· Concern over climate change and appropriate government and business response.
· Concern over the availability and cost of energy.
· Concern over the availability of natural resources and environmental damages.
· Concern over increased potential for global pandemics.
· Concern over terrorism and asymmetrical warfare.
· Concern over social needs, human rights and product pedigree.
· Concern over the globalization of business and its impact on society, environment and economy at local and global levels.
These concerns are being addressed by businesses in unique and innovative ways. This past January I met and participated in discussions with 88 global corporations in Phoenix, Arizona as part of the AHC Group’s ongoing Corporate Affiliates Workshop Series focused on its signature leader-to-leader benchmarking for corporate strategy. The 2-day executive workshop yielded for me, another intriguing look inside the drivers of corporate strategy and how leading firms are addressing issues of consequence to their customers, employees, suppliers and shareholders. One of the major themes that surfaced rapidly among several firms was the level at which they respectively are dealing with business risks like carbon, climate change, natural resource and material availability, employee health and safety and product pedigree.
From my perception the leading firms are focusing not on “green branding” of products but a well conceived internal effort to innovate new
products and services that can reduce their business risks and deliver value to their firms’ bottom line and corporate reputation. The issue of product claims and legitimacy is very important for leading firms, thus they are not riding a “green wave of optimism” for the sake of being perceived as a green company. Rather, most firms are looking at their technology, employee and product strengths as well as partnerships and identifying opportunities for innovation. And in most cases the new innovation is based on a business risk turned into opportunity. Leading companies are seeking market access and leveraging their expertise to create new businesses that begin to address complex social and environmental challenges like carbon reduction, energy efficiency or end-of-life product reclamation, reuse, recycle or remanufacturing.In the short case example below I highlight how IBM is focusing on new products and innovation for solving tough challenges in this complex world. While IBM was not part of the 88 firms I learned from at the AHC Group workshop in Phoenix, their approach to new products and innovation is similar to what’s happening at some of the largest electric utilities, building products, energy, chemical, manufacturing, computers/electronics, defense and aerospace, consumer products and healthcare/pharmaceutical companies of the world.
An Innovation Business Machine – From Eco-Patents to Big Green Innovations, IBM is building on its technology portfolio to capitalize on social needs.
Perhaps IBM should be called Innovation Business Machine. With a commitment to bring “game changing” innovation to market, the $91 billion giant is delivering on its promises. In December 2007 IBM announced Five Innovations that Will Change Our Lives Over the Next Five Years. Among those five innovations were “smart energy technologies” that will allow consumers to better manage their personal “carbon footprint” through intelligent appliances and smart electric grids.
On February 1, 2008 IBM announced the creation of its “Global Center of Excellence for Water Management” in Amsterdam, the Netherlands. Focusing on two global business risks, climate change and water, the center of excellence will draw on “…IBM consulting,
technology and research expertise, and will help IBM's public sector clients worldwide to develop enhanced prediction and protection systems for low-lying coastal areas and river deltas.” The IBM Center of Excellence will help the more than 60% of the world’s population that live in coastal and low-lying delta regions and that may be impacted by climatic influences on water in those regions.IBM’s Center of Excellence is part of its Big Green Innovations initiative which is focusing on commercializing new products and services across four strategic areas: advanced water management, alternative energy, carbon management and computational modeling. Each of these four targeted areas stems from an existing core IBM technology. For example, one of IBM’s ‘big green innovation’ ideas is for advancing the energy efficiency of large data centers through its collaboration in the Green Grid.
IBM has committed an investment of $100 million toward its ‘Big Green Innovations’ initiative and collaborative. With a focus on emerging environmental management opportunities, IBM developed its ‘Big Green Innovations’ initiative as a platform to design and develop products and services (and 10 new businesses) that address global environmental and social challenges in what they call “the latest step in a journey that began 35 years ago”.
Continuing its theme on green innovation, IBM recently announced its Eco-Patent Commons initiative, a program designed to provide the public domain access to dozens of environmentally responsible innovative patents developed by leading corporations. The intent in providing the public access to these patents is to spawn a new era of ingenuity, innovation and development of new products and services that also have a social and environmental purpose. IBM announced the Eco-Patent Commons initiative with the World Business Council for Sustainable Development (WBCSD). In addition, several peer-corporate leaders are a part of the IBM Eco-Patent Commons initiative including Nokia, Pitney Bowes and Sony. By sharing innovations within the public domain these leading corporations seek to enhance and accelerate sustainable development in a resource constrained world. Membership in the Eco-Patent Commons initiative is open to all individuals and companies pledging at least one patent. More information is available at the Eco-Patent Commons website hosted by the WBCSD.
IBM’s Eco-Patent Commons initiative is just the type of innovation that environmental business expert Bruce Piasecki uncovers and examines in depth in his book, World Inc.: When it Comes to Solutions - Both Local and Global - Businesses Are Now More Powerful Than Government. Piasecki notes, “Fifty-one of the world's top 100 economies are now corporations, and more than 40% of world trade now takes place within multinationals. As power moves into the hands of corporations, the world is looking to business instead of government to solve its problems. The corporations that can best address social issues by creating superior products will thrive and profit in this new world.”
As one of the larger corporations in the world IBM seems to be using its power and influence to solve social and environmental challenges in partnership with other peer companies and leading organizations like the WBCSD. IBM seems to have launched its product, service and R&D portfolio into what Piasecki calls “social response capitalism” a new and advanced form of capitalism that delivers shareholder value on product performance, quality and price but also a 21st Century requirement for all corporations – value toward society and social needs.
Forward thinking partnerships “on sharing ideas for the greater social and business good” like IBM’s Eco-Patent Commons are rapidly becoming the new turf on the expanding playing field by which fortunes will be won or lost and as both shareholder and stakeholder value is created by business.
What firms, like IBM, do you see as new social response product development and innovation leaders of market and global consequence tackling global carbon, climate, resource and health risks?
Mark C. Coleman
Senior Associate & World Inc. Case Leader, AHC Group, Inc.
Mark@ahcgroup.com
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