The Relationship between Sustainable Development and Product Innovation in the Body Shop

Abstract

Currently, the general public is concerned about sustainable development and the effect on business activities is much discussed. This project will mainly focus on product innovation, and analyze how the successful business The Body Shop integrated the issue into its business plan in the fashion market in the UK. Theories of sustainable business strategy have already been carried out by many experts and the achievements of The Body Shop also have been highlighted. Regarding product innovation, it is concluded that although some of the sustainable product designs need to be improved, however, it is still successful to reach the environmental product innovation development. This may be of use to business, especially for those who are seeking for the most proper sustainable business strategy.

Contents

Abstract

List of figures

Introduction……………………………………………………………………………..1

Sustainable Development………………………………………………………………….3

Definition………………………………………………………………………………..3

Impact on enterprise……………………………………………………………..5

Product Innovation……………………………………………………………………………..9

Innovation and NPD………………………………………………………………..9

Product innovation for the environment……………………………….11

The Fashion Market in the UK: The Body Shop…………………………………14

Conclusion…………………………………………………………………………………………………..18

List of references…………………………………………………………………………………………20

List of Figures

Figure 1. The Three Components of Sustainability……………………………………..4

Figure 2. The Enterprise Management Model………………………………………………6

Figure 3. Interactive Model of Innovation……………………………………………………10

Figure 4. A Framework of Achieving Green Design…………………………………….12

Introduction

In recent decades, the importance of sustainable development has been globally emphasized and discussed in the business approaches in all realms of the market. As Rainey (2006:84) mentioned, it is important for business to integrate the environment issues with the business management approaches. Companies, in the present time, not only have to make the maximum profit for shareholders but also need to maintain the balance of environment when they are implementing business activities. In the fashion market, developing a new product through the philosophy of sustainability is the most efficient way to achieve the sustainable requirements successfully. As Stamm (2008) commented, designing a sustainable product can avoid the cost of repairing the damage to the environment and also help the company to adapt to the environmental requirements rapidly. Therefore, focusing on producing eco-friendly products can be a vital issue.

Although much of the literature is emphasizing the importance of implementing the sustainable product innovation, there is still little companies can do to achieve the goal successfully. As Carrillo-Hermosilla (2009) stated, since there is a wide range of sustainable strategies, it might be risky for companies to adapt the approach in an uncoordinated manner. According to Buchholtz (2006) the relationships between business and society seem to support this, and reach a conclusion that when companies announce taking the responsibility to meet the social expectations, it will be examined in a more critical way by the general public.

The aim of the project is to examine the well-known company in the UK fashion market, namely “The Body Shop” to see how it achieves the sustainability requirements when running the business and how the product is developed in a sustainable way. The project will first start with the definition of the sustainable development, then analyze how the business approach is affected by the sustainable issue. Finally, it will focus on the product innovation for the environmental protection and examine The Body Shop in compliance with the theories mentioned.

1. Sustainable Development

1.1 Definition of Sustainable Development

There is a strong possibility that business activities will generate numerous environmental crises when they mainly aim at maximizing profit. Some examples of the damage are environmental pollution, ever-increasing problems of waste disposal, and the erosion of local cultures and environment caused by the booming tourism industry. Therefore, the regulations of environmental protection are essential to ensure well-being both at present and in the future. (Carrillo 2009:1)

Sustainability, which was brought to public attention in the 1970s, was clearly outlined in the Brundtland Report, which stated that it is crucial that the economic development be prevented from exhausting natural resources and the environment should be repaired. In the past, the concept of sustainability was deemed to be similar to environmental protection, which in the present time has been extended to include three dimensions, namely economic, social, and environmental (Elkington 1999).

Figure 1. The three components of sustainability

Source: Crane (2004:23)

Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

(World Commission on Environment and Development 1987)

More specifically, the three segments of sustainable development represent different meanings. The environmental part is to decrease the damage of human activity on limited natural resources and to protect the health of environment for the future generation. The aim of the economic segment is to protect the future generations from the disadvantages of continuing population or industrial activity growth. The final part is the social segment. This mainly focuses on the influence of business activities on native people.

With the coming of the age of sustainable development, more and more companies are beginning to reexamine themselves. For example, in the UK, as Crane (2007:24) stated, the popularity of the dish named “Fish and Chips”, caused a severe overfishing problem. As a response, the government imported fish from other more sustainable resources to ameliorate the harm to the bio-system.

1.2 Impact on Enterprise

Sustainable development has significantly affected the business management approaches over the past few decades. Although it is risky for business to adapt themselves to the requirements of sustainable development, companies still can take advantage of the emerging issue by formulating effective sustainable strategies. (Rainey, 2006)

In order to develop a holistic sustainable strategy, it is useful to apply the enterprise management model (EMM) to achieve the SWOT analysis. As Rainey (2006:87) provided, the EMM presents an overview of the environment of business which is much closer to the practical business environment. Business can develop the sustainable strategies by analyzing the strengths and weaknesses of internal components and the opportunities and threats of external surrounding.

Figure 2. The Enterprise Management Model

Source: Rainey (2006:88)

Firstly, business can conduct the SW analysis. The internal environment is presented as a value-added process in EMM which provides the business a complete structure to maintain the balance of environment and avoid producing toxic waste. By examining the process of producing products, business can make sure that the sustainable development is followed not only by the business itself but also by the material suppliers. (Rainey, 2006:90)

Furthermore, companies should analyze the opportunities and threats of the external environment, which mainly focuses on the effects of shareholders and the infrastructure. Shareholders are the people who can affect the practice of business operation and marketing strategies. The infrastructure is the facility which supports business to meet the social expectations. Both of them are associated with the aspects of social, political/legal, economic, technology, competition, ecology, and ethical and connect the external surrounding and internal elements with the knowledge and information flow.

(Rainey, 2006:91)

After the SWOT analysis, it seems possible that companies are able to develop sustainable strategies in an organized manner. According to Weybrecht (2010:387), the sustainable strategy was developed depends on whether the business applied it to the whole business approaches or only integrated it in an uncoordinated way. However, there is a far less agreement about the possible sustainable strategies. Rainey (2006) concluded that the sustainable strategies need to be designed in a systematic method which linking the several possible sustainable issues with the supply networks, operation, distribution, markets and customers, and retirement disposal.

Although businesses are adapted to the sustainable development by setting the effective sustainable strategies, it still cannot be successful without the cultural change. Changing the business culture means to establish sustainable thinking and knowledge in the organization. As Weybrecht(2010:255) claimed the sustainable culture can be built in the following process:

Communication- hold discussions constantly to exchange the ideas about sustainability.

Recruiting- hiring the right person to lead the sustainable related management activities.

Feedback- training staff by offering some sustainable related education programs and give some rewards when staffs achieve the sustainable mission successfully.

By following the steps above, the concepts of sustainability can be built from the bottom of the organization to the top. (Weybrecht, 2010:255)

2. Product Innovation

2.1 Innovation and NPD

Innovation plays a considerably important part in the present time. As Trott (2008) pointed out, since the 1930s, many researchers have argued about the relationship between innovation and economic growth. It seems that issues about innovation have drawn public attention for many years and are still being discussed until now. However, the relationship between innovation and business management has been highlighted and widely discussed since Abernathy and Utterback(1978) contended that the birth of any industrial sector is associated with the one radical innovation by another and the widespread incremental innovation, which means that the power of innovation decides the fate of new business. Since the rising popularity of innovation, the explanation of innovation is defined in many different ways. According to Stamm (2008:259), innovation includes creativity and implementation, which means innovation not only requires creativity, to generate new ideas, but also implementation which means the business activities to realize the unique ideas. Implementation is a process of business activities which plays a determined role in the success of innovation. As Stamm (2008:273) analyzed, the implementation can be divided into three steps, namely idea selection, development, and commercialization which turn the creativity into a rigid one.

Figure 3. Interactive Model of Innovation

Source: Trott (2008:23)

As Trott (2008) stated, innovation is the result of the marketplace, the science base, and the organization’s capabilities and affected by the increasing improvement of technology and the needs of the market. Moreover, in the process of new product development (NPD), examining the different aspects of a product is an important process to achieve the product innovation. Trott (2008) showed the five aspects of marketing, economics, design and engineering, R&D, and production management, which provided companies with the direction to develop new products. Although companies can make profits by decreasing the cost of manufacture, the sales increase will not last for a long time since the competitor will set a relatively low price quickly which will turn the competition of market share into a vicious circle. Also, the long-term methods to increase the market share and be a market leader is to create the competing ability which is hard to imitate.

2.2 Product Innovation for the Environment

The concept of product innovation for the environment is to design a product which lowers the impact on the business environment, and meets the social expectations. In the dynamic environment, how to produce a product that meets the requirement of sustainability becomes the most important issue. Although staff from the top to the bottom all need to be responsible for the change of sustainable development, the most efficient way is to focus on the design. A comment by MacKenzie stated, Designers are the central part of product innovation as they embrace the holistic knowledge to design an eco-friendly product. This opinion is also supported by Carrillo-Hermosilla (2009:98) which mentioned that design for environment can decrease the reprocessing cost and avoid encountering problems in the end of product life. As Burell (1992:91) suggested that the design of an environmentally friendly product can follow four dimensions. The framework for achieving green design is presented as follow:

Material Conscious

Energy conscious Green Design Maximize product life

Design for recyclability

Figure 4. A framework for achieving green design

Source: Adapted from Burall (1992:92)

In order to achieve the requirement of sustainability, companies need to minimize the use of hazardous materials and find the alternative ingredients which do not come from the scarce resources. Additionally, companies can also use the material which is beneficial to the environment such as recyclable paper. Also, it is essential to make sure that the suppliers follow the standard of environmental protection which will not affect the sustainable achievement of the company.

Moreover, saving energy is also an important issue. Currently, many environmental issues like global warming are caused by the overuse of energy power. Business should design the product which can lower the consumption of energy and be user-friendly for customer to operate.

With regard to the design for recyclability, although the company already uses natural resources, it still needs to avoid combining too many different ingredients which may lead the product to be difficult to recycle. Additionally, labeling the ingredients of products clearly can be helpful not only because the classifying work can be easier but also make the hazardous ingredients to be noticeable. Also, designing the long life products for re-use can reduce the amount of wastes.

As to maximize product life, design a product which is more realistic than only fashionable and ameliorate the weakness of products can improve the company’s reputation. Furthermore, it is also vital for companies to design a product which can be user-friendly and easier to be repaired.

Developing eco-friendly products by examining through the four aspects can help companies to meet the sustainable standards more efficiently. Products which meet the social expectations can generate the profit in a long term way through the rising of company’s reputation. (Burall, 1992)

The Fashion market in the UK: The Body Shop

The Body Shop was founded by Annita Roddick in Brighton in 1976. Unlike most cosmetics companies, the promotion concept of The Body Shop is to emphasize the suitable cosmetics products for the different age of people instead of selling the slogan that people can stop ageing because of using its products.

With regard to the internal analysis of The Body Shop, in order to ensure the maintenance of sustainability, it chooses the natural resources to be its raw materials and builds a close connection with its suppliers. Also, due to meet its shareholders expectation of caring for the elder people in the community it trades with, The Body Shop establishes the “Trade Not Aid” to alleviate the poverty and help people who are suffering from low payment in the third world countries. Moreover, The Body Shop aims higher moral standards by not only building a soap factory in the deprived region instead of in the safe suburb but also donating 25% of the future profit to extend the local facilities. The concept of sustainability of The Body Shop is to consider the value of sustainability as a core issue in its decision making process. For example, when The Body Shop wants to develop a new product, it will examine each aspect of the product design which is related to the sustainable issues and devote itself to making the world as good as possible. In addition, The Body Shop founded a training school in 1985. The purpose of the training school is to educate its employees and related business partners about the knowledge of the latest environmental issues and considerate the awareness of environmental protection. (Roddick, 1992)

As to the product innovation, green design, of The Body Shop, it is considered as a paradigm among various companies. There are two major applications of green design in The Body Shop. First of all, when it comes to the material conscious, most of the cosmetics products in The Body Shop consist of natural ingredients, such as, cocoa, and green mud. None of them are scarce or natural resources under threat. Secondly, there are some of the product designs for recyclability in The Body Shop. Before 1980s, The Body Shop particularly focused on the recycling and energy conservation schemes. After that The Body Shop started to pay attention to the environmental issues of packaging, waste and effluents and invented a bag which was made from recycled polyethylene in order to diminish the negative influences of its products. Besides, it encouraged the general public to use the non-chlorine bleached cotton bags which can be refillable. In 1992, The Body Shop was the first corporation in the UK which recycled its own post-customer recycled waste.

However, it is important to point that learning how to use natural resources to produce sustainable products in the underdeveloped countries may lead to the overuse of the natural resources. Since the natural resources are rather unique in the underdeveloped countries, the company may only gather the natural resources from the certain countries, however, because of the great demand of certain useful materials, they may be overused, which in turn the natural resources may become scarce in the future. Take honey for example, honey is known as a natural ingredient which contains rich nutritive materials. However, the rapidly increasing demand of honey makes the amount become fewer and fewer. As a result, some of the companies are forced to stop using honey as their materials.

Additionally, although it is believe that the economy of the third world countries gain benefits from the “Trade no Aid” activity because the indigenous people can avoid the price exploitation of the middle trader. However, trading with poorer countries might generate several drawbacks in these third-world countries. The most significant negative effect is on the economic development. Because the majority type of jobs offered by trading activities is usually low-paid or short-term job the benefit of this kind of jobs is limited. Although the living standard of indigenous people is improved temporarily, it must not be overlooked that the countries in the third world have become more and more dependent on foreign countries and less likely to change their economic status by themselves.

Furthermore, although the concept of using cotton bags is a favorable idea to avoid the environmental pollution of plastic bags, it did not turn out to be widespread. In The Body Shop store, people are still using paper bags instead of the cotton bags. The reason why it is not as popular as it should be, might because it is inconvenient for customers to bring the cotton bag with them whenever they are out for shopping. However, this problem can be solved by providing customers some incentives to encourage them to use the cotton bags instead of paper bags. For instance, the body shop can offer customers a discount when they use the cotton bags. After the examination of the sustainable product innovation, it can be understand that it is challenging for companies to achieve the goal of sustainability.

Conclusion

Business approaches are significantly affected by sustainable development. Not only the development of business strategies and culture establishment but also the new product design was influenced by the issue. With regard to the development of sustainable strategy, it is important for companies to examine the internal and external business environment and make the difficulty of fulfilling the social expectations into an opportunity to earn a profit. Furthermore, when producing a product, it is essential to consider the usage of materials, the consumption energy, the life span of products, and the possibility of recycling. In the case study of The Body Shop, it can be clearly seen that the company has altered a wide range of the business approaches to meet the social expectations. However, the analysis also shows that the sustainable strategies of The Body Shop still can be improved, such as the promotion of cotton bag use and the way they help the countries in the third world.

After discussing the relationship between sustainable development and product innovation, it was concluded that integrating the business approaches with the environment management can be successful in the real world and it will be more efficient when focusing on the green product design. As Buchholtz (2006:106) stated that an active involvement in the changing society can benefit a company from the significant challenge. It should be noted that other business approaches and different types of market, which is not described in detail in this project might also be related to the sustainable development. In the future, analyzing the different realms of market place can be helpful to those businesses which are interested in developing sustainable business approaches.