4 Lessons in Sustainable Business from Nike's New Waterless Dye Technology

Today’s story is about Nike’s latest innovation – ColorDry technology which eliminating the use of water and process chemicals from fabric dyeing. The new technology, which Nike’s CEO Mark Parker described as a "manufacturing revolution" was introduced earlier this month at the opening of a water-free dyeing facility at FENC, the company’s Taiwanese contract manufacturer.

This is a great story to close 2013 with as this isn’t just another story about an innovative technology introduced by an innovative company – this story exemplifies the current path of sustainable business, including its opportunities, difficulties and challenges.

What does it mean exactly? Let me explain through four lessons we can learn from this story:

1. Making the status quo obsolete – we live in this weird reality where externalities manage to shield manufacturing processes from real world problems like increasing water scarcity. The result is inefficient and wasteful systems that somehow still dominate and shape the status quo.

It’s not that hard to figure out this won’t be for long – just think about these figures provided by Nike: on average, an estimated 12-18 gallons of water is needed to process one pound of textiles today. Industry analysts estimate that more than 86 billion pounds of polyester will be dyed annually by 2015. Multiply these figures and you get 1.3 trillion gallons of water that will be required just for the dyeing process of polyester. Does anyone believe the status quo can go on for long?

Now, the question is what companies do it about it. Most companies seem to be waiting for some sort of external intervention, such as a hike in the price of water in order to start rethinking about these business as usual practices. Few companies are behaving proactively like Nike.

Nike’s approach is based on creating better solutions that will become the norm not just because they’re sustainable but also as Hannah Jones, Nike’s VP of Sustainable Business and Innovation explains because they’re “better, easier and frankly more delightful to the consumer.” In this case, it is a technology that “reduces dyeing time by 40 percent, energy use by around 60 percent and the required factory footprint by a quarter. In addition, Kuenlin Ho, Executive VP at FENC explains “it’s also the most saturated, intense and consistent color we’ve seen.”

Better quality, reduced costs, less dependence on constrained innovation - could you ask for better new norm? Probably not. Yet, my guess is that many companies suffer from a status quo bias and will be slow to adopt the new technology, no matter how advantageous it seems to be.

2. The limits of technology – ColorDry uses recyclable CO2 to replace water, quite an impressive technology. According to the Oregonian, “Popular Science last year rated the technology among its “Best of What’s New” products.”

Yet, let’s face it. Even such technology can take you so far. When it comes to many clothing items that Nike sells like t-shirts and pants most of the water  footprint is from the raw materials (especially when using water intensive materials like cotton) and consumer use phases. This is also true for energy use and climate change impacts.

So while the manufacturing revolution is important, it is only one step on the long path to create a more sustainable economy. It’s important to note that Nike is also working on creating ‘materials revolution’ through LAUNCH, a strategic partnership between the company, NASA, USAID and the U.S. State Department. Yet, its most difficult challenge - changing consumer behavior - is still waiting to be revolutionized. I’m not sure technology will be helpful there, but hopefully Nike will use its other strengths to figure it out. Until then the revolution ain’t over.

3. The fruits of collaborative long-term approach – “Nike has embraced a long-term perspective. Improving sustainability performance often involves heavy investment initially, with benefits being realized over a longer term,” Angharad Porteous and Sonali Rammohan write in new paper published by the Stanford Initiative for the Study of Supply Chain Responsibility. “Nike has also been focused on collaborative product and process design innovations focused on environmental sustainability,” they add.

Collaboration and long-term view seem to work quite well for Nike and the case of ColorDry seems to be no different. First, the new technology follows Nike’s exploration of this technology for the past nine years and its 2012 investment in DyeCoo Textile Systems, a Dutch company that developed the first commercially available waterless dyeing technology.

In addition, earlier this year IKEA announced that it will also invest in DyeCoo and Nike revealed that its strategic partnerships group, the Sustainable Business & Innovation Lab, worked closely with IKEA GreenTech throughout the investment process. “IKEA’s decision to invest in this technology signals an exciting step in cross-industry collaboration,” Jones wrote.

Based on Nike’s experience this sort of an open innovation approach combined with the ability to think long-term and act patiently looks like an effective strategy. The only question is why don’t we see more companies adopting it as well?

4. Innovation is the new CSR – ColorDry is not a one-time innovative achievement. It’s part of a unique business culture that was built in Nike, managing to do what so many companies still struggle to figure out – how to converge sustainability and innovation.

A starting point occured in 2009 when the corporate responsibility function in Nike was redefined as the Sustainable Business and Innovation Team (SB&I) under the leadership of Hannah Jones. Made up of about 130 people, the SB&I team acts as a catalyst for sustainability companywide, leading sustainability strategy development and providing content expertise and consulting to teams companywide.

Recently Jones reported that  Nike “made some organizational changes and, as part of that, we've seen the Sustainable Business & Innovation function move to fully integrate with Nike's Innovation function. It's a significant signal of the value of having sustainability as a fundamental part of our innovation strategy."

This is not just about organizational redesign, but also about a new focus - "one of the lynchpins of the strategy is that over the last few years, we have really shifted our sustainability team from being a risk-management and reputation management agency to really also having significant R&D and innovation capabilities," Jones says.

The bottom line is that companies that want to make sustainability integral to their innovation and performance like Nike will need to rethink the way they address CSR and sustainability just like Nike did. Only then they might succeed like Nike.

[Image credit: Nike]

Raz Godelnik is the co-founder of Eco-Libris and an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and Parsons The New School for Design, teaching courses in green business, sustainable design and new product development. You can follow Raz on Twitter.