Harvard Business Publishing

The scarcity economy that we know today is based on a continuation of maximum economic activity. If we only produced the goods and services needed for a good and fulfilling life, the work week would only be a few hours. This would be totally unacceptable to those whose job depends on getting people to churn money by making, advertising, selling and buying plastic junk and by providing the services of serving food to each other, making war, regulating, policing and imprisoning people, etc. Nearly all of of the "work" that is currently done adds nothing to a fulfilling and sustainable life.

The basis of most of this need for activity is the insatiable quest for power inherent in humans. Money (virtual power) is the object in the game we play to satisfy our primitive animalistic sexual and survival power games.

I believe the abundance/gift economy is the only way to gracefully step off of the rat-race treadmill of the scarcity economy. By providing a good (education, internet, housing, water, food, health) living for those that commit to participate in the gift/abundance economy and live a minimal lifestyle we could accomplish this. We tend to provide this minimal lifestyle for a large number of people already such as children, retired people, etc. so it is not a new concept.

Our needs for power and survival would be predicated on how much a person gave rather than on how much they were able to accumulate. Accumulation is unfortunately often done by violent, destructive and immoral means. There is such a need that most of it is wasted effort.

Innovation may be too broad of a term or maybe the wrong term. It's like good capitalism vs. bad capitalism. First, for me innovation is the successful commercial implementation of invention. With that, I see sustainable becoming the adverb to innovation. Take your razor example - having two blades (minimum requirements: one pulls and the other cuts) that remain sharper longer and thus reduces demand on resources and trash in landfills is much better than the ten blades. Both illustrate innovation; there is no reason why the two blade solution could not extract a premium, especially if it delivers quality on its own right separate from the sustainability issues. But even that will be changing soon as more consumers drive a sustainable agenda because it can save money in the long run.
From a cultural perspective, the most important consumer to get this message to is the consumer that does not yet exist in the developing world. They admire our sloth and if they could discover a sustainable consumption, potentially their shear numbers would be a economic force to reckon with.

Using the term innovation defined as simply creating something new that people don't need is, to be fair, loading the term unnecessarily.

It might be more appropriate to think of innovation as changing a system, process, market, etc. in a fundamental way. You could bring innovation to the energy industry by creating cheap and accessible power for everyone. That goes against your premise of innovation as catalyst for more of the things people don't need.

Your premise seems to be trolling for an issue that isn't actually there. Rather, you may want to discuss commercialism and how it can be entwined with sustainability effectively.

I think this first prototype for a topic has missed the mark. Back to the drawing board...

Well, who said that innovation "is premised on force-feeding people more junk;" ??

That is fundamentally wrong.

Innovation is exactly the opposite, finding ways to be more productive with less resources.

So I see no point in continuing this debate when one of the premises is absolutely wrong, unless of course the author deigns himself to explain why he believes innovation is about feeding more junk to people (to begin with what is junk?)

Dimitri

Hi Umair,

I'm assuming that your obviously biased description of innovation and the false dichotomy you create between innovation and sustainability are rhetorical devices. I figure you want to draw out a discussion of what we mean by innovation and sustainability and what, if any, interplay there is between the two. So, here's my small contribution:

We could spend a lot of time trying to wordsmith definitions of the two terms and never get to something that we all agree with. For the moment I'll suggest:

Innovation is a significant change to a process that adds new value.

Sustainability is the effort to minimize a process's external costs that would otherwise be imposed on society.

I'd suggest these are independent variables. Doing something in a new and valuable way doesn't necessarily minimize societal costs, and accounting for societal costs doesn't necessarily introduce new value. We could build a 2x2 matrix; give names to the quadrants; all try to move to the upper right; etc. Looks easy on paper.

Some key challenges are:

1. A lack of shared understanding about what constitutes value. It's easy to write off your examples of innovation as simply irresponsible marketing, but I think that misses the boat. To someone with a very limited budget, that fast food meal might represent a lot more value than you or I think. To someone whose feelings of self-actualization are tied to fashion, maybe a new pair of jeans every week is a doorway into a new identity. It's different in quantity from the way I use clothes, but not in kind. The challenge here is cultural, not economic: what is valuable?

2. A lack of clarity about which costs need to be accounted for. We don't have a clear sense of which societal costs we want businesses to account for and what the relative weights are. Today the talk is of carbon footprints. Should we include noise pollution? Should we include a business's impact on local employment? Does one offset the other? Do we only account for costs incurred during production, or do we account for costs incurred during the use of the product/service?

In the end, the opposition between consumption and sustainability is a false one as well. We still need people producing and consuming value. It's just that we need it happening in a sustainable way.

This is why our efforts over the last few decades to reduce energy consumption meet with such mixed results. When we make an energy efficient appliance, for example, that does the same job with less energy expenditure, people buy it. When we try to tell people to drive less, or run their AC's less, the results are less than spectacular, because we're asking them to get less value.

The kinds of innovation we need will be ones that deliver even more value of various kinds(i.e. drive consumption higher), but they'll do it in ways that incur fewer societal costs. The opportunity for companies that bring those offerings to the world is tremendous.

But which kinds of value should we increase consumption of? and how will they get distributed?

I disagree - if we learn anything from biology and ecology, it's that innovation and change are ESSENTIAL components to sustained function of any system. Consider forest fire - destructive, mass extinction (at the local level) events that to the bystander, caught in the moment, causes nothing but anguish and worry about the ecosystem going up in flames. But in every attempt to create a savanna, one lesson keeps coming back: fire is essential to the proper functioning of a savanna ecosystem. The fire triggers seed opening, creates new habitats in the crooks of fallen, carbonised trees, removes hard-to-get-to solid wood, redistributing the carbon to tender shoots and greenwood, and trims back weed growth. Likewise, corals need typhoon storms and huge waves - destructive though they are - to wash spores around.

The lesson is clear - systems that seek equibilibrium and stable states based on zero change and destructive interference - i.e. innovation-free - are dead. Not just because life is expert at adapting to change and that to some extent this 'pushes the wheel round' - but for the more obvious reason that a monoculture environment has so little (temporal/cyclical, plus gene/meme) diversity that force majeure changes cause system collapse - the system, cobwebbed, streamlined and only illlusorily sustainable at the micro level, has no response to the changing circumstances.

The truly sustainable systems, though shaky, tumultuous, and full of new genes/memes/species/competitors/predators/prey, are dynamically stable - viewed from the macro level, they're the most sustainable of all.

Innovation and sustainability are two separate dimensions, you can increase or decrease both simultaneously and independantly.

Innovation is NOT premised on force-feeding people more junk, but rather it is premised on improving the status quo. With the vast variety of opinions and personalities on this planet 'improve' may be interpreted in a multitude of ways ranging from 'give me more stuff to buy' to 'protect the planet'.

Similarly, individuals interpret 'sustainability' as environmentally sound, whereas the old fashioned definition from a corporation's point of view is 'profitability' ie the ability of an endeavour to sustain the corporation through profit. Innovation will always continue, but increasingly as attitudes change we will see 'Sustainability' and 'Profitability' become synonymous. When this happens we will see innovation moving in the right direction and feeding sustainability in every sense.

A real advance might come through "products" vs. "services" thinking;

If I sell one-off packets of stuff, the best way for me to be successful is to persuade you and other customers to consume more of them. My incentive is to persuade you towards consumption. Even for things like eg. watts.

If, on the other hand, I contract to sell you a reliable service (such as "lighting your home") without reference to how much you consume. Then my incentive can be to minimize my inputs over time. I may do it by switching your lightbulbs to more efficient ones, I might do it by buying from sustainable wind-farms. I may even help you generate the energy yourself.

What's needed is long-term contracts to make it worth my while investing, but flexible enough that customers can switch to a better deal.

I think the stock economists answer to this question may be the most valid:

sustainability will be fully incentivized when the full costs of unsustainabilty are included in the market price of a good.

In this situation, innovation and sustainability are intertwined. Right now, businesses shrug off much of the cost of production, so they innovate within this structure (more, bigger, faster). Change the model, change the outcome.

> Innovation is premised on force-feeding people more junk;
> on fuelling artificial needs for super-size meals, Hummers,
> and a new pair of sweatshop-produced fast-fashion jeans every
> weekend.

I agree with Dmitri that this is fundamentally wrong.

I believe that innovation is premised on filling a desire that cannot currently be fulfilled within existing constraints.

> Sustainability, on the other hand, is premised on helping
> people finally step off that creaking treadmill of consumption.

I disagree with this as well. It's not just about consumption, it's about consumption of a scarce resource. Consumption of a plentiful resource is not an issue for sustainability.

excellent discussion.

guys - some of you (eric) have missed the point of an open thread. the hypothesis above isn't there because i want you to validate it - it's there deliberately to help us to kickstart debate and discussion.

nick, your argument has a fatal flaw. i'll discuss it tomorrow if no one points it out soon.

phil b, metastability is a nice concept. but the forest fire still kills the tree. should we seek metastability for economic systems?

david, dmitri, etc, the point about junk i think many of you should consider more seriously. much of what boardrooms consider innovation is junk, in the simplest sense: disposable consumer goods that end up in landfills. if we have a desire for junk, should that desire be satisfied?

the real point of the post is to force a tighter definition of both sustainability and innovation - did we get close yet? closer, maybe - sean's comment is particularly awesome, everyone should read it closely.

thx for all the comments guys.

> if we have a desire for junk, should that desire be satisfied?

I'll "answer" from two different perspectives:

- Isn't the point of business to satisfy the desires of potential customers?

- Are businesses only going to make "healthy" decisions for us? Or are adults allowed to make decisions for themselves? If we take your point forward, then businesses shouldn't be allowed to sell tobacco products, alcohol, motorcycles or anything else that's potentially unhealthy. I don't think that idea's going to fly in the U.S. or anywhere else for that matter.

I'll take a shot at Nick's alleged fatal flaw (actually, I think there are two fatal flaws ;-) )

1. There will never be full incentivization (is that a word?) for sustainability because of politics. Existing industries will get favors from governments, (e.g. tax breaks or subsidies) that prevent it. There are no truly free markets.

2. Even if one could achieve full incentivization, in an area such as sustainability (or global warming) that may not be good enough. New solutions to problems may not reach fruition in time. (I'm totally making these numbers up) Suppose that we have only 30 years of oil left. Further suppose that finding viable alternatives takes 35 years. The world has a serious problem for those 5 years and potentially longer when the economy tanks and the 35 years turns into 50 years because of a lack of resources.

a significant issue lies with businesses thinking about innovation as a tool for demand creation - a most cynical practice that if the consumer were wiser to, wouldn't be tolerated by the marketplace, which as a result would see innovation focused on very real needs and demands. The business of demand creation preys on a value/reward disconnect in consumer valuation (and thus, desire to reward) of products or services. Put quite simply - we buy Hummers because not only do we not know what we truly want, nor what truly benefits us - i.e. what we should really value - but we let ourselves be further warped by sales & marketing teams.

Only limitations on advertising and marketing - hopefully a natural effect of internet-connectedness and education, not regulatory - can save us. This entails "punishing" or limiting 'active marketing' (companies "brainwashing" consumers) and encouraging passive sales processes (consumers using the Internet to find and compare, on a rational basis, the solutions to their actual needs, without needs being suggested to them). More antimalarials, fewer 'Adartel' (anti-"restless Leg Syndrome") pills, thank you very much GlaxoSmithkline!

setting up a polarity like this has only academic value.

innovation is the funda of consciousness, of nature, of life. it is constant.

sustainability is another category, a concept derived from looking at uncreative innovation, based on ignorance, greed, ego, weird market systems, poorly structured reward incentives, on and on

get truly innovative, this seeming conflict is not found

How about this? Constant innovation might lead to sustainable growth.

I am thinking Google.

Instead of "...sustainability drive a better kind of innovation?" I would be more prone to say "innovation driving sustainability"

Just my 2cents worth.

Great! at last, some critical discussion of Umair's sloppy posts! Keep it up folks!

I'd agree that much of what is considered “innovative” by many people today eventually ends up as junk. Umairs post should not beg the question of what is innovation, because as we can see from this thread it can take infinite forms; but rather what is junk.
I believe that junk is a human concept in which we assign zero value to a particular object. Unfortunately, this notion is the antithesis of the natural order. Everything has value.
Sustainability is not the “long-overdue nemesis of innovation”; it is the long-overdue nemesis of junk. We will never see a sustainable economy until the ideas of garbage, waste, and yes junk seize to exist.

Innovation = Invention + successful commercialisation.
Successful commercialisation = value to customer exceeds cost to customer
Sustainable innovation = long run of innovation even when all relevant costs are included

An alternate view is that it is not our rate of consumption, but rather our backwards production philosophy that makes our current socio-industrial structure unsustainable.

William McDonough and Michael Braungart lead thinking in this area: that waste = food (in the input sense, not the dietary sense :)), and production could be designed such that all by-products are inputs to other production. In such a scenario, more consumption leading to more productyion is better as this creates more inputs for other production.

This might sound fanciful - but its a great example of really original, innovative thinking in the sustainability field.

More here - http://www.epea.com/english/cradle/principle.htm

Have the commenters walked the major US retailer isles lately? While U's post may too broadly scope innovation v. sustainability, we can see first hand the concept of 'over-innovation' in many consumer categories. We need to move beyond the academic definitions to the heart of what's happening in the industrial economy.

Sean's post on determining value is important, and let's also realize the machine that has put this wheel in place:

Globalization + weakening IP + concentrated retailers =

A chase for growth and profits amongst manufacturers is yielding a new prisoner's dilemma due to the ever increasing visibility of where profits lie along the value chain and faster 'account reviews' by stronger/larger sellers of goods. The applied innovation game is not purely a consumer-based model anymore, as retailers play manufacturers against each other to optimize GMROI and stay in control. Consumers do have a vote with their wallets in the end, but a new cost in the system is the churn of incremental product development [that can also appropriately be called 'over-innovation'] which is driving many manufacturers more quickly to a base economic profit.

Sustainability is a different vector altogether making contrasting the concepts more difficult. Using a review of the impact of 2-cycle gas motor sound and emissions controls in CA in 2005 as an example, we can see that sustainability can be used as a new barrier to entry that infuses sustainability into the innovation cycle in a way that is productive as opposed to incremental and possibly unproductive. This statement may support a position for regulatory guard-rails to move industry in a direction that takes more costs into account, and I'll leave that to others on this string.

Innovation is a consequence. Sustainability is a (bear with me) real and measurable objective.

Innovation is a solution that works. "Work" is the precondition. We never talk about innovation that didn't work, regardless of how innovative is the thinking process behind whatever actions we took.

So in the path to sustainability, we'll produce innovative (new? fresh?) solutions or processes. The ones that work, will be referred to as "Innovation" after testing and success.

Ergo, here oyu have your driving force. Go for sustainability, innovation tags along sometimes.

Sean wrote "Sustainability is the effort to minimize a process's external costs that would otherwise be imposed on society."

What about creating a process that makes externalities positive? The usual example is a beekeeper raising bees for their honey. It's not just minimizing the bad, but also amplifying the good.

Innovation should be shaped by sustainability. I've been grumping about hearing aids for years now: they have closed cases and the audiologists glue the tubes into the ear molds. I can't get at the integral parts to clean or replace them when they break - and they do break under heavy usage. Not every hearing aid wearer is an eight year old pseudo-Luddite. If they opened up that design, included a real manual and a small cleaning kit in each $5,000 box of aids, I guarantee I'd have less problems and audiologists would be less like technicians.

Imagine if the Detroit 3 raised their prices and told every customer that whenever the company came out with a better part they'd install it free of charge and recycle the old part.

Innovation always happens within a context, not inside a vacuum.

Within the current context it is more likely than not to include:

1) manufacturing of artificial needs (i.e. unneeded consumption)

2) manufacturing of physical goods (i.e. resource consumption)

3) manufacturing of a culture of consumption (aka. 'platform'/'user base' and a pattern of behavior that feeds on itself)

All of the three above in a current system are almost always unsustainable (going back to the original Preussian forestry definition of sustainability).

This means that in world of diminishing non-renewable primary fuel resources and shrinking ratio of non-renewable and renewable materials per capita, innovation on the aggregate can indeed be a problem, because it systemically within the current context speeds up and creates new consumption.

Now, does it have to be so. Of course not.

Will it be so in the future?

Yes, if everybody is in it for the quick buck.

Changing the context - how the system operates - is really hard work, as any social science historian knows.

It takes time, money and is ridden with risks. More than that, the pioneers rarely reap the profits.

That's why nobody wants to do it, although there is money to be made on that side as well.

It's just so much easier to piggy-bag off the BAU crumps falling off the table.

So, if we were to make this an either/or YES/NO question, I'd have to be probabilistically inclined more towards YES it is a problem, more than it is a solution.

But in the end it all depends on the context.

Unless we innovate THE context (and not just WITHIN the context), we are screwed.

> Unless we innovate THE context (and not just WITHIN the
> context), we are screwed.

Sounds like Kirk and the Kobayashi Maru.

http://en.wikipedia.org/wiki/Kobayashi_Maru

Umair,
where are you? Have you abandoned this open thread?

Amar,

Relax. Here are three suggestions.

1) Chill with the trolling
2) Try and understand why I sometimes make discussions deliberately "sloppy": to give us all more space and incentive to think
3) Invest in reading the comments - they're awesome.

Everyone else,

Excellent thread, too many killer comments to highlight - tho I will try to respond to a few soon.

Thx to everyone - we will be discussing many of these issues going forward.

Umair,

Cool! I was being sloppy too, to provoke robust and crunchy responses from you. I do read the comments and agree some are awesome.

However, does it not bother you that group-think leaves you truly unchallenged on some of the most important issues of the day?

You enjoy the fruits of a liberal society and free markets and yet seem to 'diss' it in a strange manner, often contradicting yourself, say, on under/over innovation.

Hoping to see many more provocative and crunchy posts from you.
Best wishes,
Amar

amar,

my manifesto in big, bold letters calls for more and freer markets.

so let me gently suggest that to blithely say that i am "dissing" liberalism and free markets is a profound misreading of my work.

you have got the premises of the debate you want to have exactly backwards: in fact, i am the guy that is trying to make conservative boardrooms radically more "liberal".

thx for the comment.

Ultimately, companies give consumers what they want... if there's junk on the shelves, people are probably buying it. Antti's right. As long as innovation takes place within the context of a society that places no limits on its consumption, the resulting products probably won't be terribly sustainable (long-lasting, eco-friendly, et cetera).

Judging by the avalanche of "green" journalism I've seen lately, people are thinking more about sustainability now. And at least some people are factoring it into their buying decisions. But to many others, conspicuous consumption is practically synonymous with the American Dream.

I have a feeling that the most successful innovations of the next few decades will be those that balance our endless desire to consume with the needs of the environment - for instance, recycling sewage into drinking water in places like southern California (to give a current example).

Energy sustainability will come from breakthrough solar, wind and geothermal technology in/on/under your own home. Studies show that the most innovative propositions come from people outside of the field / industry. However, these very inventive innovators are wrongly perceived as "lone wolves" by journalists, bankers, professors and village idiots. Few have established personal credentials with the media.

When it comes to funding their ideas, clever lone wolves are left to their own resources. But, wouldn't you know it, few such lone wolves have a black book full of investor pals.

The innovator's neighbors would welcome an exciting new enterprise in their community. However, being ignorant of S.E.C. Regulation A general advertising potential, few lone wolves know how to attract and aggregate millions worth of investment from the average Joe.

A radical innovation in public finance called an "Equal Opportunity IPO" (EO-IPO) may once again empower the public to bootstrap economic development in their communities. It is "a free country", so local innovation enabled by this financial innovation could spread like a prairie fire fanned by US VCs waiving good bye as they exit for China.

As for the best innovations close by your doorstep today, they just lie there and they'll die there. Think about that Mona Lisa.

great article thanks.

We can innovate if we design in a sustainable way which might mean thinking of the cradle to grave and systemic way... this is a nordic take on the subject
http://designboost.se/blog/200808/the-sustainable-wheel-an-update/way

Thanks so much.

great article thanks..