SustainNovation! Analysing the Success and Failure of Sustainability Innovations
Kai Hockerts, Centre for the Management of Environmental Resources (CMER), INSEAD,
The proposed paper summarizes four years of research on success and failure factors of sustainable
innovations carried out by the author at the University St. Gallen (CH) and Insead (F). Drawing on four
comparative case studies the paper will study sustainability innovations that aim at creating competitive
space. The paper will explain the success and failure of such sustainability innovations both from a
market-based and a resource-based view, concluding that a set of core competencies for sustainable
innovations has been a key success factor for these innovations.
In their book Factor Four Ernst-Ulrich von Weizsäcker, Amory Lovins and Hunter Lovins (1995) announce
the ascent of sustainable innovations as a business opportunity. By engaging in "factor four" innovations
companies are said to be able to cut by half the environmental impact of their products while improving the
quality of life they generate twofold.
The book sparked a controversial debate that can be summed up in Ralph Meima's rethorical question: "If
all this is so smart, then why hasn't it already happened, with a whole raft of billionaires to boot?"
This question will be at the center of this paper. Upon taking a second look at many examples heralded in
the Factor Four book, it becomes apparent that these are either prototypes (such as the hypercar or the
FRIA refrigerator; von Weizsäcker et al., 1995: 32, 123) or have only become relevant to a small market
niche (such as energy efficient housing, local food markets; von Weizsäcker et al., 1995: 42, 131). In fact
the prospects for many "Factor 4" innovations look rather bleak. This is not only true for the examples in the
Factor Four book, but as well for many other "sustainable" innovations that were announced in the last ten
years. They have either only captured a small market niche (compared
with the world market) or have had only meager profit margins.
However, it would be unjust to completely reject the potential of "corporate sustainability" as a competitive
advantage. There does exist a significant number of companies that have launched sustainable
innovations, which stand out due to their high growth rates and above average profitability. What were the
success factors of these examples? And why have many other green products only been relative small
successes?
The paper will analyze this question drawing on four comparative case studies of sustainability innovations,
all aiming at creating competitive space. In attempting to explain the success and failure of such innovations
the paper will draw on entrepreneurship theory, the resource-based view, and network theory.
Keywords: Corporate Sustainability, Entrepreneurship, Sustainability Innovations, Success and Failure,
Resource-based View, Network Theory