Hybrid cruise ships. Commercial jets powered by bio-fuels. Innovations like these are on the horizon as a rising tide of environment-related pressure, ranging from regulatory mandates to stakeholder demands, reshapes every industry, including travel.
This is the second excerpt from a dialogue between Andrew Winston, green business expert and author, and Diane Merlino, editor in chief of Travel Weekly PLUS.
Merlino: A key idea in your books about the connection between sustainable business practices and a better bottom line is that green thinking drives innovation.
Winston: On a structural level, constraints drive innovation. The need to find a new way to do things because you now have a constraint on how you operate is how we have always innovated, and there are constraints coming at us in many ways.
There are radical shifts in the weather that are affecting how we operate; things like droughts create huge problems for lots of different industries. There are constraints on the availability of commodities and resources. Commodity prices are fundamentally as high as they’ve ever been in history, and they’ll continue to rise; there’s just too much demand around the world and not enough supply. And that means the price of everything going into a business is rising.
You could also argue that pressure from customers, particularly from business customers, to meet higher standards of sustainability are also constraints.
There are constraints from many different places and different stakeholders that have put new demands on business. The companies that innovate around those demands and figure out a way to do what they do using less stuff will have a lower cost structure, will be more innovative, and ultimately will be more successful.
Merlino: You mentioned constraints imposed by business customers to meet higher green standards. Do you have an example of how that could lead to innovation?
Winston: I just was on the phone with a beverage company executive who said they’re feeling pressure in the food and beverage industries to look at how food is refrigerated. For example, the big soda machines use [refrigerant] chemicals that are very powerful greenhouse gases.
Beverage companies want to move away from those machines because it’s the right thing to do. But they are also feeling constraints from major retailers, the users of their machines and their products around the world, who are saying, “You need to stop using those chemicals. We’re only going to put a soda machine in our store if it uses a lower-impact set of technologies within the next couple of years.”
That forces innovation. You have to work with your suppliers and work with the technologies in your industry to come up with different solutions. This beverage company I spoke with is spending money to do that; they’re investing in it. They’re simultaneously investing in making soda machines lower energy so they save money on every machine. There’s innovation like this, imposed by business customer demands, going on around all the attributes of a huge range of products and services.
Merlino: Let’s slide right into your intriguing principle of heretical innovation. You say that the failure to ask big heretical questions can actually sink a business or industry. What’s heretical innovation?
Winston: Heretical innovation is a form of disruptive innovation. The difference is that disruptive innovation focuses on disrupting someone else, or disrupting an industry. Heretical innovation is about asking yourself the tough questions that challenge the very nature of how your product or business model works.
Heretical questions can range from something about a particular process or a particular aspect of how you do something, all the way up to your business model itself.
Merlino: What are some examples of heretical questions for, say, the cruise industry?
Winston: “Can we cruise with zero waste?” “Can we cruise fossil-fuel free?” Again, heretical questions drive innovation.
Are these things possible right now? I don’t know. But I do know that airlines are experimenting with biofuels and that the U.S. Navy is flying jet fighters with biofuels. I know that the U.S. Navy has an assault ship, the USS Makin Island, that’s a hybrid with batteries that can power it up to 10 knots.
I don’t see why a cruise ship couldn’t do the same. [Editor’s note: The Makin is 847 feet long and 12,821 gross tons. Today’s cruise ships range up to 1,182 feet, in the case of Royal Caribbean International’s Allure of the Seas, which is 225,282 gross tons.] The Navy expects to save about $250 million in fuel over the life of the ship, so those questions about cruising with zero waste or without using fossil fuels are not as crazy as they might sound.
Merlino: Inside a business, where does the juice for green innovation generally come? We’ve talked about it coming from customer demands. But is it also a matter of leadership?
Winston: It comes from a lot of things, including pressure from stakeholders. You want the juice to come from the top. You need leadership. Certainly you’ll get more traction and go faster if you’ve got it coming from the top.
I also hear from large clients that, for them, a big driver of green innovation is attracting and retaining the best people. There is a need for talent in every industry, and it’s getting harder to find without having answers to questions about how a business handles its responsibilities, how it responds to social and environmental issues around the world.
Employees want to know — especially the millennials, the next generation, who care about this a lot more than older generations.
Merlino: Why do you think that’s so?
Winston: There are always generational shifts. Sometimes the older generations don’t realize the debate is over, and I would argue that climate change is in that camp. That debate is over. It’s over scientifically, and it’s over with the younger generation. They don’t doubt that we have issues and challenges in this area.
There are a lot of great examples of how pursuing a sustainability agenda in a company drives engagement and galvanizes people in a way that companies haven’t seen before, because they feel good about what they’re doing.
Merlino: On a related question, have you found that business leaders are prompted to implement green practices based on their own personal values, like respect for the natural environment? Or are most leaders driven more by business concerns?
Winston: As with everything in our lives, I think it’s both, but the majority of action on this front is the business imperative. That said, I hear many stories, and I personally know many executives who have made a personal 
connection with green practices. It could be that they just care about maximizing profits, but I often hear stories about an executive whose child or grandchild asks them what they’re doing about the environment or global warming.
In my next book I’m going to tell the story about one of the top executives at Walmart. He read my first book, Green to Gold [Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage, Wiley, 2009], and then he asked his two young sons, “What do you think? Should Wal-Mart do more green stuff?” And they said “duh!” That was pretty much the entire conversation, and it was the final straw for him. He was already getting there on his own; it seemed to make sense for the business. But when he asked his boys, who were 11 and 14, that clinched it for him.
I hear a lot of stories from executives I meet who are more engaged, more enthused about green practices and sustainability based on a personal connection: There’s a sister who’s an environmental lawyer, or there’s a child that’s pushing on these ideas or working in this arena.
Merlino: So how important is it that a business leader is personally interested or enthusiastic about green practices?
Winston: If you bring your values to work, you’re always more engaged. But the basic business drivers for green practices are all there regardless of whether a leader is or isn’t enthused.
There are plenty of people doing green things in their companies who may even think it’s all BS; they don’t believe in climate change, or they don’t think it matters that much. But they know that their employees and their customers care about it, and they know commodity prices are rising, and they want to cut costs, so they don’t need other reasons to do green.
ALSO SEE: Andrew Winston onThe Cost-Cutting Business Imperative of Sustainability