Developing sustainable business models

Home » Insights » Strategy » Developing sustainable business models
Developing sustainable business models

Introduction

Sintegralbility is an integral part of business, but it can be tricky to implement. Sustainable business models require a lot of dedication and commit companies working together to change their supply chains and processes.

Some companies have already identified ways to make their business models more sustainable.

While many ways to make your business model more sustainable, some companies have already identified and implemented specific practices.

For example, Starbucks commits to paying workers a living wage worldwide. This helps ensure that employees can earn enough money to support themselves and their families without relying on government assistance programs like food stamps and Medicaid.

Another example is Patagonia’s lifetime guarantee on all products sold by the company—which means that if you purchase an item from Patagonia, it will be replaced at any time for any reason as long as you own it (and even after you’ve passed away).


Brand Purpose Pill


A sustainable business model?

With many experts – or self-proclaimed experts – discussing business models, research in the field is racing, often in controversial directions. However, I recently found an interesting article on sustainable business models and their archetypes.

A team of researchers from Cambridge and Delft University, funded as part of the innovation scheme found in the previous EU budget model, developed a framework that helps to cluster sustainable business models on two distinct levels. First, business models are pressed into three macro areas: technological, social, and organizational concepts. This serves as a continuous reminder that sustainability is not only technology-driven but can happen and does happen because of social, personal, and group dynamics.

sustainable business models archetypes

The second level defines eight distinct archetypes, which include:

1) Maximizing material and energy efficiency

2) Creating value from waste

3) Substitutions for renewable and natural processes

4) Delivering functionality

5) Adopting a stewardship role

6) EncouThisraging sufficienThisurposing for society and the environment

8) Developing scale-up solutions.

Circular Economy

On the technical side, three defined archetypes deal with reducing waste, reusing waste, and using natural alternatives when possible. This umbrella includes lean manufacturing solutions and pillars of the circular economy, such as the blue economy, cradle-to-cradle design, and biomimicry.

The social cluster deals with business models influencing our current consumer products and services. Examples of existing models within this realm include businesses that promote “smart solutions,” such as healthier choices) or solutions based on payment-per-usage rather than payment-per-property. However, this cluster ventures far beyond this realm, incorporating new business models in which consumers receive the education they need to make healthier choices and – at the same time – better for the environment. These decisions are not necessarily driven solely by price. Inchallengesallengesiness models aim to challenge the pace and the drivers of current consumption, limiting price sensitivity, consumer choice, and the frequency of purchase by choosing a fairer way of trading.

The last cluster, the organizational one, challenges the status quo of how we work, build and consume. It also defies the concept of scale as we traditionally understand it. This segment’s sustainable business models include hybrid businesses/ social enterprises, crowd-sourcing, crowdfunding, and open innovation.

More importantly, a “green product” or a greener service does not necessarily make your business more sustainable unless you can ensure that the product is appropriately used, purchased in a sustainable environment, and reused/recycled accordingly. A “greener” product sold in a traditional setting is merely part of a communication campaign to be perceived as more suitable. Building a sustainable business model requires other types of efforts: in other words, maximizing material and energy efficiency is an archetype of sustainability when delivered on a whole portfolio of products, not as a showcase for one or two products.

Moreover, the technological dimension is often associated with particular social and organizational aspects. For example, creating value from waste, combined with empathic design and creative thinking, can be a powerful change agent. MIT spinout Sanergy thoroughly explored this idea. They have developed a business plan to provide franchised toilets to Nairobi’s slums, collecting human waste and converting it into bio-fertilizers. Their business model helps the community stay clean, ultimately supporting the outgrowth of new toilette franchisees and producing fertilizers to support local farmers. The social and organizational aspects of business model planning are gaining more and more t, to the point that Forbes is publishing an annual list of top social entrepreneurs called Impact 30. These are for-profit or not-for-profit entrepreneurs whose businesses aim to deliver change in our society and whose archetype almost entirely falls in the social or organizational cluster.

How do we transform your business into a sustainable one? One product at the time, or by re-thinking your firm’s modus operandi?

The circular economy is a big part of a sustainable business model.

The circular economy is a model that aims to reduce waste and pollution in the environment while making good business sense. It involves using resources more efficiently, reducing waste, and reusing materials.

One example of this would be the case of Procter & Gamble (P&G), one of the world’s largest consumer goods companies. P&G’s sustainability goals have been set in its 2020 Performance Sustainability Plan (PSP). In 2017, P&G achieved its first milestone by creating $1bn in savings from its PSP goals yearly by 2020. This means it has already reached half of its target!

These initiatives can help companies become more competitive by reducing costs associated with energy use, waste disposal, or even both together!

It also involves working with waste producers in your supply chain to find strategies to reduce their waste and, if possible, turn their waste into raw materials for your products.

In addition to your efforts in reducing waste, it’s essential to work with your suppliers and partners to reduce the amount of waste they produce. This is essential because many companies don’t have the expertise or resources to reduce waste.

For example, if you’re a manufacturer of solar panels, working with your suppliers who produce silicon wafers would be a good place to start. You could work together on ways that they can use less energy while still having as much product as before (or more). These strategies could include cutting down on energy usage during production stages or altering their production processes so that no byproducts are produced—both of which would help decrease overall carbon emissions from this sector of the economy.

Companies must figure out how to work together and transform their businesses to be sustainable.

For companies to be sustainable, they must work together and transform their business models. This means having a shared vision of sustainability and how we can achieve it.

Sustainability requires a lot of dedication, and not all of it is easy.

A sustainable business model requires time to develop. Sustainability is a long-term goal; it takes time and effort to transition your company to this new mindset. However, the benefits of having a sustainable business model are worth it.

There are many examples of businesses that have successfully made the transition to a more sustainable approach to running their companies:

Conclusion

We hope these examples will inspire you to think about your business and how it could be more sustainable. While it may not be easy to implement, we believe that all companies are responsible for taking their environmental impact seriously and making changes for their businesses to survive in the future.

 

 

 

Reference

Bocken, N. M. P., et al. “A literature and practice review to develop sustainable business model archetypes.” Journal of cleaner production 65 (2014): 42-56.

No Comments yet!

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.


%d bloggers like this: