While start-up incubators and alumni angel investor groups have become a steady feature of many university environments in North America and beyond, home-grown company incubators are a runner up. Sustainability-focused innovation is increasingly attracting pools of capital and talent to work on the next impact challenge: the “transition” economy.
I use the term transition economy to refer to companies that need to redefine their business model and the way they deliver products and services in the global marketplace. Specifically, they need to do this because their standard operating processes may create environmental and societal harm.
In the race to zero emissions and closing the gap on social inequities, these businesses must innovate from within and pivot their practices to redefine a holistic value proposition for all stakeholders. Transitioning eighty per cent of global economic activities to their “better self” requires iterating for change. Change in evaluation metrics of business impact, in drivers of stakeholder engagement, and in feedback as direct inputs to the data used to make decisions and align financial incentives to address negative externalities and turn them into contributors of societal value.
When the business lens is reframed from a place of “transition”, adopting an impact process centered around iterating for change is key to redefining the scope of current commitments and building the next generation of impactful products and services that responsible consumers will value. Benchmarking to peer groups limits a business’s spectrum of influence.
But the “transition” lens provides a new whiteboard for businesses that operate in sectors that historically have accepted the negative environmental and social labels as “trade-offs” to provide a much needed service to society at a specific point in time. When iterating for change, if the desired outcomes are to be achieved, there must be a lens on the tangible need for transition economies as opposed to “trade-offs”.
Defining the prototyping exercise with the goal of redefining organizational commitments and business targets in terms of “transition” opens the door for a strategic dialogue focused on new opportunities. Those opportunities can revitalize services, products and business at the sunset into their new value proposition.
Companies and investors are struggling to establish a baseline for quantifiable impact beyond traditional financial measures. While the lack of standardized reporting of environmental and social dimensions has contributed to slow that process down, the art and science of prototyping business scenarios that help visualize how impact outcomes affect their strategic and operational readiness is instrumental to drive the impact movement forward. But there are questions to be answered.
Transition economies present unique opportunities for innovators. By understanding the key levers of transition, you can create innovative products and services that can help to catalyze this important change. How will you innovate in this transition economy? Let me know in the comments!
To read more about innovating for change in a transition economy you can refer to The Impact Challenge online, here. All author royalties benefit the Global Association for Research Methods and Data Science and help advance innovation through open collaboration between academics and practitioners. Make sure you follow me on LinkedIn to stay involved in the ESG dialogue that we need to innovate forward.