Product, Service & Design Innovation
Beyond Incremental:
Sustainability Initiative at MIT Sloan Takes Innovation to Scale

Once companies tackle the low-hanging fruit of operational improvement — carbon footprints, energy-efficiency retrofits and waste reduction — they are ready to address deeper sustainability challenges.

"New, sustainable products, services and processes are creating new businesses and new industries," Sterman offered. “I don’t think it’s an exaggeration to say that creating a more sustainable world is the greatest entrepreneurial opportunity since the industrial revolution.”

Over the years, MIT alumni have founded ZipCar, Next Step Living and nearly 26,000 other companies, including Clean Energy Venture Group, which is one of the largest angel investor syndicates in the sector.

The Sustainability Initiative, consisting of 31 scholars and founded in 2006 at the MIT Sloan School of Management, aims to harness the university's propensity for innovation to “achieve social justice, care for future generations, and the flourishing of life” on our planet.

A Campus-Wide Sustainability Laboratory

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Professor Jay Forrester, founder of the field of system dynamics, initiated MIT's involvement with sustainability in 1970. He and his colleagues at MIT Sloan coauthored World Dynamics and then Limits to Growth, which sold 12 million copies and was translated into 37 languages.

Limits to Growth was one of the most provocative and controversial publications of the 21st century,” said Jason Jay, director of the Sustainability Initiative. “It highlighted the tension between growth in human economic activity and the limits of a finite planet, launching the field of sustainability right here at MIT Sloan.”

The Sustainability Initiative at MIT Sloan is part of a larger commitment to tackle global sustainability challenges that includes the MIT Energy Initiative and the newly created MIT Environmental Solutions Initiative.

Wednesday, February 25
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"While technological innovation is a hallmark of all three initiatives, the Sustainability Initiative at MIT Sloan pays particular attention to management innovation, without which technological innovations like renewable energy won't reach scale or economic feasibility," Jay explained. "The shifts include business model innovations like power-purchasing agreements and car sharing; market infrastructure and policy innovations such as feed-in tariffs and eco-label certification; and the degree of systems thinking in management itself."

The Initiative's cornerstone is the Laboratory for Sustainable Business, or “S-Lab,” one of MIT Sloan’s 16 Action Learning Labs. Since 2007, 382 students have joined faculty to tackle sustainability challenges with globally recognized companies. Projects have included Facebook’s current and future data center designs, and a life cycle assessment framework for Amazon's frustration-free packaging.

The lab’s "action learning" roots date back to the 1960s and reflects MIT's Mens et manus motto, which is Latin for "mind and hand." The intellectually rigorous and hands-on approach is employed throughout the 42+ course options available through the Sustainability Certificate program to MBAs and Masters-level students across MIT.

The MIT Sloan Sustainability Initiative also promotes a Sustainable Business Internship Program that incentivizes businesses to place MBA students at their firms for the summer by subsidizing the salaries of the first five internships.

Shifting Industries Toward Sustainability-Driven Innovation

Renowned aerospace and technology company Lockheed Martin is one major corporation working with the Sustainability Initiative.

After grasping MIT Sloan’s approach through Executive Education programs, Lockheed saw the potential for sustainability to drive commercial ingenuity. It recently funded an Initiative research project on the practices that lead to successful sustainability-oriented innovation.

Jay, who leads the project, said Lockheed’s interest in the topic stems from two aspects of the company’s business. The first is the potential to accelerate its own pipeline of new technologies, products and business models (examples might include adapting drone technology to address the challenge of environmental monitoring and precision agriculture, or applying graphene technologies to water filtration). The second is the opportunity to inform sustainable economic development in the countries where Lockheed does business.

The project team will help identify the key competencies of sustainability-driven innovators, and develop a decision framework to invest in sustainability-oriented innovation at the corporate and national levels.

Lockheed Martin also benefits from the broader MIT hacker-innovator-entrepreneur ecosystem. Last summer the company purchased hydrogen fuel company Sun Catalytix, a startup that spun out of MIT professor Daniel Nocera's lab. And in October 2014, it participated in an industry symposium at MIT on manufacturing new materials.

"Lockheed Martin wants to propel responsible business growth, attract fresh talent and strengthen stakeholder confidence, so it's valuable to count MIT and MIT Sloan as strategic allies in our work to bring sustainable innovation to market," said Matthew Swibel, the company's Director of Corporate Responsibility.

The company’s engagement with MIT Sloan also led to sponsorship of the Climate CoLab conference. The 30,000-member, international CoLab community harnesses their collective intelligence to implement new, crowd-based solutions to global climate change.

"Our employees see [working with MIT] as a tremendous opportunity," Swibel said.

Digging Deeper Into Systems

MIT Sloan’s strengths in system dynamics and innovation come together in the study of how innovations diffuse, and the ripple effects when they do.

The U.S. Navy's S-Lab project, for example, explored the secondary and tertiary impacts of creating a biofuel market, as the Navy explores this technology for aviation.

“Everyone says they want to use biofuels, yet a viable marketplace has yet to develop,” said Damian Blazy, former Special Assistant to Navy Vice Admiral Cullom, who led the Navy's engagement with MIT Sloan to stimulate the widespread adoption of biofuels. “We wanted to know if we could work with airlines and cargo carriers to create a meaningful market.”

The Navy had multiple student teams consider different aspects of this strategy. One group identified the key potential allies in industry for building a market for biofuels. Another team, in the S-Lab course, critiqued a key assumption in the Navy’s strategy, which relied on biofuel from crops such as camelina, grown on marginal lands. The assumption was that using marginal crops for biofuel production could avoid competing with food crops for land and resources. However, the team discovered that after a marketplace is established, supplying enough camelina to meet demand could create important risks. Faced with increased prices for camelina-derived biofuels, farmers might increase their cultivation of camelina on non-marginal lands, or increase the season of its crop rotation. As a result it would eventually risk driving up food prices.

In a 2011 interview for the U.S. Navy’s Information Technology Magazine, Cullom cited another MIT Sloan finding that without market incentives and collaboration, biofuels would not be cost-competitive until around 2020. These findings were shared in a congressional session and demonstrate how system dynamics can also inform policy.

“When experimentation is impossible, when the consequences of our decisions unfold over decades and centuries, as is the case for many of the most important issues we face," Sterman said, "simulation becomes the main — perhaps the only — way we can discover for ourselves how complex systems work, what the impact of different policies may be, and catalyze enduring change.”

Hardwiring Sustainability Into the Enterprise

Through MIT’s action learning projects, the Initiative is discovering that organizations also need other sustainability tools to innovate in their businesses.

"Measurement and management are central to sustainability, but the space is fragmented. We are looking to build out the tools and advance the sustainability profession," Jay said.

Looking ahead, Jay said he has the ambition of making MIT Sloan the destination for sustainability professionals who want to “hardwire” sustainability into the enterprise and are looking for the frameworks, tools and methodology for doing so. This is one reason why MIT Sloan co-presented the 2014 New Metrics conference with Sustainable Brands.

The Sustainability Initiative intends to publish some of the approximately 28 tools and frameworks created from its industry engagements for broader use, Jay said. These range from product-level carbon footprint calculators to recycling cost estimators and microloan scorecards.

He wants to encourage companies to publish their own tools on the MIT Sloan platform, perhaps as early as 2015. Jay said that by using the platform, companies will be able to accelerate their innovation and learning.

Transforming the Enterprise and Its Value Chain

The learning organization, according to Peter Senge, author of The Fifth Discipline: The Art and Practice of The Learning Organization (1990), is “an organization that is continuously expanding its capacity to create its future.”

Senge teaches Leading Sustainable Systems (L-Lab), one of the Sustainability Certificate courses. His best-selling book introduced systems thinking as a management approach. The course tackles the issues of organizational change and learning in global business sustainability.

These human elements are the critical, connective element in sustainability work. “Transforming value chains is a complex undertaking that begins with understanding the social and environmental contexts in which we are trying to create efficient supply chains for high-quality products,” Senge wrote in a recent publication. “The kind of understanding that leads to improvement is greatly enhanced by partnerships that enable us to work beyond our traditional boundaries by bringing together the perspectives of both civil society and business throughout the chain.”

OCP S.A., the world's largest producer of phosphate, is an example of a corporation that has engaged MIT and the Initiative extensively to accelerate its learning and help transform its operations and value chain.

The company, which is at the top of a global farm and agricultural products supply chain, recognized in 2006 that to be profitable it needed to triple its fertilizer production capacity. To do so, OCP opened four new mines, which meant creating a new business model.

Ultimately, OCP formed a new marketing strategy, opened 10 new fertilizer plants, and developed plans for a pipeline to minimize phosphate losses, reduce waste water, and lower transportation costs. In a speech at MIT Sloan, OCP chairman and CEO Mostafa Terrab also said the company decentralized and changed the culture of “hierarchy and bureaucracy,” while relocating managers to industrial and mining sites.

Along the way, the Morocco-based company participated in three L-Labs and two GO-Labs — an Executive MBA action learning program for global organizations. OCP also put its top 40 executives through a custom MIT Sloan Executive Education program with a significant component on sustainability and its strategic role in African food security and agriculture.

“At the national level, we contribute to the wealth and well-being of Morocco, not only by our exports, but by our close collaboration, as a socially responsible company, with smallholder farmers, SMEs, IDEs and the local communities that surround our operations,” said Terrab, who is an MIT alum. “At the same time, we are increasing our efforts to build partnerships and share our expertise and experience, especially with farmers in developing countries, through a variety of innovative South-South partnerships. In particular, we are increasing our presence and efforts in Africa, a rising continent with vast agricultural potential, and a continent to which we are proud to belong.”

OCP also has hosted multiple internships and, like their counterparts engaged with the Initiative, OCP sponsors other MIT research as well: phosphate processing at professor Alan Hatton’s lab in the chemical engineering department.

“These kinds of multi-faceted engagements with MIT have proved attractive to dozens of companies across industries and geographies,” said Jay. “MIT is a place that understands and creates the future. We are working hard toward a sustainable future, and we are lucky to have so many allies in industry who are doing the same.”

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