Barriers and drivers to sustainable business model innovation: Organization design and dynamic capabilities

Sustainable business model innovation is increasingly seen as a key driver for competitive advantage and corporate sustainability. While it has been recognised that companies require dynamic capabilities to innovate their business model for sustainability, the role of organisation design to nurture such dynamic capabilities remains under-addressed.

To investigate this in more detail, we conducted a study with 7 multinational corporations leading in the field of sustainability. In total, we conducted 53 semi-structured, in-depth interviews with 6 top managers, 24 senior managers, and 25 mid-level managers actively engaged in Sustainable business model innovation inside their organisations.

By taking this qualitative research approach, we address how organisation design affects dynamic capabilities needed for sustainable business model innovation. We identified barriers and drivers on three levels: the institutional, the strategic, and the operational. The overview of institutional, strategic and operational barriers and drivers can be found in the figure below. It should be noted that drivers are not direct antidotes to the barriers identified; they rather co-exist as counter-forces.

 

 

Figure Barriers and DriversThis study has 3 key contributions:

  1. Understanding how organisational design affects dynamic capabilities needed for business model innovation.
  2. Presenting a multi-level framework (institutional, strategic, operational) to show how interconnected barriers and drivers obstruct or enable sustainable business model innovation
  3. Advancing theoretical perspectives on sustainable business model innovation through this comprehensive study

 

Finally, this study on sustainable business model innovation, organisation design and dynamic capabilities can help guide companies in their transitions towards achieving greater levels of sustainability. By creating greater awareness of the barriers and drivers at the institutional, strategic and operational levels, building on knowledge from mid-, senior- and top-managers in 7 multinational companies seen as sustainability leaders, it can serve as a source of inspiration to support business practice towards sustainability.

The fully open access article can be found here.

 

Sources: 

Bocken, N. M.P., & Geradts, T. H.J. (2019). Barriers and drivers to sustainable business model innovation: Organization design and dynamic capabilities. Long Range Planning, 101950.

Teece, D. J. (2018). Business models and dynamic capabilities. Long Range Planning, 51(1), 40-49.

 

Developing Circular Business Model Innovation Tools

The circular economy is now seen as potential driver for sustainable development by business, academia, and policymakers. In such a future circular economy, new business models need to be developed that slow, close and narrow resource loops to address key resource and climate challenges. However, this is not easy and new tools and methods are necessary to support the transition and development of such new business models.

In the new collaborative paper with Lars Strupeit, Katie Whalen, and Julia Nußholz, we map the field of Circular Business Model Innovation (CBMI) tools. We find that there are many generic tools and approaches that might be used, such as the lean startup approach by Eric Ries, or the business model canvas by Osterwalder & Pigneur. Also there are various sustainability focused tools such as the value mapping tool. However, few specifically focus on CBMI, and the generic tools and approaches might ‘dilute’ the circularity or sustainability message. We classify the tools according those that focus more on Ideation and Design, Implementation and Testing, and Evaluating and Improving circular business models, building on the work on business model innovation by Frankenberger and colleagues, amongst others. Finally we develop a checklist that could support future ‘tool developers’ (Figure 1, below). This checklist might also be of interest to those developing sustainability tools, by replacing the first line with ‘The tool is purpose-made for sustainable innovation’.

Future work will involve collaborative development of CBMI tools and roll-out to help make circular business models more widespread.

Checklist for tool CBMI development

Figure 1. Checklist for CBMI tool development. Source: Bocken, Strupeit, Whalen, Nußholz (2019). 

 

Source:

Bocken, N., Strupeit, L., Whalen, K., Nußholz, J. 2019. A Review and Evaluation of Circular Business Model Innovation Tools. Sustainability, 11(8), 2210.  https://doi.org/10.3390/su11082210

 

 

 

Value mapping tool for Sustainable Business Modelling – Guides for facilitators

The Value Mapping Tool was developed to assist in ‘sustainable business modelling’ – the process of inventing new sustainable business model ideas.

The process of using the tool, and the terminology of value captured, value missed, value destroyed and new value opportunities were introduced in the first journal paper and earlier conference paper about the value mapping tool. By first considering the value captured, value missed and value destroyed from the perspective of multiple stakeholders, the failed value exchanges in existing business models can be identified. “Environment” and “Society” analogous to the work by Stubbs and Cocklin (2008)  are necessary stakeholders in the value mapping tool, next to the more familiar ones such as customers, the government and suppliers. The business is split up into its key stakeholders: employees and investors/ shareholders. Only after considering the value captured, missed and destroyed from these multiple stakeholder perspectives, new value opportunities should be sought that resolve failed value exchanges and create new forms of value through business model innovation. In this way, more value can be created for the whole value network, not only the firm and its customers.

Since its development the value mapping tool has been used by researchers and people in businesses around the world, which has led to various translations. This post shares some of these.

Because of multiple requests for advice, the brief guide with prompt questions for facilitation of workshops using the value mapping mentioned in the first journal paper can be found here:

 

 

Other languages 

Courtesy of researcher Ignacio Pavez the guide is now also translated into Spanish:

 

Courtesy of Dr Benjamin Tyl, the tool itself is now translated in French and the figure can be found below.

The document guideline-value-mapping-tool-fiche-ti-1446 also developed by Benjamin includes an in-depth guide for practitioners in French with various new ideas. It is structured according to: The workshop process (split into 3 sessions); Advice; FAQ; and Next steps.

 

Value mapping tool - French

Value mapping tool – French

 

Thanks for sharing your translated versions!

 

Happy Value Mapping!

 

Sources:

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.

Sustainable Business Modelling

A business model describes how a company does business and what its value proposition (benefits or offering to customer), value creation (resources, suppliers and other partners who help create value) and value capture mechanisms (cost structures and revenue streams) are.

Sustainable business models consider a much wider group of stakeholders than just customers, and explicitly consider society and environment as stakeholders. They go beyond creating value for a customer and include concerns about the benefits and harms to society and the environment by the way business is done. This is a much more systemic view on doing business than making money by delivering benefits and value to customers.

I am interested how current business models can become more sustainable and how start-ups can develop sustainable business models from the outset.

Together with my colleagues Sam ShortPadmakshi Rana, and Steve Evans, I developed the Value Mapping Tool, to assist in ‘sustainable business modelling’ – the process of inventing new sustainable business model ideas.

Value Mapping Tool

Value mapping tool. Source. Bocken et al. (2013)

This tool can help users to:

  • Understand the positive and negative aspects of value in a network of stakeholders
  • Identify conflicting values (i.e. where one stakeholder benefit creates a negative for another stakeholder)
  • Identify opportunities for business model redesign – especially to improve societal and environmental impact

Here is a simplified process of using the value mapping tool to use for your business:

Each ring in the diagram represents a different brainstorm. During each of these brainstorms, all of the following “stakeholders” need to be considered:

  • Customers – perceived and actual benefits and negative impacts. You may want to break this down into different customer segments.
  • Network actors – in short, the firm and its supply chain responsible for creating value. This may be broken down into particular key suppliers or partners.
  • Environment – benefits (afforestation) and negative impacts (e.g. emissions to air).
  • Society – benefits (e.g. health) and negative impacts (e.g. working conditions)

 

Brainstorm 1: the purpose of the business is discussed. Why is the business here in the first place? What is the product or service offered by the company or business unit? What is the primary reason for the existence of the business (this should not be primarily financial)?

Brainstorm 2: what value is created for the different types of stakeholders? What positive value is created and what negative value do all the stakeholders mitigate?

Brainstorm 3: what is the value destroyed or missed or negative outcomes for any of the stakeholders? Consider for example, waste to landfill or loss of local employment caused by offshoring. Are there contradicting impacts at a global and local level? Is the business missing an opportunity to capture value, or squandering value in its existing operations? For example, are assets, capacity and capabilities under-utilised? Are potentially useful materials going to landfill?

Brainstorm 4: This brainstorm is intentionally put at the end and is about blue-sky thinking. The focus is on turning the negatives into positives. What new positive value might the network create for its stakeholders through introduction of activities and collaborations? What can you learn from competitors, suppliers, customers or even other industries?

To move from ideas to implementation the brainstorm may be followed up by roadmapping the activities and business model elements to be changed. A great way of doing this is using the Business Model Generation work by Osterwalder and Pigneur (see www.businessmodelgeneration.com for more details). We have adapted their “strategy canvas” here:

 

Business Model

Overview of business model elements. Source: www.businessmodelgeneration.com. Adapted by Bocken (2013)

 

For a more detailed discussion of the value mapping tool, I refer you to the full research article:

Nancy Bocken, Samuel Short, Padmakshi Rana, Steve Evans, (2013) “A value mapping tool for sustainable business modelling”, Corporate Governance, Vol. 13 Iss: 5, pp.482 – 497. DOI link: 10.1108/CG-06-2013-0078

The open access version of this article (not edited by the journal) is available here: https://www.repository.cam.ac.uk/handle/1810/245028