According to the World Economic Forum, “The pace of change over the past 50 years has been extraordinary. The global economy has expanded fourfold, over a billion people have been lifted out of extreme poverty, we live significantly longer and childbirth mortality had significantly dropped.” However, the planet has paid a heavy price for this growth, and now it is incumbent upon the profiting corporations to focus on sustainability. Yet, many don’t know where to begin or how to change their legacy approaches. Partnering with startups gives corporations the inventive solutions needed to drive change.
Why should companies care? It’s good for profits, and it’s good for the planet. A new report from the World Economic Forum states that “$44 trillion of economic value generation – over half the world’s total GDP – is moderately or highly dependent on nature and its services.” The Shelton Group’s latest Millennial Pulse study reveals that 90% of millennials say they would purchase from a brand that applies effective environmental and social practices, and 95% of them would recommend that brand to friends. According to Nielsen, “81% of global consumers feel strongly that companies should help improve the environment.” Finally, a study by professional services firm PwC found that 65% of people across China, Germany, India, the U.K. and the U.S. want to work for sustainable employers and organizations with a strong social conscience. These numbers have an enormous financial significance for companies.
Companies like Patagonia, Tesla, Whole Foods and the Honest Company have all focused their positioning around environmental and social practices, with Patagonia even changing its mission to “We're in business to save our home planet.” But what if your company’s focus is only on returning value to shareholders? How can you start to make an impactful difference when sustainability isn’t ingrained into your brand DNA?
Whenever an established company is faced with a business challenge that isn’t solved through traditional means, we recommend tapping into the startup ecosystem for inventive and often breakthrough solutions. Startups and their investors focus on specific challenges and deliver outsized results that can be amplified through partnerships with larger companies. Sustainability is one of the hottest growth areas in the startup ecosystem and a huge opportunity for collaboration. I recommend three ways of partnering with startups:
- Open Innovation: Host a competition sourcing the best ideas, startups and technologies to solve your environmental challenge.
- Invest: Place several bets on early stage companies that are tackling the challenge you want to help solve.
- Partner: Identify startups that can work with you through pilot partnerships to accelerate results.
So how do you start? First, you must understand the impact that you want to make. Do you want to make your packaging sustainable, streamline your supply chain or minimize your carbon footprint? Whatever the impact is, it should be tied to your company’s authentic mission and reason for being. This isn’t about greenwashing your image, but about making a change that is important and aligned with your business. Once you understand your desired impact, I recommend you engage your employees and your consumers to help brainstorm the solution together. By involving everyone in the plan, you get the wisdom of the crowd as well as involvement, which will help you turn your idea into a movement. Then, you reach out to the startup community to find inventive solutions via the three paths of partnering listed above.
The accelerated change around us has delivered tremendous financial rewards, yet at tremendous environmental costs. However, now we have an opportunity to invest in a greener future and save our planet, all while driving growth and profitability. It will take inventive, creative solutions, but startups and corporations can work together toward change.
To learn more about how to build an External Innovation practice, contact info@venturefuel.net
