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Sustainable innovation in small and medium-sized enterprises

Sustainability is a topic that many companies are dealing with right now. Especially in the development of new products, services, processes and business models, the focus is no longer only on economic efficiency, but also on the social and ecological effects. Sustainable innovations are therefore more complex and require new knowledge, methods and tools. Thus, sustainable innovation forms a new innovation discipline, so that manufacturing companies in particular are beginning to rethink their innovation work.

However, small and medium-sized enterprises (SMEs) already face different drivers and obstacles in the field of innovation than large companies. They face different challenges in establishing sustainable innovation work, but also leaves them with great opportunities.

How do I, as an SME, manage to establish sustainable innovations?

Due to their structures, SMEs often face a number of obstacles when trying to establish sustainable innovations.

It is precisely the financial and personnel constraints that form a first major obstacle to investing money and time in sustainable innovations, especially if the return on investment is not immediately visible. Establishing sustainable innovation requires time and resources that are often tight in a small business. New approaches always involve some risk, and some SMEs are reluctant to take these risks, especially if they are in an uncertain financial situation.
But unlike larger organizations, SMEs can make decisions and can implement change more quickly if there is the will of a few key drivers. The will for sustainability has a very large influence on whether the topic of sustainability is advanced and integrated into innovation work.

When sustainability is integrated into all aspects of the business, not just specific products or services, it leads to a big drive. From improving the energy efficiency of operations to minimizing waste in the supply chain, many levers are possible.
With the help of their improved agility, SMEs can test and implement innovative, sustainable solutions faster and better, and thus chart a course toward sustainability more quickly. Sustainable innovation work becomes part of the company’s sustainable orientation and thus also part of sustainable innovation capability.

A distinct prerequisite: sustainability-oriented management that promotes innovation. Without this support and direction, only small individual measures will ever take place and sustainable innovation projects will be stifled due to the immediate costs. In doing so, there are governments and organizations that provide support and funding for SMEs that want to promote sustainable innovation. These have to be revealed and used for their own benefit.

As a further step, it makes sense to invest in employee training, because employees are the most valuable resource, especially in smaller companies. Their skills and knowledge are critical to the success of sustainable innovation initiatives. Sustainability often requires specialized knowledge and skills that may not be available in a small business. Therefore, the focus should lay on corresponding competencies.
The first step is to keep up with the constantly changing legal regulations and requirements with regard to sustainability. But sustainable innovation work goes beyond statutory regulations. It constantly keeps an eye on the customer as well as the planet and tries to create added value for both. SMEs are often in direct contact with their customers. This contact has to be used to better understand customer needs and develop sustainable products or services that meet those needs.

In addition, good business networking ensures finding new partnerships to share resources and knowledge on sustainability. Joint projects can lead to innovative ideas and reduce research and development costs.

The topic of trade fairs is also a must-have. It is important to measure and report on the impact of all sustainability initiatives and any newly developed sustainable products and services. This can help demonstrate the value of the effort and gain support for further sustainable innovation projects.

What helps with establishing and supporting sustainability transformation

  • A clear will for sustainability on the part of the management, which ensures quick decisions and the courage for change
  • Sustainability as an integral part of all business areas, not only in innovation work
  • Agile testing and implementation of innovative, sustainable solutions, which small companies in particular can do better and faster
  • Government and organization support and funding for SMEs with sustainable innovation projects
  • Building sustainability knowledge, skills, and competencies among employees.
  • Leveraging close customer contact to meet the customer’s needs with sustainable products and services that also do something good for the planet
  • Leverage good and personal business networks to form new partnerships for sustainable innovation projects
  • Measure the impact of new sustainable products and services to encourage readiness for further sustainable innovation projects

3 first steps to establish sustainable innovations in SMEs

  1. Create awareness: Raise awareness for the topic of sustainability, because for many people sustainability does not yet play a (major) role in business or in private life.

    Raising awareness of sustainability among all employees is the first step towards establishing sustainable innovations. If there is no recognition that we all need to drive sustainability, the development of sustainable products, services, processes and business models will also lack support within the company.
    Many people are often unaware of the current major crises of species extinction, pollution and global warming in depth. Take care of enlightenment! For example, think about small formats for informing employees and making environmental and social grievances visible. Or provide a playful gamification approach. There are now platforms and apps that inform employees and also reward sustainable behaviors in a fun way.
    Try to draw a big picture in the process. Don’t just address climate change issues, but show as broadly as possible how our current actions and linear economies are impacting the environment and society worldwide.
    Tip: Make it personal. For example, show what the world should look like in 2050 and how old the employee him/herself or his/her children will be then. What does life look like then if we continue as we do right now?

  2. Immerse yourself in the topic of sustainability: Engage with the UN’s 17 Sustainable Development Goals and set your goals.

    What does sustainability actually mean? What is behind the term? And what is the potential of our company at all if we want to become more sustainable?

    The UN’s 17 Sustainable Development Goals (SDGs) provide the guard rails for entrepreneurial, sustainable action and innovation. They show what to look for in product service and process development. They form the basis and point of reference for developing the company’s own sustainability goals and thus also derived limits for the development of innovations.
    What impact may our new products, services, processes and business models still have on the environment and society?

    Exemplary questions for sustainable product development can be:
    – How much CO2 can a new product still emit? Or can it even be developed CO2-positive?
    – What is the maximum amount of waste a new product can generate?
    – How durable does it need to be?
    – How much water may be used in production?
    – What are the essential working conditions at our suppliers during the manufacturing of the product?

    The SDGs open up potential fields for innovators in which sustainable directions can be considered in innovation work.

  3. Be honest with yourself: Evaluate the current situation, without whitewashing.

    It makes little sense to set goals if you do not know the current ACTUAL situation. It is important to have a clear idea of where the company currently stands in terms of sustainability. This includes evaluating current products, services, processes and cultures, and identifying areas for improvement. The current impact on the environment and society must be understood, measured and made transparent for everyone to see. Because even if uncomfortable truths should open up here, we still have to be honest with ourselves.
    Sustainable reporting standards provide a guideline for looking across business units and using the right measurement indicators. Even if this means a great deal of effort in the first year, once a sustainable reporting system has been established, it also ensures that measurement indicators for new products, services and processes are provided when innovating.

Tips for sustainable innovation in SMEs

  • Be aware: Who is actually driving the topic of innovation operationally at your company?
    Is there an innovation manager? Or do you have a product development department? Does the owner/manager provide the new ideas?
    Ensures that these people get the sustainability knowledge they need to think differently about ideas in a sustainable way.
  • Start small
    Is there a lack of budget for the big sustainability ideas? Then ask yourself, what are the low hanging fruits. Can you think differently about internal processes in the long term? Can you change little things about existing products to make them more sustainable?
  • A clear strategic direction that everyone is aware of
    Draw a “fit for the future” picture together with the management as a vision. Derive mission and strategy from this. Without direction, no one knows where to go. in that case, you might as well don’t have to do innovation work in the first place.
  • Quick testing of ideas
    You already have a close customer relationship? This is a great starting point for testing sustainable ideas. Be bold and go public with your sustainable ideas early. This is the only way to find out whether customers really want them.
Handwritten by Malvine Klecha