harvard business review merger

8/3/2019 Harvard Business Review Merger

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HARVARD BUSINESS REVIEW

WHY SUSTAINABILITY IS NOW THE KEY

DRIVER OF INNOVATION?

HOW GREEN WILL SAVE US?

BY,

C.K.PRAHALAD

RAM NIDUMOLU

M.R.RANGASWAMI

CRITICAL REVIEW BY:-

GROUP NO: 7MERGERS


2/5

INTRODUCTION

ABOUT AUTHORS:

C.K.Prahalad is an India born American economist, alumni of IIM Ahmadabad and Harvard

business school. Prahalad has been among the top ten management thinkers in a major survey

around the world. He was a university professor at Michigan University and also a member of

Blue ribbon commission of UN of private sector.

Dr.R.Nidumolu has 20 year experience in strategy and execution consulting. He has been a

pioneer in studying major business trends such as corporate sustainability. He is currently the

CEO of Innovastat.

Dr.M.R.Rangaswami is a software executive investor and philanthropist and he was the

founder of corporate Eco forum organization dedicated to improve the effectiveness of eco

strategies.

C.K.Prahalad, R.nedumolu and Rangasamy were associated

with Eco forum organization. They had a common interest on sustainability and green energy;

this brought them together for this case study.

REGARDING TOPIC:

The growing industrialization has lead to major economic development all over the world.

This economic development demands more natural resources, which are limited. To sustain we

require this natural resources .This sustainability can be achieved only by innovation

.Innovation helps us to find ways to use this resources optimally.

AIM OF THE CASE STUDY:

Industries are using more non-renewable natural resources as their energy which is a non

sustainable practice. By using renewable resources companies can save cost and save

environment. The case study focused on methods companies can adapt for optimal use of natural

resources and profit. How innovation can help them to make profit and leads to sustainability.

FINDINGS:

Companies in developing countries have fear of profit erosion if they follow environment

friendly methods. But in developed countries companies are forced to adapt such methods.

Sustainability has become a corporate social responsibility.

Sustainable practice will lead to low input cost.


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Early followers will develop a core competence and avoid government regulations.

Sustainable practices save companies from crisis.

SUMMARY:

Companies can adapt sustainable practices to get every advantage to be profitable and

competitive.

View compliance as opportunity:

Compliance with the government rules will avoid government interference and actions to adhere

to such rules. Compliance to global standard saves companies money. By compiling rules and

regulations companies can avoid penalties. Egg: GM followed California fuel consumption and

emission standard so that they are ahead of competition .Hardware manufacturers avoided

hexavalent chromium as it creates cancer.

Making value chain sustainable:

Drive to be efficient will drive us to renewable energy which will cut cost and improve

efficiency. Practicing sustainable measures will increase efficiency of the supply chain. Many

companies induce suppliers to become environment conscious for which incentives are provided.

This helps companies to reduce bottom line cost.Eg: Fedex was able to reduce its fuel

consumption by 42% by introducing Boeing 777 airplanes instead of smaller planes and by using

hybrid vans. Companies also try to improve efficiency by letting their employees to do work

from their homes.

Designing sustainable products and services:

Companies need to understand consumer behavior and produce Eco friendly products both

beneficial to the company as well as customer. Companies can also redesign their existing

products. E.g.: P&G conducted research and introduced cold water washing powder instead of

hot water powders which helps to save kilowatts of electricity.

Developing new business model:

Invention is creation of new things; innovation is the effective application of invention.

Companies need to develop business models which can reduce the input cost and earn profit.

Adopting new business models helps companies to gain competitive advantage and have a better

public image. E.g.: FEDEX acquired kinkos chain of print shop instead of shipping it chose

delivering copies electronically.

Creating next practice platform:


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Early movers have always a competitive advantage next practice changes existing paradigm.

Implementing sustainable practice at every level of organization will be a better environment

practice. Employees after knowing these practices will save environment for them and their

generation. E.g.: practices such us smart grid for interchange of technology information will

reduce cost and increases efficiency.

CRITIQUE

STRENGTHS:

Following sustainable practices helps companies to develop a better corporate image.Companies need to be update with the current technology and trends.

Being the first to adapt certain sustainable practice help the company to gain competitiveadvantage.

Adapting sustainable practices help companies to reduce cost and increase efficiency.This also helps company to decrease their supply chain cost and increase bottom lineprofit.

Sustainable practice leads to innovation which will lead to many R&D drives bycompanies giving eco friendly products to customers

Practicing modern sustainable practices will be a change for the traditional high costpractices.

WEAKNESSES:

Sustainable practices require huge initial investment due to which companies indeveloping countries hesitate to adapt.

The benefits from sustainable practices can be achieved only in a long run. Companiesneed to be very strategic to design these practices for better result.

Lack of awareness among customers is also one of the reasons for slow growth of ecofriendly practices.

It is to maintain same standard across the globe due to various country policies.The following questions are to be answered to satisfy community to adapt sustainable practices:

Why we require sustainability? What are the benefits of following sustainable practices? Why to spend money on sustainable practices? Can we get profit from such practices?

NOTABLE FEATURES:

If you comply with sustainability rules we can avoid penalties and improve our bottom line.

Sustainable practices helps in optimizing supply chain.


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With innovative sustainable products companies can create demand for their product and gain

huge market share.

SOURCES TO SUPPORT:

Vatech wabag was a small company in 1990s with only 20lakh turnover .They is intowater treatment, desalination, water reuse business. Today the company has turnover of

3000crores.The Company was able to identify the opportunity for such eco friendly

practices which gave it a huge profit.

In Tirupur, a small town in Tamilnadu where many textile units were forced to closedown as they were not following environmental norms set by government of India.

Similarly coca-cola beverages bottling plant at plachimada in kerala was closedown due

to over exploitation of groundwater during recession.

During recession time, Jet airways had to withdraw aircrafts like A330-200 fromChennaiSingapore routes and introduced much smaller planes like B737 to reduce cost

and fuel consumption. Software companies have started adapting car pooling, initiative for employees to share

their cars which help in reducing fuel consumption.

CONCLUSION:

Leadership and talent are critical for low carbon economy. The current economic situation has

placed enormous pressure on planet. Sustainable practices have to be followed to sustain without

disturbing environment. Traditional approach companies will collapse and companies who take

innovative steps will sustain.

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