Strategy. Innovation. Brand.

Are Green Companies More Innovative?

Mashing up green and innovation.

Mashing up green and innovation.

By now, you probably know that I like to mash things up in the pursuit of innovation. Mashup thinking is also a good way to do research and discover interesting correlations.

With that thought in mind, I decided to mash up Boston Consulting Group’s  compilation of the world’s most innovative companies with Interbrand’s list of the Best Global Green Brands. Both studies identify 50 companies in rank order. Both tables are compiled annually; I used the 2013 list.

I first merged the lists and found that 74 unique companies occupy the 100 total slots. I divided these companies into three lists. Here’s how they break down:

  • 26 companies – the “greenovators” — appeared on both lists; that’s 35.1% of the 74 unique companies. (These companies are listed in alphabetical order below).
  • 24 companies (32.4%) appear on the innovation list but not the green list.
  • 24 companies (32.4%) appear on the green list but not the innovation list.

The degree of overlap increases as you go up the scale. Looking at the top ten companies on each list reveals a much higher degree of correlation than is found throughout the rest of the list. On the innovation list, eight of the top ten companies also appear on the green list (not necessarily in the top ten). Similarly, on the green list, seven of the top ten companies also appear on the innovation list.

So, there’s a high degree of correlation between being green and being innovative. There are at least four plausible explanations here:

  • Innovative companies are forward thinking and, thus, also interested in being green.
  • Green companies need to innovate in a number of ways to reduce their environmental footprint. The innovation spills into other areas as well.
  • The two lists are actually measuring the same thing.
  • Some third factor is causing many companies to be both green and innovative.

We clearly don’t have enough evidence to reach a conclusion as to cause-and-effect. However, the second hypothesis seems the most logical to me. To be green, a company needs to change its business processes. In other words, it needs to innovate. It seems logical that stimulating innovation in one area of a business would have ripple effects on other areas.

Additional findings are also intriguing:

Car companies dominate the greenovator group – of the 26 companies that appear on both lists, nine are car manufacturers (34.6%).  It’s the single largest industrial segment in the list. Why would car companies lead the way? It could be that green is a good marketing tool. It could be that car companies learned their lesson in the 2008 meltdown. It could be that government mandates for higher gas mileage lead to green innovation.

Some non-green companies disappoint me – three of my favorite companies are Amazon, Apple, and Google. Only Apple makes the greenovator list. Similarly, UPS makes the green list but FedEx doesn’t. Why wouldn’t these companies want to be seen as green? That’s disappointing.

These are great brands – I recognize all of the 74 unique companies. Indeed, I’m fairly familiar with most of them. These are valuable brands and I’m sure that being seen as leader in innovation or green or both only burnishes their reputation. In fact, I think my next mashup may be a three-way: brand value mashed up with innovation mashed up with green.

In the meantime, if you can help me sort out whether green causes innovation or vice-versa, I’m all ears.

Greenovators: Apple, BMW, Cisco, Coca-Cola, Daimler/Mercedes, Dell, Ford, GE, Honda, HP, Hyundai, IBM, Intel, KIA, Microsoft, Nestlé, Nike, Nissan, Nokia, Philips, Samsung, Shell, Siemens, Sony, Toyota, VW

Innovative, Not Green: Amazon, Audi, BASF, Bayer, Boeing, BP, Dow, Exxon Mobil, Facebook, Fast Retailing, Fiat, GM, Google, Lenovo, LG Electronics, P&G, Renault, Softbank, Target, Tencent, Tesla, Unilever, Virgin, Wal-Mart.

Green, Not Innovative: 3M, Adidas, Allianz, Avon, AXA, Canon, Caterpillar, Citi, Colgate, Danone, H&M, IKEA, J&J, Kelloggs, L’Oreal, McDonald’s, Panasonic, Pepsi, Santander, SAP, Starbucks, UPS, Xerox, Zara.

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