The future's smart

New tool puts business innovation under the microscope

Faced with a tough and highly competitive economic climate, companies have to innovate to survive. Even as the economy recovers, they will face testing challenges, as issues like water scarcity and obesity – not to mention carbon – rise rapidly up the corporate agenda.

Simply carrying on as normal is no longer an option: tomorrow’s successful companies will be those that have the smartest ideas today. But which ideas are good ones and which are red herrings? Which products and services are likely to be successful in 10 or 20 years, in a more populated world where climate change impacts are hitting home? And will these new offerings help solve those problems – or exacerbate them?

Smart businesses, whether micro-entrepreneurs or major retailers, already recognise that this forward thinking is essential. At Forum for the Future, we’ve developed a tool that can help guide people through this process, using a series of questions which lead to a clearer picture of any business model’s key social, environmental and economic impacts.

It might sound obvious, but even the ‘greenest’ of business concepts need to be scrutinised in depth to check that the sustainability benefits outweigh the disadvantages. For example, does the picture change when you tackle specific questions like: ‘Is there a reduction in ecological impacts and resource intensity?’ or ‘Does each link in the supply chain add economic value?’

We’ve tested the framework out on a range of existing businesses, from commercial car clubs to major supermarkets, and have come out with some interesting results. Take a car club such as Streetcar or Zipcar, for example. One club car is estimated to replace six private cars, so it definitely represents a tangible shift from a product to service. At first, our framework appears to show that the model not only reduces car numbers, but gives customers the freedom to travel at a relatively low cost. So far, so sustainable.

But the tool drills down further, asking questions like, ‘What happens when it goes to scale?’ In urban areas – where the business works best – a car club might compete with a highly efficient public transport system. So could it potentially dissuade people from using that system, with negative environmental impacts? If the business model were really sustainable, wouldn’t it take people beyond petrol-fuelled private transport, or help them to switch to buses, trains and bikes, instead of cars? To be fair, Streetcar is one step ahead on this. Recognising that petrol-fuelled cars aren’t the long-term solution, it has recently introduced its first plug-in electric-hybrid rental car. The tool shows that, while car clubs are not a flawless sustainable business idea, they are certainly a move in the right direction.

It could also help weed out any really bad ideas early on. For example, we hope it would act as an important ‘sense check’ for an acquisitions team thinking of buying a bottled water company!

What we want to do next is use the framework with any company that is developing a new venture or that wants to challenge its current business model. We believe it could not only help avoid future commercial headaches, but – more fundamentally – could identify which businesses are truly ‘fit for the future’. – Dan Crossley

For more information, please contact Forum’s Head of Business Strategies: d.bent@forumforthefuture.org