Can Sustainability Disrupt Nintendo?

Nintendo is the poster child of disruptive innovation. Disruption experts like Anthony Scott like to use the Wii as an example of new market disruption, explaining how “instead of focusing on sharper graphics, crisper sound, or more complicated interfaces, Nintendo is expanding the market by making video games simpler and more accessible.” Hell, there’s even a Harvard business case study entitled “Nintendo's Disruptive Strategy: Implications for the Video Game Industry.”

Why am I bringing this up? Because when it comes to conflict minerals, Nintendo is no innovator, and actually seems to be lagging behind most other electronic companies. That's why the company was targeted by the anti-slavery group Walk Free in a campaign asking Nintendo to ensure its suppliers source minerals responsibly.

So why is such an innovative company so behind when it comes to conflict minerals? And, no less important, can acting responsibly on conflict minerals be a disruptive force? Can it disrupt the disruptor?

Nintendo’s conflict minerals practices are nothing new. The main issue seems to be the company’s lack of engagement with organizations working to eradicate conflict minerals like the Enough Project. In 2010 the organization reported that “Nintendo… has been entirely unresponsive to NGO engagement efforts.” Instead of engaging with activists, Enough Project complained, Nintendo had an auto-response email to their inquiries:

“…As a remote purchaser that buys finished components made from many materials, Nintendo requires its suppliers to comply with its Corporate Social Responsibility (CSR) Procurement Guidelines, which stipulate suppliers comply with applicable laws, have respect for human rights and conduct their business in an appropriate and fair manner.”

Two years later nothing seems to have changed much – in a report Enough Project issued to assess consumer electronics companies on their progress toward responsible and conflict-free supply chains, Nintendo was the only company to receive zero points and was ranked last. “Nintendo is, I believe, the only company that has basically refused to acknowledge the issue or demonstrate they are making any sort of effort on it,” Sasha Lezhnev, senior policy analyst at Enough Project told CNN.

After reading this report, a high-school activist in California started a Change.org petition, calling Nintendo to follow the lead of other electronic companies and clean up its supply chain. Her petition, Enough Project reported, inspired the Australian-based anti-slavery group Walk Free to create its own petition, asking Nintendo to “take the first step toward ensuring their products are free of conflict minerals mined with slavery by auditing their supply chain according to industry standards and making this information public.”

430,558 people have emailed Nintendo following this petition and Nintendo seems to be taking notice. A company spokesperson told Polygon, a technology news blog, last September that in addition to having its CSR Procurement Guidelines that all suppliers have to adhere to, the company “obtained individual confirmation from each production partner that they agree not to use conflict minerals.”

While this response reflected some progress, Enough Project’s Lezhnev explains that it’s still far from meeting even the bare minimum. “Guidelines are not supply chain investigations, audits, requirements to source from conflict-free smelters, or a plan to help certification.  Nintendo should join the electronics industry audit program for conflict-free smelters, and require its suppliers to use only conflict-free smelters.”

Walk Free was also dissatisfied with Nintendo’s progress and last month it moved its campaign to the next level, releasing a video game parody of Super Mario Bros and an interactive video game  in a call to Nintendo to audit their supply chain according to industry standards and make this information public.

It’s not clear why Nintendo is lagging behind other companies when it comes to blood minerals, but its approach reminds me of Apple’s approach to supplier responsibility up to about a year ago, where the company believed that its self-regulated code of conduct was sufficient. We all know how that worked for Apple, yet it seems that it doesn’t stop Nintendo from using the same playbook, which means we have a pretty good idea how it will end – growing pressure of stakeholders, not to mention the new SEC requirements, will eventually force Nintendo to adopt a more transparent and progressive policy on conflict minerals.

It’s interesting though to see the lack of interest that Nintendo has in “changing the game” or “transforming existing markets and creating new ones by playing the innovation game in a fundamentally different way,” which are two ways to look at disruptive innovation according to Anthony Scott. And it’s not just about being more transparent, but about taking a more holistic innovative approach, like Intel does for example with its goal to manufacture the world’s first microprocessor validated as conflict-free for all four metals (tantalum, tin, tungsten, and gold) by the end of 2013.

Nintendo probably doesn’t see any need to apply its famous innovative approach because it doesn’t believe that changing its approach to conflict minerals will change the definition of performance. To put it another way, the company doesn’t think consumers would value it as much as they value the ability to use your body as a way to evolve in the game, for example.

This might be the reality today - we have to admit that Nintendo is probably right. Yet, as Tim Huse explains, one of the lessons from Nintendo’s success is that it's crucial to keep thinking about what comes next, and “what the source of sustainable competitive advantage is that will allow the disruptor to fend off the inevitable competitive counterattack.”

So, while sustainable competitive advantage might not include for now conflict-free minerals, consumer sentiment on this issue can definitely change in 5-10 years and disrupt the market, making the story of successful innovative story of Nintendo nothing but a distant memory.

[Image credit: Walk Free]

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.