A hopeful but volatile 2012 confronts all product development professionals with an immutable truth: companies can no longer effectively manage their brands without proactively managing sustainability. Brand reputation and appeal increasingly depend on sustainable product development.
For products companies, it’s the products that comprise the vast majority of total corporate environmental footprint. So it won’t be the CMO or slick advertising that leads the way in persuading your customers that your company is walking the talk on sustainable business practices. It will be you, and the decisions you make — decisions on what new products and features to approve, and how sustainably they will be designed, sourced, made, distributed, and disposed of or re-used.
Gartner, the technology analyst firm, recently released compelling new research¹ on achieving competitive advantage through sustainable business. One of their top three recommendations is building an integrated and multidisciplinary approach to sustainability. But what does “integrated” really mean from a product portfolio management perspective?
It may seem obvious that it means sustainability decisions can’t be made in a vacuum. If obvious, then why are most sustainability assessments still segregated from core portfolio assessments such as overall customer impact, competitive impact, cost, and risk? Less obvious is the fact that true integration also requires something more — something explained beautifully the other day by a very articulate VP-Corporate Social Responsibility. He said to me, “Even with all we’ve achieved as a sustainability leader, until now without the right portfolio management tools we didn’t have a way for our product development teams to systematically encounter sustainability criteria early in the portfolio decision cycle.” His engineers were culturally conscious about sustainability considerations, but needed a platform for concept evaluation to assess trade-offs within sustainability criteria as well as trade-offs between sustainability and other customer requirements; hence, systematic.
That’s how a lithium-ion battery manufacturer, for example, sees that proposed new battery “Concept A” is more sustainable than what it replaces and yet still will improve customer experience on other key criteria as well, while Concept B, only slightly more sustainable, makes too many performance compromises. But the product development VP also had to know that the reason both concepts were more sustainable than their current product is lower toxicity and less energy use in production, even though water use would be somewhat higher. The key was looking at systematic trade-offs both inside and outside sustainability in an integrated assessment of the development portfolio.
Managing sustainable product development as part of a larger portfolio management system also means giving sustainability expertise a seat at the table right alongside cross-functional team members from engineering, product management, and marketing early in product development decisions before it gets much more expensive to make mid-course corrections. Back to the Gartner recommendation: multidisciplinary, which now includes sustainability — extending across the C-suite. (I discussed the CIO role in a previous post titled, How Portfolio Management Can Maximize CIO Contribution to Shareholder Value.)
What’s the return for sustainable product development? Not just stronger brands, stronger customer relationships, and the premium pricing and investor confidence that accrues to that, but also better employee attraction, retention, and satisfaction. In short, sustainability propels shareholder value and brand success. I hope they are both yours in 2012 and beyond.
¹ Gartner, Inc. (Stephen Stokes and Simon Mingay), “Achieving Competitive Advantage Through the Pursuit of Sustainable Business,” December 2011.