10 types of sustainable innovation -Identifying opportunities beyond products
In the quest for sustainable innovation, we’re seeking a new process, product or service, that adds value to a market and makes a positive impact on the environment and society.
Product innovation is often the main focus, however an idea or tech can be copied by competitors with expertise and budget, so... organisations should really be looking beyond products and across the business as a whole for opportunities.
The Ten Types of Innovation framework from Deloitte's innovation branch, Doblin, is a useful tool to examine existing practices and to identify the potential across three main categories: Configuration (business model), Offering (product) and Experience (marketing).
I couldn’t find many examples of sustainable innovation in existing articles on the ten types, so I hope this helps you envision them and inspire your efforts. I’ve mixed corporate innovations for consumer goods with startup examples, but please note that these are not perfectly sustainable by any means.
NB. If you’re too busy to read it all, follow me on Instagram where I’ll be posting them individually.
Although powerful areas for innovation individually, the ten types should really be used together eg process and network, or profit model and channel. Ideally, making improvements across several, if not, all ten types.
Let’s check them out!
CONFIGURATION
The first third of the framework focuses on how the business model works in the organisation and opportunities to shake it up to capture value.
1. Profit Model. This is essentially how the business will make money and there are over 50 ways to do this. Subscription eg. Rent the Runway, Razor + Blade eg. Replenish Bottles + Refills, Peer2peer eg. ShareTool, PayAsYouGo eg. Bundles, One-for-One eg. Toms, and SO MANY MORE. The rise of the circular economy encourages pay-per-use, moving away from ownership, to rental.
Rent the Runway - “Fashion’s biggest crime is overproduction” and the average woman wears one item of clothing 5 times max, throwing away 37kg of clothes a year. The “Netflix for clothes” sharing-economy model asks subscribers $69/mth to rent 4 items of high-quality clothing to keep for as long as they like, then drop-off at a specific location and order 4 more. Not perfectly sustainable due to added deliveries, but headway has been made with “green” dry cleaning and recycling the plastic bags.
Value: $1B. $100M revenue, 8M customers.
Bundles - Every year 600,000 washing machines are thrown out - in the Netherlands alone! Working with customers like Miele, Bundles leases washing machines for $30/mth for 35 washes. Their smart plugin device tracks the washing machine data (energy, time, load, wear and tear) and they manage maintenance of the machine, refurbishing it at the end of life to maximise materials use and avoid white goods going to waste. Miele is the only remaining manufacturer that uses 100% reusable or recyclable materials.
Raised: €1.2M in bonds, 2k customers.
2. Network. This focuses on developing win-win partnerships to create value, by sharing or acquiring assets eg. technology, talent, resources. This could be through supply chain integration, partnerships, creating secondary markets for by-products, or through open innovation initiatives such as startup challenges, external hackathons or working with academics - ultimately saving R&D time and costs developing something that already exists.
Unilever - The FMCG giant actively crowdsources new solutions from startups, academics, designers and established companies having technology which they are specifically seeking eg. intelligent packaging and innovations to reduce material use. Unilever Foundry a separate unit have launched 200+ pilots between startups and in-house brands using the pitch-pilot-partner model but seem to be more focused on marketing and communications.
Toast-Ale produce beer from bread-waste in partnership with bakeries including sandwich-makers Adelie Foods, who never use the end slices of the loaves, and more recently Walburton, who pass on their un-sold crumpets. With 44% of baked goods going to waste - 15million tonnes going to waste in the UK alone - ToastAle has already saved close to 2million slices of bread. Using the un-used bread instead of virgin hops, this is a perfect example of a circular economy, saving 11 tonnes of CO2 in 2019.
Sales: 600k+ pints in UK, 150k+ pints Globally 2019
3. Structure. This focuses on the existing tangible and intangible assets of the company generating revenue. New tools, apps and systems come in to play, but managing knowledge, training programmes, boosting intrapreneurship, and optimising systems to reduce redundancies is the core. Social intrapreneurship also means that employers meet sustainability goals faster and boost productivity in other areas as a result.
Total Energy - Initially a Social Intrapreneurship project launched by three Total employees with the aim to provide solar energy to areas with limited electricity, they sold 50,000 solar lamps in the first pilot year in 3 countries. The project has scaled to 40 countries with local distributors and 15million customers, avoiding 4million metric tons of C02.
LiquidSpace allow companies to hire out underused space in their offices - similar to WeWork but more like an AirbBnb spare room option - facilitating asset sharing for 11,000 partner locations in 2,500 cities. It “unlocks existing workspace opportunities”, improving more inclusive work-spaces, while avoiding more construction.
Funding: $25M. $3.2M 2019 est. revenue, 109K+ customers, 6M transactions
4. Process innovation. Without changing the product itself, the method of creating it, is improved. Often involving new techniques, equipment, or software to maximise efficiencies and reduce waste across product creation.
Blue River Technology - This Computer Vision and machine learning digital farming solution identifies and sprays only the weeds in a field (not healthy plants). Continuously improving accuracy rate and reducing herbicide use by up to 90% it saves hundreds of thousands of dollars a year for large-scale farms.
Acquired for $305M by John Deere in 2017
Diageo - The British-owned, leading global alcoholic drinks company uses grain by-products from the whiskey distilling and brewing processes to create renewable energy on their on-site bioenergy plant in Scotland providing 50% of the distillery’s energy, saving approximately 10,000 tons of CO2 per year.
OFFERING
This mid-section of the framework suggests changes to the product itself, perhaps an iterative innovation to improve a product, making it better quality, faster, stronger, more convenient, more reliable, comfortable or with better performance or features - or a completely new never-seen-before product. Important to maintaining market position, it’s crucial to ensure products are continuously improving.
5. Product performance. By improving the performance of the product there may be sustainable innovation in reducing emissions, resources or energy used, or simplifying products to reduce complexity for end of life.
Rolls Royce works to reduce carbon emissions through their efficient airplane engine design. Their Trent XWB engine is 15% more efficient than the previous model, using less fuel thanks to the unique three-shaft design, advanced materials and fan system technology, is quieter, reduces life cycle costs and is lighter in weight and more aerodynamic.
$2.9M savings on fuel per year per aircraft (no stat on average CO2 savings)
LUSH - The vegetarian British-owned global cosmetics brand, counts 35% of their product range as “naked” of packaging to reduce plastic use, inventing the infamous patented Bath Bomb, shampoo and moisturising bars - solid and wrapped only in paper. Using less than 50% of packaging materials than a comparable competitor, in the US alone, their sales of 6.5 million shampoo bars have saved 19.4 million plastic bottles from being produced equivalent to 535 tons of plastic (weight of five blue whales!).
Annual Turnover: £900M+
6. Product System. Here, we’re considering the product as a system, how it works with other products as a complete offering and considering a more modular understanding of what a products’ purpose is. You may re-think the design, identify the real use-case for customers, and product longevity.
Gerrard Street - Dutch-based modular-designed headphone system facilitating the upgrade, customisation, and easy repairs to speaker units, cables and ear pads. The global linear headphone industry wastes 15,000 tonnes a year of discarded headphones usually through worn or broken components. Rather than throw them out or return the whole product - the individual parts can be mailed directly, replaced and reused - the whole system is based on a subscription service of €7.50/month and they manage to re-use 85% of the components.
Current annual turnover €50K with 900 clients.
Replenish - Only 13% of global plastic bottles are recycled - leaving 23 BILLION kg to waste every year. A typical bottle of detergent is 90% water and only 10% actual ingredients - yes, you read that right - you’re mainly buying water and plastic 👍. The Replenish refillable concentrate system pairs a reusable bottle with concentrates in pods (6 doses) that users screw onto the bottle, inject a dose, and fill the rest with water. The bottle therefore becomes an appliance, with the refill-pod as the product. No info could be found on sales or revenue.
EXPERIENCE
The customer-facing part of the framework focuses on customer touch-points and marketing. This is perhaps where we see the most micro-innovations through social media platforms.
7. Service. Improvements to touch-points surrounding your product or user communities and support systems can make a difference.
RiverSimple - Total experience management for your car. This subscription-based car service for approximately £370/mth includes everything - even fuel - so it forces improved product performance as they have to make it as efficient as possible to reduce their fuel costs. Pilots taking place this year.
Lush - I didn’t want to repeat a brand (I could purely give examples for Lush in this article!), but Lush Cosmetics drive service in various ways, including loyalty through their 5-for-1 programme. Customers receive a free face-mask for bringing back 5 empty black pots to the store for recycling in Lush’s in-house manufacturing plant. Encouraging the customer to participate in a closed-loop recycling system.
1.2MN black pots returned to Lush stores (2018) distributing 250K+ face masks.
8. Channel. Innovation relating to how the product is distributed and delivered to the customer. This could be in the form of experience centres, flagship stores, pop up stores, direct channels by-passing retailers altogether and non-traditional channels like below.
Ecover - The eco-friendly household detergent maker originally from Belgium, has encouraged customers to re-fill their bottles since 1989, but rolling out to supermarkets is a game-changer: Waitrose continued successful trials in 2019, and M&S and Sainsbury’s are trialling in-store refill stations.
2019 Ecover laundry detergent Sales growth 16% to £16million
Algramo - Working to bring lower-income households more affordable products, this Chilean startup provides another channel for refillable detergents (Unilever products) all managed through a mobile app. Customers schedule the delivery cart to refill bottles at their doorstep typically at 40% of the price. The RFID code on the reusable bottle incentivises customers through discounts on future purchases “Packaging-As-A-Wallet”, and provides data related to individual environmental savings per bottle.
220,000 customers, avoided 180,2000 kg of plastic trash.
9. Brand. How a brand positions itself with regards to sustainability makes a difference in customers’ perceptions of brand authenticity, challenging their actions every day. Imperfect sustainability is still acceptable as long as it’s clear that there are efforts being made towards a positive impact, so transparency and clear values are essential.
H&M - Transparency is a key driver for sustainable innovation, displaying steps taken and planned to improve social and environmental practices. H&M scored 73% in the Fashion Transparency index - the highest of clothing brands. They disclose the names of all their suppliers openly on their website, received 29,005 tonnes of clothing through the customer reuse/recycling programme, use 96% renewable electricity, and their recent partnership with the Ellen McArthur foundation means extra accountability for their operations.
Net Sales 2019: €22 billion
Danone - Starting their journey to become a B-Corporation in 2015, the FMCG giant has successfully gained the status for 17 of its subsidiaries including plant-based Alpro drinks and Blédina baby food. The B-certification is given to companies who have proven their Green Credentials by scoring over 80 (out of 200) in the Impact Assessment covering social and environmental performance and commit to improving each year. It’s easier to get accreditation as a smaller company. 30% of Danone’s global sales are B-Corp certified getting closer to their goal of becoming the first multinational B-Corp.
10. Customer engagement. How to speak to customers. Personalisation, automation and a memorable, meaningful experience - delighting customers when possible creates a strong identity and invites customers to feel part of something bigger.
Patagonia - Consumers are placing more importance on brands helping them become better people - socially and environmentally. This global outdoor clothing brand has created a loyal base of customers through multiple actions. The “Cleanest Line” collaborative stories for thrill-seekers, controversial but impactful marketing campaigns asking people to buy less, ActionWorks activism programme taking engagement to the next level, the IronClad Guarantee emphasising the notion of durability in the products - they even launched a tour of their Worn Wear repair truck, all catching customers’ attention, educating them on sustainability issues, and contributing to growth .
Sales 2019: $1 billion, 14% average growth with 3,000 employees globally
Adidas - The sport-shoe giant launched the new FutureCraft Loop shoe designed to be completely recyclable and an excellent example of the Circular Economy for consumer goods. Currently, in Beta Testing with 200 users, who have all returned the shoes - the ultimate test will be if global customers will give the shoes back to Adidas for re-manufacturing. Making customers feel like they’re part of something bigger, and that their trainers will become part of someone else’s story is pretty engaging.
Overall, the examples above have many imperfect eco-innovations, where an improvement in one area may increase emissions in another through rising demand, manufacturing and delivery. Many advances could be seen as “green-washing”, deemed too small an effort compared to the massive impact of plastic waste, deforestation or fracking.
Those underwhelmed by the lack of disruption in the list, will note that companies striving to be eco-friendly, often repackage “past-generation” services resurfacing as innovations, or have purely incremental improvements - catching up on what should have been done decades ago. In many cases, it’s too late.
Conclusion
While there may be a cultural shift to consume less where you live, globally, consumption is rife. Through these examples, I hope you find something to inspire you in your search for sustainable innovation.
The Ten Types of innovation framework gives many ideas of areas for discovery, however there are opportunities in the Circular Economy that companies potentially wouldn’t have considered - for example pairing process with customer engagement when thinking about reacquiring materials and considering sold goods as continuous assets in the cycle. I’ll be exploring these opportunities in a future article.
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