Sustainable Innovation

Why? - The Need for Sustainable Innovation

As a starting point, innovation is more than just a mix of process optimization and R&D investments. It is an ongoing and multi-level process that changes the way businesses are run. Even companies with a long and successful history, like the German Mittelstand, have to create and implement completely new business models in order to ensure that they stay relevant in the future. During the past decade, the Mittelstand has invested massively in both its digital transformation and digital innovation. The vast majority of companies are seeing a positive impact from their investments. 

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Digital Transformation

By using digital technologies, companies create new (or modify existing) business processes, cultures, and customer experiences to meet changing business and market requirements.

Examples:

• Viessmann introduced an AI-based optimization tool to improve the sales process of its complex heating solutions. The faster response time led to higher customer satisfaction and a reduction in costs. 
• Clasen Bio used to sell its products to local retail stores. Together with us, they launched a new e-commerce business, with new structures and processes. 

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Digital Innovation 

A digital innovation is a feasible, relevant offering such as a product, service, process, or experience with a viable business model that is perceived as new and is adopted by customers.

Examples:

• Netzsch launched an industrial IoT platform to offer new services like real-time machine monitoring to their customers, who run industrial mills. 
• The Star Pump Alliance developed a dynamic e-commerce platform to allocate highly qualified leads to industrial pump producers. 

Even though companies have started to introduce processes to improve internal operations and launch new products and services, only 35% of German companies state that they have successfully delivered digital transformation.¹

Besides the current efforts of the German Mittelstand to digitally transform, another transformation towards sustainable business practices requires more and more attention. Sustainable innovation involves making intentional changes to a company’s products, services, or processes to generate long-term social and environmental benefits while creating economic profits for the firm.

Following the sustainable transformation, more and more companies include environmental, social and governance (ESG) factors in their decision-making. They mainly have an impact on the prioritization of digital initiatives.