What Henry Ford can teach us about sustainable innovation

Henry Ford faced the same challenge in the early 1900s that people examining sustainable business face today. Ford saw opportunity in a market where cars were a niche product -- expensive and for the rich only. Why not, he reasoned, innovate to lower production costs while raising factory workers' salaries? This innovation concurrently would create a new product, new pricing and a new buyer group.

Today, we see niche products, and companies, that have attributes of being eco-friendly, fair trade or even holistically "sustainable," in terms of being consonant with and not undercutting the structure and function of ecological and socio-cultural as well as economic systems. The opportunity for sustainability-focused business players is to make a seismic leap in terms of innovations in product design, materials, supply chains and production processes as well as business models, as Bill McDonough laid out in his recent article.

Why not view all of these environmental and social business issues -- from product design through sourcing input, user groups and re-use -- in the way that Ford did as an integrated problem space that requires an integrated solution?

Of course, some already do view the issues in this way and inspirational work is underway. For example, Interface long has been, and rightly so, offered up as an example of a company thinking about -- and working on -- its sustainability challenges holistically. Newer entrants are crafting their own approaches that offer great promise by focusing in on key leverage points, such as Puma's development of an "environmental profits and loss" (EP&L) statement that likely will motivate avoidance, mitigation and possibly offsetting of impacts in the future. Rio Tinto and the Walt Disney Company have set "net positive impact" corporate goals associated with biodiversity and ecosystems, with the potential for whole system review and innovation.

Yet the number of corporate decision-makers who are thinking expansively about their impacts and opportunities for innovation remains limited. Simply put, much of the current work in the private sector is quite humble in its ambition and reach. Few of today's corporate environmental and social goals -- and the associated activities -- are as expansive as the Henry Ford full-system innovation approach. Ford and his team re-designed the product (which became the Model T), as well as the manufacturing process, and addressed the (lack of) buyers by raising pay for its own employees. Yet few corporate leaders rise to this level of a challenge in their thinking about business opportunities.

Perhaps more leaders will have to do so in the near-term, as a growing number of companies are (or will soon be) struggling with questions from investors about risk posed from climate change and other environmental issues, following on a recent Trucost report on natural capital and business risk issued by TEEB for Business. Companies also face an increased set disclosure requests in terms of social and environmental impacts, such as on carbon disclosure, water disclosure and even forest footprint impacts.

Amidst all of these discussions today, however, an opportunity is being missed.