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Guest post from Michael Lenox:
Humanity faces a number of critical sustainability challenges, global climate change chief among them. In my new book with Ronnie Chatterji, Can Business Save the Earth? Innovating Our Way to Sustainability, we assert that to address these challenges requires substantial, disruptive innovation across a wide number of sectors. Electrical vehicles in transportation. Renewable energy in electricity generation. Electrification in heavy industrials. And the list goes on.
Such innovation cannot and will not happen without the active involvement of the business community. Innovation is more than invention. It is the creation of commercial viable products and service. Markets are where the value of innovations are articulated. Innovation requires creating value that exceeds the cost of production. Business, and markets more broadly, are often the catalyst for innovation and are thus a critical players in our innovation challenge.
However, the burden of our sustainability challenges does not solely rest on business leaders. Rather than berate business for inaction or implore them on the business case for sustainability, we assert that we need to think of the broader institutional envelope – the system – that shapes and influences how markets function. This systems perspective highlights, in the famous worlds of Pogo, that “we have met the enemy and he is us”. Or put more positively, we all have a responsibility to bear and a role to play.
This suggests a new type of leadership – one that Jeff Walker and his coauthors have referred to as “shapers”. Shapers understand that one must look for levers to influence the system – to shape it to desired ends. Command and control does not work. The innovation system has a momentum and logic of its own. To increase the innovative output of business, especially the output of sustainable technologies, requires pushes and nudges along the edges. Individual action may seem ineffectual, but collectively such action can have a profound impact on how the system behaves.
Business leaders clearly have a role to play in driving innovative new sustainable technologies that disrupt current markets. So do customers that demand green goods and services and investors who seek out investment opportunities in sustainable technologies. Government can both help create demand “pull” through pricing interventions and regulation and technology “push” by subsidizing R&D and funding university research. Social ventures and NGO’s, of all shapes and sizes, can help catalyze the innovation ecosystem, for example, by creating market transparency through labeling initiatives or motivating corporate action through boycotts and protests. Universities and national laboratories can provide the basic research that drives new technologies. Entrepreneurial communities can incubate nascent technologies and ventures through accelerator programs and crowdfunding. Banks can create green bonds and other novel forms of investing in sustainable technologies. And so on.
Ultimately, each one of us has an opportunity to lead, to shape the institutional environment so as to catalyze the innovation ecosystem to generate more of the disruptive sustainable technologies that we need to meet our sustainability challenges. Time is of the essence. Only through collective leadership can we meet the challenges before us.
Michael Lenox is co-author of Can Business Save the Earth? and Tayloe Murphy Professor of Business Administration and Senior Associate Dean and Chief Strategy Officer at the University of Virginia’s Darden School of Business. His work has been cited by the New York Times, the Financial Times, and the Economist. In 2009, he was recognized as a Faculty Pioneer by the Aspen Institute and as the top strategy professor under 40 by the Strategic Management Society. In 2011, he was named one of the top 40 business professors under 40 by Poets & Quants.
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