CHAPTER 1

Design for Sustainability—Collectively Transforming Systems and Process

Where can you find evidence of substantial change and the impacts of sustainability on products, processes, and supply chains? Design and the use of environmental AND social metrics have together culminated in new insight, cost savings, impact reduction, and differentiation as a result of leveraging sustainability for operations and supply chains. Examples include:

• MillerCoors has recognized that its products (beer) have a major impact on society. Consequently, it has developed and implemented a comprehensive program that embraces all aspects of sustainability—the social, environmental, and financial capital. This is a plan that is moving MillerCoors toward reducing the amount of water needed to make one gallon of beer—the goal is 3:1 in an industry where craft breweries typically use anywhere from 6 to 10 gallons to make one gallon of beer. The plan involves developing a sustainable supply chain through collaboration and education. The plan also involves MillerCoors helping communities deal with the adverse effects of drinking by focusing on reducing/eliminating underage drinking and on encouraging responsible consumption and designated drivers. Through the plan, MillerCoors has set a goal to ensure that by 2020 43 percent of the management will consist of women and minorities. It is a plan that strives to change the culture of MillerCoors. The results have positively affected MillerCoors’ public image, its top line (revenue) and its bottom line (profits).
• Amazon, one of the world’s largest e-retailers, has embraced sustainability both within the company and in the supply chain. It has focused on improving the sustainability of packaging within the supply chain, beginning with the packaging at Amazon. Consequently, it has introduced Frustration-Free Packaging—programs designed to promote shipping products in their own packages without additional shipping boxes and easy-to-open, 100 percent recyclable packaging. These initiatives have grown to include over 1.2 million products and have eliminated more than 36,000 tons of excess packaging in 2015 alone. Amazon has also pushed sustainability through the supply chain by requiring each supplier to ensure that their suppliers and subcontractors conform to the standards and practices of Amazon’s Supplier Code of Conduct—a standard that covers areas such as health and safety in production and working areas, the right to legal wages and benefits, prevention of child labor or forced labor, and fair and ethical treatment (including nondiscrimination). Amazon has been known to terminate any supplier that either violates the Code or does not cooperate with the auditors.
• McKinsey and Co predicts $380 billion in potential annual net material cost-saving opportunities in the European Union (EU) from the adoption of “circular” business practices. In this system, value is created by looping products, components, and materials back into the value chain after they fulfill their utility over the life of the product. To realize the full resource productivity opportunity, firms will need to work across circular supply chains, analyze how raw materials are extracted, components produced, products designed, and how return markets are organized, while also considering new business models such as leasing products to customers to retain ownership of materials embedded in the products.¹

These examples illustrate the new opportunities available from a better understanding of products, processes, and supply chains. In this chapter, we discuss the evolution of design trends, stress the importance of educating management as to the importance of design thinking, and the utilization of well-known stage-gate product design processes. We review our own research regarding the adoption of sustainability practices by different categories of firms (Innovators, Early Adopters, Early Majority, Late Majority, and Laggards), followed by a discussion of what it will take to cross the sustainability chasm to integrate better design into current practices. To help operationalize this integration, we review important new opportunities to design with less energy and materials, planning, and project assessment.

Objectives

1. Understand what firms are doing to integrate sustainability into stage-gate new product design processes.
2. See opportunities through a design and systems thinking lens.
3. Leverage Design for Sustainability (DfS) to improve product and process efficiency.

Introduction

The product or service design decisions organizations make are linked to sustainability and strategy. It’s hard to know why Apple made the decision to stop certification of its products by Electronic Product Environmental Assessment Tool (EPEAT), a green computing standard.² This important standard moved the product-labeling sector toward more detailed product assessment and was supported by an Executive Order in 2007, requiring all U.S. government agencies to procure 95 percent EPEAT-registered products. As a result of Apple’s actions and the decision to stop utilizing this product standard, whole cities such as San Francisco have blocked Mac purchases.

The reality for Apple and other electronics manufacturers is that there is no single definition of a “green product.” The manufacture, use, and disposal of IT products can have a wide range of environmental impacts. Some products may have excellent environmental performance in some dimensions, such as energy efficiency or the absence of toxic materials, but substandard performance in other dimensions, such as raw material extraction and transportation. Apple has performed life cycle assessments (LCAs) of its products and found that 91 percent of the greenhouse gas (GHG) emissions associated with its products are traceable to the manufacturing and use phase. It traced just 2 percent of its GHG emissions to recycling. Some issues have come up with glued-together components of products such as the MacBook Pro. Armed with more detailed LCA information, Apple has the opportunity to revisit product design and marketing options regarding product labeling. While this product offering is lighter, and has more power, customers cannot take it apart, and it cannot be upgraded or recycled. These product attributes result in order losses for many who have been happy with Mac offerings in the past.

Apple has a history of sending mixed messages when it comes to sustainability and customer engagement. At the time of writing this book, Apple’s newest laptop, the MacBook Pro with Retina display, has taken a substantially unimpressive reversal in recyclability, which means the product did not qualify for EPEAT certification. When the news broke, Apple reacted by pulling ALL its computers from the EPEAT program and claiming that customers valued design over sustainability. Customers, including the city of San Francisco, were quick to disagree, and just as quickly as they had reacted, Apple had not only returned to the EPEAT standard but assigned the latest (still not recyclable) laptop an EPEAT gold rating. This mixed messaging and struggles with standards and customer expectations highlights the importance of strategic alignment of sustainability. Apple’s strategy could use a closer look at business model alignment, the closed-loop capabilities of its products and processes, and key customer engagement. Apple already designs very attractive products, and they appear to have strayed from earlier “green” product attributes and again need to design sustainability into their products and processes.

When looking for your own opportunities for integrating sustainability, look at any problem from a different perspective than your function. Start with an understanding of strategy and ask questions regarding how environmental and social performance can be included in design processes. This can be a new way of thinking. A design-thinking approach to any product or process refers to the methods and processes for investigating ill-defined problems, acquiring information, analyzing, and positing solutions early in the design and planning process.

Within this chapter, we want readers to take a step back from their own processes and look at the world as designers. With this in mind, we first look at the origins of DfS and well-known stage-gate processes for integrating sustainability metrics and decision criteria into decision-making practices. DfS has been applied to developing economies, city planning, architecture and is defined as “requiring awareness of the full short and long-term consequences of any transformation of the environment. Sustainable design is the conception and realization of environmentally sensitive and responsible expression as a part of the evolving matrix of nature.”³

We will review the chapter design topics (Figure 1.1) while presenting evidence of the growth of DfS, we identify trends that will remain important to operations and supply chain managers, and highlight how firms across industries are crossing a chasm into new territory. By the end of the chapter, we review frameworks and tools available to help enable operations and supply chain professionals to identify sustainability opportunities. Finally, we take a look at metrics before reviewing a step-by-step approach to design practices.

Figure 1.1 The design architecture

As seen in the concepts of just-in-time (JIT)/Lean, total quality management (TQM), and time-based competition (TBC), waste is any activity or product that consumes resources or creates costs without generating any form of offsetting value stream. GHGs are yet another form of waste. We know that managers can minimize waste by changing the way new products are designed. Those firms who include environmental and social issues in the design process have the opportunity to engage customers, utilize new data, reduce disposal costs and permit requirements, avoid environmental fines, better utilize raw materials, boost profits, discover new business opportunities, rejuvenate employee morale, and improve the state of the environment.

Ideally, the most appropriate place for considering sustainability issues is in the design phase since the amount of waste generated is a direct consequence of decisions made during product and process design. DfS is a component of manufacturing and supply chain management and involves making environmental and social considerations an integral part in the design of a product. The concept originated from industry’s effort to target specific “environmental” objectives for design engineers to incorporate when creating a new product. DfS has evolved to integrate environmental and social considerations into the design and redesign of products, processes, and management systems. The goals of sustainability can more easily be achieved when environmental issues are identified and resolved during early stages of product and process design, when changes can be made to reduce or eliminate environmental waste.⁴

Most of the research aimed at the development and evaluation of new environmental tools, and procedures focuses on the design stage. This emphasis recognizes the importance of DfS to the overall success of waste reduction and elimination. We now realize that product design, while actually responsible for a relatively small percentage (approx. 5 to 10 percent) of the total costs, has a significant impact on the actual costs incurred within the system. Some estimate that up to 85 percent of life cycle costs are committed by the end of the preliminary design stages. For thirty years now, we have known that at least 50 percent of the costs for a class of mature products are design determined and that up to 70 percent of costs are determined by manufacturing process decisions.

When viewed in this light, it is expected that more managers will be interested in the implementation and use of DfS procedures and tools. Managers will also want to look at DfS issues during the redesign or reengineering of a product or process. Redesign and reengineering typically occur during the maturity or decline phase of the product life cycle, however the time in which a firm is rethinking a product or process is not the only opportunity for DfS practices. After all, DfS involves the identification and elimination of in-process waste streams before they actually occur. However, for most firms, DfS has not achieved the same degree of acceptance as have JIT/Lean, TQM, and TBC. Our research in this area has shown that the level of acceptance of sustainability practices and principles remains very uneven. Some firms such as 3M, Bayer, Baxter, Dow Chemical, DuPont, Herman Miller, Intel, Interfaces, L’Oreal, P&G, Puma, and Timberland, to name a few, have tried to incorporate these concerns into the design process and evaluate product performance not only in terms of costs and profit but also in terms of environmental outcomes. For other firms, DfS remains a perceived constraint—as something that adversely affects the ability of the firm to deliver better products to the marketplace.

Product designers need to understand sustainability opportunities and be able to influence process design. Instead, top management’s focus is on regulatory constraints, the slow corporate decision-making process, and cost. Engineering-based design evaluations have long been cited as obstructing environmental and social issues from being an integral part of product design.⁵ As you will see, DfS changes are already happening.

Product Design and DfS

The product design process is one of the major tasks for any firm, responsible for two major types of design activities: (a) new product design and development, (b) process design and development. Both product and process designs are closely interrelated and greatly influence each other while simultaneously impacting the environment. Both aspects must be considered to ensure that the firm has developed and implemented effective and efficient designs and processes. These design activities (Figure 1.2), in general, present opportunities for firms to find solutions to environmental issues and social issues. When combined, the two design activities shape the scope of the transformation process by determining the types of inputs required and outputs created. Inputs involve substitution of less hazardous alternatives for previously hazardous materials. Some outputs are desirable (e.g., cars built) while others, such as pollution and waste (i.e., GHG emissions), are not.

Figure 1.2 Cooper’s stage-gate new product development model

The product development process embodies all of the steps necessary to take the product from concept to full production. Recently, this process has undergone extensive revision and rethinking due to increased market pressures to reduce the total cycle lead time (from concept to full production), reduce cost, enhance product flexibility, improve product quality, and leverage new tools such as LCA and information. These pressures are some of the same forces that impact prior developments such as TQM, JIT/Lean, TBC, and mass customization.

To reduce total cycle lead time, managers have turned to the development of processes characterized by the use of multifunctional teams and close interaction of the team members over the period of the initial design. This multifunctional teaming and interaction is also integrative in terms of the breadth of the manufacturing system. Examples can be seen in the consideration of not only issues of design but also issues pertaining to manufacturing planning and execution. This reorganization of the design and delivery process has been referred to by such names as simultaneous engineering and concurrent engineering.

One can envision the process (i.e., product/process design and delivery system) as consisting of linked stages: discovery and idea generation; scoping; building the business case; development; testing and validation; launch; and finally postlaunch review.⁶ Between each stage is a decision-making gate. The go/no-go gates provide an organized approach to assessment of easier-to-manage innovation and new product design processes. In all stages of the new product development (NPD) process, environmental and sustainability factors must be considered in addition to all other objectives and issues. Furthermore, one function or group no longer manages each activity in isolation. Rather, there is integration of multiple groups or stakeholders, both internally, with other functions, and externally with stakeholders, customers, and suppliers. In the earlier stages of development process, meeting the needs of stakeholders “such as key customers and regulators” is important. In the later stages of this stage-gate process, working with special interest groups and third-party endorsement of products becomes important. The stage-gate model processes include the following:

The discovery stage contains prework designed to discover opportunities and to generate new ideas. The current focus is on innovation and design thinking, understanding the needs of key customers while leveraging technology, transportation, and closed-loop supply chains. Scoping is a preliminary analysis of each project. It provides inexpensive information through basic research to enable narrowing the number of projects. This stage can be a first screen for environmental AND social attributes using known standards (reporting using the global reporting initiative [GRI], ISO 14001, ISO 26000, SA8000) and simple checksheet approaches to identifying potential attributes.

Building the business case is a more detailed analysis by primary marketing and technical research. The business case must include the product definition, justification, and a project plan. Here are opportunities to identify LCA impacts and alternative materials and processes, financial performance projections and top line growth, sustainable value added (SVA), sustainable performance review of a supply base, and supply chain analysis and optimization considering variables such as GHG emissions, timing and modes of transportation within given markets.

Development is the detailed design and development of the product along with some preliminary product tests. At this time, a production plan and a market launch plan are developed, including exploration of available environmental and sustainable certifications such as C2C, product labeling, Environmental Product Declaration (EPDs), and applicable ISO certifications.

Testing and validation take a deeper dive into product tests in the marketplace, the lab, and the manufacturing process. This deeper look at processes includes supplier auditing of social AND environmental performance and measurement of product/process impacts such as GHG emissions.

Launch is the beginning of full production, marketing, (if possible, eco-labeling) and selling. Market launch, production and operations, distribution, quality assurance, and reverse logistics should include postlaunch reviews and updated information for corporate sustainability reporting aligned with the GRI, materiality assessment, Carbon Disclosure Project (CDP), and information for stakeholder inquiry such as socially responsible investors and fund analysts.

The stage-gate model is generalizable and, with minimal modification, accommodates environmental and social considerations into each gate and screening process. Of course, it will be necessary to drill down into more firm-specific detail of the subactivities to provide insight and operational instructions for any innovation team. Our own work with firms taking this approach simply starts early in the discovery and scoping stages with a screen for environmental and social performance indicators. A simple checksheet goes a long way toward engaging others in how and why financial, AND environmental, AND social performance can be considered early in any product development process.

There are a number of advantages to using the stage-gate model for product development, which typically result from its ability to identify problems and assess progress before the project’s conclusion. Poor projects can be quickly flagged and rejected by disciplined use of the model and gated processes. When using the stage-gate model on a large project, the process can help reduce complexity of what could be a large and limiting innovation process into a straightforward rule-based approach. When a stage-gate model incorporates cost and fiscal analysis tools such as net present value (NPV), and economic value added (EVA), management can project quantitative information regarding the feasibility of developing potential product ideas. In the not too distant future, this model will also include SVA. Finally, the stage-gate process includes an opportunity to validate the business case by a project’s executive sponsors. Other advantages include but are not limited to:

• Well-organized innovation process as a source of competitive advantage.
• Prevents poor products in early stages and helps to redirect them.
• Recognizes environmental waste and social sustainability opportunities early in process planning.
• Accelerated product development, a necessity of shorter product life cycles.
• Increases success of new products.
• Breaks down complex innovation process within large organizations into smaller pieces.
• Provides overview, prioritization, and focus.
• Integration and market orientation.
• Cross functionality, utilizing input and participation of employees from various functions.
• Can be combined with various performance metrics such as the SVA concept.

One issue with the stage-gate process is the potential for structural organization to interfere with creativity, as overly structured processes may cause creativity to be reduced in importance. Other limitations include:

• This is set up as a sequential approach to innovation, yet some believe innovation should be organic and organized in parallel with feedback loops.
• Tensions exist between organizing and creativity. Both are important to innovation.
• The stage-gate process needs to be modified to include a top-down link to the business strategy if applied to nonproduct development projects.

The end of the product development process creates several important outcomes, such as the design and introduction of the product, the determination of the types and quantities of materials used, and various processing characteristics (i.e., equipment needed, transportation optimization, closed-loop supply chains, and intermodal options). When taken together, the product design process sets in place the material and capacity requirements, establishes the cost and performance traits of the product, and determines the types and timing of waste streams created and when these waste streams will be created.

The design activities are strongly cross-functional in nature. That is, to be successful from both a corporate and marketing perspective, the product design activities must consider the perspectives of multiple parties and stakeholders.⁷ Perspectives included come from internal areas such as marketing, product engineering, finance, manufacturing, production and inventory control, accounting, manufacturing engineering, quality assurance, top management, and external stakeholders such as stockholders, suppliers, government, competitors, special interest groups, the environment, and the customer.

The importance of the gates should not be overlooked. The role of the gate is to ensure that all of the major concerns, objectives, and issues present in the preceding stage have been addressed before permitting the process to continue to the next stage. At these gates, different factors affect sustainability initiatives such as formal information systems, the presence of a green corporate culture; and the use of different tools, metrics, and available options for energy reduction and waste minimization. During decision-making times between stages, management has the opportunity to generate new practices from environmental, social, and sustainability issues that were formerly viewed as obstacles, but now become opportunities for innovative firms looking for competitive advantage.

While gates are critical to the innovation process, they do not provide insight as to the creation of new ideas and what is typically found within Research and Design (R&D) functions. To better understand what the innovation creation process may look like, we next draw from the design thinking paradigm to help focus on one component of the business model, key customers.

Design Thinking: Reinvent Products, Processes, and Supply Chains for Customers

Design thinking refers to the methods for investigating ill-defined problems, acquiring information, analyzing, and proposing solutions in the planning and design fields. It is generally considered the ability to understand the context of a problem, creativity in the generation of insights, and rationality to fit solutions to the context. In recent years, design thinking has become an increasingly important part of design and engineering practices, as well as business and management. Its broader use in creative thinking and action learning is having an increasing influence on contemporary education across disciplines. The IDEO approach is currently being used by Duquesne University (Pittsburgh, PA) for teaching and applying design activities within its MBA sustainability program. In this respect, it is similar to systems thinking in understanding and solving problems.

The design process is what puts design thinking into action. It’s a structured ethnographic approach to generating and improving ideas. Its phased approach helps to navigate the development from identifying a design challenge to finding and developing a solution. It is a human-centered approach that relies on your ability to be intuitive, to interpret what you observe, and to develop ideas that are emotionally meaningful to those customers you are designing for. The design process consists of discovery, interpretation, ideation, experimentation, and evolution. The result of the process should be: innovative products, processes and services found at the confluence of viability, desirability, sustainability, and feasibility. For those utilizing design thinking, this approach translates into new, innovative avenues for growth grounded in business viability and market desirability.

The innovation design process and its major inputs

Currently, there is momentum to expand awareness about design beyond designers and related professions, by teaching design thinking in both industry and higher education. The premise is that by knowing about the process and the methods that designers use to ideate, and by understanding how designers approach problems to try to solve them, individuals, businesses, and business students coming into the workforce will be able to better connect with and invigorate their ideation processes in order to take innovation to a higher level. The goal is to create a competitive advantage in today’s global economy and interconnected supply chains.

How Firms Integrate Sustainability and Design: Crossing the Chasm to Design Sustainable Solutions

To better understand the integration of sustainability into design processes, we draw from a modified version of Moore’s (1991) Technology Adoption Life Cycle model.⁸ This model has five categories of firms: Innovators, Early Adopters, Early Majority, Late Majority, and Laggards (see Figure 1.3). We see these same categories of firms in our own research and find generalizable attributes of these firms within their different approaches to sustainability and DfS.

Figure 1.3 Sustainability adoption life cycle

Source: Modified from Sroufe et al. (2000).

An interesting aspect of Moore’s model is the identification of gaps between the categories of firms. These gaps are defined as the amount, or the level of resistance that must be overcome before the group will accept the innovation. With slight modification to fit DfS practices, the gaps signify the difficulties firms and industries may have with sustainability. The largest gap, the “chasm,” separates the Early Adopters from the Early Majority. This chasm is important because the acceptance of sustainability initiatives, amount of time, and resources allocated, type of culture necessary, presence of tools or measures available, and sustainability options explored are vastly different on either side. The gaps between the other categories of firms are not as clear, and do not impact the acceptance of sustainability initiatives as strongly as the chasm. The chasm can be described in what the Early Adopter is pursuing as firms to the left of the chasm are perceived change agents with a competitive advantage. The chasm is a gap between different levels of sustainability and DfS practices. To understand where your own firm may stand or to help identify other firms within a given industry spectrum, we offer the following attributes of each category of firms.

The Innovators pursue new sustainability management techniques aggressively because unique environmental resources are central to their manufacturing process. These firms may have integrated sustainability in the past because it was right for them given the existing cross-functional culture, ability to measure performance on multiple dimensions, and business environment they faced. Sustainability and innovation are considered part of the formal corporate culture. Innovators promote their green culture, market “green” or “eco-labeled” products, and seek new technology for specialized information, pollution prevention, more effective public relations programs, require more frequent auditing, reporting, management reviews and policy improvements. These firms develop an integrated and formal DfS process in order to have a unique resource (e.g., management and decision support systems) and specialized information to aid in decision-making. They find that enhanced financial performance and competitive advantage can come from the design process. There are not many Innovators, but their success is key, because their endorsements reassure other firms that new environmental initiatives do in fact work.

A commonly used example of an Innovator is the General Electric (GE) Company. GE launched Ecomagination based on four commitments: (a) double the investment in R&D for cleaner technologies; (b) increase revenues from Ecomagination products; (c) reduce GHG emissions and improve the energy efficiency of GE’s operations; and (d) keep the public informed. These commitments represent ambitious goals for GE and reflect the broader challenges their customers and society face. Drawing on their global capabilities, strengths in technology and knowledge of markets around the world give GE the ability to build a broad portfolio of innovative solutions to a range of energy and environmental challenges. In this context, GE Global Research has formed an Ecoassessment Center of Excellence that provides focused expertise in LCA, end of life and transportation of materials in the environment, and human health/eco risk assessment.

While many factors affect an organizations’ adoption of sustainability practices, the drivers tend to be the formal cross-functional responsibility found within these firms, teams within the organization, corporate socially responsible culture, the use of environmental and social performance measures, and the presence of a sustainability functional unit. Motivations for implementing DfS activities are impacted by corporate culture. In some situations, the CEO dictates the corporate social responsibility (CSR) culture; while in others, environmental champions within functional areas will lead the way.

More innovative firms tended to have environmental specialists and engineers (Apple, Interface, Nike, PepsiCo, Stonyfield Farms, Toyota, Unilever) even climate scientists (Ford) involved in all of the design processes and they value the inclusion of sustainability performance measures in individual and corporate performance assessment.

Early Adopters are much like Innovators, having bought into new environmental concepts early in the concept’s life cycle, but unlike Innovators, their corporate culture does not emphasize sustainability. Rather, Early Adopters are firms who find it easy to conceptualize or understand the first mover benefits of sustainability initiatives, and relate these potential benefits to their objectives. These firms tend to look at initiatives from an anticipatory performance measurement and cost savings perspective. Early Adopters do not rely on well-established references in making sustainability initiative decisions; they instead prefer to rely on intuition, vision, and developing their own business case for sustainability. Early Adopters become the key to opening up new sustainability initiatives in technology or the adoption of new standards. Adoption of DfS or environmental standards such as EMAS, and ISO 14000 are directly aimed at financial enhancement and competitive advantage. The driving forces for improvements are to seek new technology for waste reduction, pollution prevention, more effective public communication programs, some green labeling of products, auditing and reporting, and frequent management reviews and policy improvements. Early Adopters find the factors affecting value (i.e., flexibility, lead time, cost), the market, and performance measurement to be important to the integration of sustainability issues into new product design. While the design process itself may be formal, there are components of the process that formally and informally integrate sustainability issues. Informal integration is typically the work of a sustainability champion, and formal processes involved checksheets, cross-functional information systems, and a sign-off at each stage or gate of the product development process.

The Early Majority shares the Innovator’s and Early Adopter’s ability to relate to new sustainability initiatives, but is driven by practicality. Our prior research has shown these firms are risk averse, and thereby content to wait and see how others are progressing before they adopt or invest in an initiative. Early Majority firms need a compelling, verifiable reason to change. Sustainability issues are seen as more of an opportunity than an integrated part of business processes. The driving force for sustainability improvements is the threat of current and changing future industry norms, the appearance of potential risk, and regulation. The Early Majority look at sustainability initiatives such as DfS opportunistically and informally. The Early Majority and Late Majority focus more on the elements of value, with budgets sometimes constraining their efforts.

The Late Majority consider the costs of new sustainability projects too high to handle. As a result, they wait until there is an established standard before starting a new initiative and showing support. Thus, the importance of established standards discussed in Volume 1, Chapter 4. Late Majority firms see the driving force for environmental improvements as favorable public perception of company operations, avoidance of legal liabilities, and protection of the firm’s reputation. Sustainability initiatives are looked at only periodically and informally. The Late Majority tend to consider more carefully the trade-offs concerning the allocation of the budget and resources to environmental projects.

The final classification of the firms is the Laggard. These firms are last to adopt sustainability, and simply do not want anything to do with new social or environmental initiatives for a variety of reasons. The only time they will buy into initiatives such as DfS is when it is a critical part of their product or when an external group (e.g., customers or regulators) forces it upon them. The drivers for sustainability improvements are current regulations and industry norms. Laggards are reactive, focusing primarily on governmental regulations (specifically Occupational Safety and Health Act [OSHA], Resource Conservation and Recovery Act [RCRA], Waste Electronic and Electrical Equipment [WEEE], and Regulation Evaluation, Authorization and Restriction of Chemicals [REACH] regulatory requirements) to drive sustainability policy. For Laggards, sustainability, if it is considered, is the job of the Environmental Health and Safety function and lawyers. Typically, an environmental problem (spill, accident, or injury) is what will prompt action from a Laggard, rather than seeking opportunities for CSR and resource efficiency.

Crossing the Chasm

Firms can, and have, crossed the chasm to improve their sustainable business practices. The existence of the chasm does not, in itself, stop the evolution of firms in integrating sustainability business practices. Instead, the chasm represents the greater amount of effort needed by a firm to have a proactive stance on sustainable business practices. Innovators and Early Adopters have formally integrated sustainability issues into the new product design process within firms such as 3M, Bayer, Dow, DuPont, L’Oreal, Herman Miller, Timberland, and Unilever to name a few. Examples can be found within formal processes that integrate environmental concerns within each step of the stage-gate design process. LCA software, databases, and information systems are in place to aid in decision-making. Being the first to adopt, the Innovators and Early Adopters expect to get a jump on the competition via a specialized asset. This jump on the competition can take on several forms, that is, unique resources, reputation, and brand image, legal restrictions to entry and access to new markets, perceived risk reduction by investors, lower product costs, waste reduction, energy reduction, more complete customer service, or other advantages that include employee attrition, learning, and productivity. By contrast, the Early Majority want productivity improvements for existing operations. DfS will be seen as a way to minimize the discontinuity with the old ways of doing business. By the time these firms adopt DfS, they expect it to work properly and to integrate with their existing systems and standards. The Early Majority and other firms to the right of the chasm take a more opportunistic, or periodic, and informal approach to sustainability. These firms may not have formal systems that help with environmental issues during product development. Instead, these firms may rely on individual champions to address environmental problems when they arise. The Laggards may not even consider sustainability issues. It has been suggested by Lubin and Esty that sustainability is a strategic imperative for firms.⁹ Within this context, the authors suggest leadership needs to have a vision of sustainability and understanding of the value creation process to start. Next, management needs to establish and integrate execution capabilities of which, we know design is a critical element. Whether your firm is involved in assessment, strategy development, or integration, the use of DfS will shape your thinking, manufacturing, and delivery of goods and services in new and profound ways. Crossing the chasm with a focus on value creation and performance metrics may be what enables your firm to take advantage of the sustainability megatrend.

Leveraging Metrics

As shown in Volume 1, Chapter 3 (which deals with performance measures and metrics), if you do not measure sustainable business practices, you cannot manage sustainable business practices and no one can be held accountable. The idea that metrics and tools are in themselves a solution is a false assumption. Instead, the presence of metrics and tools is an observable attribute that helps to verify the presence of sustainability practices and helps a firm to monitor and control its sustainability or DfS practices. The presence or lack of sustainability metrics can be seen in the chasm between the Early Adopters and the Early Majority. The state of performance metrics is a good indicator of the status of sustainability within firms. Innovators have extensive metrics present within their formal system for product development. The metrics can be firm-wide metrics for waste reduction and economic value added, or they can be individually based measures of design speed, cost, and environmental quality. While Early Adopters also have metrics, these firms tend to focus more on the wastes generated from the manufacturing process as a benchmark. Those firms to the right of the chasm lack sustainability measures, and instead rely heavily on environmental regulatory limits of waste generation. These firms tend to think that if they meet the minimum regulatory requirements, everything is fine, yet they miss out on the environmental and economic benefits obtained by leading firms.

A significant difference exists on either side of the chasm when considering the tools available to manage sustainability issues. Innovators and Early Adopters actively use environment management systems (EMS), LCA, and DfS tools. The separation between the Innovators and Early Adopters is found in the amount of familiarity and availability of these tools across functions. Those firms right of the chasm lack decision-making tools for sustainability; they may have some sort of EMS available to aid decision-making, but do not use these systems or reward for this type of job performance.

The focus on options such as EMS, DfS, LCA, and GHG emission metrics, pollution prevention, reduction, reuse, outsourcing, energy conservation, recycling, and water conservation can be found throughout many firms, especially Innovators and Early Adopters. Interestingly, we see a greater need for justification of sustainability projects and return on investment (ROI) coming into play on the right side of the chasm for the Early Majority. In addition, Late Majority firms may try to spread environmental risks to supply chain members. This can be done by outsourcing hazardous processes, or by having someone else process and dispose of the waste generated on site. As would be expected by reactive firms such as the Laggards, sustainability options and opportunities are not even considered.

While much of our focus is on the chasm between the Early Adopters and Early Majority, the effort needed for firms to move from no action (Laggards) to some action (Late Majority) will constitute a paradigm shift for many. Crossing what could be construed as a second chasm may lead to the greatest aggregate improvement in the integration of sustainability initiatives and should be a catalyst for all firms to get started. While these practices may not be implemented evenly by all industries, those who choose to explore these environmental practices and DfS will find many opportunities to learn, differentiate, and for Innovators and Early Adopters, gain competitive advantage.

Given the inherent differences in how firms approach integrating sustainability into the product design process, there are a number of frameworks and tools that are available to help you cross the chasm in understanding and operationalizing DfS.

Summary

Our own work with companies integrating sustainability has shown a concern for what some have described as a “myopic focus on costs.” While costs are important, Innovators and Early Adopters have been able to realize cost savings through better design, leveraging transportation, lengthening ROI and payback timelines on new projects, while leveraging the SVA of sustainability opportunities. This is important for several reasons as a firms focus will move from products, to processes and to packaging, you need to answer the question “how do we change processes to eliminate waste, or do we simply go after the outputs?” By understanding if your current efforts are process or output driven, you will be able to recognize opportunities to design proactively for more effective supply chain management.

By reading this two-volume set and purposefully setting aside some of your time to gain insight from a series of Action Items (AIs) and Audit Questions (AQs) found within each chapter, the end goal of this process should be a tailored approach to supply chain transformation. This transformation starts with an understanding of sustainable supply chains and their benefits before we go on to systematically assesses your own supply chain to help identify and execute sustainable practices. This assessment process will help develop a sustainable supply chain vision and strategy: create an executable plan for new sustainable supply chain projects; provide opportunities to integrate sustainable practices throughout your company, as well as among suppliers and customers; bring about better clarity regarding supply chain processes; leverage existing enterprise-resource-planning (ERP)-enabled manufacturing activities (energy consumption, emissions, scrap and waste, recycling, remanufacturing, packaging); guide you as to where to look for improvements in warehousing and fleet management; enable strategic sourcing highlighting the importance of design thinking, create programs for sustainable raw materials and packaging; and how to plan for closed-loop systems and reverse logistics activities, while leveraging existing systems and programs to identify and operationalize opportunities for existing and new sustainability practices.

Information within this book is sequenced in a way to help accomplish all of the aforementioned while taking the complex paradigm of sustainability and breaking it down into constituent parts focusing on how systems work. Chapters begin with evidence-based management, highlighting short vignettes, recent trends, and sustainability initiatives from innovative and early adopting firms. Information within chapters reveals applicable frameworks, tools, and proven standards as enablers of sustainable supply chain management (SSCM) initiatives. The end of each chapter challenges readers to reflect on their own operations through applied action-learning opportunities focusing the reader on AIs.

Applied Learning: Action Items (AIs)—Steps you can take to apply the learning from this chapter

AI: Where is your firm on the sustainability adoption model?

AI: Why is your firm considering sustainability?

AI: To what extent are your sustainability concerns driven by marketing or strategic needs?

AI: Do you have a formal design process in place?

AI: Who are the Innovators and Early Adopters of sustainability in the transportation industry?

AI: To what extent is sustainability integrated into your product design processes, or the processes of your customer?

AI: To what extent is sustainability integrated into the performance measurement system at the product level? Supply chain/supplier level?

Further Readings

Benyus, J. M. (1997). Biomimicry: Innovation Inspired by Nature, New York, NY: HarperCollins Publishers Inc..

Braungart, M., McDonough, W. (2007). Cradle to Cradle design: Creating Healthy Emissions—A Strategy for Eco-effective Product and System Design. Journal of Cleaner Production. 15(13–14): 1337–1348.

Ehrenfeld, J. R. (2008). Sustainability by Design. New Haven: Yale University Press.

Fiksel, J. (1996). Design for Environment. New York, NY: McGraw-Hill.

Moore, G. A. (2014). Crossing the Chasm: Marketing and Selling Disruptive Products to Mainstream Customers (3rd ed.). New York, NY: HarperCollins Business.

¹McKinsey and Co. (2012).

²Green Research (2012).

³McDonough and Partners (1992).

⁴Allenby (1993).

⁵Bhat (1993).

⁶Cooper (1993).

⁷Polonsky et al. (1998).

⁸Moore (1991).

⁹Lubin and Esty (2010).