Danabayeva Rauan

Al-Farabi Kazakh National University, Santiago de Compostela University, Phd student

Shedenov Utegaly

Al-Farabi Kazakh National University, doctor of economy sciences

Sustainable innovation strategies

Today there is a predominant strategy based on competitiveness and sustainability which is shared by nations, international organisms and companies throughout the world. That is, there is a shared understanding that today’s society is immersed in a complex globalization process, growing and uneven, and is therefore facing a time of great challenges and opportunities that need to be tackled, at least in part, through placing innovation and sustainability at the center of the agenda. This means that competitiveness is no longer the sole driving factor of the world economy. Competition must be accompanied by being responsible, by pursuing sustainable development and minimizing potential negative impacts of our actions, through innovating products and services, processes and models.

Innovation is certainly a key competitiveness factor for firms as it can help to significantly increase performance by improving products and services, processes, business models and marketing strategies. It is, however, unclear how to measure it. This is why it is very important to take a broad perspective on innovation and not see it solely as a linear process based on an investment, a R&D activity and an output or return on the original investment.

Thus, focusing on sustainability and innovation as two central factors to achieve a competitive advantage in the long run has also become central to private firms throughout the world. For instance, in June of 2010, Accenture presented the results of a survey conducted on over 750 CEOs worldwide which concluded, among other things, that 93% of CEOs see sustainability as a key competitiveness factor for their firm, that 91% understand will be a key factor in developing sustainability in the coming years, and that 96% assume that sustainability in the future will be fully integrated into their firm’s operations and strategies [1]. So, we are in a context of uncertainty that is being faced by nations, regions and companies alike, at least in part, through sustainable innovation strategies.

Different companies use different terminologies when referring to social and environmental policies, such as Responsibility, Corporate Social Responsibility (or CSR), Sustainability, Compliance, Accountability, Corporate Citizenship, or Business in the Community to a name a few. Furthermore, some companies use these terms as synonymous, others define their policies under a single terms and place the others as sub-categories, yet others invent their own terms. In many cases, when companies talk about sustainability they refer to environmental policies, while when they talk about CSR, they focus on social issues.

As we can see in Figure 1, we can understand that there is a central goal, which is sustainable development, and that regardless of the terminology, the private sector suggests an approach to contribute to this common goal .

Figure 1. The Sustainable development organizational framework [2].

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Sustainability in corporate setting is often understood as the voluntary integration of social, environmental and economic concerns in business operations and stakeholder relations. The problem with this definition is that no widely accepted integrated framework exists to clarify which are the social and environmental concerns, how a company can integrate them in its operations and relationship with its stakeholders and, most importantly, how this can be carried out from a strategic perspective.

Many initiatives have appeared in the last few years to try to solve this problem by proposing some sort of framework on sustainability. However, as in the case of innovation, these initiatives use different nomenclatures, classifications and definitions. Generating confusion rather than helping to clarify the issue. Nevertheless, sustainability seems to focus on central aspects such as corporate vision, community relations; workplace policies, accountability, and incorporating sustainability in products and services, particularly in terms of research and development and innovation. At the center of the debate on innovation as a linear versus a dynamic, complex and unpredictable process in the question of what drives innovation. Ultimately, innovation has been generally about generating profits for the firm, while today there seems to be a tendency to understand innovation as the effective application of new processes and products designed to benefit the company as well as its stakeholders [3].

The innovation drivers are very important because there is some evidence that the manner in which the firm innovates determines what the firm innovates. In other words, a firm that uses exploration throughout its ranks understands that the basic unit of innovation is no a department, but rather a network which aims to generate public and private good. As Prahalad and Rangaswami proposed in 2009, ‘we find that smart companies now treat sustainability as innovation’s new frontier’.

References

1. Accenture 2010 Global Consumer Research executive summary.

2. Mascarenhas, B. 2009. The emerging CEO agenda. Journal of International Management.

3.Ram Nidumolu, C.K.Prahald, M.R.Rangaswami 2009. Why sustainability is now the key driver of innovation, Harvard business review.