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The Fifth Axis of Competition and Sustainable Value Management

DRAFT PAPER on green innovation

By Peter David Pedersen

E-Square Inc., April 27, 2010

CREDIT: Roger H. Goun (CC).

Why have corporate giants such as General Electric (GE), Walmart and P&G so fervently been pursuing green business and sustainable corporate practices since around 2005? Why have eco-cars, very much pioneered by the Toyota Prius, become the new battlefield for automotive manufacturers? And, why do we see old, first world companies, such as the German chemical conglomerate BASF, or French dairy giant Danone, building alliances with new third world social businesses, such as the Grameen Group, in Bangladesh?

The answer to all three questions is that green innovation and the pursuit of sustainability have, together, become the fifth axis of competition for corporations in today's marketplace. In my view, the four decisive axes of competition, crucial to the survival and "thrival" of large corporations in the latter half of the 20th century, were business model innovation, market share, pricing, and quality (process and product quality). This short article does not allow me to describe each of these in detail, but the fourth axis of competition, quality, clearly became the key frontier of competitive differentiation from the late 1960s and beyond. Japanese manufacturers took the lead in perfecting this axis with kaizen management, while American corporations such as Motorola and GE aimed to catch up through Six Sigma quality management initiatives.

Mastering each of these four competitive axes is still a business imperative for the modern corporation. There is, however, a fifth and rapidly emerging axis which can no longer be ignored. Green innovation plus the pursuit of sustainability is, increasingly, becoming the fault-line of success and failure in the marketplace today.

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