Towards an integrated framework for sustainable innovation

Abstract

Sustainable innovation represents a current challenge for companies, as firms need to change the way they design, develop, produce and distribute products and services. Therefore, this paper proposes a new framework to be used as a reference guideline for organisations to define a roadmap, specific actions and projects to achieve sustainable innovation, integrating four key enablers. The first enabler is mass customisation (MC), which targets the identification and compliance with customers' specific needs and requirements in order to achieve customer‐driven design. At the same time, the sustainable development (SD) paradigm is taken into consideration, where for any new product or service, companies analyse the benefits, risks and impacts of not only economic factors, but also social and environmental implications. The third enabler is linked to the value network (VN), where innovations happen owing to the active collaboration and distributed knowledge of partners inside and outside the company. Finally, the fourth and last considers the complete product and service life cycle (PSLC), where the three sustainable elements are identified and analysed in each single business process. Two case studies, (footwear sector and water treatment plants) are described to show the validity and successful deployment of the proposed framework in real industrial scenarios.

Keywords:

• sustainable development
• mass customisation
• value network
• product and service life cycle

1. Introduction

In recent decades, innovation has been regarded by many policy makers, economists, engineers and business managers as a key element in the attainment of competitive advantage. Developed countries target innovation to maintain their competitiveness and high standard of living. On the other hand, developing countries look for innovation as a means to alleviate poverty and provide new value added jobs and new products for global markets. Based on Josef Schumpeter's definition (Schumpeter 1949) of innovation, the Oslo Manual (Organisation for Economic Co‐operation and Development 1997) proposes five innovation types:

1. the introduction of a new product or a qualitative change to an existing product;

2. the introduction of a process new to an industry;

3. the opening of a new market;

4. the development of new sources of supply for raw materials or other inputs;

5. changes in industrial organisation.

In parallel with the trends to invest in innovation to remain competitive, there has been a developing global awareness that our planet Earth, as a resource system, has a limited capacity for supporting the growing human population with its intensive extraction activities for materials and energy. However, it is impossible for the human population to stop resource consumption to fulfil its current needs (Tsoulfas and Pappis 2006). As a consequence, the new paradigm of sustainable development (SD) was coined to encourage the World's population to approach and face its unsound consumption of natural resources and the negative impacts that this consumption has on environment and people's quality of life. The United Nations World Commission on Environment and Development reached a global consensus on the meaning of SD: ‘development which meets the needs of the present without endangering the ability of future generations to meet their own needs’ (World Commission on Employment 1987). This definition proposes economic and social development in ways that do not exhaust natural resources. However, how can firms support the SD proposition and how can this support be mobilised to ensure that firms remain competitive through the delivery of innovative products and services?

2. State of the art analysis

Mass customisation (MC) and SD are emerging paradigms in various industrial sectors, as for instance reported by Jovane et al. (2003) in their analysis of the evolution of the role of automation in the manufacturing industry. In this work, they proposed that the current dominant paradigm, MC, will co‐exist with the sustainable production one for a while. The latter can eventually replace MC as the dominant paradigm in the following decades. Sustainable innovation is an emerging and fundamental force for change in business and society (Larson 2000). Sustainable innovation is a process by which sustainability considerations (environmental, social, financial) are integrated into company systems from idea generation through research and development (R&D) to commercialisation. This applies to products, services and technologies, as well as new business and organisation models (Charter and Clark 2007). According to Rennings (2000), sustainable innovation or eco‐innovation is the process of developing new ideas, behaviours, products and processes that contribute to a reduction in environmental burdens and to reach specific ecological sustainability targets. The ‘disruptive’ nature of SD is also underlined by Hall and Vredenburg (2003), who states that it can be difficult to design a strategy that efficiently integrates the goals of innovation and SD. This is due to the huge number of heterogenous primary and secondary stakeholders that can be influenced by an innovation having significant impact on sustainability. It is essential to evaluate an innovation for its ‘sustainable development innovation’ impact and not just to focus on its potential technological superiority. In fact, sometimes the introduction of radical innovations (Genetically Modified Organisms or Stem Cell Engineering) could result in fierce opposition, due to their controversial assessment by some secondary stakeholders, while less ambitious incremental innovations are better accepted.

The heterogeneity of the actors involved in the design, introduction and diffusion of new sustainable innovations calls for the definition of specific policies, such as Strategic Niche Management (Caniëls and Romijn 2008, Foxon and Pearson 2008). In fact, even if existing SD policies, plans and programmes within firms provide an important foundation on which to build efforts, they do not provide guidance to integrate the SD concepts in the day to day operations. For this reason, various frameworks have been developed for supporting the design of sustainable innovation strategies (Hallenga‐Brink and Brezet 2005, Rocha 2007). Rocha et al. (2007) have proposed a sustainable development management system that integrates seven key elements: stakeholders, resources, leadership, processes, values, objectives and results. The proposed framework enables the introduction of SD principles in each of the seven micro‐level key elements. It also enables to take into account, at the macro level, the interrelationship and trade‐offs between them. This allows to manage the overall strategy according to a whole system perspective that considers short‐ and long‐term impacts. A framework for supporting the design of efficient sustainable innovation strategies, based on the enhancement and the integration of the ‘product innovation model’ and of the ‘design for eco‐efficient services’, is also proposed by Hallenga‐Brick and Brezet (2005). The proposed ‘sustainable innovation design diamond model’ accounts for the initial diverging creative process of idea/concept generation and the subsequent converging phase, where the end goals are clearly defined. The model allows to evaluate the impact of the internal (management, vision, learning, policy) and of the external (consumers, government, local community, business) factors and constitutes a useful brainstorming tool that facilitates the collaborative generation of new ideas between value chain members who are not direct competitors. This simple framework is designed for supporting micro‐sized enterprises that cannot afford more complex and time consuming approaches.

The relevance of defining and implementing social and environmental performance indicators for assessing sustainability has also retained researchers' attention (Fadeeva 2004, Brent and Labuschagne 2007). In particular, Brent and Labuschagne (2007) focused on social sustainability aspects, introducing methods and indicators to follow up the impact of social sustainability throughout projects and technology life cycles. The assessment framework proposed by Fadeeva (2004) stresses the importance of taking a comprehensive multi‐facets approach while evaluating the results of networking for SD. In particular, the following aspects should be taken into account: the type of innovation (new ways of thinking or acting, changes in the roles of the different actors, changes in the roles of leadership), the scope of the impact (economic, societal, environmental), the level of value‐added generation (personal, organisational, regional, society), the degree of achievement of the network's own goals. This work also underlines the importance of collaborative practices among the members of an heterogenous value network (VN) in order to achieve sustainable innovation, another recurrent statement in sustainable innovation literaure (Jovane et al. 2003, Dewick and Miozzo 2004, Fadeeva 2004, Caniëls and Romijn 2008, Foxon and Pearson 2008).

The achievement of SD often implies a long‐term analysis integrating the entire product/service life cycle. In the construction industry, the analysis of the entire life cycle of buildings results in the introduction of technical and organisational innovations that improve sustainability. This is also due to the fact that the life‐cycle analysis is made considering the externalities related to social and environmental impact (Dewick and Miozzo 2004). As already remarked, incremental technical innovations are easier to introduce, because their adoption requires a lower level of mutual trust. The establishment of long‐term relationships among the various stakeholders (housing associations, constructors, design teams) allows to increase mutual trust, economies of learning and experience, thus promoting the adoption of sustainable technologies. The importance of product and service life cycle (PSLC) thinking is also demonstrated by the results of other works (Jovane et al. 2003, Manzini and Vezzoli 2003, Kocabasoglu et al. 2007, Mont and Bleischwitz 2007, Ny et al. 2006, Short 2008). In the creation of ‘product service systems’, an innovation strategy is defined where the objective is not designing and selling a product but selling customer satisfaction. This latter is achieved through the design of a bundle of products and services; the less innovating approach among the proposed three consists of providing value added to the product life cycle (Manzini and Vezzoli 2003). In their analysis of sustainable consumption and resourse management Mont and Bleischwitz (2007) show how, in business strategies, numerous practical realisations of life‐cycle thinking exist, including life cycle assessment (LCA), that lay the ground work for methods such as design for environment, eco‐labelling, environmental product declarations, and environmental management systems.

Ny et al. (2006), while developing their framework for strategic SD, cited LCA and life‐cycle management (LCM), as interesting and rigorous tools that, although requiring significant efforts to ensure correct application, could complement the approach they developed.

Many papers dealing with SD have mainly focused on environmental aspects. However, only integrating economic and social sustainable strategy, it is possible motivating the stakeholders' to durably change their behaviour. For this reason, it is fundamental for any industry attempting to develop and apply a new sustainable innovation strategy to ensure that it provides customer satisfacation and customer value, since from these derives the economical sustainability of the company (Manzini and Vezzoli 2003, Short 2008). In particular, Short (2008) puts back the focus on customer wishes and the consequent requirements in terms of product/service functionalities and quality. He explained how the assumption that being a ‘green company’ constitutes an effective marketing tool is not true, because both functionality and quality are the main drivers for purchasers. For instance, ‘environmentally‐friendly’ products, such as electrical cars or fluorescent tube light bulbs, are often associated with ‘poor performances’ (Short 2008, Hall and Vredenburg 2003). Applying the MC paradigm allows, in a straightforward way, the satisfaction of customer needs, because in many cases personalisation can be considered as a Kano delighter, and facilitates the achievement of economic sustainability. In turn, the achieved economic sustainability and competitive advantage allows easy promotion and fulfillment of the criteria linked to the remaining two SD axes: social and environmental. MC relates to the ability to provide customised products or services through flexible processes in high volumes and at reasonably low costs (Da Silveira 2001). One key dimension is the provision of sufficient product variety to meet diverse customer requirements, business needs and technical advancements while maintaining economies of scale and scope within manufacturing processes (Huang et al. 2005). Gilmore and Pine (1997) have proposed ‘four faces of customisation’ for achieving innovation outputs:

1. collaborative (designers working closely with customers);

2. adaptive (where standard products are changed by customers during use);

3. cosmetic (where packaging of standard products is unique for each customer);

4. transparent (where products are modified to specific individual needs).

Lampel and Mintzberg (1996) discuss a continuum of various MC strategies including different configurations of processes (from standard to customised), product (from commodities to unique) and the nature of the customer transaction process (from generic to personalised).

It can be remarked that the key enablers composing our framework are widely treated in the presented literature. However, in the previous works usually only one or two of the proposed enablers are considered when speaking about sustainable innovation. Furthermore, the interrelationships among them are not explicitly described, neither is explained how they can be exploited by applying a synergistic approach to develop and deploy a successful sustainable innovation strategy. This justifies the creation of the proposed integrated framework, which aims to provide a reference model. The latter supports the identification of the activities needed to design a suitable roadmap to achieve a sustainable innovation strategy development and application. This reference model can also be applied as a tool to conduct benchmarking analysis and scenario planning.

3. An integrated framework for sustainable innovation

The proposed integrated framework (Figure ) for achieving sustainable innovation, which capitalises upon the four key enablers introduced above, is developed to answer the increasing pressure faced by organisations to successfully apply in their daily operations the principles of SD. This targets the business holistic view of reaching economic success taking care of wider environmental and social implications, and, at the same time, developing highly innovative products and services for the global markets (Jovane 2003).

The presence of SD among the key enablers is obvious, considering that one key challenge to achieve sustainable innovation is to balance the conflicting pressures created by the principles of sustainable development: firm economic performance, versus environmental degradation and social disruption (Matos and Hall 2007). The formalisation of the SD objectives along the three axes and the subsequent development of assessment frameworks and qualitative/quantitative indicators ensures a comprehensive evaluation of all the aspects related to sustainable innovation introduction (Fadeeva 2004, Brent and Labuschagne 2007). Besides the targeted balance of the three axes of SD, innovative sustainable products should capture and reflect the specific needs and requirements of the global customer (using MC), the interaction with all the business partners composing the VN, such as suppliers, and provide knowledge transfer practices and the management of materials and waste along the complete product life cycle. The relevance of MC is undisputed even if describing its impact is less straightforward. On the one hand, MC, increasing customer satisfaction while keeping costs under control, can be a valuable source of competitive advantage. Thus, it becomes a main driver of economic sustainability. On the other hand, the MC paradigm can also have substantial impacts on environmental sustainability because of:

1. rational use of raw materials, which are consumed only when a specific customer order arrives;

2. forward and backward logistic optimisation: only the products ordered by the customers are delivered, thus strongly reducing the backward logistic linked to product returns;

3. dramatic back shop space reduction and a generalised reduction of the required space for inventory keeping all along the supply chain;

4. reduction of the number of unsold finished products to be recycled and/or disposed.

MC also contributes to social sustainability improvement, because it allows the realisation of product and services satisfying the requirements of global customers. This implies the possibility to easily comply with cultural, ethical and religious differences. The provision of ‘localised’ product/services, customised according to the specific needs and resources (knowledge and technological means) characterising a given geographic market, gives the opportunity to further improve social sustainability through the delocalisation of key processes, such as design and after‐sales services, with the relevant knowledge transfer (Flores et al. 2008). The current challenge is to target MC following the SD guidelines starting from the design phase where most of the new product strategic decisions are taken.

A strategy for sustainable innovation, managing at the same time the challenges related to MC and SD paradigms, requires the intervention, capabilities and knowledge of many heterogenous stakeholders, which should collaborate in order to fulfill both short‐ and long‐term objectives. This explains the importance of analysing the characteristics of the VN in which evolve the sustainable innovation strategy and matching the various innovative collaborative models with the requirements of SD. Thus, VN should consider the need to develop sustainable supply chains addressing also the environmental and social elements for sustainable innovation. Key activities under this enabler should concentrate on expanding the traditional focus on the forward flow of materials, components and products to explicitly address disposal, recycling, reconditioning and remanufacturing of used products (Kocabasoglu et al. 2008). Additionally, the reduction and elimination of by‐products along the complete supply chain, by using, for example, cleaner process technologies, is a fundamental goal under this enabler (Linton et al. 2007). Improvement initiatives can take several forms, including supplier development programmes. Additionally, different knowledge management practices should also be addressed. This would enable different knowledge resources, SD documents and know‐how, to be accessible by intra‐ and inter‐organisational partners in order to promote the use of the developed practices across organisational, professional, and multicultural boundaries and thus obtain multiplying effects (Wetherill et al. 2007). This is particularly important for disseminating best practices to suppliers located in emerging markets, since these suppliers usually do not assign sufficient resources to learn sustainable development goals and implement them in real practice.

The attention given to the overall PSLC thinking is justified by the important paradigm shift that imposes an analysis of the impacts of products and services from cradle to grave, i.e. from resource extraction to final waste disposal, or even better from cradle to cradle (McDonough and Braungart 2002). Furthermore, the latter should be done addressing also environmental and social challenges, because companies can no longer afford to be concerned only with product quality and production efficiency. Relying upon structured and rigorous methods, such as LCA or LCM, which embrace all the relevant processes from design to recycle/disposal passing through production and consumption/use, allows a better assessment of the sustainable requirements enabling them to be put in practice while developing the new sustainable innovation strategies.

Figure 1 Integrated framework for sustainable innovation.

4. Case studies

The proposed framework has already been applied as a benchmarking tool for assessing and comparing various Swiss–Indian collaboration scenarios in the machine building sector (Flores et al. 2008). In the following section, we present two supplementary case studies to demonstrate how the proposed framework constitutes a guideline to cover the four enablers of sustainable innovation. The research method used in the case studies is judged suitable for the proposed framework deployment, because a case study is an empirical enquiry that investigates a contemporary phenomenon within its real life context. According to Yin (1994), a case study is an examination of a specific phenomenon, such as a programme, an event, or a project. The bounded system, or case, might be selected because it is an instance of some concern, issue or hypothesis.

4.1 The HydroNET Project

The HydroNET project is a Swiss applied research project funded by the Swiss Innovation Promotion Agency. The HydroNET project's full name is ‘New Modular and Adaptive solution for water recycling and treatment’ and has the objectives of carrying out the design, production and implementation of decentralised and modular water treatment systems. The project will apply the dissolved air flotation (DAF) process instead of sedimentation. By deploying the flotation process very small or light particles that settle slowly can be removed more efficiently and in a much shorter time leading to a much smaller tank volume and footprint. The main deliverable of the project will be a fully functional prototype HydroNET system for its deployment in developed countries as well as in emerging markets. The scope and depth of the HydroNET research project, which originates mainly by a technical improvement need, has been enlarged through the application of the proposed sustainable innovation integrated framework in order to embrace sustainability and MC requirements and thus exploring further sources of competitive advantage.

1. Mass customisation (MC). The HydroNET project proposes a decentralised approach to waste water treatment and water purification as it promotes solutions tailored to the prevailing conditions. In fact, the project's goal is to understand the different locations' specific needs to design and customise the HydroNET system considering environmental and social aspects from the design phase. One innovative aspect of the project is the delivery of HydroNET modules to provide flexibility, adaptability and scalability depending on the water treatment demand. The deployment of DAF will allow customers to reduce the space required by common sedimentation processes and at the same time reduce the bad odours that affect the quality of life of the inhabitants living close to the water treatment plants.

2. Sustainable development (SD). During the project a SD measurement methodology and tool will be developed to enable the tracking not only of the economic benefits, but special interest will be focused on measuring and improving the social and environmental conditions of people in the different locations. Additionally, international initiatives such as the integrated water resources management (IWRM) approach will be followed to (1) identify critical knowledge needs at global, regional and national levels, (2) help design programmes for meeting these needs, and (3) promote alliance‐building and information exchange on IWRM.

3. Value network (VN). HydroNET targets the implementation of both lean supply chain management (LSCM) and concurrent engineering (CE) to design and deliver the proposed HydroNET modular system to the global market with competitive prices, on time and with the expected quality. By implementing both LSCM and CE techniques, efforts can be focused in both the product development and order fulfilment processes. Consideration will also be given to the complexity of integrating the customised needs for product development and the integration of new local suppliers within the lean value chain to eliminate waste. The HydroNET system's components will be standardised thus facilitating the integration of new local suppliers. These suppliers will be provided with a development programme to train them to apply and comply with SD principles and waste reduction techniques. One key aspect for this enabler is to understand the re‐use and/or recycling of components after their useful life cycle.

4. The entire product and service life cycle (PSLC), from the HydroNET system design, to its production, delivery and after sales service processes, will be analysed according to the economic, environmental and social axes. The LCA method will be applied to measure and track the material consumptions and potential types of emissions of the main standardised components over their complete life cycle. The LCA approach will also support the identification and compliance of local rules and regulations and identify actions for continuous improvement (Hauschild et al. 2004).

4.2 The footwear sector

Design for new products and processes can significantly improve sustainability by integrating guidelines and rules inspired by SD. Furthermore, by integrating MC rules, guidelines and tools, the improvements will be even better (Boër and Dulio 2007), demonstrating the strict relationship between these enablers.

A fully sustainable footwear MC approach must re‐think the whole shoe production cycle, introducing the increasingly important ecological criteria from the design phase of the shoe.

Environmental concerns are already topical, as shown by the introduction of the European footwear eco‐label (Ecolabel 2008). The footwear eco‐label is, indeed, a synthesis between the recognised need of a more environmentally‐friendly shoe industry and the customer's requirements for sustainable goods.

Notwithstanding the fact that the environment now plays an important role in customer preferences, shoe mass production still requires the use of chemicals and materials with a relatively high environmental impact, e.g. heavy metals (chromium), solvents, synthetic polymers, etc. Moreover, environmentally‐friendly end‐of‐life management of shoes still presents a challenge for the footwear industry that has yet to be resolved (Staikos and Rahimifard 2007).

Sustainable materials should be selected (or designed) on the basis of the ‘cradle to cradle’ principle (McDonough and Braungart 2002). This may require a complete redesign of the production process as well as of the well‐assessed materials that have been used so far in the footwear industry.

Materials from renewable resources that are completely biodegradable already exist. However, poor performance still strongly limits their implementation in the footwear industry. Emerging nanotechnology may help to reduce the performance gaps between the well‐assessed generation of materials used at the present and the newest, emerging, sustainable materials. Nanotechnologies applied to footwear have just started to be studied and they promise a dramatic improvement on impermeability/permeabiliy, better detection of material origin (with DNA bio‐nanodevices). For example, non biodegradable synthetic polymers derived from oils, widely used for the production of several kind of shoes (e.g. sport shoes), can not be easily substituted with biodegradable polymers from renewable resources e.g. polylactide (Arkema 2008), biodegradable rubber (de Koning and Witholt 1996) because of a lack of performances. However, the emerging possibility of using as low as ⩽5% by weight of nanofillers to noticeably improve the properties of biodegradable polymers from renewable resources (Ema et al. 2006, Jiang et al. 2007, Wu and Liao 2007), reduces the gap with the well‐assessed, non sustainable materials. Nevertheless, the use of biodegradable materials is only one of the factors which may contribute to a sustainable footwear industry.

Life‐cycle assessment of a shoe can provide evidence of the effects of not just the materials on the environment but also of the production processes. The application of LCA is, in fact, mandatory to get the eco‐label (Ecolabel 2008). Even if the application of LCA to the mass production model represents a step forward to more environmentally‐friendly footwear manufacture, two main concerns have to be underlined:

1. the eco‐label is not mandatory for the market and, more important;

2. the intrinsic characteristics of the mass production model, based on the push mechanism and thus being always under the risk of producing products that are not requested by the market, reduce the benefits arising by the application of LCA.

As mentioned above, the MC, consumer‐centric approach, based on a rational use of raw materials, on the logistic chain optimisation and on the reduction of the number of unsold finished products to be recycled and/or disposed, reduces the environmental impact of the (footwear) industry even without focusing on environmental‐specific issues.

This is obtained by selling, producing, manufacturing, and delivering the customised footwear only when is needed, where is needed and with the specific characteristics required by the consumer. The complete logistic chain is adapted to provide devotion to a single customer whilst taking into consideration the advantages of mass production in terms of economy of scale. The end results are: no or very little stock all along the supply chain; no need for return of unsold products; and energy used to produce only what is effectively sold (Boër and Dulio 2007).

Furthermore, the benefits linked to social sustainability, are considerable in terms of more adapted footwear for a variety of feet forms including deformed feet or feet sensitive to health problems such as diabetes. The impact of poorly fitting shoes on the world population has not been calculated exactly but in some advanced countries health insurers provide discounts for people wearing well‐adapted or, better, personalised shoes (Boër and Dulio 2007).

The integrated framework for sustainable innovation, combining together MC with service life cycle, may represent a step forward to reach the goal of sustainable innovation also in the footwear sector. Reaching this goal will require a change in the culture of the consumer as well as of the producer and this in turn will be driven by public institutions. The European Commission (EC) has supported the technical and cultural evolution of the footwear industry through Framework programmes, for examples: EuroShoE and CECmadeShoe.

The EUROShoE project (www.euro‐shoe.net), [EC Fifth Framework Programme, specific programme ‘Competitive and Sustainable Growth – Call Growth 2000’] proposed an important transformation in the process of designing, producing and selling shoes. The project was aimed at paving the way for the development of a complete range of enabling technologies that would set new standards in terms of flexibility, process efficiency and technical levels for all kinds of shoe production (Boër and Dulio 2007).

The CECmadeShoe project [EC Sixth Framework Programme, specific programme Priority {IST – NMP}] aims to sustain the footwear industry in all the aspects of shoe manufacturing: promoting and performing R&D activities regarding products, processes, materials, organisation, and a widespread use of Information and Communication Technologies.

CECmadeShoe addresses many efforts to develop a sustainable shoe production process, for example, developing and applying new, biodegradable materials for shoe manufacture (Rodríguez Gómez et al. 2007, Simões et al. 2007).

A new EC funded project, DOROTHY, is now further promoting the MC concept in shoe design tools. DOROTHY promotes a radical transformation of the shoe sector that relies, on one hand, on the development of tools for the design of customer driven, adding value shoes and, on the other hand, on the realisation of tools for the design, configuration and reconfiguration of flexible multi‐site, multi‐nation production factories, meant to manufacture those customer driven shoes. DOROTHY's mission is to ‘design customer driven shoes everywhere, manufacture them intelligently anywhere’ as a crucial challenge for the shoe industry to gain competitiveness in global markets. The project will combine the benefits of a MC‐oriented design of the shoe with the MC‐oriented design of the factory, further extending SD empowerment.

5. Conclusions

Sustainable innovation is an actual challenge for organisations to develop innovative solutions that also comply with SD guidelines. Employees require training to develop a new mind‐set that enables them to integrate not only the economic aspect in their daily operations, but also the environmental and social elements. This paper has proposed an integrated framework to support organisations to propose and carry out new projects and initiatives to obtain sustainable innovation outputs. The four proposed enablers are: MC, SD, VN and PSLC. The case studies have demonstrated the general applicability of the framework. Future research will be oriented to the development of tools to support design and decision making in accordance with the described framework.