(This is an extract of a recent presentation delivered by Keith Williams to the Hitotsubashi University and Kanagawa University in Japan, and Lancaster University in the UK)
The combination of sustainability, design thinking, and digitalization can lead to more effective, innovative, and user-centric solutions that address complex challenges while also promoting environmental and social responsibility. Organizations that embrace these connections can position themselves as leaders in driving positive change for a more sustainable future. In this blog I shall attempt to share my thoughts on how these fit together and the benefits that might accrue from such integrated models.
The benefits of combining sustainability, design thinking and digitalisation are tangible. Impacting areas such as growth, operational productivity, cash and brand value. But there are barriers to change – that organisations should consider addressing to secure compelling sustainable advantage. The model below identifies six enablers that can unlock the potential of design-thinking, digitalisation and sustainability to deliver change.
Holistic Problem Solving: Combining design-thinking with sustainability leads to solutions meeting user needs while reducing negative environmental and social impacts. Digitalization enhances this by providing insights into user behaviour, market trends, and environmental factors for sustainable design.
Data-Driven Sustainability: Digitalization offers real-time data for measuring environmental impact, aligning with sustainability goals. It aids informed decisions, process optimization, and waste reduction.
Innovation for Sustainability: Design thinking nurtures innovation, vital for eco-friendly solutions beyond small improvements. Adding digitalization lets organizations use tech like IoT, AI, and blockchain for new and impactful sustainability solutions.
User-Centric Sustainability: Design thinking’s user focus extends to aligning sustainable practices with stakeholder preferences. Digitalization offers personalized experiences, educating users about eco-friendly behaviours for change.
Circular Economy Solutions: Design thinking creates circular products; digitalization manages materials throughout their lifecycle, supporting sustainability’s shift from a linear model.
Collaborative Innovation: Design thinking and digitalization encourage cross-disciplinary collaboration for sustainable solutions, often involving various stakeholders. Digital tools enable virtual teamwork, while design thinking aids problem-solving.
When working with Periphas I seek to position innovation proactively from the outside in.
We encourage executives to “think differently……..” By adopting a “We noticed ………….we thought” mindset we secure our clients the credibility to collaborate in shaping opportunities and defining solutions. This enables breaking away from the invisible orthodoxies governing corporate behaviour. The power of data driven intelligence is used to seed the potential for innovation.
So – for example – when a large corporation reports that their voluntary employee leaver rate is 14% in 2023 – and we know it was 10% in 2019 – with $19bn representing their employee cost base. Through a calculation including recruitment cost, training cost, productivity losses and learning curve impact we can easily justify a $300- 500m cost saving opportunity by improving employee experience through HCM technology that eases social concerns within their sustainability agenda .
This form of positioning seeds the opportunity for Design-Thinking and Sustainability to converge – referencing a cost that had it been averted in this example would have ensured that the CEO reached their stretch cost reduction targets in their executive pay plan.
Relevance of Environmental, Social and Governance
It is often said that the most sustainable businesses are the best run businesses. That may be contentious for some business leaders. What we can certainly say is that businesses with a greater focus on sustainability are more attractive to the investment community and as such we see higher equity prices for businesses considered more sustainable.
Recent economic and social trends have led to higher levels of ESG integration among firms worldwide and higher prioritization from investors to include ESG-focused firms in their investment choices. From a global survey group over one-third of the respondents were willing to prioritize ESG benefits over a higher return on their investment . These trends influenced the performance of securities on the market, leading to an increased value of individual weighted stocks, resulting in an overall increase in the index value. We believe that investors will tend to prioritise sustainability initiatives that support a corporation’s ability to differentiate and drive profitable financial performance.
Conclusions
So, in summary, we know that organisations with the culture, leadership, infrastructure to effectively implement the Trinity of Design-Thinking , Sustainability and Digitalisation are likely to do better than their peers in terms of financial performance metrics, access to funds and the cost of capital, shareholder value and their overall brand value. But organisations still have cultural and structural barriers that they need to overcome to realise these benefits – particularly in relation to their ability to change reward systems, herd mentality cultures and their resolve to modernise legacy infrastructure and invest in talent and skills.
