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Innovation and sustainability are two key areas that are increasingly important for businesses looking to succeed in today’s world. The global economy is rapidly shifting towards a circular model, where resources are continuously reused, repurposed, and recycled to reduce waste and environmental impact. This shift requires companies to enhance their capabilities for sustainable innovation and create products and services that deliver value throughout their lifecycle, from manufacturing to disposal (Ellen Macarthur Foundation, 2013).
However, achieving this is not easy. One of the key challenges is balancing the needs of the environment with the needs of the economy and society. Viable innovation must not only reduce environmental impact but also create economic value for firms and consumers. This is where the circular economy comes in (Hankammer et al., 2019).
Research such as Hankammer et al. (2019) shows that the development towards sustainability and circularity in innovation management requires a mindset shift towards outcome-driven strategies and approaches that prioritize the long-term value creation of a product over short-term profits.
Sustainability refers to meeting the needs of the present without compromising the ability of future generations to meet their own needs (Brundtland, 1987).
Outcome-Driven Innovation® (ODI) is one way to create new products and services that address those needs and challenges. In the context of the circular economy, ODI can help create products that are designed for circularity – from design to disposal. These products can be easily disassembled, repaired and recycled. By focusing on needs and outcomes to create long-term value for customers, companies can create circular solutions that are viable and profitable. When developing such products and services, ODI can be instrumental in driving sustainability and resource efficiency in the innovation strategy in the following 10-step guide (Hankammer et al., 2019):
1. Identifying unmet sustainable needs: ODI starts by identifying the unmet needs and desired outcomes that customers are trying to achieve in a specific market. This may include a desire for more durable, reusable, or recyclable products and services. By understanding these needs, companies design circular products and services that not only address the pain points but also encourage sustainable consumption patterns. Addressing such needs create new market strategies and opportunities for company growth.
2. Design for circularity and develop sustainable solutions: Outcomes of the ODI process help companies focus on those solutions that contribute to green development. This implies considering the environmental and social impact of products and services throughout their lifecycle. Designers then make informed choices about materials, production processes and end-of-life management during the design process. The result? Products which are easier to reuse, repair, remanufacture or recycle.
3. Encouraging green innovation in materials and processes: When designing products, materials, processes, or technologies that contribute to circularity should be used. Organizations identify those needs and opportunities by using ODI. This may include using bio-based or recycled materials, adopting energy-efficient manufacturing processes, or employing digital technologies to track and optimize resource use throughout the product lifecycle.
4. Enhancing customer value and loyalty through sustainability: ODI emphasizes delivering superior value to customers. By developing circular products and services that address customers’ unmet needs for sustainability and resource efficiency, organizations create a competitive advantage while also fostering customer loyalty and advocacy.
5. Prioritizing needs and reducing innovation cost: By focusing on the most critical needs, companies allocate resources effectively and develop innovative solutions that maximize the circularity of products and services. This helps reducing development costs by avoiding features customers do not value. Additionally, by establishing solutions that meet customer needs, companies avoid costly product recalls and negative customer feedback.
6. Encouraging collaboration for sustainability: In order to develop innovative and viable solutions, ODI encourages companies to collaborate with various stakeholders, including suppliers, customers, and other partners. This collaborative approach helps create a network of organizations working together to promote circularity in products and services, thereby driving the transition towards a circular economy throughout the value chain.
7. Supporting a culture of continuous improvement for sustainability: Companies are encouraged to be more customer-centric and data-driven in their approach to innovate sustainable. Thus, a culture of learning is fostered, which helps companies consistently refine their circular products and services based on customer feedback and market trends. This adaptive path enables organizations to stay ahead in the rapidly evolving circular economy landscape.
8. Customer sustainability education and engagement: ODI driven circular products and services educate customers about the importance of sustainability and resource efficiency. By offering solutions that are designed according to their environmental impact, companies encourage customers to adopt more sustainable habits and consumption patterns while becoming advocates for the circular economy.
9. Measuring the success of sustainable innovation: The Outcome-Driven Innovation® process involves setting clear objectives and measuring progress towards green development. By creating and tracking key performance indicators based on the identified desired customer outcomes, companies identify areas for improvement and continually refine their products and services to better meet customer needs and drive sustainability.
10. Redesigning business models for greater sustainability: Use ODI to move from a linear “take-make-dispose” model to a more circular one that emphasizes product-as-a-service, sharing economy, leasing models, etc. By focusing on desired outcomes, this helps companies creating new revenue models like pay-per-use that support circularity and sustainability and may include adopting product-service system models or incentivizing product take-back.
In summary, achieving sustainable innovation in the circular economy requires a shift towards outcome-driven strategies that prioritize the long-term value of a product. It requires companies to design products for circularity, creating economic value while reducing environmental impact Outcome-Driven Innovation® helps organizations developing circular products and services by focusing on unmet customer needs related to sustainability.
By integrating its principles into product and service development processes, companies achieve innovations, which contribute to a greener and circular economy while benefiting both the bottom line and society as a whole.
About the author:
Sebastian Brenk, PhD, Assistant Professor, Nijmegen School of Management, Radboud University, Netherland; and Affiliate Researcher, Institute for Technology and Innovation Management, RWTH Aachen University, Germany
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