Industries that are foundational to the global economy are entering a crossroads for their significant 2030 corporate sustainability commitments. The window is narrowing for companies like Apple, Target, and CVS to meet these ambitious goals.
The majority of decarbonization pathways will require scaling through large enterprises: they have the financial power, established value chains, and market access to integrate and scale new deep tech solutions that drive impactful decarbonization. That said, there are three common points of failure that corporate innovation teams often face in this process:
- Team alignment and resourcing pitfalls
- A lack of buy-in from finance teams
- Inability to create new value chains required to commercialize disruptive tech.
A new model of corporate innovation can help avoid these points of failure. At Newlab, I collaborate with startups and corporations to scale and commercialize climate tech. I’ve seen firsthand how companies that equip their innovation teams with resources, decision-making authority, and a clear core mandate accelerate progress toward sustainability goals while also driving business growth.
Team Alignment & Resourcing
In many companies, innovation teams solely function as information funnels that feed internal business units insights on emerging technology, industry trends, and competitors’ strategies. On the other hand, some emerging innovation teams are taking on the authority to establish new partnerships, seed R&D efforts, and deploy early-stage investment capital.
…Some emerging innovation teams are taking on the authority to establish new partnerships, seed R&D efforts, and deploy early-stage investment capital.
Leaders seeking to reimagine innovation should first establish the right teams aligned to committed resources. This starts with defining (or redefining): What does innovation mean to your business and sustainability goals? What are the teams and resources needed to achieve near- and long-term outcomes attached to those goals? Clear, quantifiable metrics that align innovation and business KPIs with sustainability ones are crucial.
I’ve seen how this approach can thrive in my role working with corporate innovation teams and startups to facilitate pilot programs of new technologies. Of the 100+ pilots we’ve helped execute, about one-third have led to commercial next steps — including follow-on larger-scale pilots, joint development agreements, corporate venture capital investments, and acquisitions — between the startup and corporate partner.
In all of those cases, the corporate partners have brought unique, intentional innovation strategies executed by integrated teams, making them primed to engage with external technologies, empowered to apply resources and take action on successful pilot projects. When Verizon piloted a bi-directional EV charging system for the first time with Newlab, they brought together engineers, value chain partners and a corporate venture capital investment to help scale the outcome.
Innovation teams are often doomed to fail to deliver ROI if there isn’t a clear throughline to the company’s financial goals.
Decision-Making Under CFOs
Innovation teams are often doomed to fail to deliver ROI if there isn’t a clear throughline to the company’s financial goals. One way that corporations can mitigate this is by having the Chief Financial Officers oversee innovation teams.
This trend is already underway – as climate reporting regulation drives CFOs to manage more corporate sustainability efforts, it will become natural for companies to link sustainability innovation to financial strategy. Having innovation teams report to the CFO can help tie innovation outcomes to climate progress and business growth by connecting a company’s sustainability goals with its Horizon 1 to 3 roadmaps.
With this structure, teams are empowered to invest in new technologies and scale them through financial instruments established by the CFO. One company we work with raised a significant sustainability bond to support the procurement of electrified vehicles and charging infrastructure for their fleet operations, underpinned by organizing investment resources around developing new climate technologies.
Creating New Value Chains
As companies face increasing pressure to decarbonize and achieve sustainability goals, they often struggle with how to integrate innovation across their entire value chain. Many innovation and new product teams are siloed, lacking the cross-sector partnerships necessary to actually apply new technologies in areas like manufacturing, supply chains, and go-to-market strategies.
Evolving value chains with technology and innovation can lead to real sustainability progress across partnering corporations. Look no further than Walmart, which hit its emissions goal six years early — while also lowering costs — by analyzing its value chain and then collaborating with partners and suppliers to optimize energy efficiency, package design, and food waste reduction.
Value chain innovation can be pre-competitive as well. Google, Microsoft, and steel manufacturer Nucor demonstrated how this form of collaboration can work by jointly establishing a market for climate technologies. They recently launched an initiative to “aggregate their demand for advanced clean electricity technologies,” bringing their collective future clean energy usage to create an immediate market for scaling first-of-a-kind solutions.
Looking Ahead
We still have time to create a new, brighter climate future. With sustainability goal deadlines rapidly approaching, companies need to establish novel innovation strategies and aggressively invest in scaling them to realize that vision.
Satish Rao, Chief Science Officer, Newlab.
