Unsustainable business models

In 2014, we published an overview of sustainable business model archetypes based on literature and practice review. At the time, this was a great way to move the business model discussion beyond products-as-a-service (e.g. Tukker, 2004) and also propose some more challenging models such as the ‘sufficiency-driven-business-model’ (Bocken & Short, 2016), focused on business challenging their role in endless consumption. We used cases of companies like Patagonia (‘don’t buy this jacket’) and Vitsœ (living with less, that lasts longer) to demonstrate that other business models are possible.

From the great and constructive feedback we got on the archetypes since, we found out that many people used these archetypes to develop sustainable innovations, whether it is in their own venture or business, a large corporation, NGOs, or in their research.

While it is also clear that a lot of companies started innovating their business models for sustainability and the circular economy since (and we report on emerging business examples in ERC project Circular X) we found that greater awareness of unsustainable business models could help people recognise common flaws and solutions for their sectors. Such flaws are often so ingrained – sometimes even commonly accepted – that more awareness is needed of these flaws to break through them.

We were inspired by the great focus on lineareconomy vs circulareconomy, but considered there were many other institutionalised unsustainable business models and possible sustainable business responses. Awareness of these institutionalised unsustainable business models could create more traction to break them down. See below our list of Unsustainable Business Models (UBMs) developed in this recent article:

  1. Environmental resource exploitation and waste UBM
  2. Human resource exploitation and waste UBM
  3. Economic exploitation UBM
  4. Unhealthy or unsustainable offering UBM
  5. Quantity over quality and value UBM
  6. Addictive consumption pattern UBM
  7. Complex opaque global value chain UBM
  8. Short-term shareholder – not stakeholder value UBM
  9. Financing and supporting unsustainable practices UBM

Please find the full open access study on unsustainable business models as well as possible positive pathways forward for different industries such as energy, transportation, construction, food, clothing, and finance, co-authored with Dr Sam Short here.

Sources:

Bocken, N. M., & Short, S. W. (2016). Towards a sufficiency-driven business model: Experiences and opportunities. Environmental Innovation and Societal Transitions18, 41-61.

Bocken, N. M., & Short, S. W. (2021). Unsustainable business models–Recognising and resolving institutionalised social and environmental harm. Journal of Cleaner Production, 127828.

Bocken, N. M., Short, S. W., Rana, P., & Evans, S. (2014). A literature and practice review to develop sustainable business model archetypes. Journal of cleaner production65, 42-56.

Tukker, A. (2004). Eight types of product–service system: eight ways to sustainability? Experiences from SusProNet. Business strategy and the environment13(4), 246-260.

Young, D., & Reeves, M. (2020). The quest for sustainable business model innovation. BCG.

Conference track “Business model experimentation for sustainability” at New Business Models conference 2021

Project Circular X jointly hosts a special conference track together with colleagues from Norway, Finland and Germany. The track on “Business model experimentation for sustainability” will be open to for paper submissions at the New Business Models conference 2021. 

Track 2.6: Business model experimentation for sustainability
Track chairs: Nancy Bocken, Lars Jacob Tynes Pedersen, Sveinung Jørgensen, Jan Konietzko, Marc Dijk, Ilka Weissbrod, Maria Antikainen

The conference track aims to explore the topic of “Business model experimentation for sustainability”. The aim of experimentation is to put forward and accelerate novel and impactful solutions (Bocken & Snihur, 2020). This special track investigates different contexts in which experimentation could take place, such as new ventures, established business, social businesses, but also local governments such as cities, and collaborations between these actors.

What is business model experimentation for sustainability? How might it be conducted in different contexts? Who are the main actors?

Business model experimentation for sustainability comprises several interrelated stages of experimentation (Antikainen & Bocken 2019) from idea generation to the development of testable ideas and experiments building on hypotheses about the future business (Bland & Osterwalder 2019; Ries, 2011), and the design and execution of such experiments using various tools and methods (Bocken et al. 2019; Bashir et al. 2020; Døskeland & Pedersen 2015). It involves deliberate learning and decision-making about follow up actions (e.g., more experiments, pivot, scalability of results). Moreover, effectual logic (Sarasvathy, 2001; Baldassarre et al., 2020) suggests that companies experiment, using available knowledge, means, and resources and iterative processes through stakeholder interaction.

With business experimentation as a popular topic in business research and practice, broader questions arise. These relate to the ethics of experimentation in the field, the outcomes of experimentation, how to stimulate a culture for experimentation, and how to organize and govern experimentation practices into business development units or other organization units. These are relevant for the understanding of business model experimentation for sustainability (e.g. Weissbrod & Bocken, 2017).

Research questions and themes proposed for this track on Business model experimentation for sustainability” include, but are not limited to:

Process

  • How to formulate testable hypotheses in business model experimentation?
  • What kind of tools and methods are needed for experimentation?
  • To what extent can randomized and controlled experiments be developed in a businesscontext?
  • What are the possibilities for collaboration and/or action research in business modelexperimentation for sustainability?
  • How to co-create a business model experimentation process with stakeholders?
  • How does ecosystem experimentation work, e.g. in cities or regions?

Impacts

  • How to measure the circularity/sustainability of the outcomes during business model experimentation?
  • What are success and failure cases of experimentation, with reported sustainability impacts?
  • What are the unintended consequences and rebound effects associated with the outcomes of business model experiments?
  • How does sustainable business model experimentation differ from conventional businessmodel experimentation?
  • What are the challenges when scaling-up of findings from experiments in practice?
  • How to shift from qualitative and exploratory experimentation to more quantitative,hypothesis-driven experimentation? 

Ethics and biases

  • How can ethically justifiable experiments be developed in the field?
  • What are the design challenges in experimentation, including sampling of customer segments and possible biases?

More information will be available on the conference website

References

Antikainen, M., & Bocken, N. (2019). Experimenting with Circular Business Models—A Process- Oriented Approach. In Innovation for Sustainability (pp. 353-374). Palgrave Macmillan, Cham.

Baldassarre, B., Konietzko, J., Brown, P., Calabretta, G., Bocken, N., Karpen, I. O., & Hultink, E. J. (2020). Addressing the design-implementation gap of sustainable business models by prototyping: a tool for planning and executing small-scale pilots. Journal of Cleaner Production, 255, 120295.

Bashir, H., Jørgensen, S., Pedersen, L. J. T., & Skard, S. (2020). Experimenting with sustainable business models in fast moving consumer goods. Journal of Cleaner Production, 122302.

Bland, D. J., & Osterwalder, A. (2019). Testing business ideas: A field guide for rapid experimentation. John Wiley & Sons.

Bocken, N., & Snihur, Y. (2020). Lean startup and the business model: Experimenting for novelty and impact. Long Range Planning, 53(4), 101953.

Bocken, N., Boons, F., & Baldassarre, B. (2019). Sustainable business model experimentation by understanding ecologies of business models. Journal of Cleaner Production, 208, 1498-1512.

Døskeland, T. and Pedersen, L.J.T. (2015). ‘Investing with Brain or Heart: A Field Experiment on Responsible Investment‘. Management Science, 62, 6, 1632-1644.

Weissbrod, I., & Bocken, N. M. (2017). Developing sustainable business experimentation capability–A case study. Journal of Cleaner Production, 142, 2663-2676.

Project Circular X – Experimentation with Circular Service Business Models

Circular X is a new publicly funded research project about ‘Experimentation with Circular Service Business Models’. Here more information can be found about the project.

Circular X is an ambitious research project funded by the prestigious European Research Council (ERC), which ‘supports top researchers from anywhere in the world’. The project is running from 2020-2025 and is led by Principal Investigator (PI) Nancy Bocken, based at Maastricht Sustainability Institute (MSI) at Maastricht University, Netherlands. The project takes place in close cooperation with businesses – from small start-ups to large multinationals – who want to innovate towards the circular economy.

Summary

With increasing pressures on resources and the climate it is clear that a new way of doing business is needed. The Circular Economy is a potential key driver for sustainability and competitiveness. In contrast to the current ‘linear economy’, in a Circular Economy, materials  are kept at their highest utility at all times. Despite great policy, business and academic interest, knowledge on how to ‘implement’ the Circular Economy in business is lacking.

Project Circular X addresses a new and urgent issue in sustainability research: experimentation with circular service business models (CSBMs). Examples of such new business models include companies shifting from selling products to selling services and introducing lifelong warrantees and maintenance and repair services to extend product lifetimes. However, CSBMs are far from mainstream and experimentation focused on experimentation with new CSBMs is little understood.

Project Circular X aims to bridge and expand knowledge on experimentation approaches across disciplines such as sustainability, design, business and entrepreneurship research. It seeks to develop novel concepts, tools and labs by bridging these diverse research fields and advance understandings on how CSBMs manifest themselves in business and how these can be experimented with, which will ultimately advance business activities towards a circular economy transition.

Timing and funding

Circular X is run between 2020-2025 by Maastricht University, Maastricht Sustainability Institute (MSI) and is funded by the European Union. This project has received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation programme, grant agreement No. 850159. Principal Investigator of the Circular X is research programme is Professor Nancy Bocken, based at Maastricht University, Maastricht Sustainability Institute (MSI). For any information and potential collaboration, feel free to contact me via LinkedIn or email.