Blog: The complexity of green innovation2022-09-07
To make our society more sustainable, we need to reduce the carbon footprint of scalable products. This means that it is not enough to invent a new “green” technology. We also need to create a market for it, know how to expand this market, help users of green technology and other important stakeholders to see the environmental, financial and societal benefits in this new market. If we fail, the new technology risks remaining an invention that is used by few, instead of being an innovation that can change our trajectory in broader context.
In a recent study, we examined the complexity of managing green innovation in the Swedish wood construction industry. By complexity we mean the difficulties and the uncertainty that surround implementation of green innovation internally for the organization, but also across the value-chain. We focused on the engineered wood technology, which is used to construct high-store wooden buildings. Using this technology reduces the CO2 output of a construction project compared to building with steel and concrete. The Sara Cultural Center in Skellefteå, Sweden, is one of the world’s tallest timber buildings that uses this technology.
Using data from material and product manufacturers, materials and equipment suppliers, contractors, architects and engineers, and other service providers that are directly involved in the construction of high-store wooden buildings, we studied the type and the range of internal innovation activities that these actors need to do for using this new technology. We also looked at driving forces that bring different companies together to participate in construction projects that uses this technology.
We found that the level of complexity for implementing green innovation can differ in three ways:
- Companies behind the development of green innovation technology need to engage in a wide range of innovation activities (product innovation, process innovation, position innovation, and business model innovation). This makes managing innovation activities highly complex, but is considered worthwhile given the new business opportunities that may arise from scaling this innovation.
- Companies that adopt green innovation need to innovate their processes to handle this new technology. These are material and product manufacturers, contractors and builders. They are mainly responding to the changes that are created by the material producer by changing their procedures in light of new technology.
- Companies that are unaffected by the new technology and do not need to innovate in order to be considered sustainable. These are architects, engineers and certain contractors. For them, using engineered wood technology is simply one of the possible ways of operating. These companies already embrace high customization as their daily business and do not need to change in order to adapt to new technologies.
So, what motivates these different types of companies to participate in green innovation construction projects? We found three main driving forces for working with engineered wood:
- It can improve efficiency
- It can open new market opportunities
- It can increase the level of servitization
Surprisingly, the desire to engage in sustainability was not a reoccurring theme across the value chain. Instead, sustainability is rather a goal of the company that wants to drive change. However, in order to get other actors to play along and implement green innovation – the innovation needs to be profitable to the value chain actors.
PhD and senior lecturer in Business Administration
- Abadzhiev, A., Sukhov, A., Sihvonen, A. and Johnson, M. (2022), "Managing the complexity of green innovation", European Journal of Innovation Management, Vol. 25 No. 6, pp. 850-866.