fewer resources and less energy. For example, one can use biogas, wind or solar energy. If it is not possible, purchase renewable energy credits. Have innovations that will allow the products to use fewer raw materials and virgin resources with maximum efficiency.
Come up with internal communications strategies that focus on sustainability objectives and success. Have formal methods of communication like intranets, websites, annual reports and informal methods like progress reports from the management.
Trainings. Have time to time trainings on sustainability. You can import Expertise from outside and recruit new employees who have interests and skills in innovation and sustainability.
Adopt a closed -loop manufacturing concept. This concept involves recovering wastes this is, water, heat, raw materials or energy and reuse them. This can be done through the circular economy where these wastes are reused across different organisations. A business can also adopt a cradle-to-cradle design in which a product ends up to the manufacturer at the end of its lifecycle.
When coming up with strategies, use back casting. This is where an organisation’s vision starts from the future to the present but not the other way round.
Biomimicry. This is a concept in which an organisation learns from nature. Have your experts, this is the engineers, product development teams and designers, learn from the activities and process of the nature.
Let your organization be leaders and agents of change. Think of ways of engaging your suppliers and manufacturers that would lead to sustainability even in their organisations.
Conclusion
It is evident that innovation is a fundamental thing for there to be sustainability of a business. For this reason, an organisation’s governance should come up with business strategies that focus on achieving continuous innovations and should be flexible and be ready to change the business model according to the requirements for sustainability.
References
Achtenhagen, L., Melin, L., & Naldi, L. (2013). Dynamics of business models–strategizing, critical capabilities and activities for sustained value creation. Long range planning, 46(6), 427-442.
Amit, R., & Zott, C. (2012). Creating value through business model innovation. MIT Sloan Management Review, 53(3), 41.
Baden-Fuller, C., & Haefliger, S. (2013). Business models and technological innovation. Long range planning, 46(6), 419-426.
Baden-Fuller, C., & Mangematin, V. (2013). Business models: A challenging agenda. Strategic Organization, 11(4), 418-427.
Boons, F., & Lüdeke-Freund, F. (2013). Business models for sustainable innovation: state-of-the-art and steps towards a research agenda. Journal of Cleaner Production, 45, 9-19.
Casadesus-Masanell, R., & Ricart, J. E. (2010). From strategy to business models and onto tactics. Long range planning, 43(2-3), 195-215.
Chesbrough, H., & Rosenbloom, R. S. (2002). The role of the business model in capturing value from innovation: evidence from Xerox Corporation’s technology spin?off companies. Industrial and corporate change, 11(3), 529-555.
DaSilva, C. M., & Trkman, P. (2014). Business model: What it is and what it is not. Long range planning, 47(6), 379-389.
Morris, M., Schindehutte, M., & Allen, J. (2005). The entrepreneur’s business model: toward a unified perspective. Journal of business research, 58(6), 726-735.
Osterwalder, A., Pigneur, Y., & Tucci, C. L. (2005). Clarifying business models: Origins, present, and future of the concept. Communications of the association for Information Systems, 16(1), 1.
Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning, 43(2-3), 172-194.
Utterback, J. (1994). Mastering the dynamics of innovation: how companies can seize opportunities in the face of technological change.
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