In recent years, companies and industries are starting to rethink their products and services in order to achieve ambitious environmental goals. While these eco-design efforts are necessary, they are still object-bound while ignoring the whole system. 

Anh Nguyen

Auriane Clostre

Colette Menard

In recent years, companies and industries are starting to rethink their products and services in order to achieve ambitious environmental goals. 

While these eco-design efforts are necessary, they are still object-bound while ignoring the whole system.

Meanwhile, the environmental impacts of industries and companies equally lie in their production and business models, which were often designed in the 19th century, when environmental criteria were not taken into account.

No matter how hard we try to "fix" or improve this faulty system, we will never achieve the target level of environmental performance

. As environmental targets become more demanding, it is necessary to move away from the optimisation thinking and design new systems that are compatible with current environmental issues.

Reinventing to break free from past design choices

Our current industrial and economic models are a legacy of the industrial revolution of the 19th century

, and of design choices that did not take into account the scarcity of raw materials, or upstream and downstream pollution during the manufacturing process. These are models that have mainly responded to the challenges of economic performance, speed and efficiency.

Companies therefore find themselves optimising the environmental performance of systems that were not originally designed to do so

 - systems that are energy-intensive, raw-material consuming and waste-inducing. So long as companies remain in this optimisation mindset, they will come up against the very limits of their model and, in most cases, will not be able to meet the environmental objectives defined by current or future regulations. 

This is a phenomenon we call the "invisible R&D wall"

, which is well known in R&D activities. When optimising a system, initial efforts are well rewarded and significant improvements are quickly made. But, over time, it becomes more and more expensive to optimise the system and the performance gains are smaller and smaller.

Companies, faced with the climate emergency, must therefore opt for 

, a process aiming to thoroughly reinvent a product, a service, a business model or a historical process, 

by freeing themselves from the choices and design models of the past

. A good example of reinvention is the transformation of 

 from a mining company in Belgium to a precious metal refining and recycling company in the 2000s. This transformation required the total reinvention of its activities and expertise. The example of Umicore given earlier corresponds to a radical transformation of the company's positioning. 

A company can in fact play on one or more dimensions of reinvention to drastically reduce its environmental footprint.

Let's take the example of a leading European packaging company, with whom we started working in 2019. Our work with the R&D team initially focused on reinventing the

, which resulted in the reuse of over 30% of thermal energy, saving €1.5 million per year. In 2020, we tackled the second dimension - their 

, by completely transforming the packaging architecture. This reduced the amount of raw material used, and therefore the associated CO2 emissions within the manufacturing process, by 40%.

 The order of reinvention naturally corresponded to the expertise of the R&D team of this manufacturing company.

 Work on these first two dimensions has already yielded significant results, but it is possible to push the ambition even further.

The company's business model is based on a single unit and single use sales model.

 The company is therefore still attached to a system that is very energy and resource intensive. Reinventing the business model therefore represents a significant potential for reducing environmental impact. Tackling this dimension means 

a profound rethinking of product use and functionality, the value chain and relationships with suppliers and customers

Given its systemic nature, this dimension often goes beyond the traditional scope of business, and therefore, is understandably the most difficult to address. But precisely because of its systemic nature, it can enable us to 

transform entire industries in a profound way, with significant potential for reducing environmental impacts.

There are examples of companies that are beginning to experiment with this third dimension of reinvention, rethinking the rules of the most common business models inherited from previous centuries: 

Tackling the third dimension of reinvention: leading examples

Single-use or disposable products are products with a limited life span. One of the most striking examples is that of the giant tire manufacturer 

 has experimented with shifting from the model of selling single-use tires to a pay-per-use model.

 This model aligns economic and environmental interests, encouraging maximum use and life of a tyre. It is also more beneficial for customers, as it provides significant cost savings. For road transport customers, for example, 

good equipment maintenance can reduce fuel consumption by 

 for long-distance transport (or 8 tonnes of CO2 emissions).

 corresponds to products that can potentially last indefinitely, but customers tend to want or own more than one, such as clothes, shoes, kitchenware, etc. Several established companies in the textile and fashion industry are beginning to find answers. For example, 

 - a second-hand marketplace for luxury clothing now valued at $1.7 billion. To take the model a step further,

 one could ask whether it is possible to limit the loss in value of these products over their life cycle, or even increase their value. 

This is the principle of upcycling or Kintsugi, which involves, for example, repairing broken pottery with gold dust.

 can be easily challenged for products that have a long life but are not used very often. It is common for every household to own them, even if their use is not always very frequent, such as specialised utensils, tools or even parts of the home. 

monetising the unproductive and little-used spaces of a household

. The platform creates new suppliers and customers of rental spaces by monetising small rental units, such as the provision of a room for a short period of time. The same model of sharing and mutualisation applies to household appliances, with tool rental platforms such as 

Major challenges such as the climate emergency and environmental degradation require profound and systemic transformations. And this reinvention must be tackled on three dimensions - process, product and business model. 

Only by deconstructing the historical models on each of these dimensions, and by questioning the most deeply rooted elements

, that we will start building build these new, more adapted models.

companies must reexamine: What dimension of Reinvention was previously addressed? What results have been achieved? Would it be interesting to go further and tackle other dimensions or perimeters? 

For some industries such as ready-to-wear, automotive or consumer goods, if we don't address the business model dimension, we are not addressing the most important lever and risk missing out on the opportunities for truly meaningful change.

Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy & Sustainability writers, their opinions do not necessarily represent those of illuminem.

Reinvent the business model – the most important lever to tackle the environmental shift

Climate change and environmental shift are becoming one of the most discussed topics in the business world. Yet, unlike past shifts and transitions, the impact and urgency of the situation is no longer just business-based. The challenges caused by environmental and climate degradation have been scientifically proven to be crucial to the survival of not only businesses, but our societies and humanity as a whole.

Climate change and environmental shift are becoming one of the most discussed topics in the business world. Yet, unlike past shifts and transitions, the impact and urgency of the situation is no longer just business-based.The challenges caused by environmental and climate degradation have been scientifically proven to be crucial to the survival of not only businesses, but our societies and humanity as a whole.

Bigger challenges require solutions of a grander scale

When being confronted with challenges of such grandeur, we are being asked to solve problems on a different scale. The environmental shift, therefore, is not the job of some innovative companies alone. It must be examined and studied on a sectoral level, first because regulatory objectives are often defined at this level. Most importantly, because profound changes require the involvement of the entire value chain of a sector - from outsourcing, manufacturing process, anticipation of product’s end-life, business model evolution etc. 

These changes can only be achieved by breakthrough innovations 

- which allow the reinvention of historical products, services and processes.

Different sectors, however, are not facing 

the same level of urgency as well as the diversity of innovation options 

when it comes to the environmental shift. Therefore they do not face the same challenges: the Oil and Gas industry is facing problems with a degree of urgency and complexity different from those of the Automobile or Food & Beverage industry.

In this article, we will address the challenges & bottlenecks faced by different categories of industries, based on the urgency to which a sector must respond to the environmental shift and on the availability of innovation options that they have come up with. 

We categorise these situations into 4 different zones: the Anticipation Zone, the Hazard Ahead, the Chaos Zone and the End Zone.

These different situations generate different needs. Therefore, we propose secondly, a set of innovation options to respond to the situation faced by a sector, including

 (exploring, mapping, deciding, accelerating) and

 (Derisker, Performer, Differentiator, Game-Changer).

The End Zone- Build the way out as fast as possible

The situation faced by the Oil and Gas industry, for example, can be considered in 

, where there is an absolute urgency to come up with transformative business & technological offers. Yet, there are not many viable options due to the inherent dependence of this sector on fossil fuels across their value chain. How should they make the switch towards different activities? Do too many changes create completely different businesses with completely new assets and know-how, or is it possible to leverage existing ones?

Being in the most dire situation of all, the stakes for companies in this situation are extremely high, but not impossible to overcome. In order to progress, one must put the invention activity back to the center, since

 only radically new business models and offers can help open new pathways to survive the situation.

It is worth noting that, despite the high level of urgency, one should make sure to have an exhaustive overview of all existing options. Jumping straight away on the first seemingly “good enough” idea is risking investing energy and resources on less-optimal options, which will lead one to a dead-end.

One remarkable example in the situation of End Zone is 

, initially an oil and gas company in Denmark. In 2009, around the time the COP15 was hosted by Copenhagen, 

 prepared a strategy called "85/15 vision" - shifting from 85% of their fossil fuel-based activities to a 85% renewable energy base. The chosen new core business is their minor offshore wind activity. To raise capital, 

 - including all gas companies, hydro and waste-fired plants, as well as issuing debts. In parallel, through strategic acquisitions as well as quick tests and implementation of a “cost-out” program allowing a 60% cost reduction of offshore wind, the company was able to scale up their new core business incredibly fast. In only 10 years, they became the 

, with 88% of their produced energy being renewable. Its finances benefited greatly from this shift as well, coming from a deficit of 1,6 billion euros in 2012 to a stock valuation of 56 billion dollars in 2020.

The mindset needed to power this fast shift is that of a 

, whose mindset aims at designing a radically new model that fundamentally transforms the business and orchestrating ecosystem transformation. As the ambition is high, this work must be done by the joint force of the whole company - from 

The Anticipation Zone - Identify your future playgrounds

The opposite of the End Zone, companies in this situation do share a desire to take a stand in the environmental shift. Yet, due to the lack of urgency and hence viable options, they struggle to balance between communication and concrete actions and risk being trapped

To get out of this race, it is often the responsibility of

 the Strategy, Innovation, Marketing or CSR director

 to identify the ambition of the company towards the environmental shift. This can be done by closely monitoring potential disruptions that could put it at risk in mid and long-term, and by exploring new playgrounds to create key future offers.

An interesting example in this situation is

, a French-based multinational corporation specialised in luxury goods. Since 2015, the Group has prepared a 2025 Sustainability Strategy, with the reasoning that any paradigm shift will take time, and a 10-year exploration and development will allow them to create compelling playgrounds. The strategy includes: a commitment to reduce raw materials’ environmental footprint by the initiative Environmental Profit and Losses accounts (EP&Ls); an effort to explore technological breakthrough innovations by investing in R&D with universities, and most importantly, an effort to design new business models driven by breakthrough innovations. The aim is two-fold: to reduce their environmental footprint by 40% across the entire supply chain by 2025 and to lead the industry standards and secure their leader position.

, where one must obtain a very good understanding of the upcoming transformations and their potential impacts on its ecosystem, in order to carry out an effective technological and trend watch. This extensive understanding also allows one to detect as early as possible the weak signals - consumer awareness, changes in regulations, positioning of new players etc. - which would indicate an exit of the whole sector from the Anticipation Zone to a more pressing situation.

The Hazard Ahead - Take down your invisible wall

, there is not yet an immediate urgency but not yet viable options. This case can be applied to the situation of the Packaging or Manufacturing sector, where the regulations to reduce their environmental impact are on the way to arrive in mid-term. To keep up with the increasingly ambitious environmental performance objectives, their R&D and Innovation departments have long been developing solutions, but are facing what we call “the invisible wall of R&D”. This happens when we keep optimising incrementally a product or service or process throughout the years. Yet, the more we advance, the lower the optimization gains, until we exhaust all possibilities of significant optimisation.

To break this wall and obtain another high level of optimisation, disruptive innovation is the only solution. Meanwhile, as the development of new disruptive systems often takes years, the design of radically new options must be started now, or actors in this situation risk not meeting upcoming regulatory constraints imposed by the Government and other regulatory bodies.

, who are at the forefront to observe future’s disruptions. That being said, before this reinvention effort, one must assure that everyone in the company understands that a collective effort is required, and therefore prepare adapted organisational models to put these breakthroughs on the market as fast as possible.

) in 2008. Driven by European Objectives to reduce Greenhouse Gas Emissions, the CEO then set a target of reducing the fuel consumption of its turbines by 35% by 2030, initially criticised as an unattainable target as "beyond the laws of thermodynamics”. Despite strong internal reluctance, he launched the “Propulsion 2030” program, piloted with the 

, involved more than 30 experts over the period of 6 months and gave rise to a “commando team” of innovators. As early as 2009, the exploration phase led to the emergence of concepts with promising potential, varying from 12% upto 

A mindset to adopt in this situation is that of 

, who develops and implements cutting-edge technologies that drastically improve the performance of their core activities. They do this by assessing the potential options in a fast test-and-learn cycle and creating suitable landing zones for the most viable options based on their singularities.

The Chaos Zone - Decide and accelerate the most valuable path

In the opposite situation from the Hazard Zone is 

, which is characterised both by the urgency and the confusing abundance of options. The Automobile industry can be one of the examples in this zone. 

There is an immediate urgency while there exists lots of different viable options.

 Actors in this industry are juggling a wide range of technological topics: while electrical vehicles seem unavoidable, plug-in hybrid, natural gas, hydrogen and fuel cells are tempting nonetheless. As these options are based on very different technologies and infrastructure, companies cannot invest in all of these directions at the same time. On the other hand, the answer might also lie in a shift of business models, such as car-sharing, mobility-as-a-service or car-on-demand. It is not an easy task to know which should be the right direction to invest in, or if they are still missing out on more disruptive ideas.

Actors in this zone find themselves having many projects at hand to invest in without a global vision, while constantly afraid of missing out. The situation is delicate because while it is not advised to put all eggs into one basket,

 it is impossible to invest in everything at the same time. 

To get out of this situation, it is necessary for

 the Innovation, R&D and Strategy directors 

to map all the existing options to date, test their viability as quickly and economically as possible and then select few most valuable paths, according to their company’s ambition and positioning.

Coming back to the example in the Automotive industry. As individual vehicles represent 

 of all C02 emissions in transport in Europe, automotive companies are under pressure to abandon combustion engine vehicles and quickly develop new alternatives out of many technological and business model choices at hand. So far, safe bets are being made in this sector. For example, 

continues their hybrid fleet, while investing in electric vehicles with batteries, rechargeable hybrids and hydrogen. Meanwhile, 

 took a step further and made an announcement in March 2020 to 

, while phasing out hybrids and not investing in hydrogen fuel cells.

Looking back at the recent history of this sector, one can find inspirations with the example of 

, who paved the way for electric vehicles and 

, who created the most successful car-on-demand platform. A common trait of these two companies is a clear and innovative value proposition, which allows rapid scale-up to take the lead in the playground they created. Can the same stories be replicated in the case of established automotive companies?

is much needed, whose focus is to position itself in a new value chain or an emerging ecosystem. Rapid development and industrialisation is also a driving force behind this strategy, obtained by leveraging their current assets in order to quickly launch high-visibility innovations.

Despite the increasing efforts, we are only in the beginning of an exhaustive and long-haul transition towards a more sustainable future. As proven in previous periods of human history, 

innovations and mindset leap are what needed to shift the status-quo.

 To replace the short-term and fragmented vision in which our industries have been operating since the 19th century, industries must aim at creating breakthroughs - a leap - towards a more long-term and holistic change that our time calls for.

This starts first with a clear understanding of where your sector and your company is located

 and precisely how the environmental shift is affecting the future of your business. In a second time, comes the effort to adopt the right ambition mindset and most importantly, 

deploy focused actions to bring about breakthrough innovations to meet environmental objectives in the fastest way possible.

This article was originally published in 

uture Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy & Sustainability writers, their opinions do not necessarily represent those of illuminem.

Environmental shift: which innovation strategy for your sector?

, she has one obsession: to drastically reduce the environmental footprint of industries. To achieve this, she offers her clients Stim’s expertise in disruptive innovation and innovative design methods to help them reinvent themselves in the face of the ecological emergency.


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Auriane Clostre

Auriane Clostre

Environmental shift: which innovation strategy for your sector?

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