new challenge .© 2013 harvard business school publishing B u s i n e s s F i n a n c e
Role: Director of Product Innovation
You studied environmental science in college and are active in many
environmental causes. You believe deeply in the potential for the
sustainability initiative to foster innovative R&D and a broader
product portfolio at Spectrum, and you are willing to stake your career
on its success. You aggressively lobby your friend and mentor, Deborah
Edge, about the benefits of this initiative.
You are Director of Product Innovation within the Research &
Development unit of Spectrum Sunglass Company. Spectrum’s immediate
future looks bright as the company enters its second decade of
operations. Externally, the consumer sunglass market is growing again,
and competitive-pricing pressures have subsided. The company recently
rehired some of the workers laid off during the last recession, and many
departmental budgets have been restored to well-funded, pre-recession
levels. You are especially proud that one potential new product design
has received positive focus group feedback after the first phase of
development, and some exciting branding deals with Hollywood celebrities
are under negotiation. Everyone at Spectrum Sunglass is looking forward
to growth and enhanced earnings.
While you generally feel very positive regarding the situation at
Spectrum, you have noticed that the topic of sustainable economic
development and the link between sustainability and innovation is
featured in many of the professional articles you read, such as “Why
Sustainability Is Now the Key Driver of Innovation.” You are frustrated
that you don’t have any new sunglass products to offer to the vocal
customers who increasingly express concerns about Spectrum’s
environmental impact. Not only does sustainable development make sense
to you personally, from both a moral and an economic standpoint, but you
also see this as an opportunity to differentiate Spectrum’s products
from your competitors, which focus exclusively on design and price.
During Spectrum Sunglass Company’s annual strategy retreat, you
decide to pitch the idea of forming a task force to make the company and
its products more environmentally sustainable. Your vision for Spectrum
consists of three specific goals: (1) Eliminate 25% of waste by
redesigning the manufacturing process; (2) reduce the current level of
greenhouse gas emissions by 15%; and (3) create a new product line based
entirely on environmentally benign materials. You argue that these
goals, while aggressive, are achievable within the next two years. You
also add that based on your current understanding, the task force will
need to pursue the following activities: (1) Conduct energy audits and
set aggressive milestones for improvement on the three goals; (2)
redesign processes and products to be more environmentally sustainable
(and scale up successful experiments quickly); (3) analyze environmental
life cycles throughout the entire value chain inside the firm and with
its suppliers; (4) seek to replace fossil-fuel energy sources with
renewable energy sources; and (5) seek to replace petroleum-based
materials with biodegradable materials.
After politely listening to your proposal, Andrew Chen, the General
Counsel, interjects that in his professional opinion, the sustainability
project opens up the company to unnecessary legal risks. If the company
does go ahead, he advises that only one of the three goals be pursued
and that it not be publicly announced or promised until after a careful
internal due diligence process. Then the CFO, Paul D’Arcy, speaks up,
adding that instead of focusing on a pie-in-the-sky sustainability
project, the task force’s time and money would be better spent on
finding innovative ways for Spectrum to reduce raw material costs and
counteract the seasonality of its business. Just when you are about to
inject a counterargument to this increasingly negative reception, Luke
Filer, the VP of Operations, states that he is concerned about a product
and process change that is likely to increase raw material costs and
disrupt existing production flows.
Breaking the impasse, Leslie Harris, Spectrum’s VP of Sales and
Marketing, argues that this idea has considerable promise and that it
would be foolish to reject it prematurely. After an hour-long
discussion, during which some members of the top management team voice
support for the initiative while others express skepticism, Henry Adams,
the CEO and the rest of the management team agree to support your
proposal, with the condition that the measure of success be your team’s
ability to achieve the proposed three goals within the next two years.
The CEO agrees to allow you and your task force members to spend 75% of
your time on this change initiative over the next two years. You agree
to this arrangement, and you recommend that the task force report
directly to the CEO in order to signal its importance to the rest of the
organization and to facilitate direct communication on key issues as
they come up. As the retreat ends and everyone heads to dinner, you
start pondering the numerous issues and obstacles you’ll need to
overcome in order to implement your sustainability vision.
Your central challenge is to convince your colleagues that a dramatic
change in the organization’s strategy and products is necessary and
that environmental sustainability is one of the keys to the firm’s
future. This challenge is somewhat complicated by the fact that you must
influence the rest of the organization without the formal authority to
command employees’ attention, and there is no generally perceived need
to change at this moment because of the firm’s return to normal
profitability. However, you do have a reputation for being competent and
trustworthy, and this reputational capital will be invaluable to you as
you take on this new challenge.