It's pretty well accepted now that sustainability is not the key purchase criteria for most customers. Few are going to buy a product or service because it's greener than a competitor's or made by more equitably treated employees if it costs more or doesn't perform as well.
Of course, there are product and service "eco-niches" supported by customers who will buy green despite poorer performance and price. But, with competitors continually strengthening the value of what they provide while increasingly making their offerings more sustainably, eco-niches will come and go
But here's the flip side: Sustainability is a key consideration in attracting and retaining employees. And, it has become an increasingly important factor to shareholders of companies that have significant sustainability risks
So what's the solution? Should you make your operations more sustainable, building your green-cred with employees and shareholders while passing on developing poor returning, eco-niche products and services? Perhaps, but that's a bar many will hurdle soon, if they haven't already in your industry. E&Y's recent survey found that 65 percent of executives planned to invest to "develop new products and services" in response to climate change.
A more compelling approach is to grow your revenue with new products and services by leveraging sustainability taking one or more of the paths I've described below. None of these will put you in a position of trying to sell products to customers based on how green they are or responsibly they are made. All will strengthen the credible link between your company and sustainability that your employees and shareholders care about.
Here are the paths you can follow:
1. Innovate for Sustainability: Improve your customers' sustainability performance.
This path is ideal for B2B businesses that sell equipment to reduce their customers' operating costs by cutting their use of resources and environmental impact in the process. GE has built a $7 billion business selling wind turbines this way. Diversey, a multi-billion dollar leader in industrial cleaning products and services, has introduced innovations that allow it to clean beverage plants and lower operating costs by using 30 percent less water and 60 percent less energy. P&G does the same thing on the consumer side, reducing customer energy costs with cold water washing machine detergents.
Key to success taking this innovation path is to understand your customers' sustainability challenges well enough to develop solutions that help address them in a way that either lowers their costs and or improves their performance.
"Innovating for" is clearly the busiest path for top line sustainability innovation and growth now. And with good reason -- there are tremendous efficiency improvement opportunities available. But, if your product or service has little opportunity to change a customer's sustainability, following this path will not yield the opportunity to benefit them or advantage you.