The 7 Keys to Low-Carbon Business Innovation
The 7 Keys to Low-Carbon Business Innovation
With rising energy consumption, a lingering economic malaise and a dearth of climate policy, companies that contrive ways to grow while reducing the carbon impact of their products can not only survive, but flourish despite uncertain times.
That’s the case the Pew Center on Global Climate Change makes in its latest report, “The Business of Innovating: Bringing Low-Carbon Solutions to Market.” The study, released Tuesday, identifies seven best practices that are key to low-carbon innovation and takes a look at how four companies -- Hewlett-Packard, Daimler AG, Johnson Controls Inc. and Alstom SA -- are using them to unlock growth opportunities.
The report's "seven keys" for low-carbon business innovation were distilled from wide-ranging research that included a survey of executives at 35 companies with annual revenues of $600 million to $285 billion and robust R&D budgets. According to the report, companies that are successfully pursuing low-carbon strategies share several of these characteristics:
The 7 Keys to Low-Carbon Innovation
1. Manage policy uncertainty by integrating existing and likely future policies into innovation strategies.
2. Set a clear direction with a firm commitment from company leaders.
3. Focus on multidimensional customer value propositions. For example, low-carbon innovations that not only reduce carbon emissions, but also result in lower operating costs, greater flexibility and other competitive advantages.
4. Create new business models. This is often more important than technical inventions, the report said, because the success of new technology or services depends on a company's ability to re-engineer its business model to launch and support the innovation.
5. Organize or reorganize critical business relationships inside and outside established networks -- a task called "nexus work."
6. Craft robust and resilient innovation strategies. Given that a company's chosen strategy rarely plays out as planned, the report noted, innovation strategies must advance the firm's competitive advantage in the short run while preserving enough flexibility so that the company can respond to changing technology, markets and policy in the long run.
7. Wisely leverage partnerships, investments and acquisitions. Some new technology never makes it over the hurdle that separates scientific breakthrough and commercial success. Established companies can meet the changing needs of their market by engaging in early-stage efforts, and through partnerships, investments and acquisitions integrate newly developed technologies into products and services.
Combinations of the best practices were evident in innovations by HP, Daimler, Johnson Controls and Alstom. The Pew Center's report included case studies of eight solutions devised by the firms. Here are highlights:
HP's Videoconferencing and Managed Print Services
HP, the world's largest information and communications technology, emphasizes energy efficiency and energy innovation through "green IT and IT for green," according to Engelina Jaspers, the company's vice president for sustainability. Of the two strategies, IT for green presents the bigger opportunity to change how people live and work for the better, she said during a Pew Center briefing on the report. [See recent GreenBiz articles on HP's increasing focus on IT for sustainability are here and here.]
HP's Visual Collaboration videoconferencing system and managed print services, the two examples detailed in the Pew Center research, illustrate HP's evolution from a firm focusing on hardware to company that emphasizes solutions. Videoconferencing and print services have brought HP customers substantial savings in costs, use of resources and greenhouse gas emissions.
Daimler's BlueTEC Diesel Technology and Freightliner Cascadia Trucks
Daimler's BlueTEC diesel technology is at the heart of the company's efforts to reduce emissions in widely used commercial and passenger vehicles while working toward an ultimate goal of zero-emissions. BlueTEC is a diesel engine exhaust treatment that reduces emissions of traditional air pollutants, making it possible to use fuel-efficient diesel engines in a variety of cars and trucks, said Jake Jones of Daimler.
BlueTEC is central to the company's efforts to put cleaner, greener heavy-duty trucks on the road and was one of the major green features of the redesigned Cascadia truck that the firm's Freightliner division rolled out in 2007. The company's BlueTEC strategy recognizes that for the immediate future internal combustion engines will hold sway in the commercial and passenger markets until the push for emission-free vehicles reaches a tipping point.
Johnson Controls' Building Efficiency Business and Stop-Start Batteries
Building efficiency and automotive power solutions are two huge businesses for Johnson Controls, as GreenBiz has frequently reported. Like Daimler, Johnson Controls' strategies in both areas represent an effort to capture current opportunities -- for JCI that means retrofits in existing buildings and batteries used in internal combustion vehicles -- while also developing next-gen solutions for the built environment and cars.
JCI is now adapting its techniques in delivering public sector retrofits through performance contracts -- arrangements in which the work is paid for through realized savings with little or no upfront costs -- to the private sector. And its battery business is ramping up manufacture of stop-start batteries. The technology can can improve the efficiency of traditional internal combustion engine vehicles by 5 to 12 percent.
Alstom's High-Speed Rail and Ultra-Efficient Power Plants
French firm Alstom manufactures high-speed rail rolling stock and is developing supercritical and ultrasupercritical high-efficiency steam power plants. Both represent new takes on long-existing technology, though the power plant strategy recognizes an element that many environmentalists, particularly those in the U.S., do not embrace -- the concept of clean coal plants. Here is what the Pew Center report says about the strategy:
"While replacing fossil fuel-based technologies with zero-carbon alternatives represents the best long-term path for significantly reducing greenhouse gas emissions, opportunities for low-carbon innovations that improve existing and widely used products and processes can help reduce GHG emissions today. ... Existing technologies are expected to play the dominant role in meeting that demand for capacity and, as a result, global dependence on fossil fuels for electric power generation and transportation will remain practically unchanged.
"In electricity generation, this demand is expected to outpace the introduction of low-carbon energy sources such as wind, solar, nuclear, and hydroelectric power and, particularly in developing economies, is driving the construction of new coal- and natural gas-fueled power plants."
Robert Hilton, Alstom's vice president of Power Technologies for Government Affairs, acknowledged that the demonstration projects of his firm's next-gen plants are chiefly in Europe and China, but he remained bullish on the prospect of their also coming to the U.S. one day. "We're going to build coal plants in this country eventually," Hilton said during the Q&A session of the briefing on the report. "We advocate that we can make coal as clean as anything else."
The full report by Pew Center on Global Climate Change is available for free download from the organization at www.pewclimate.org/business-innovation/report.
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