The Substitution Trap

Companies often dismiss sustainability because they mistake a single failed substitution for the entire playbook.

By Daniel Aronson | Published 1 day ago | About a 2 minute read

When companies say, "sustainability doesn't pay," they almost always mean one thing: substitution didn't pencil out. Swap recycled plastic for virgin, or swap the cheaper component for the greener one, and watch the unit economics get worse.

That's real.

But substitution is just one technique; in my research, I’ve found more than three dozen. Most organizations default to one, test it once, and write off the whole category when it fails. They never get to the other thirty-five.

Here's a completely different technique: strategic surplus. Build more capability than you need internally, then capture that value externally. I helped a startup restaurant chain do exactly this while growing their social impact.

They built an exceptional training program for people reentering the workforce. It worked; their people were productive and loyal. But that meant they had more training capacity than they needed. So they turned it into a service they offered to others.

They delivered highly trained workers to local hotels and caterers in exchange for a fee. They also became a top partner for the local workforce development agency; the agency helped fund their work, further improving the economics.

They helped more people reenter the workforce. And they turned their cost center into a profit center.

Strategic surplus is just one of the three dozen sustainability techniques. Tailoring (putting only what's needed exactly where it's needed) is another. Time shifting (trading time for effort or capital) is a third.

That means if your sustainability strategy starts and ends with substitution, you're working from 1/36th of the playbook and wondering why the numbers don't work.

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🗣️ What capability does your organization have more of than it needs — and have you ever asked what it might be worth to someone else?