Corporations Are Killing Sustainability… But Startups Can Bring it Back

Factory and startup thinking together to solve for sustainability.

Corporate complexity kills sustainability. Weathering the flood of process and politics, large companies struggle with the flexibility needed to drive innovation. And, while this reality fuels anxiety about our planet’s future, it also creates fertile ground for startups to plant seeds of true sustainable change.

It’s not just in good form to want to care about the environment or the communities around us and abroad. Sustainability makes sense from a financial perspective. “Going green” or contributing to community well-being can account for substantial cost savings over time. And, what corporation doesn’t love a good press push after announcing an initiative to reduce pollution while also making factories safer for workers?

So why is it that so many corporations struggle to innovate in ways that make them better stewards of the environment and communities?

As someone who has experience working in sustainability at a large corporation, I can attest to the fact that change is slow no matter how good these companies’ intentions. It’s tough to get corporate buy-in to drive an effective sustainability initiative. And, even if you’re able to get C-level support and sign-off, it’ll still be years before all the pieces of the corporate system are aligned toward sustainability goals and actually showing progress.

This is exactly why I decided to shift my focus to working with startups. Startups have the power to innovate quickly, without bureaucratic overhead slowing them down. No more waiting two years for someone to approve a budget. Startups, and in particular, technology startups, are more effective at identifying problems and creating focused solutions to solve them. Therefore, they have a better chance of reaching sustainability goals.

Startups vs. Corporations

Corporations are like big ships: They’re hard to turn around.

It’s hard enough to get a bigwig CEO to change from a Blackberry to an iPhone. So how are we going to convince that person to invest in sustainability? Even if that person is totally on board, think of all the systems, vendor relationships, and other organizational aspects that need to change in order to get something done. And if that person’s not on board? Maybe you’ll have a chance in a few decades, after you’ve navigated the turf wars and political power plays necessary to introduce a new initiative. You know, in addition to the hundreds of other initiatives in varying development stages at any given time.

On the other hand, individuals or teams launch startups after they recognize problems that exist in the world. Founders craft solutions to solve these problems. The best ones are laser-focused in their approach. Unlike corporations, startups don’t have years of processes and traditions causing an uphill battle against implementing sustainable change. When they can find the right solution that resonates with the right customers, they can work directly with the consumer, rather than having to spend years navigating the structure of the large corporate machine.

The Role of Tech

Corporations and startups often tackle different types of sustainability problems. Corporations strive to improve operations so they use less energy and water and generate less waste. They focus on improving working conditions, both for their own employees and within their supply chains. They look for philanthropic opportunities to support the local communities in which they operate. Software and other technology are often part of these corporate programs (for monitoring and tracking performance, as one example). Rather than driving change themselves, they’re merely tools that support corporations’ sustainable change.

Startups, on the other hand, are very market-oriented in their approach to driving environmental and social change. They identify problems people in the market experience. They then build companies around the products and services that provide solutions to those problems. These nimble companies development many “smart home” energy efficiency solutions this way. Startups identified homeowners’ need to understand home energy and water usage so they could optimize this usage to consume less and save money. Nest is one of the earliest and best known of these companies.

These startups are not just bringing sustainability-focused tech to the consumer market. Startups are solving major environmental and social issues in sectors ranging from industrials to utilities to healthcare to buildings to agriculture. Just peruse the winners and finalists of this past year’s SXSW Eco, Cleantech Open Northeast and Echoing Green, for some amazing examples.

When sustainability-minded startups think correctly about the problem, solution, market, and business model, their nimbleness and inventiveness is a huge advantage.

Startups and Corporations: Sustainability In Practice

Startups have some huge advantages over corporations when it comes to sustainability in practice. And, corporations are taking note of this. They use their financial power to play in the space more effectively than they can by creating their own home-grown solutions.

For example, telecom giant Vodafone partnered with a company called TABIT to help improve small-scale farmers’ lives. The program, called The Farmer’s Club, gives preferential offers and payment systems to these farmers to help meet their needs. This, in turn, expands Vodafone’s client base while also supporting the farmers who help create a sustainable infrastructure for our world’s agricultural systems.

Instead of partnering, many corporations buy their way to innovation. Startups are acquisition targets for these large companies (often resulting in a nice exit for the founders). Google famously acquired Nest, mentioned above. Climate Corporation, another well-known tech startup working on precision agriculture, was acquired (infamously) by Monsanto. UL Environment acquired GoodGuide, a platform that provides environmental, health and social data on thousands of products and companies. And most recently in the edtech space, Sylvan Learning Centers acquired Citelighter, a tool that helps students improving their writing skills.

Embracing The Startup Mindset: Test And Iterate

The best way for corporations to integrate sustainability is to take a lesson from startup culture: test and iterate. Instead of investing in large-scale initiatives, we encourage corporate leaders to think like startups. They should implement small changes and use those learnings to steer that ship. When corporations can’t solve problems, corporations should turn to the startups that move rapidly to tackle these issues.

Over time, we expect to see a fundamental shift in how corporations and startups join forces to create sustainable change. Beyond ROI and better local economies, corporations have a lot to gain from implementing technology that creates a better world.

 

FounderTherapy helps startup founders build better businesses. Our Tech for Good initiative is centered around using technology to solve problems in the areas of the environment, education, healthcare, and civil society. Want to learn how we can help you launch your business? Get in touch at www.foundertherapy.co

I’m a sustainable business expert who specializes in helping founding teams work through strategic and company-building challenges. I work on product strategy and development, as well as operations and process management. I specialize in sustainable tech and “tech for good”, and I serve as a Sustainability Mentor for Cleantech Open Northeast, and am a volunteer with Echoing Green.

Previously, I worked on emissions management and energy efficiency projects for a large waste and recycling company in the northeast. I have also worked as a sustainability consultant to large corporate clients, including Walmart and Citrix.

Prior to my work in sustainability, I ran my own digital fine art reproduction business, launched a city-wide economic revitalization organization, and have taught art, business, and sustainability courses at several universities. I have an MBA in Sustainable Management from Presidio Graduate School and an MFA in Imaging Arts & Sciences from RIT.