BUS604: Innovation and Sustainability

"A concrete example in the Netherlands is AkzoNobel. Together with DSM (the Dutch chemicals and nutrition conglomerate), AkzoNobel is a leader in the Dow Jones sustainability index. They are highly respected sustainable companies. For example, AkzoNobel produces coatings that can partly keep out the heat of the sun so that you need less energy for air-conditioning systems, and coatings for ships, so you can have the same speed using less energy. There is a connection between sustainability and products. They are also connected with the Human Cities Coalition. At the same time, they were confronted with PPG, who wanted to take them over (in 2017). So we have a struggle between sustainable business practices and the hard world of takeovers, financial interests, and shareholder value. But at the same time things are changing.

"Last year I was invited to speak at a conference of the Singapore Institute of Directors. A thousand people were there. It was all about the question: what do sustainable development goals mean for our businesses? You can feel things are changing. You have front-runners, and you have people that are lagging behind. People like Paul Polman, Feike Sijbesma (head of DSM) and Frans van Houten (head of Philips) are leaders. They will change the world. In my opinion it is a matter of how you change the mindset and how you change the mainstream.

"I am convinced that the role of business is changing. In my presentation I usually refer to Milton Friedman saying in 1970: "the business of business is business". Today it is Michael Porter (the American academic) who is saying: "No, it is a matter of creating shared value". A company is there to generate economic value, otherwise you cannot exist, you cannot invest in R&D, you cannot keep your people employed. At the same time you are there to create societal value by addressing the needs of society. And you have to combine these two components. I believe that this is a new reality.

Lesson Learned

Always be aware of the DNA and values of your organization. Use the creativity of your organization and its people.

Try to make a connection between the Sustainable

Development Goals, Climate Change, the Circular Economy, the New Economy, and the Moral Dimension.

If you have analyzed things well and have the conviction to carry out reforms and implement new ideas, stick to them.

In order to be successful, especially when it comes to innovation, it is essential to cooperate with other organizations and sectors. Invest in new alliances with relevant stakeholders.

Leadership requires long-term thinking. In order to accomplish change, you need to develop a long-term view.

"Partly it is a matter of defining long-term goals. If you want to review your CO2 emissions, you can try different rules to reach that, but that is the goal: we want to reduce our CO2 emissions. Or you want to only have clean energy. These things can be part of your organizational strategy. These are the longer-term goals. But then you can put the other question: how do you achieve them? That is a matter of instruments, and also of scenarios".

"Has the Innovation Platform led to new ideas? One element you can see now more and more of in the Netherlands is start-ups, because start-ups are all about generating new ideas. They are all about creativity. Traditionally, a company like Philips has been interested in start-ups for a long time. They offered facilities for start-ups to do their business and they had connections with them. In the province of Limburg we have, for example, the Brightlands Chemelot Campus (which describes itself as "a creative breeding ground for innovation in smart materials and sustainable manufacturing" and hosts 2,500 people engaged in a variety of innovative activities).

"A lot of start-ups are active in the sphere of smart materials. At the medical faculty of Leiden University, you will see a lot of startups in the sphere of health. In Rotterdam we have three initiatives: the Erasmus Centre for Entrepreneurship, the Cambridge Innovation Centre (CIC), which has to do with start-ups; and PortXL, which is encouraging start-ups in the sphere of port development.

"We have food initiatives at Wageningen University. And we have energy-focused start-ups in the Northern region. Today there is a kind of admiration for start-ups. The problem is that a lot of start-ups fail, because their innovations and ideas do not lead to a scaling-up of activities. That is the reason why today we are trying to develop connections between the big corporations and start-ups. That is the model you can see now in Eindhoven, in Limburg, and in Rotterdam. This is increasing and people really like those new ideas, that creativity".

Why have the United States been so successful in innovation, often from individuals developing their ideas, like Google which was started by two young men. Why haven't the European countries with all the money spent on innovation been able to come up with something as dynamic as that?

"I think it has to do with the American spirit, entrepreneurship. There is an economic dynamism in the US, that is their big advantage, in Silicon Valley and all the other initiatives. We can learn from that in Europe. Although we have good universities and good companies, so much more can be done. We need a kind of new European dream. In the 1950s, after the Second World War, political leaders said that should never happen again. They focused on creating a European economy and economic cooperation to create a better life for people.

In the 1980s politicians and economists said yes, we have a tariff union but we do not have a real single market. That led to the strategy of Europe 1992 with the free flow of goods, capital services, and people.

"All this created a kind of new dynamism. Then people said Europe is the place to be, here you can find the world's biggest consumer market. Everything went well until 2008. Then we had the financial crisis in the US but a year later it was no longer about the US, it was about Greece, Ireland, Portugal, Spain, Italy, and France. People said, what is happening with Europe? Is it a museum? Now things are going better. But it's not enough. We must have a new European dream. Europe can really make a difference when we act on sustainable development goals, climate change, or the circular economy. We should do much more on that. We need a new European mindset. And it will help if there is a leadership that enables it, that thinks in other terms about Europe. So far it has been too defensive.