Organizations can innovate to address environmental and social problems — but they need to build the right culture.
It’s no surprise that many large multinational corporations are paying increased attention to sustainability-oriented innovation (which we’re broadly defining as improvements for social good, not just “green” initiatives).1 Faced with mounting challenges and pressure from governments, nongovernmental organizations (NGOs), investors, and employees to be more aware of the environmental and social impacts of business activities, companies are searching for ways to do things differently while also seeking opportunities for growth.2 As a result, many are attempting to tap into the creativity and entrepreneurial potential of their employees, encouraging them to develop new products, services, or business models that create value for both the company and society.3
Sustainability-oriented innovation isn’t new — researchers have been studying it for more than a decade.4 However, as traditional organizations adopt new technologies and business models, some are finding it difficult to get employees to think like entrepreneurs, which is essential to building an innovative culture that’s committed to solving environmental and social problems.5 To learn what leading companies are doing to address that challenge, we conducted interviews with managers at seven multinational companies recognized for their sustainability activities: AkzoNobel (a Dutch paint and chemicals company), Interface (a U.S. carpet-tile manufacturer), Johnson & Johnson (a U.S. medical products, pharmaceuticals, and consumer goods company), Pearson Education (a British education and publishing company), Koninklijke Philips (a Dutch company involved in health care, consumer electronics, and lighting),6 UBS (a Swiss financial services company), and Unilever (a Dutch-British consumer goods company). (See “About the Research.”) In this article, we integrate the experiences of these companies with findings from prior studies to illustrate what effective sustainability-oriented innovation looks like and to describe how companies can cultivate the entrepreneurial thinking and behavior that will spark such efforts.
What Sustainability-Oriented Innovation Culture Looks Like
Sustainability-oriented innovation takes many forms — everything from the development of new or improved products or services to the creation of new processes and business models that bring benefits to the environment or the society at large.7 While the innovations themselves may or may not be disruptive or radical, the idea is to mitigate the negative impacts of existing solutions or, even better, make a positive impact.