Despite having been around for 30 years, never before has eco-design become such a popular philosophy of design. Companies are either being praised or criticised if they present eco-design labelled offers - it is either a good push in the right direction towards a more sustainable future, or it is greenwashing. 


Colette

Despite having been around for 30 years, never before has eco-design become such a popular philosophy of design. Companies are either being praised or criticised if they present eco-design labelled offers - it is either a good push in the right direction towards a more sustainable future, or it is greenwashing. As business leaders, it is important to navigate among these noises: what are the limitations of eco-design, as used today? Will it bring a differentiation factor or will it drive up the production cost?
<h2>Eco-design as used today is counterproductive</h2>
Let&rsquo;s look at the case of a multinational food and beverage company, one of our clients. As plastics and plastic packagings for food and beverages are under scrutiny in Europe, the Strategy and Innovation team started to explore different packaging materials. One of the ideas was to use aluminium - which is recyclable and gives a luxurious touch to the product. They spent 12 months conducting studies and surveys to choose the perfect test subject, and then another 12 months to replace the plastic packaging with a super thin, recyclable aluminium one.
However, aluminium packaging is too expensive to produce. This drives up the production cost as well as the end customers' purchase price. The team, therefore, switched towards a design-to-cost approach: they spent another year studying the different product shapes that could minimise the production cost while keeping the new aluminium packaging. A new oval shape was proposed to replace the current cube shape, which drove the production cost of each unit down to 10%. Yet, this new shape caused another problem for stacking and storing. Logistics-wise, this is not optimal.
This is the case of one of our clients, yet it is also the situation of many others. These eco-design practices didn&rsquo;t work because the team had started solving the problem with a mono-parameter approach. They went from replacing an old material with a new one to redesigning with constraints (design-to-cost, on top of a new type of material). With constraints upon constraints, the solution space ends up being empty.
<img src="https://illuminem.b-cdn.net/articlebody/b61ae2a609cc355a7f6595ff38a287d6d190d0c1.png" alt="Figure 1: With a mono-parameter approach, one is adding constraints upon constraints, and hence comes up with impossible solutions to fit in the current system (StimShift, 2022)." />
Here&rsquo;s another example. The innovation team of this multinational cosmetics company wants to reduce the amount of raw material used in their creme containers. The newly-designed concept was not accepted by their brands, as the new containers are much lighter and hence, do not give a luxurious feel to the product. Finding the perfect compromise between environmental friendliness (removing raw materials) and a luxurious feel (adding more raw materials) seems to be a puzzle that is almost impossible to solve. This dilemma has been occurring more often than not. Despite its good intentions, eco-design as used today, in most cases, often leads to unsatisfying solutions. The problem here is that teams approach a design problem with narrow-defined design parameters: &ldquo;which material is more &ldquo;sustainable?&rdquo;, &ldquo;how to reduce the amount of raw material used?&rdquo;... while trying to fit these new concepts into the current systems - the same business models, the same codes of consumption, the same stakeholders with the same needs and demands.
<h2>What is the eco-design of tomorrow?</h2>
To break free from this limitation of current eco-design practices, it is important to opt for the mindset of designing to reinvent. Let&rsquo;s take the example of our other client in the cosmetic industry, who also wished to reduce the weight of the containers, hence the amount of raw material. Instead of directly trying to solve this problem using narrowly-defined design parameters, we opted for an extensive exploration of possible concepts. Any characteristic of the current design can be challenged: the shape, the way users interact with the container, the traditional elements, the way these containers are stocked and transported and most important of all, the values perceived by end users. It was necessary to challenge the codes of luxe: less doesn&rsquo;t mean low-cost, cheap-looking products. Simplicity can be luxurious, purity can also mean lush and desirable.
With this new code of luxe introduced, the company has created a new system, in which a lighter, &ldquo;purer&rdquo; cosmetic container can be possible and perceived as desirable by the clients.
<img src="https://illuminem.b-cdn.net/articlebody/fbb8560504898affde1075ee70f1d6708e4c9dc4.png" alt="Figure 2: A multiple-parameter approach allows a system shift: one designs possible solutions for a new desirable system (StimShift, 2022)." />
Here&rsquo;s another example to illustrate this mindset of designing to reinvent. The Innovation team of this international premium pet food manufacturer called for us with a clear mission: creating radically new products that allow a reduction of 80% of the environmental footprint.
To reach such a high ambition, the team was ready to challenge the whole system (i.e. products, processes, consumer habits and upstream supply chain). The exploration resulted in 3 concepts allowing a 50 to 80% reduction of the environmental footprint, each with descriptions of their completely different business models, value propositions and production techniques. These 3 concepts are being tested and validated to replace the existing products and processes by 2030
If we had started the project by applying the current mindset of reducing and replacing, we would have gotten stuck with impossible solutions, incompatible with current systems and therefore would never get to the development phase. The change of mindset is critical: from a very narrow set of design parameters such as reducing and replacing, towards a broader ambition of designing to reinvent, in which possible, sustainable and desirable solutions can be allowed to happen.
<h2>Conclusion</h2>
Business leaders today are being asked from all fronts - regulations, shareholders and clients - to develop more sustainable offers. Therefore, it is essential to get rid of the mono-parameter approach only related to the environmental dimension when it comes to the design and development of new sustainable systems and adopt the design to reinvent mindset.
This mindset can bring out incredible differentiation and game-changing opportunities. Companies, in this case, don&rsquo;t just aim at doing slightly better than their competitors by optimising some elements of the current system but create an entirely new set of codes and systems, ones that are more desirable and will become the industry&rsquo;s new standards.
Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.

Eco-design: a differentiation factor or a dead-end?

Being a good business leader can mean a lot of different things. If we search for a definition of a “good business leader” on Google, there are more than 740 million search results. Among all the noises of latest studies and surveys, we believe there is only one quality that sets apart a great business leader and executive from the good ones: do they have a vision or not?

Frederic

Being a good business leader can mean a lot of different things. If we search for a definition of a “good business leader” on Google, there are more than 740 million search results. Among all the noises of latest studies and surveys, we believe there is only one quality that sets apart a great business leader and executive from the good ones: do they have a vision or not?
Let us not confuse vision with business strategies and strategic planning. All Chief Executives have a business strategy and roadmaps to help realise them. But strategies and roadmaps are not visions. They are short and mid-term plans (from 5 to 15 years) to reach a specific goal.
For example, Estée Lauder designs new product lines that align with <a href="https://www.elcompanies.com/en/our-commitments">their stated commitments</a> of reducing plastic packaging, celebrating different skin colours and complexions, or sourcing from more inclusive purchasing programs. These strategies look promising to their clients and investors. Yet, one cannot deny that they are born out of necessity to answer to upcoming regulations and laws and the emerging demands from clients and potential clients. One way or another, a company like Estée Lauder or any other cosmetic company will have to prepare themselves for these roadmaps. As necessary as they are, these strategies are not business visions.
A proper business vision, on the other hand, surpasses current constraints and conditions. It aims at creating a lasting organisation whose presence contributes to the betterment of societies and the environment in which it operates. To examine whether you have a business vision, here’s a set of simple questions:
<ol><li>How will your business be perceived in the next 25 years? 50 years? 100 years?</li></ol>
<ol><li>What cause and legacy will your company and you help contribute in the next 100 years?</li></ol>
<ol><li>If your company disappears tomorrow, how could that affect humanity in the next 100 years?</li></ol>
If you don’t have an answer to any of these questions, you don’t have a vision yet, and it might be time to build one.
<h1>What is a vision?</h1>
As you can guess from the questions above, two essential elements make up a business vision that can create a long-lasting company. First, it is a set of things, causes and legacies that inspire you as a business leader. These are your aspirations, things that drive you and make you wake up in the morning. Second, they are also a part of a cause and a collective endeavour for the greater good. This way, your vision can inspire others to onboard with you - your clients, your employees and talents, your investors etc.
<img src="https://illuminem.b-cdn.net/articlebody/f6dd7391b4f316155776741ab4a46fdf401f0d21.png" alt="Figure 1: A Ven Diagram showing the intersection to build a business vision for a long-lasting company: personal aspirations and a cause for the greater good.">
The second element is frequently underestimated, yet it is precisely the aspect that ensures that your vision and your company will last in the next generations of employees, clients and investors, even if it is no longer you who leads the way. Patagonia and its purpose of <a href="https://eu.patagonia.com/gb/en/ownership/">having Earth as its only shareholder</a> have been praised worldwide in September 2022. Debates on the retail nature of the business and its environmental impacts aside, this vision will inspire many clients, talents and investors and help secure the company’s position as one of the industry’s leaders for many years to come.
The original vision of Steve Jobs for Apple was “To make a contribution to the world by making tools for the mind that advance humankind&quot;, which has inspired generations of designers, engineers and developers, as it involves a legacy that is larger than the life of the company itself. Since Jobs passed away in 2011, the vision has turned towards “To bring the best user experience to its customers through its innovative hardware, software, and services”. This new vision is no longer attached to a greater good but focuses solely on its customers and offers. Only time can answer the effect of this change, yet one thing is for sure, the new vision is much more short-term, matter-of-factly, and hence, less desirable.
<h1>How to build a vision?</h1>
The building process of a vision can happen differently from person to person, yet can be jotted down into two main steps:
<h2>Step 1 - Expansion: search for new horizons</h2>
To design a long-term and inspiring vision, you must search for inspiration from areas far from your current scope of operation. Staying within the studies and analysis of your industry will limit your imagination and hence only give you short-term, matter-of-factly ideas. Instead, the question at this stage is, “what are the topics and subjects that drive me, and are parts of the most existential questions of our society?”. To get inspired, you are encouraged to search for different materials such as philosophy, science fiction, and essays on virtually no limitation of topics.
Once you judge that the exploration’s results are satisfactory, the next step is to distil what you have learnt into two areas - your aspirations and the cause for the greater good and find the junction between these two elements to draw up your vision.
This exploration might continuously last for several months or days in a focused and intentional manner, depending on your personal preferences. For those who have zero time to search for inspiration due to their hectic schedule, it is compulsory to decide to “stop” the time and create a time-space of a few hours or days in which you can entirely focus on finding inspiration.
<h2>Step 2 - Execution: prepare the foundations for your vision</h2>
Once the vision has been defined, the next step is to prepare the foundations to make it a reality. The question to ask now is, “what are the capabilities of my company and myself that can help make this vision a reality?”. As the question suggested, you are expected to define a) the strategic and differentiating capabilities of you and your company to execute this vision - what “superpowers” do you and your company have, compared to the rest of the industry, that are instrumental in concretising this vision? and b) the strategic and vital resources needed, such as talents, investments, a different skillset etc., that would help accelerate the execution of your vision.
For example, the purpose of LEGO is “&#x27;to inspire and to develop the builders of tomorrow”. Despite a world in which most kids are now playing video games, the 90-year-old Danish continues the simplicity of their products’ components as plastic building bricks while hiring the best designers to create curious and daring themes and imaginaries and launching new collections every year. This way, the “small giant” continues to enjoy extreme loyalty from generations of customers and increasing revenues (27% annual growth in 2021). They have earned a place in shaping the minds of future builders.
<h1>Conclusion</h1>
A recent study by McKinsey showed that the average lifespan of S&amp;P 500 companies dropped to<a href="https://www.imd.org/research-knowledge/articles/why-you-will-probably-live-longer-than-most-big-companies/"> less than 18 years in 2016</a>, compared to 61 years in 1958. It is forecasted that “75% of the companies currently quoted on the S&amp;P 500 will have disappeared” in 2027, either because of buy-outs, M&amp;A or bankruptcy.
Businesses of our times are undoubtedly designed to be short-lived, answering demands constrained by current conditions and then disappearing. As a business leader, one can continue down this path and be contented with this setup. Or, they can decide to change the course: becoming an organisation, an entity, an enterprise that lasts and helps solve the most crucial puzzles of our societies. This decision to change identity - from a fleeing entity to a long-lasting, responsible and desirable one, would be the first step in creating a legacy worth praising and remembering for generations to come.
Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem.

CEOs, do you have a vision?

Businesses are being asked from all fronts - clients, employees, stakeholders and policymakers - to propose a new industrial model that is more desirable, more daring and more respectful towards the environment and social well-being. This is, by no means, a simple task, because of two main obstacles. 

Businesses are being asked from all fronts - clients, employees, stakeholders and policymakers - to propose a new industrial model that is more desirable, more daring and more respectful towards the environment and social well-being. This is, by no means, a simple task, because of two main obstacles.
<h1>What is preventing you from creating a desirable future?</h1>
The first obstacle in creating a desirable future is the fixation on the current business values, which will no longer be relevant to future clients and stakeholders in a near future. Many industry leaders still spend millions each year to stay ahead of the curve, despite the strong signals showing that the market is, however, shifting to another curve.
What constitutes this new curve, then? In a previous article, we have provided a <a href="https://illuminem.com/energyvoices/03504914-a0d0-4c1b-9624-5c4122584d80">6-value model</a>, listing six new values of tomorrow that could make a brand more desirable: from brand name to intrinsic values, from client-first to people and planet-first, from rapidity to proximity, etc. To help them envision a truly desirable future, we suggest that leaders examine these new values and choose the ones that make the most sense to them personally and to their business.
The second obstacle is what we call “the invisible wall of optimisation”, in which the effort of optimising a faulty existing system will become more and more costly with a result that becomes less and less significant.
<img src="https://illuminem.b-cdn.net/articlebody/d92cdab281dabd05496fd158a01fa18f7c1f40fd.png" alt="Figure 1: Safran Helicoper Engine (previously Turbomeca) and their invisible wall of optimisation (2013).">
The graph shows the case of Safran Helicopter Engines in 2013. The red curve is their optimisation effort in order to reduce the environmental impact of their engine, while the red triangles are the objectives fixed by European regulations. It was clear that the company cannot keep on optimising its existing models. The company’s leaders, therefore, decided to reinvent their products, by redesigning the engine and also parts of the helicopter itself, in order to reach a <a href="https://www.cairn.info/revue-entreprises-et-histoire-2013-4-page-13.htm">50% reduction in fuel consumption</a>.
This “invisible wall of optimisation” applies also to the industrial system as a whole. It is futile to try to change the current industrial machine whose focal point is solely put on productivity and profitability. This design default leaves no space left for the new desirable values. Therefore, businesses must opt for Reinvention in order to create a desirable future based on new values. This is an effort to reimagine, redesign and build new systems by eliminating the obsession with productivity and profitability, while introducing more desirable values, ones that are more respectful, less energy and resource-demanding and more humane.
And yet, not all Reinvention efforts are “born” equal. Some will bring exponentially superior results to others.
<h1>A shortcut to your desirable future: aiming at a 10X result</h1>
In a previous article, we have explained different types of reinvention - product, process and business model. We concluded by saying that the reinvention of the business model is by far <a href="https://illuminem.com/energyvoices/44e4e474-7977-46bf-ae16-262a23b5580b">the most powerful lever</a> in order to reach meaningful environmental and social objectives. All thanks to the systemic transformations across the whole value chain.
But that was in terms of expected results. What about effort? What if to realise a business model reinvention, business leaders will have to spend hundreds of millions of dollars of investments, along with decades of R&amp;D and marketing tests in comparison to other levers?
Here are two good news: first, businesses have already spent hundreds of millions of dollars, spent decades of R&amp;D and marketing tests for way less; and two, the level of desirability that we can achieve is not directly proportional to the level of effort that we have to spend.
<img src="https://illuminem.b-cdn.net/articlebody/566cb1c91a1b24567bd59363b0916effcdcc3841.png" alt="Figure 2: The exponential efficiency of reaching for the 10X result: 10X result does not require 10X effort. Meanwhile, the gray and green zones represent a paradigm shift: the 10X results, very likely, mean a shift in historical models - in which the product/service and process will not stay the same.">
To reach the 10X level of desirability does not mean that companies will have to spend a 10X effort. Danone can spend millions of dollars, years of R&amp;D and marketing to reduce the amount of raw material for single-use plastic packaging (optimisation) for their yogurt products. Or they can spend the same in order to find out the perfect biodegradable replacement for single-use plastic packaging (partial product reinvention) to reach a 2X level of desirability.
Or they can focus their efforts on creating a 10X more desirable vision: creating yogurt products that are based on seasonal fruits and local milk sourcing, which will be distributed and sold locally. Hence without single-use packaging (business model and supply chain reinvention). The product, the process and the supply chain, in this case, will not stay the same, which indicates a massive shift in Danone’s historical models to reach a new level of desirability.
This focus on creating the 10X level of desirability will create transformational results, yet will not demand a much more colossal effort in comparison to other pathways. In addition, not diverging efforts will save time and energy in order to reach the desired goal faster. This applies to individual endeavours as we know them, and also to collective ones such as a company’s vision of a truly desirable future.
<h1>Conclusion</h1>
Once the decision on a Reinvention path is made, the question that needs to be asked is not how to adapt the current business machine to reach a desirable future. It is easy to fall back on the optimisation fallacies, with reasoning based on the constraints of the current system.
The good question, instead, should be how to create a new organisation and mechanism that would allow the development and acceleration of a desirable future. Asking this right question will help business leaders to build the right team capable of such a task and find the right resources to foster the introduction of a truly desirable business vision.
Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem.

Here’s a shortcut to achieve a desirable future for your business

There is no denying that we are living in a turbulent time of fast changes and paradigm shifts. Things that mattered yesterday can be of little value today. The productivity-driven industrial model designed in the 19th century - a model upon which we have built our businesses and societies for the last 200 years is being very much questioned today by the younger generations of consumers. 

There is no denying that we are living in a turbulent time of fast changes and paradigm shifts. Things that mattered yesterday can be of little value today. The productivity-driven industrial model designed in the 19th century - a model upon which we have built our businesses and societies for the last 200 years is being very much questioned today by the younger generations of consumers.
Industry and business leaders of our times, therefore, are being challenged to come up with a vision that is more desirable than that 200-year-old narrative. The clients are asking for more: more respect for social wellbeing, more consideration towards nature, better quality, more equality. More adventures and daring concepts, but more respectful ones all the while.
As clients are becoming more engaged, they expect the same from businesses. According to a study by Deloitte, <a href="https://deloitte.wsj.com/articles/consumers-expect-brands-to-address-climate-change-01618945334">65% of respondents</a> expect CEOs to “do more to make progress on societal issues, including reducing carbon emissions, tackling air pollution, and making business supply chains more sustainable.” These expectations are indeed backed by policy makers, with more and more stringent climate and environment policies. By 2019, there exists a total of 1925 climate change mitigation policies reported by EU Member States (a <a href="https://www.eea.europa.eu/publications/more-national-climate-policies-expected">27% increase between 2017 and 2019</a>).
Indeed, businesses do try to respond to those demands. <a href="https://www.forbes.com/sites/dishashetty/2021/03/24/a-fifth-of-worlds-largest-companies-committed-to-net-zero-target/?sh=5758dba9662f">By 2021, one-fifth</a> of the 2000 largest publicly traded companies had made a &quot;Net Zero&quot; commitment. Surely, promises are one thing and concrete actions must be followed, but this is still one of the weak signals showing that businesses need to shift towards a new narrative to stay relevant in the future.
<h1>The true WHY toward a more desirable future</h1>
Beyond regulations and pressures from clients and policymakers, business and industry leaders do have a more personal interest to shift toward a new, more desirable future. By creating a new narrative of how businesses should be done, leaders are holding in their hands an immense power to shape the society of the future. Either that society of the future continues on this trajectory of the last 200 years, or it could become something else that is more exciting, more daring and yet humane.
No leaders would wake up in the morning and be excited over a goal of a two-fold annual sales increase, or the takeover of a new emerging market. As important as they are, numbers figures are certainly not the drive that inspires us to do what we are doing. The true why lies in the daring visions and ambitions behind: What are the biggest challenges of humanity that we would like to tackle? Why should it be done by us and not by someone else? What is the personal agenda that we would like to turn into a reality?. These visions are the hidden driving force, the reasons that we wake up everyday.
This applies to individuals, business leaders, but also to businesses. A business vision that focuses solely on the sales performance or other productivity-driven KPIs no longer speaks to clients, stakeholders and employees. It does not inspire, and it does not comply with the changes demanded by the market, either.
<h1>Draw me your desirable future</h1>
The question now is: what are the elements that would make a future “desirable”? What is the new narrative, the new story-telling that would inspire your future clients, stakeholders and employees? What would make your brand not only relevant but also desirable?
<img src="https://illuminem.b-cdn.net/articlebody/8b9126853d3e2a3822cc85599bf8937437df5164.png" alt="Figure 1: The 6 Value model for a desirable future, StimShift (2022)">
One important shift might happen when the intrinsic values of a product or a service prevail over the brand name. Procter &amp; Gamble alone, the largest advertiser worldwide in 2020 spent more than <a href="https://www.statista.com/topics/990/global-advertising-market/">8 billion US dollars</a> (equivalent to the <a href="https://www.worldometers.info/gdp/gdp-by-country/">GDP</a> of the entire country of Moldova) to promote their fast-moving consumer goods. In total, the world spends <a href="https://www.statista.com/statistics/236943/global-advertising-spending/">622 billion US dollars to advertise and enhance brand names</a>. What if companies don’t advertise at all because the intrinsic value of their products/services is undeniable? For example, the electric automobile manufacturer Tesla, the iconic Sriracha hot sauces or Supreme, one of the world&#x27;s most expensive clothing brands <a href="https://www.peppercontent.io/blog/brands-that-succeeded-without-marketing">never spent a dime advertising their products</a>, but still enjoy a strong engagement with their consumers and sales revenue is always on the rise, from one year to another.
Another shift in values could happen in the approach of “client-first” vs “society or nature-first”. The obsession with “client-first” of the giant retailer Amazon might become not that desirable in a near future, as <a href="https://jacobinmag.com/2021/12/minnesota-fulfillment-centers-injuries-turnover-wages-bezos">criticisms and accusations of terrible warehouse working conditions</a>, reckless care for drivers and <a href="https://www.businessinsider.com/amazon-delivery-drivers-reveal-claims-of-disturbing-work-conditions-2018-8?r=US&amp;IR=T">their safety,</a> <a href="https://www.aspi.org.au/report/uyghurs-sale">forced labor in China,</a> etc. have gradually become an associated part of the brand. As <a href="https://www.helpscout.com/customer-loyalty/">64% of consumers</a> stated that they have a relationship with a brand because it shares their values, the narrative “client-first” despite all other human and environmental factors, before long, will be not enough to sustain a desirable brand. Meanwhile, Patagonia is on the other end of the spectrum. Their consistent narrative of “planet and people first” has become one of the best-in-class examples of demarketing, product circularity and recyclability and therefore, has created a community of extremely <a href="https://www.peterfisk.com/2019/05/loyalty-beyond-points-patagonia-finds-a-better-ways-to-engage-its-consumers-in-what-they-really-care-about/">loyal customers</a>.
Another example in the clothing industry with a shift from affordability - today’s value to durability - tomorrow’s value could be already observed in Generation Z or Millenials. Being born into the challenges of climate change, biodiversity loss and social injustice, they are emerging as the sustainability generations. The dominant narrative of affordability backed by fast-fashion brands is no longer desirable, with examples found in the events of <a href="https://www.bbc.co.uk/news/business-55139369">Arcadia going into administration,</a> Forever21 filing for <a href="https://edition.cnn.com/2020/02/02/business/forever-21-bankruptcy-sale-brookfield/index.html">bankruptcy</a>, and H&amp;M <a href="https://www.bbc.co.uk/news/business-54369802">making plans to shut 250 stores globally</a>. Meanwhile, the value brand resale market is growing now at a rate of 12% per annum, <a href="https://uk.fashionnetwork.com/news/Luxury-industry-comes-to-terms-with-gen-z-s-appetite-for-collaborations-resale,1091093.html">reaching €31 billion in 2021</a>, fueled mostly by millennials. As value brands offer products with much better durability than fast-fashion brands, this shifting mindset of the younger generations signals a radical change in the narrative that brands should adopt in order to stay relevant.
<h1>Conclusion</h1>
Businesses are asked to “reinvent” themselves all the time in order to stay ahead of their games. We, on the other hand, believe they should stop doing that before figuring out their desirable future first. It is no longer enough to stick to the narrative of productivity and rapidity that has been persisting since the 19th century.
Future clients, stakeholders and employees are demanding a different story-telling, one that is more adventurous and daring, but more respectful all the while. It is the only way for businesses to stay relevant in the upcoming years and step up to become the shapers of our future societies and economies.
Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem.

Is the future that you are imagining for your company desirable?

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. 

Auriane

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 &quot;fix&quot; 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.
<h1>Reinventing to break free from past design choices</h1>
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 &quot;invisible R&amp;D wall&quot;, which is well known in R&amp;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 Reinvention, 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 Umicore 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&#x27;s positioning. A company can in fact play on one or more dimensions of reinvention to drastically reduce its environmental footprint.
<img src="https://illuminem.b-cdn.net/articlebody/4434f3f40708f763b4b9e7104e483f18bbd56849.png" alt="Figure 1: Shows the reinvention process schematic">
Let&#x27;s take the example of a leading European packaging company, with whom we started working in 2019. Our work with the R&amp;D team initially focused on reinventing the manufacturing process, 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 products, 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&amp;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&#x27;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: single use, single buy and individual use.
<h1>Tackling the third dimension of reinvention: leading examples</h1>
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 Michelin, who 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 <a href="https://digital.hbs.edu/platform-rctom/submission/michelin-tires-as-a-service/">2.5 litres per 100km</a> for long-distance transport (or 8 tonnes of CO2 emissions).
<img src="https://illuminem.b-cdn.net/articlebody/cb37700ef06f91e5c062f4881def35308503122f.jpg" alt="Figure 2: Shows the logos of the discussed companies, Michelin, Kering and Airbnb">
On the other hand, the single buy model 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, Kering recently invested in Vestiaire Collective - 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.
Last but not least, the individual use model 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. Airbnb has become a classic example of <a href="https://hbr.org/2021/05/what-makes-an-online-marketplace-disruptive">monetising the unproductive and little-used spaces of a household</a>. 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 Bricolib, Allovoisins or Kiwiiz.
<h1>Conclusion</h1>
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.
To succeed in this Reinvention process, 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&#x27;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 &amp; 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.
<h1>Bigger challenges require solutions of a grander scale</h1>
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 &amp; Beverage industry.
In this article, we will address the challenges &amp; 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 different innovation strategies (exploring, mapping, deciding, accelerating) and<a href="https://www.hbrfrance.fr/chroniques-experts/2019/07/26924-avant-dinnover-definissez-vos-objectifs/"> innovation mindsets</a> (Derisker, Performer, Differentiator, Game-Changer).
<img src="https://illuminem.b-cdn.net/articlebody/56aaec636b4bae19487344593facb409186b8e57.png" alt="Figure 1: Axis of evaluation for the urgency and accesibility of solutions for each group">
<h1>The End Zone- Build the way out as fast as possible</h1>
The situation faced by the Oil and Gas industry, for example, can be considered in the End Zone, where there is an absolute urgency to come up with transformative business &amp; 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 DONG Energy - now Ørsted, initially an oil and gas company in Denmark. In 2009, around the time the COP15 was hosted by Copenhagen, Ørsted prepared a strategy called &quot;85/15 vision&quot; - 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, Ørsted sold eight of their historical businesses - 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 world’s largest offshore wind company, 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 Game-Changer, 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 strategy teams (COMEX, Strategy…) to operational teams (Innovation, R&amp;D, Marketing…).
<h1>The Anticipation Zone - Identify your future playgrounds</h1>
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 in a winless “greenwashing” race.
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 Kering, 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&amp;Ls); an effort to explore technological breakthrough innovations by investing in R&amp;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.
This is the position of what we call a Derisker, 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.
<h1>The Hazard Ahead - Take down your invisible wall</h1>
In the Hazard Ahead, 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&amp;D and Innovation departments have long been developing solutions, but are facing what we call “the invisible wall of R&amp;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.
This work is advised to be assigned to Innovation, R&amp;D and Strategy directors, 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.
This was the situation of Turbomeca (now Safran Helicopter Engine) 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 &quot;beyond the laws of thermodynamics”. Despite strong internal reluctance, he launched the “Propulsion 2030” program, piloted with the C-K Method, 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 40% of reduction in fuel consumption.
A mindset to adopt in this situation is that of a Performer, 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.
<h1>The Chaos Zone - Decide and accelerate the most valuable path</h1>
In the opposite situation from the Hazard Zone is the Chaos Zone, 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&amp;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 60,7% 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, Toyota continues their hybrid fleet, while investing in electric vehicles with batteries, rechargeable hybrids and hydrogen. Meanwhile, Volvo took a step further and made an announcement in March 2020 to <a href="https://www.bbc.com/news/business-56245618">go fully electric by 2030</a>, 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 Tesla, who paved the way for electric vehicles and Uber, 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?
To be able to get out of this Chaos Zone, the mindset of a Differenciator 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.
<h1>Conclusion</h1>
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 <a href="https://t.sidekickopen87.com/s3t/c/5/f18dQhb0S7kF8c83l6W1ngmWp59hl3kW7_k2847sCVdpW3KTcmh1FVGdCVVmN2X81JrGv102?te=W3R5hFj26QkHmW4mKDs-3Cf8rCW3zdYNr1JyNC30&amp;si=7000000000659808&amp;pi=f4413f56-b7a9-48b4-ca30-7e50ad74b095">Harvard Business Review France</a>. Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem.

You can’t miss it!

Anh Nguyen

Anh Nguyen

Eco-design: a differentiation factor or a dead-end?

Recent publications

Readers also like

Want to know more about illuminem Voices?