SUSTAINABLE INNOVATION

DRAW TWO CIRCLES, overlapping slightly. Label one "sustainability" and the other "innovation." Now shade the overlap between them. This is where the challenge of sustainability meets the promise of innovation and the promise of sustainability meets the challenge of innovation; this book is for those who create and compete in this space. Call it "sustainable innovation" — the development of new products or processes that consume fewer environmental resources, foster the health of individuals and communities, and are financially viable for producers and consumers alike. It has a second meaning, too. This space is also about creating organizations capable of innovating time and again at a pace they can sustain.

Add another circle intersecting the first two and call it "information technology" (IT); this is where the information revolution shapes, and is shaped by, both sustainability and innovation and enables sustainable innovations. Change the label to "automobiles," "agriculture," or "energy," and it describes the space where sustainability and innovation will drive change in a technology or market. If you want to get more complicated, you could add a fourth circle and see how, for instance, IT and automobiles converge with sustainability and innovation, maybe by making smarter engines that increase efficiency and reduce emissions. The combinations are endless.

The point is that the topics of sustainability and innovation — our two original circles — are vast. Nevertheless, they overlap in distinct and specific places. Not all aspects of sustainability require innovation — reducing your factory's carbon footprint through improved lighting or cooling, employee carpooling, or switching from Styrofoam cups to glass mugs in the break rooms are not innovation. And not all aspects of innovation are sustainable — the latest pizza delivery application on your iPhone, for example, will not be our salvation. The key is understanding where, when, and how sustainability and innovation overlap in your company, your markets, your industry.

This book is about the challenges companies will face and the capabilities needed to overcome them in the pursuit of sustainable innovation. It's not a promise that sustainable innovation is a wise or profitable strategy. I hope we're past that now. It's not a sermon on our obligation to save the planet for future generations, although this motivates many of us. It's not an inventory of sustainable technologies, although a better understanding of innovation sheds light on competing alternatives. And it's not a pitch about the most effective policies to support sustainable innovation, although a better understanding of innovation informs policy. It is based on the results of five years of research on sustainable innovation and ten years spent working alongside corporate leaders, entrepreneurs, investors, scientists, and policy makers attempting to bring sustainable new technologies to the market. From that work came an understanding of the capabilities that enable companies to discover and pursue opportunities for growth or pivot from emerging threats through innovation.

Who will face these challenges? Everyone. The demand for sustainability is spreading across all sectors, all markets, and all niches, like ripples from a rock dropped into a pond. It's already brought new opportunities and new threats to those sectors where we would most expect them: energy, transportation, and construction. But the waves keep expanding outward, creating disruptions in places few expected. A number of companies have embraced this reality and aggressively pursued sustainable innovations. Some did so because they were relatively small and nimble and had these values baked into their culture and customers. Think of Patagonia, Body Works, Smith and Hawken, North Face, Revolution Foods, and Tesla Motors. Others did so because they were large and, for whatever reasons, were the first to experience the threats emerging today and see the opportunities in them. Consider General Electric, Interface, Walmart, Nike, Morrison and Foerster, Unilever, Johnson Controls, and many others. In other words, some of these companies chose to find and pursue opportunities for sustainable innovation; others were forced to.

Yet these companies are only the most recent. The last several centuries may be a history of industrialization, but they are also a history of innovations that responded to and overcame the environmental and social challenges of their time, dramatically changing the fates of companies, industries, and entire nations. James Watt's steam engine dramatically improved the efficiency of existing engines and, by doing so, brought steam power to the factories, railroads, and ships of the first industrial revolution. Thomas Edison's electric lighting reduced the demand for coal gas (and its accompanying environmental costs) and brought electric power into homes, offices, and factories. Henry Ford's mass-produced automobile replaced horses, then more populous in New York City alone than across the United States today, and their attendant feed and manure.

We can and will learn from many of these cases, from their mistakes and successes. Whether you're in an established firm or are starting one, if you want to positively influence the environment and society or simply survive the coming changes, this book is meant to help you.

Why Now?

Many executives have asked, "Is it worth rethinking, and rebuilding, parts of our organization for sustainable innovation, or is this just a passing fad?" After all, the modern sustainability movement began around fifty years ago with Rachel Carson's Silent Spring, which raised public awareness that pesticides were devastating the environment. The backlash led to the creation of the US Environmental Protection Agency; the banning of DDT, leaded gas (tetraethyl lead), chlorofluorocarbons (CFCs), and other industrial chemicals; and the enactment of a raft of new federal regulatory policies: the Endangered Species Act, the Clean Air and Clean Water Acts, and roughly a dozen other federal environmental laws in the 1970s. The oil crises of the 1970s provided a temporary boost for alternative energy: the modern wind and solar industries emerged, the first modern electric vehicles hit the market, building codes began requiring installation of insulation and other energy efficient practices, and the corporate average fuel economy (CAFE) standards for fuel efficiency were created. Indeed, most of the seminal research on climate change was done in the 1970s. But let's face it: despite all the scientific and regulatory efforts, the last fifty years of the environmental movement have been characterized by more sound and fury than progress.

The last decade brought a surging consensus on — and often direct experience with — the realities of climate change and related challenges. This has...