Eco-Innovation: The Next Business Megatrend

Eco-efficiency and eco-innovation are two concepts with a growing presence in the world of corporate sustainability. Marc Stoiber highlights two companies – Domtar and Replenish – at the helm of this trend.

Eco-efficiency and eco-innovation are two concepts with a growing presence in the world of corporate sustainability. Marc Stoiber highlights two companies – Domtar and Replenish – at the helm of this trend.

Corporate sustainability is gathering momentum in North America. Companies like Wal-Mart and GE are indisputably proving the business case for efficiency with an environmental slant, and unprecedented numbers of corporations are jumping on the eco-efficiency bandwagon. Although it is still early days, indicators are that this trend could become a megatrend, influencing not only our economy, but our perspective on how companies should behave.

As eco-efficiency gathers steam, however, we are seeing signs of another trend on the horizon. Eco-innovation appears to be the next iteration of eco-efficiency, but with greater potential for both brand and revenue building.

Eco-innovation is, by definition, an application of innovation to sustainable development. However, the essence of eco-innovation is best revealed by juxtaposing it with eco-efficiency.

The two might be considered as evolutionary stages of corporate sustainability. Eco-efficiency is, for a corporation, the perfect introduction to sustainability thinking. It’s low hanging fruit, and offers almost immediate payback – which emboldens more green corporate action. Eco-innovation, on the other hand, is the stage a corporation enters when it has pushed eco-efficiency as far as possible. It’s definitely fruit that’s higher up on the tree – harder to reach, but tastier for the effort.

You might also view the two as linear vs. lateral thinking. Eco-efficiency is about discovering a source of inefficiency, then trimming out the wasted resources, pollution, and energy. It’s math, well applied. Contrast that with eco-innovation, which relies more on invention, creation and intuition. Like any other form of innovation, it can be wildly successful when executed properly – but it doesn’t offer the same degree of certainty as efficiency.

Finally, you might look at eco-efficiency as a template for savings, and eco-innovation as a route to strong brand growth. Indeed, the power of eco-innovation is its capacity for constant reinvention, improvement and iteration – the very lifeblood of a vital, dynamic brand.

If eco-efficiency is just now entering the mainstream of corporate America, one would think that eco-innovation would be a far-off, undeveloped, academic concept. Nothing could be further from the truth.

Two cases for eco-innovation

Domtar is North America’s largest supplier of uncoated paper. A progressive company, Domtar is actively engaged in eco-efficiency, especially in the forest and at the mill site.

Lewis Fix, Domtar’s VP of Brand Management and Sustainable Product Development, notes that while the efficiencies have delivered solid financial performance, they can’t offset the decline in the paper industry. As Fix explains, Domtar has responded by innovating beyond the core business, into areas like:

  • Energy – The company has long used pulp byproducts to produce its own energy. But now, Domtar is forming partnerships with energy companies to be part of their renewable energy portfolio.
  • Repurposing – Domtar is today reinvesting millions to repurpose mills from traditional paper products to high-demand products like fluff pulp.
  • Nanotechnology – The Domtar innovation that is generating the most buzz today is the development of tree fiber-based nanotechnologies. Minute ‘building block’ nanomaterials derived from pulp are being reassembled into new materials, revolutionizing applications like iridescent films, coatings and bioplastics. Advantages like tensile strength (ten times greater than steel) and electrical conductivity make these nanomaterials a very attractive product – and an innovation that could move Domtar into an entirely new realm of expertise.

Domtar provides a wonderful example of a large, industry-leading company embracing eco-innovation to stay ahead of the curve. On the other end of the spectrum, startups like Replenish are being launched with eco-innovation built right into their DNA.

Replenish is bringing a radical new household cleaner ‘delivery system’ to market in October. According to Jason Foster, CEO at Replenish, it’s an innovation that was conceived with both practical and sustainable considerations.

Foster says the idea for the innovative bottle and concentrated liquid cleaner came to him when he considered both the insanity of shipping bottles full of diluted cleaner around the world, and the impracticality of current concentrate systems.

Foster realized the key to improvement lay in bottle design. It was an area sorely lacking in innovation – the spray head and bottle design in use today was essentially the same as the one designed by Roger Drackett in 1943.

Instead of endeavouring to make the existing bottle eco-efficient (or ‘less bad’, as Foster says), Replenish created an entirely new bottle based on cradle to cradle design.

The result? A reusable bottle system that uses 90% less plastic, 90% less oil and 90% less CO2 than the old system. As Foster says, Replenish ships utility, not water. And that utility results in both environmental and financial benefit.


Tips for launching your eco-innovation

Although eco-innovation is still new, conversations with companies like Domtar and Replenish highlight some key learnings in ‘getting it right.’ The following thought-starters provide great guidelines for anyone exploring eco-innovation

First, think outside the jar. This discipline actually applies to all innovation. If you’re too deep inside the brain space of your company, you’ll be able to give a million reasons why a new idea WON’T work. To embrace a new, potentially great idea, you need to step outside this limiting thinking, and see your company as a consumer would – from the outside.

Next, think beyond Eco. Nike did just that when they created their new Air Jordan shoe. They incorporated incredible eco-innovation, but positioned the shoe not as eco, but as pure, Nike technology. How can eco-innovation help unleash thinking that might benefit you beyond the bailiwick of sustainability?

Collaborate and tap your network. Often, the best innovation comes from two things that don’t seem to fit – like chocolate and peanut butter. But collaboration, often between the unlikeliest of partners – is what’s driving eco-innovation forward at breakneck speed. We’re already seeing companies – using tools like the GreenXchange – share their IP to accelerate their eco-innovation.

At the same time, tapping your company’s collective genius – from suppliers to employees to stakeholders – will drive eco-innovation.

Be transparent. Sustainability is a journey that never ends. That means you need to be very transparent about all the things you still need to address – in addition to celebrating the things you’re getting right. Be open, be transparent, and invite constructive critique. It’ll make your product better, and win you stronger support.

Make many small bets, instead of one big one. The ideal innovation portfolio is spread between four areas – far-off R&D, fast-failing exploratory innovations, enhancements of current platforms, and necessary strides forward to stay relevant. You should have a blend of all four in your innovation pipeline. But most important, you should never bet the ranch on one idea.

Make eco-innovation core to everyone’s success. In the past, we’ve seen companies create green teams, or bring in a Chief Sustainability Officer. That turns sustainability into something that isn’t core – it’s a ‘bolt-on’. Companies like Patagonia and Seventh Generation don’t think that way. Everyone, from the C-Suite on down, has sustainability in their job description. And they’re measured on the eco-ideas they bring to the table.

Get innovation discipline. Everyone has great ideas. But those ideas fail, unless they answer an unmet need, come from a real insight, are interpreted the right way, and are presented in a way that your target audience can relate to.

And finally, let your innovation be guided by the north star of sustainability. As long as you never lose sight of your mission – to profitably create a world where we can live with abundance, without depleting the resources of future generations, your innovations will stay on mission.

This article was originally presented as a webinar on August 18, 2010, and first appeared in article form in Fast Company.