‘Business of Innovating’: Keys to success

This blog post is co-authored by Engelina Jaspers, Vice President, Sustainability at HP

How can we address climate change and achieve robust economic growth? Innovation in low-carbon technologies is critical, and businesses are the engines of innovation. With this in mind, we—the C2ES and HP—set out to explore how leading companies successfully execute low-carbon innovation strategies, with the aim of sharing lessons learned.  Today we release the key findings in a new report, The Business of Innovating: Bringing Low-Carbon Solutions to Market, which will also be the focus of a conference in Atlanta on October 25-26.

Our partnership leveraged the insights and expertise of C2ES staff, members of the Center’s Business Environmental Leadership Council (BELC), and HP’s commitment to applying innovative technologies and approaches to environmental challenges. The report’s author, Andrew Hargadon, Professor at University of California, Davis’ Graduate School of Management, studied the BELC members and other leading companies, including an in-depth study of eight low-carbon solutions from HP and three other companies: Alstom, Daimler and Johnson Controls. The report outlines the barriers particular to low-carbon innovation efforts and provides a set of seven practical lessons for companies.

We set out to better understand the opportunity for innovation that both drives business growth and generates solutions to the climate change challenge. We explored the barriers that companies face when developing and deploying low-carbon technologies, products and services, and how companies think about innovation in the context of energy and climate change. We learned that efforts to reduce greenhouse gas emissions are spawning new policies, technologies, and markets that are altering the competitive landscape of entire industries. We also learned that all innovation entails risk-taking, but that low-carbon innovation faces some unique risks. For example, today’s policy environment, particularly in the United States, creates an uncertain environment for business decision-making. Yet corporate executives must still make decisions that affect their company’s strategy and competitive opportunities for years to come.

We found that forward-thinking companies are developing innovative approaches to managing these risks and uncertainties. Leading companies are strategically pursuing low-carbon innovations to hedge risks, capture new business, and stay competitive with emerging markets and technologies. Low-carbon technologies and solutions reduce GHG emissions and provide opportunities for revenue growth, product leadership, and market share. For example, HP Labs continues to develop the next generation of sustainable IT ecosystems including the pursuit of a net zero datacenter.

One barrier to more broadly deploying low-carbon innovations is what Dr. Hargadon calls the “breakthrough bias.” Public investment and policies toward low-carbon innovations have often focused on scientific discovery and technological invention—based on the assumption that breakthroughs would set major energy transitions in motion or uncover a “silver bullet.” Yet this pursuit of radical breakthroughs diverts attention away from commercializing known solutions which can be ultimately more disruptive. In fact, incremental advances relying on existing technologies—deploying “silver buckshot”—may have far greater impacts on business activities and behaviors. For example, HP’s Managed Print Services reduces an average company’s energy consumption from printing by 30 to 80 percent and overall printing-related operating costs by about 30 percent. Or if all makes and models of printers, notebook and desktop PCs, displays and servers shipped in 2005 were recycled and replaced with new HP energy-efficient models, customers could save approximately $10.4 billion in energy costs, and avoid more than 40 million metric tons of CO2 emissions within a year.

In fact, much of a new technology’s value and potential for GHG reductions aren’t realized until after it has been put into use. When successful iterations of a low-carbon innovation do take hold, they spawn new business models and technology platforms, and transform markets. This in turn spurs new investments in complementary innovations.

Huge energy and GHG savings are possible with existing low-carbon technologies. The limiting factor thus may not be our ability to invent novel technologies, but rather to deploy and integrate those we have. The challenge for many executives: to invest in advancing and bringing to market known solutions despite the allure of countless “breakthroughs” that may be just around the corner. HP recommends that its customers unlock the full potential of energy by choosing energy-efficient products, consolidating with solutions that streamline or displace inefficient products and processes, and controlling energy use with solutions that intelligently manage consumption.

This is just one of several challenges that low-carbon innovation strategies must overcome. Environmental effects and related policies will change energy prices, market preferences, and the competitive dynamics of seemingly distant markets, sometimes with surprising speed. Over the long term, those companies most able to adjust themselves and tailor their offerings to the new conditions will prosper. The practices described in this new report capture the experience of companies already developing low-carbon innovations to compete in their own markets. Actions taken today can help businesses thrive in industries and markets that are shifting in response to climate change, creating competitive advantage and growth opportunities that will last for years to come.

Judi Greenwald is Vice President for Technology and Innovation at C2ES.

Engelina Jaspers is Vice President, Sustainability at HP