Scaling up social businesses

Social businesses can play a pivotal role in developing countries by addressing needs such as healthcare, energy, education and sanitation, but there a limited number of such businesses which have achieved significant size and reach.

These businesses address a social need while generating profits typically reinvested into the business itself, but there is limited understanding of the ways through which social businesses achieve scale.

New research identifies how social businesses can achieve scale:  “Increasing the number of customers or members of a business as well as expanding its offer and maximising its revenues until it reaches millions of people.”

The cases of BRAC, Aravind and Amul are investigated: how did these businesses develop over time and what strategies did they use?

The research identifies four key strategies and two methods for social businesses to scale up, which could help them reach billions of people in developing countries who could benefit from the services of such businesses.

Sources: 

University of Cambridge Judge Business School – Blog 20 September 2016 

Bocken, N.M.P., Fil, A., Prabhu, J. Scaling up social businesses in developing markets, Journal of Cleaner Production, 139, 295–308

Product design and business model strategies for a circular economy

The transition from a linear to a circular economy requires a range of strategic and practical practical challenges for companies. What are the product design and business model strategies for companies that want to move to a circular economy model?

The following paper (open access) discusses some potential design and business model strategies to support the move to a Circular Economy. Building on the work by Walter Stahel, the strategies of slowing, closing, and narrowing resource loops are introduced.

Slowing loops is about strategies to design long-life products and extend the useful life of products, for example through reuse and repair and new service-driven business models. It is about reuse of long-life products. Closing loops is concerned with closing the loop post consumer-use through recycling, resulting in a circular flow of resources. It is about reuse of materials. Narrowing loops is about resource efficiency, using fewer resources per product. It is about using fewer resources in the product design and production process phases.

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Figure 1: Strategies of closing, slowing and narrowing resource loops. Source: Bocken, de Pauw, van der Grinten and Bakker (2016). 

 

Different business model strategies and product design strategies are formulated to help slow, close and narrow resource loops. Figure 2 gives an example of the business model strategies which have been used as a framework for the book “Circular Business – Collaborate and Circulate”. 

With these strategies in mind, companies can start looking for new options to innovate their designs and business models to start the transition to a Circular Economy.

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Figure 2. Framework to assess circular projects and businesses in the book. Source: Kraaijenhagen, van Oppen and Bocken (2016),  p. 30. 

 

 

Sources:

Bocken, N.M.P., de Pauw, I., van der Grinten, B., Bakker, C. 2016. Product design and business model strategies for a circular economy. Journal of Industrial and Production Engineering, 32 (1), 67-81.

Kraaijenhagen, C., Van Oppen, C., Bocken, N. 2016. Circular business. Collaborate & Circulate. Circular Collaboration, Amersfoort, The Netherlands. Available at www.circularcollaboration.com

http://www.product-life.org

https://www.ellenmacarthurfoundation.org

SUSTAINABLE BUSINESS MODEL AND SUPPLY CHAIN CONCEPTIONS – TOWARDS AN INTEGRATED PERSPECTIVE

The concepts of Sustainable Supply Chains and Sustainable Business Models are closely related and highly complementary. Business model innovation often requires significantly new supply chain lay-outs. For example, when shifting from product sales to product rental or leasing models, new forms of distribution and product take-back are required. The relationship with retailers also changes. Similarly, supply chain opportunities can drive business model innovation, for example, when new distribution channels give access to new customer segments desiring different value propositions.

This blog discusses the similarities and differences between Sustainable Supply Chains and Sustainable Business Models .

It is based on the book chapter on the topic written by Florian Lüdeke-Freund, Stephan Gold and Nancy Bocken in the book “Implementing Triple Bottom Line Sustainability into Global Supply Chains” edited by Lydia Bals and Wendy Tate, published in May 2016 via Greenleaf)

 

Sources: 

Bals, L. & Tate, W. (2016) (Eds.): Implementing Triple Bottom Line Sustainability into Global Supply Chains.Sheffield: Greenleaf.

Lüdeke-Freund, F.; Gold, S. & Bocken, N. (2016): Sustainable Business Model and Supply Chain Conceptions – Towards an Integrated Perspective, in: Bals, L. & Tate, W. (Eds.): Implementing Triple Bottom Line Sustainability into Global Supply Chains. Sheffield: Greenleaf, 337-363.

BOOK LAUNCHED – ‘CIRCULAR BUSINESS – COLLABORATE AND CIRCULATE’

The book Circular Business – Collaborate and Circulate explains how you can establish a successful circular business. The three authors, Christiaan, Cécile and myself, are working in the area of sustainability and aim to close the gap between theory and practice in the circular economy. The sustainably produced book was launched with a festive event in Amsterdam on 18 March 2016 attended by over 100 invited guests with a sustainability and circularity interest. A number of case companies from the book – Gispen, MUD Jeans and Interface – explained in interviews how they are putting the circular economy into practice.

The Circular Economy has become a hot topic with specialists in sustainability and beyond. While the interest in ‘circularity’ has increased, many companies are still struggling with how to come to grips with this concept and putting this into practice. This gap motivated us (Christiaan Kraaijenhagen, Cécile van Oppen and Nancy Bocken) to think: Why is circular thinking not yet common sense? How can we do contribute positively to closing this gap? We noticed that a lot of companies started to think about the technical aspects, or, sometimes, the business model. A third aspect of collaboration is equally important, but there is even less knowledge about how to tackle this. This is unfortunate, because a circular economy cannot be created in isolation and requires new forms of collaboration.

10 practical steps

The book guides the reader through a process of 10 steps to initiate circular projects within an organisation, find the right collaboration partners and (financial) incentives and contracts. We take a positive perspective by explaining each of the steps with illustrative cases that successfully started to implement circularity. Several well known but also less-known cases are included such as Interface, Patagonia, Vitsœ, Marks & Spencer, Riversimple, Desso, MUD Jeans, Gispen and G-Star. These cases form an inspiration for companies and professionals who want to make important steps towards the move to a circular economy.

SETTING THE EXAMPLE

In collaboration with Ecodrukkers and Paperwise the book itself has become a circular economy example: it is printed using biological ink, on paper made from agri-waste. Readers are encouraged to make notes in the book and pass it on to the next user. In this way, the sub title “Collaborate and Circulate” gets a double meaning.

MORE INFORMATION AND ORDERING THE BOOK

The book and more information are available at: www.circularcollaboration.com

 

Circular Business Book Slide1

 

 

Book launch celebration 18 March 2016

The integration of a stakeholder perspective into the front end of eco-innovation

It is often recognised that stakeholder concerns are important for companies’ strategic processes towards sustainability (Bansal, 2005, Stubbs and Cocklin, 2008 and Bocken et al., 2013). Stakeholders are any person(s) or any organisation(s) potentially (directly or indirectly) affected by the operations of the organisation and vice versa (Freeman, 1984). In the value mapping tool for example, Society and Environment, are key stakeholders to take into account in the sustainable innovation process, in addition to the ones that are more familiar to business such as customers, suppliers and owners/ shareholders.

The front-end of eco-innovation, or the early stages of the eco-innovation process, including opportunity identification, opportunity analysis, idea generation, idea selection, concept and technology development (Koen et al., 2001) of eco-innovations is a key stage to start integrating these stakeholder concerns. At later stages of the innovation funnel, it is harder and costlier to change innovations. There are real opportunities in ensuring key stakeholders such as “Society” and “Environment” are integrated early-on into the innovation process. See for example this collection of studies on the business case for sustainability.

This research investigated how stakeholder concerns can be embedded in the from end of the eco-innovation process. This was investigated by running multiple scenarios with innovation teams (students and business) using different tools and approaches at the front end of eco-innovation. Tools such as the value mapping tool and eco-ideation were used with different innovation teams.

It was found that, although trying to integrate a variety of stakeholders in the innovation process is good to enrich the ideas, it can lower the number of relevant ideas generated. Furthermore, visualisation of stakeholder concerns, interests and conflicts is essential to enrich the process. Finally, during the facilitation of such sessions it is important to pay more attention to less familiar stakeholders such as “Environment” and “Society” than to ‘easy’ ones such as “Customers” and “Suppliers”. If easier, participants might imagine certain NGOs as proxies for Society and Environment when they brainstorm about these less familiar stakeholders.

Overall, the integration of multiple stakeholder concerns in the front-end of eco-innovation looks like a promising approach for sustainable innovation.

The full paper is available here.

 

Sources:

Bansal, P. 2005. Evolving sustainably: a longitudinal study of corporate sustainable development. Strategic Manag. J., 26, pp. 197–218

Bocken, S. Short, P. Rana, S. Evans. 2013. A value mapping tool for sustainable business modelling. Corp. Gov., 13 (5) (2013), pp. 482–497

Freeman, R.E. 1984. Strategic Management: A Stakeholder Approach. Pitman Publishing, Bosto

Koen, P., Ajamian, G. Burkart, Clamen, A. et al. 2001. Providing clarity and a common language to the ‘Fuzzy Front End’. Res. Technol. Manag., 44 (2).

Stubbs, W., Cocklin, C. 2008.Conceptualizing a “Sustainability business model”. Organ. Environ., 21 (2) (2008), pp. 103–127

Tyl, B., Valet, F., Bocken, N., Real, M. The integration of a stakeholder perspective into the front end of eco-innovation: a practical approach. Journal of Cleaner Production, Volume 108, Part A, Pp. 543–557: http://www.sciencedirect.com/science/article/pii/S0959652615010768

Sustainable venture capital

What is the role of ‘sustainable’ venture capitalist in developing new sustainable start-ups?

Venture capitalists have a special role to play as they usually invest during the more risky stages of doing business – when businesses are still relatively young and the business benefits are not yet fully crystalized. This research has focused on ‘pragmatic idealists’ – in short, those that want to change the world positively, but also want to make good business out of this.

Figure 1. Role of venture capital. Source: Bocken (2015) based on Marcus et al. (2013)

Key people in the industry were interviewed over a period of a couple of months in 2013. These ‘sustainable venture capitalists’ either started to work on this area because they see themselves as ‘practical idealist’, they disagree with the status quo, or they want to help mainstream sustainable businesses. Some are motivated by fear or a personal epiphany (e.g. having their first child).

Figure 2.  Pragmatic idealists. Source: Bocken (2015)

Innovation in the business model, collaboration, and a strong business case were found to be key reasons for sustainable start-up success. Failure often happens due to the fact that ‘start-ups just fail’ (about 9 in 10 as mentioned by some of the experts), but a strong existing industry is also important. On the investor side, there may be only a few suitable and willing venture capitalists to invest in sustainable ventures, because of a short-term investor mindset and a search for quick-win-formats (e.g. apps).

There is plenty of opportunity for large businesses to collaborate with start-ups by acting as an R&D partner of serving as a major customer. Entrepreneurs are already challenging existing business models (e.g. Airbnb, Zipcar, and numerous new service models, and sharing models (e.g. Peerby and Yerdle), which can eventually make existing business models obsolete. There is also opportunity in new forms of financing such as crowdfunding and peer-to-peer lending. In the end venture capitalists should plan for potential slower returns, in favour of positive societal and environmental benefits.

The full article can be found here:

Bocken, N. 2015. Sustainable venture capital – catalyst for sustainable start-up success? Journal of Cleaner Production (in press) http://www.sciencedirect.com/science/article/pii/S0959652615006460 (open access)

Other sources:

Marcus, A., Malen, J., Ellis, S. 2013. The Promise and Pitfalls of Venture Capital as an Asset Class for Clean Energy Investment: Research Questions for Organization and Natural Environment Scholars. Organ. & Environ, 26 (1), 31-60.

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Value mapping for sustainable business thinking

Value mapping for sustainable business thinking

Pressures on business to operate sustainably are increasing. As a result, companies need to adopt a systemic approach to doing business, that integrates consideration of the three dimensions of sustainability – social, environmental, and economic – in a manner that generates shared value creation for all stakeholders including the environment and society.

This is referred to as “sustainable business thinking”.

The business model is a useful framework for system-level innovation. It is about the way business is done. It makes a link between different activities inside a company, such as design and production, to more outward looking activities, such as supply chain management, managing partnerships, and distribution.

A business model framework is included below.

Screen Shot 2015-03-09 at 14.44.21

 Figure. Business model framework. Bocken et al. (2015), adapted from Richardson (2008), Osterwalder and Pigneur (2010) Bocken et al. (2013) and Short et al. (2013).

A value mapping tool has been developed before to assist in ‘sustainable business modelling’ (see below). The tools aims to help create awareness of stakeholder perspectives, contradictions and synergies, and consider the value captured, missed and destroyed for each stakeholder to develop new opportunities that could benefit the whole network of stakeholders, not just the firm and the customer.

Figure. Value mapping (this particular version was used in a joint workshop for AMFI together with Christiaan Kraaijenhagen 20 Jan, 2015)

In this study, the potential use of value mapping as a tool and process was explored, to encourage sustainable business thinking. A range of workshops (over 20) was held with different audiences – industry, academic and student, non-profit – to get a better idea of the usefulness of the tool in different settings.

The potential applications to stimulate sustainable business thinking identified by using the tool include the following:

(1) Ideation for start-ups and established firms, to develop new sustainable business model ideas

(2) Education, to learn about sustainable business model innovation, by using case studies for example

(3) Product and process design and life cycle thinking

(4) Evaluation and screening, of new business model ideas

(5) Systems thinking, to take a more holistic perspective on doing business

(6) Collaboration, to find out about each other’s ‘value maps’ and find common ground

More information on value mapping as an approach is available at:

Bocken, N., Rana, P., Short, S. 2015. Value mapping for sustainable business thinking. Journal of Industrial and Production Engineering, DOI: 10.1080/21681015.2014.1000399 

Bocken, N., Short, S., Rana, P., Evans, S. 2013. A value mapping tool for sustainable business modelling. Corporate Governance, 13 (5), 482 – 497

From refining sugar to growing tomatoes

How could the biggest sugar refiner in the UK become the biggest tomato grower as well?

Over the past three decades, British Sugar has systematically identified ways to turn waste streams and emissions from their sugar production processes into useful and positive inputs to new product lines. Their main business is still sugar, but the business model has evolved to offer a broad range of additional profitable product lines, including animal feed, electricity, tomatoes, and bioethanol.

The article “From refining sugar to growing tomatoes” describes the business model innovations British Sugar has pursued over time, ways in which it achieved these innovations, and the sizes of these innovative opportunities. The innovative examples seek to inspire companies to also find ways to transform ‘waste’ into a valuable resource for new business lines.

The full article, which is part of a special issue in the Journal of Industrial Ecology on “Industrial Ecology as a Source of Competitive Advantage” is available here.

About the special issue on “Industrial Ecology as a Source of Competitive Advantage

Industrial ecology has contributed important innovations to the pursuit of sustainability in business. Life cycle assessment and the use of life cycle thinking more broadly, industrial symbiosis and the exchange of resources among neighboring factories, loop-closing, material flow analysis, design for environment are innovations with the potential to reduce environmental impacts and to generate financial benefits for companies.  Yet the case that these intriguing approaches actually contribute to corporate competitive advantage has not been made.

In “Industrial Ecology as a Source of Competitive Advantage,” a special feature of the new issue of the Journal of Industrial Ecology, cutting edge research is presented on how, when and why the use of industrial ecology by business can lead to cost savings, enhanced profits and a variety of more intangible business benefits.

Some highlights from the issue include:

  • Johnathan DiMuro and colleagues from the Dow Chemical Company use replacement cost methodology and life cycle assessment (LCA) to systematically document the financial and environmental benefits of a constructed wetland at a Union Carbide Corp. plant in Texas.
  • Christoph Meinrenken and colleagues from Columbia University and Pepisco present a tool that uses data mining and machine learning to rapidly generate product carbon footprints (PCFs) for PepsiCo and combine them with business key performance indicators on a routine basis in its strategy and business planning.
  • Mark Finster and Michael Hernke of the University of Wisconsin develop a typology of strategic benefits related to competitive advantage that are enabled by industrial ecology concepts and methods, drawing on examples from Grohe, Interface, Maersk, Nestlé, Procter & Gamble, and Unilever.
  • Samuel Short, Nancy Bocken and Claire Barlow from Cambridge University and Marian Chertow from Yale University explore the relationship between industrial ecology and business model innovation through a case study of British Sugar, the UK’s largest sugar producer.
  • Connie Hensler of Interface tracks the 20-year evolution of Interface’s use of LCA as a tool guiding the company toward more-sustainable practices in carpet manufacturing.
  • Mona ManYu Yang and colleagues of AU Optonics present a case study of how AU Optronics Corp., a global leader in thin-film-transistor liquid-crystal displays, differentiated itself from its peers and competitors by implementing IE approaches, most notably carbon footprint (CF) management and dematerialization.
  • Joo Young Park and Hung-Suck Park present a case study of an industrial symbiosis involving a municipal waste-to-energy incinerator and the Hyosung chemical company in South Korea showing economic and environmental benefits of the project as well as an assessment of the competitive advantages for the participants.

Articles will be freely available online for a limited time.

The Journal of Industrial Ecology is a bimonthly peer-reviewed scientific journal, owned by Yale University, published by Wiley-Blackwell and headquartered at the Yale University School of Forestry & Environmental Studies.

Business model innovation for sustainability grid

Today, the business model innovation for sustainability grid was launched.

The business model innovation for sustainability grid was developed to inspire businesses to reconceive how they operate and become more future proof when faced by growing sustainability challenges. It was based on based on research by Nancy Bocken, Samuel Short, Padmakshi Rana and Steve Evans (University of Cambridge)A literature and practice review to develop sustainable business model archetypes. It is maintained by Plan C the Flemisch network for sustainable management of materials.

To grab the opportunities of a sustainable future, innovations need to introduce environmental and social considerations at the core of the business model, while retaining a profitable proposition. Classified around 8 archetypes of business model innovations for sustainability, a multitude of approaches and real life business cases is presented.

The business model innovation for sustainability grid is available here.