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Shift Happens

Why product strategy is key to innovation and new markets

Want to be a leader in sustainability? Start focusing on your product or service.

You're in business because your product or service delivers what your customers need. A sustainable product strategy gives your customers the opportunity to reduce their impact through the purchase and use of sustainable products. That said, making the transition away from traditional products takes patience, perseverance and organizational buy-in.

Perhaps your organization's corporate sustainability evolution began with reporting and tracking metrics such as safety incidents or environmental violations. From there, you saw opportunities to drive operational efficiency and cut costs through initiatives such as reducing fuel consumption by switching to electric or hybrid vehicles. A sustainable product strategy is a logical next step in the organizational evolution of corporate sustainability programs and has the potential to provide a huge upside.

A recent survey found that 32 percent of CFOs anticipate that over the next few years, about 5 percent of annual revenue growth will come from products and services that reduce environmental and social impacts. For instance, Dow Chemical's investment in sustainable product development to help customers address environmental challenges is projected to be a $350 billion market opportunity. While companies might see entering this market as a risk, we see it as an area of opportunity that is not as difficult as some might think.

For example, ThyssenKrupp Elevator Americas (TKE) understands that its industry is full of products that require regular maintenance and updating to keep riders safe and comply with regulations. The constant use of its products causes significant wear and tear. Therefore, TKE developed a suite of products called Modernization that allow building owners to choose the parts they need to repair their existing elevators without purchasing an entirely new elevator.

Furthermore, these Modernization products are more efficient, reliable and durable, so they can extend the elevator's life over a longer period of time with less maintenance. TKE also has developed a line of sustainable products that lowers energy costs, reduces power consumption by eliminating the use of a motor generator and captures and reuses energy through advanced regenerative drive technology. Again, these products extend the elevator's life but they also reduce travel time for riders, reduce noise inside the cab and increase the overall ride quality.

Making a leap from operational efficiencies to sustainable product design requires a change in the way you view your company's products and services. It is an opportunity to see what you already do in a new light but also see the potential for further innovation and leadership. There are two distinct paths that you could take if you decide to make this leap from traditional to sustainable products and services.

1. Recognize the sustainability attributes inherent within current products and services

Many companies do not see the sustainable attributes of their products. This is often due to being too close to those goods or having an outdated perspective. Once a company looks at its own products with an eye for where the environmental and social benefits are, it's often surprised at what it finds.

The Davey Tree Expert Co., a professional tree care and landscaping company (and a BrownFlynn client), is early in its sustainability journey and has been focused on operational efficiencies. Initially, Davey was hesitant to promote its products and services as sustainable -- even though a large part of its business is based on the preservation of trees and vegetation -- because it was afraid of greenwashing. The best way to ensure environmental claims are trustworthy is to use research and analysis like a lifecycle assessment (LCA) to back it up.

A number of companies out there are highlighting the sustainable attributes of current products. A great example is Salesforce, which came out with its first sustainability report earlier this year, proclaiming that its cloud computing platform produced less carbon than a traditional client server IT environment by 95 percent. Salesforce's aim here is to show customers that using its platform will help them reduce energy consumption and achieve sustainability goals.

2. Redesigning with sustainability in mind

Redesigning products using sustainability as a lens for development is evident of true leadership in this space. Nike's Considered Design initiative enabled the company to recycle 82 million plastic bottles into high-performance sportswear and increase the use of environmentally preferred materials by 20 percent. The initiative resulted in additional operational efficiency success such as reducing waste by 19 percent in its footwear business, and achieving a 95 percent reduction in volatile compounds. These activities never have been seen before in the footwear category, showing how sustainability is a tool for innovation and differentiation in the marketplace.

Making the decision to move from traditional products and services to thinking and designing in a more sustainable way will help companies secure a place in the market for years to come. A sustainable product strategy boosts reputation and credibility amongst peers and customers. It opens up doors for new customers and opportunities not yet realized. To become a truly sustainable enterprise, offering a sustainable product or service is the final evolution.

Nike Trash Talk shoe, made with factory waste and part of the company's Considered Design initiative, image courtesy Nike

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