Corporate sustainability takes notes from IT

A recent, rather refreshing article published in the Harvard Business Review advocates for sustainability that is embedded in strategy, a movement from structure to networks and value creation for customers, shareholders and other stakeholders.

The writers of the article, Lubin and Esty, have analysed sustainability with megatrends approach, and tell us how we can learn from the experience of the IT sector.

"First, they [IT companies] focused on reducing cost, risks, and waste and delivering proof-of-value. Second, they redesigned selected products, processes, or business functions to optimize their performance—in essence, progressing from doing old things in new ways to doing new things in new ways. Third, they drove revenue growth by integrating innovative approaches into their core strategies. Fourth, they differentiated their value propositions through new business models that used these innovations to enhance corporate culture, brand leadership, and other intangibles to secure durable competitive advantage."

What are their steps to value creation? Innovation is the bedrock of progress at each stage.

1. Do old things in new ways. "Firms focus on outperforming competitors on regulatory compliance and environment-related cost and risk management. At its inception 30 years ago, 3M’s Pollution Prevention Pays was just this kind of initiative. As of 2005, PPP had reduced 3M pollutants by more than 2.6 billion pounds and saved the company more than $1 billion."

2. Do new things in new ways. "Firms engage in widespread redesign of products, processes, and whole systems to optimize natural resource efficiencies and risk management across their value chains."

3. Transform core business. "Sustainability innovations become the source of new revenues and growth."

4. New business model creation and differentiation. "At the highest level, firms exploit the megatrend as a source of differentiation in business model, brand, employee engagement, and other intangibles, fundamentally repositioning the company and redefining its strategy for competitive advantage. GE’s ecomagination initiative, poised to deliver $25 billion in revenues in 2010, enabled CEO Jeff Immelt not just to reposition the company as an energy and environmental solutions provider but to build a green aura into the GE brand."