Meaningful innovation will help us build a better future

Interestingly, most of the companies I have studied at the frontlines of Better Business are not regarded as world-class in rankings of the world’s most innovative companies. Instead, the top 10 most innovative companies in 2021 (according to a study by Boston Consulting Group) had a distinctly digital feel and background, starting with Apple, Alphabet and Amazon. Only Microsoft (#4), Tesla (#5) and IKEA (#32) match the criteria for this book. Apple (#1) has also come far when it comes to sustainability, at least according to their ESG ratings. This innovation gap most probably means that there is an opportunity to focus on exploration and innovation in this field.

Traditional product or technology-driven innovation will, however, not alone transform our world to the better. We will also need to look for new business models as the means to create the necessary transformations. As stated by Stefan Schaltegger and his colleges in a relevant research paper, ”…the usual approaches to sustainable development of philanthropy, corporate social responsibility, and technological process and product innovation are insufficient to create the necessary radical transformation of organizations, industries, and societies toward genuine, substantive sustainable development.”

Today we do not only have a need for innovation and business model innovation, but for more meaningful innovation that helps solve the wicked problems faced by humanity. It is not enough to reduce harm, instead we need to start thinking about how to solve the really big problems. Tesla (Elon Musk) seem to have understood this – which has sparked a wheel of change across the whole automotive industry. You could of course argue that small volumes of luxury electric cars are hardly any better for the environment than the alternative. But remember the technology cycle: what starts out as being exclusive for only a few ultimately reaches scale effects which enables a mass-market approach. Replacing traditional cars with its electric equivalent will indeed need to be part of the solution to a wicked problem, i.e., climate change.

This is important. Because much of the innovation efforts of today, in reality, bring very little or no added value for the planet and humanity. The world is actually full of meaningless innovations and failed innovation efforts. Ideally, innovation would help remove problems and simplify life for its users in a meaningful way, reducing complexity and making things easier. That’s why customer insight is key. Truly meaningful innovation, however, requires more than understanding human needs in the context of the design challenge. Rather, it emerges as solutions to problems found at the intersection between the world’s wicked problems, human needs, useful technology, and impact business models (ideally circular, and even regenerative).

Going forward, meaningful innovation should always start at the intersection between human needs and wicked problems and aim to identifying new potential ways to addressing these dilemmas. Then, useful and applicable technology should be developed and put into use in a sustainable way. And finally, impact business models (ideally circular or even regenerative) should be developed and/or applied, tested, deployed and continuously challenged and improved. The business model should also safeguard the value creation for the company as well as for other relevant stakeholders.

Due to its complexity, the concept of meaningful innovation however demands both knowledge and insight into all four dimensions: the world’s wicked problems, human needs, useful technology and impact business models. See figure below.

This implies that a traditional innovation team will not be able to achieve this on its own. Instead, truly meaningful innovation can be most effectively pursued in cross-functional teams with diverse backgrounds and competencies spanning across the relevant areas, having an understanding of the SDGs and working in open innovation efforts with experts, or in different types of unconventional strategic partnerships and collaborations.

To speed up the process, an alternative is to partner with, or even acquire, a promising new player in a relevant field. This should, however, be regarded as a complement to driving your own exploration and innovation agenda, rather than as a substitute.

Food for thought!

Learn more in Better Business Better Future: Decode the Good Practices of Sustainability Trailblazers and Transform Your Corporate Business, by Elisabet Lagerstedt (published January 1st 2022).