Sustainable business model innovation is the process of designing or creating new business models that increase sustainability.
Many traditional business models have negative impacts on the world and our environment and the creation of sustainable business models helps to reduce or improve the impact that they make.
When we look at sustainable business model innovation the process is much the same as for more traditional business model innovation.
Differences between BMI and Sustainable BMI
The substantial differences are that:
- The why changes. We are no longer purely concerned with economic outputs.
- The goals of business model innovation change from accelerating the the value proposition and disrupting competition to include having a positive sustainable impact.
- In the revenue box in the business model canvas, we also capture the sustainable impact that we are making.
- As we go through the process of business model design we are constrained in the sets of choices that we can make
What doesn’t change is
- Analysis and understanding of competitors business models – though this can be usefully broadened to include more stakeholders, especially when complex supply chains are involved.
- Consideration of the balance point within the model. Where are the key feedback loops in the business model going to be centred.
- The process of drafting multiple business models to identify and capture insights.,
- The need for a perceptual shift – seeing the world differently so that you don’t replicate what competitors are doing.
- The test and validation process where new business models are repeatedely trested at greater scale to reduce the risk profile as quickly as possible.
Need to Disrupt Not to Replace
As I think about it more a sustainable business model has to disrupt existing non-sustainable business models. It has to provide a better alternative to existing business models and the products and services they make. It has to make it a lot harder to sell or manufacture those products.
If it doesn’t it’s not creating the change that we need.
So for example, if you are looking at creating a business model in the packaging industry it is relatively easy to come up with a product that is more sustainable than competitors selling single-use plastic solutions.
The sustainable business model innovation process needs to explore how non-sustainable competitors can be disrupted and single-use plastics taken out of the supply chain.
Greenwashing
When we are creating sustainable business models the goal is to create substantial positive environmental or social change. We are not creating the impression of change. Put another way – laying out green plastic grass on your patio is not a real change. Ripping up the patio and replacing it with a mix of grass to create a mini wildflower meadow is.
This comes back to the heart of business model innovation. If you aren’t making substantial changes that disrupt your industry then the changes you are making are part of normal business. A standard, limited, response to competitive pressures. Thinking small without creating impact doesn’t change anything.
Economic vs Sustainable Business Models
Many people will say that a sustainable business model is less profitable than an economic business model. This relies on several false assumptions.
It doesn’t accurately capture the future costs and risks of non-sustainable models
The value created by the business model is not measured by profits alone – wrong frame of reference
It doesn’t reflect the changing nature of the competitive marketplace – it’s not profits OR sustainability. It is profits AND sustainability.
