Ask yourself: can your business remain stagnant? Is it possible to enhance value, efficiency and market presence without evolving or changing?
Is innovation optional?
Now, consider the surge of “unprecedented” events and the profound interconnections and interdependencies between financial, environmental, and social dimensions.
Is sustainable innovation optional?
Anna Itkin and Marisa Agrasut, Managing Partners of The Inceptery, have spent a combined four decades deep-diving into frameworks, methodologies, systems, and research that enable people, planet and profit business models to thrive.
Their passion lies in driving sustainability-led innovation through business and collaboration.
Here, they share their experience and practical insights:
What’s the difference between invention and innovation?
Anna:
Invention creates new things. Innovation improves or applies them to create additional types of value.
Britannica defines invention as “the act of bringing ideas or objects together in a novel way to create something that did not exist before”. While innovation is “the creation of a new way of doing something”.
Human beings have been inventors and innovators since the beginning of civilisation! Take for example the Agricultural revolution about 10,000 years ago. It was a sequence of innovations, such as domestication of a few types of plants and animals that led to aggregation of energy surplus and dramatic changes in societal structure and behaviour. It led to exponential growth of the human population that needed to be fed, housed, dressed, etc, leading to exponential growth in resource use and exponential growth in pollution.
This sequence of innovations also led to an explosion of inventions, such as agricultural tools and later directed genetic selection to prioritise certain traits over others. That, in turn, fueled the scientific revolution that became an even bigger engine for inventions and innovations that continues to this day.
While from one perspective innovation is an extremely powerful driver of development, from another it could be extremely damaging by creating unintended consequences, unless innovators are mindful not just about their positive impacts, but also the negative impacts of their innovations.
All our activities exist within the limits of biophysical reality and within societal constructs. Our current economic system – that drives every aspect of our civilisation – is set up as linear and extractive. As long as innovation is happening within the boundaries of this system, it has higher chances of contributing to the planetary damage that we are already experiencing. Therefore, there is a dire need to reframe the purpose of innovation, the purpose of organisations, the purpose of our society.
Marisa:
For me I would rather define what we (at The Inceptery) mean by innovation because it’s such a broad term now, and it gets applied to almost everything. So when you meet someone and they say they are innovating/ innovative, it’s worth digging a little deeper to understand which part or what they mean.
On one hand it might be that they provide development “funding” for startups, that they “connect people” in a certain ecosystem, they might have a new “innovative technology” or that they themselves are developing “a product/service” that is the solution – these are a few examples. All of which are part of, and supportive of this idea of innovation.
Innovation, as we define it, encompasses several parts that form a holistic process. These are:
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- Framing or identification – of a problem/ objective(s)/ outcomes or a strategic direction.
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- An intent – the desire or intent to shift, change, do, address or solve it
Through:
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- Shifting mindset & mental models – challenging or changing the way we think, see or do things either permanently or temporarily.
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- Explicit, evidence based process guidance and optimisation with application and action, which should result in movement or progress towards that thing initially framed or identified (sometimes in novel ways and sometimes not so novel ways).
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- More often than not in a group or collective setting.
What we focus on usually incorporates a combination of activities within a programme that attempt to optimise the conditions for innovation to succeed.
Fundamentally, it’s (often) about outcomes of change, from the status quo or existing paradigm. All of which need to be driven or supported at all levels.
Long lasting change rarely happens instantly (unless it’s traumatic or spiritual/mystical). So whilst we do our part to guide, facilitate and manage processes that optimise the desired outcomes or direction, we emphasise the importance of continuous learning and adaptation.
I think there are definitely some civilization defining reframes needed, but at another level we can still need to continue with activity/purpose but how and what that looks like can be radically different to how it is currently done or interpreted. Here I think we get into a more spiritual perspective.
How do you define Sustainable Business Model Innovation (SBMI)?
Anna:
Traditional BM creates value only across the financial dimension. Stakeholders, value captured and delivered, relationships are all defined from the perspective of money flows as the only source of value creation.
Sustainable BM creates value across three dimensions equally: environmental, societal and financial. Accounting for the interconnections and interdependencies between these three dimensions and intentionally identifying the opportunities for multiple types of value creation. So when one approaches SBMI, it is a well structured, design-led, careful process that is co-created with all stakeholders. It is intentional in creating multiple types of value simultaneously as well as avoiding unintended consequences by first and foremost, being aware of them.
Why SBMI?
Anna:
Many have already heard of the VUCA world – riddled with Volatility, Uncertainty, Complexity, and Ambiguity, where rapid technological advances, shifting policies, and geopolitical instability became the norm. However, the polycrisis – pandemic, climate change, biodiversity loss, inequality and global instability – shifted our understanding of reality even further: BANI stands for Brittle, Anxious, Non-Linear and Incomprehensible (concept first invented by Jamais Cascio, shared by Jeroen Kraaijenbrink and introduced to me by Prof. Josep M. Coll).
This is our reality today and it calls us to let go of the illusion that we can predict, plan for and design for a stable reality. Ancient Greek philosopher Heraclitus observed that the only thing that will never change is the presence of change itself. This realisation begs the conclusion that in this era of BANI awareness, traditional strategies (built on assumptions of stability and predictability) often fall short in ensuring long-term resilience of organisations.
In 2020, the average lifespan of a company on S&P’s 500 Index was just over 21 years, compared with 32 years in 1965. There is a clear long-term trend of declining corporate longevity with regards to companies on the S&P 500 Index, with this expected to fall even further throughout the 2020s.
Source: Statista, 2024
Sustainable Business Model innovation offers a proactive approach, helping leaders not only mitigate risks but also seize emerging opportunities. By embedding sustainability into the core of their business strategies, leaders can future-proof their organisations, adapt to disruption, and unlock new pathways for growth, even as they face time constraints and knowledge gaps.
Using SBMI you can design your next business model instead of surviving the impacts of continuous rapid and unpredictable change.
What are the impact and value opportunities from SBMI?
Marisa:
If innovation is about creating value, then we need to have a clear picture of what value is.
Traditionally, value in business equated to financial capital. However, more and more organisations and individuals are recognising and even prioritising diverse forms of value.
Ethan Roland, through his work on alternate forms of capital (value) or “8 forms of Capital” provides a useful vocabulary to unpack and explore these ‘new’ value forms. It also expands our understanding of how value can be derived through business exchanges and interactions.
By opening ourselves up to this expansion of opportunity, we enter into a whole new paradigm in being able to compare and define returns – a paradigm that is far more suited for economic, environmental and social (sustainable) development and solving the complex and wicked problems of our time.
Are there different types of innovation? What approaches can be used?
Marisa:
There are hundreds and thousands of different frameworks and methodologies (some are sustainability focused and others aren’t). Fundamentally I see these as tools, whilst many have very deep research, thinking and robust logic which goes along with them, intent and the way we apply them is where it’s important.
Besides the frameworks used to innovate, there are different types or categories of innovation. Most often what we hear about is product innovation, particularly in the context of addressing sustainability challenges. But there are others, often more impactful types. Such as process innovation – not just the “what”, but the “how”. For example, using green chemistry to manufacture products. Or instead of sourcing virgin materials like gold, silver or rare earth metals, sourcing from old products through extraction or choosing remanufacturing. Some other innovations focus on business models, which we talked about earlier, highlighting the benefits of initiating this process.
And then there is organisational innovation or one might even say a process of “evolution” of organisations. Frederic Laloux identified 4 organisational models that exist today:
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- Impulsive with division of labour and top-down authority
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- Traditional – with replicable processes and stable, often hierarchical organisational chart
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- Achievement – driven by innovation, accountability and meritocracy
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- Pluralist – that has empowerment and values-driven culture at its core that creates stakeholder value.
There are also large systems change through social innovations that attempt to address wicked societal challenges such as poverty, homelessness, inequality and others. These would usually involve deep transformative collaborations across and between sectors, societies and economies.
How does investor interest in Environmental, Social, and Governance (ESG) drive sustainable business model innovation?
Anna:
Investors’ interest in ESG is expanding with their understanding of sustainability challenges as well as being driven by evolving regulations.
In my recent conversation with a sustainable investing specialist from a global bank, they shared that KPI’s are no longer just about “green” projects. In the process of assessing ESG metrics, there is a strong focus on business models being sustainable. This focus in turn aligns financial incentives with sustainability goals determining the capital allocation.
Then, of course, there are new frameworks like the ISSB Standards, which are gradually becoming mandatory across the world. The ISSB requires disclosures on governance, strategy, risk management, metrics, and targets, as well as climate-related risks and opportunities. ‘Opportunities’ offer an invitation to explore possibilities through foresight, discovery, stakeholder engagement, and collective sensemaking, tapping into the underlying currents of innovation.
How does sustainability reporting offer opportunities for innovation?
Marisa: A starting point for many businesses (especially SMEs) is overwhelm by the cost and resources required for sustainability reporting.
What many people don’t recognise is that sustainability reporting is a first step towards sustainability as a business opportunity – it’s a driver of innovation!
The reporting process, regardless of framework used, is a business check-in that can reveal possibilities overlooked in daily operations. This methodological assessment is a prime starting point for innovation.
You see, innovation is not entirely random – it’s a discipline with structures and processes designed to optimise meaningful outcomes. The detailed information from reporting, revealing change opportunities, can therefore be a bedrock for innovation.
To treat reporting solely as a compliance task is to miss valuable opportunities to drive meaningful business growth.
What are your favourite examples of sustainable innovation in business?
Anna:
Right People Company’s Transition from Oil & Gas to Renewables
Founded in 1972 as PONCO, Right People Company built its reputation as a leading supplier of manpower to Indonesia’s oil and gas industry. The company provided a wide range of personnel, from mechanics to chefs, along with payroll, taxation, and training services. However, after the 2008 recession and another oil price collapse in 2014, the company faced severe challenges.
Under new leadership, the company’s CEO shifted the focus to renewable energy. Recognizing the rising need for clean energy, especially for off-grid locations relying on costly diesel, Right People Company offered solar energy solutions with short payback periods and long-term warranties. This pivot not only kept the workforce employed but also addressed environmental concerns.
The company’s “People, Planet, Profit” approach involved first investing in employee well-being and education, which improved client relationships and profitability. By offering renewable energy solutions, the company reduced pollution and helped clients cut costs, proving that small family businesses can drive impactful sustainability-led innovation.
Marisa:
Novelis: Leading the Aluminium Industry with Sustainable Innovation
Novelis, founded in 2005 as a spin-off from Alcan, has emerged as a global leader in aluminium production and recycling, with a strong commitment to sustainability. Traditionally focused on producing aluminium for industries such as automotive, packaging, and aerospace, the company recognised the environmental impact of its operations and shifted its business model to embrace sustainable aluminium solutions.
Novelis’s key innovation was pioneering the use of recycled aluminium, reducing the need for energy-intensive virgin aluminium production. Through their closed-loop recycling systems, the company collects aluminium scrap from its customers and reprocesses it into new products. This process requires 95% less energy compared to traditional methods, significantly lowering carbon emissions and supporting a circular economy.
Their focus on low-carbon aluminium not only supports sustainability goals but has also driven business growth, especially in the automotive sector where demand for lightweight, eco-friendly materials is rising. By embedding sustainability into their core operations, Novelis has proven that even in heavy industries, innovative approaches to environmental responsibility can deliver long-term profitability and industry leadership.
