Why every company needs a Chief Innovability Officer
A few international friends of mine asked for an English translation of the original Dutch editorial. Hereby - with thanks to Jurgen Mortier for his assistance with the translation.
To the extent that a Google search is exhaustive, there is only one person in the world whose business card carries the title ‘Chief Innovability Officer’: Ernesto Ciorra, member of the Management Team of Enel, the Italian energy group with 63,000 employees worldwide.
'Innovability' is of course the merger of 'innovation' and 'sustainability'. You could dismiss this as a cheap (and somewhat contrived sounding) trick. But the underlying message is crystal clear and extremely relevant: without innovation, a company cannot be sustainable. Or to formulate it positively and concretely: innovation is essential to contribute as a company in a meaningful and profitable way to the realisation of the Sustainable Development Goals (SDGs). As a reminder, the SDGs include the greatest challenges of our time (poverty, climate change, good education, etc.) and have the ultimate ambition to make the world a better place by 2030.
Much has been written about those SDGs. And many companies are obviously working on this, also in a European context. In many cases the focus is on controlling the negative side effects of the company’s core processes, such as emission of harmful substances. Or it is directed towards 'doing good' in the periphery of business operations. Examples of this are plentiful: think of the food company that donates one cent for each euro of product X sold in a fund for poor farmers in the South; the financial institution that annually sponsors a cultural exhibition on a misunderstood topic; the clothing brand that has an inspection firm carry out audits on child labor at suppliers in the Far East; etc.
There is of course nothing wrong with these activities. However, few companies structurally reflect on new products and services that directly contribute to the SDGs. This is somewhat surprising, because 'doing good' can significantly contribute to more profit. The most famous example in Belgium is Umicore. They develop cathode materials for battery manufacturers that supply these batteries to car assemblers. It is the performance of the cathode materials that ultimately determines the range of the electric car and thus the commercial and societal success of 'green mobility'.
What can be done to convince more European business leaders to take the path of sustainable innovation? There are three major challenges.
Collective management challenge
Let’s be clear, not every company needs a Chief Innovability Officer. But they do need a management team that collectively appropriates the challenge. Although Corporate Social Responsibility (CSR) has gained influence in companies in most EU territories, it is usually far removed from the governance bodies where decision-making really takes place, the executive / management team and the board of directors. As a result, efforts in the field of sustainability typically fail to inform the business model of the company and often dilute into mere 'public relations'.
A nice, positive example is the Dutch DSM. Under the leadership of CEO, Feike Sijbesma, and his team, the company went through a strategic transformation from a traditional chemical company to a "science-driven sustainable company." Or elsewhere, in France, the food giant Danone, of which CEO Emmanuel Faber claims that its Board-supported corporate mission is to make "healthy food accessible to as many people as possible, for the benefit of everyone; suppliers, consumers and owners."
Innovation with new partners
It is only through innovation that a company can move 'doing good' to the core of its business. And this type of innovation can range in scope: from products and services over distribution models and operational processes to, ultimately, the way in which the company makes money (the business model).
The challenge for companies that are serious about innovation is that new alliances and partnerships are required to develop solutions and models that are viable and scalable, ideally worldwide. Companies hold unique 'assets & capabilities' to work on innovation. But to really make impact, business managers must become (much) better at collaborating with other organisations, including organisations that are currently not on the company’s radar, such as NGOs, social entrepreneurs, social profit entities, government agencies, etc.
A good example is Nike, the American sports giant. They deliberately search for "unconventional partnerships" to innovate. Initiated by Nike and, among others, the American space administration NASA, LAUNCH started a few years ago. The initiative connects more than 150 scientists, NGOs, manufacturing companies, entrepreneurs, etc. with a view to collective innovation towards environmental and social challenges. Or closer to home, Enel, where Ernesto Ciorra as Chief Innovability Officer, works on “open innovability” with the ambition to turn Enel into "the leading energy innovation eco-system."
Management with longer time horizon
Finally, management’s time horizon is crucial for the success of sustainable innovation. Every organisation that engages innovation seriously knows that it requires continued efforts. This is no less true for sustainable innovation.
Put differently, we need business leaders (and investors) who dare to think and take action in a long(er)-term perspective. The short-term strategising that tends to be the norm in companies today stands in contrast to this reality.
Unilever CEO Paul Polman is an advocate of a long-term strategy horizon. He abandoned quarterly reporting, precisely because it runs counter to the long-term value creation ambitions of his organisation. Coincidentally, this debate also seems to be very topical in the United States.
When European companies take on these three ‘doing good’ challenges, they do not only contribute to a better world. They also put in place the foundations for sustainable growth and robust profitability.