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Sustainable Business Model Innovation to Create Value in a World of Finite Resources

March 12, 2015 • Climate Change, Emerging Ideas, INNOVATION, Social Impact, SUSTAINABILITY & ETHICS

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http://www.europeanbusinessreview.com/sustainable-business-model-innovation-to-create-value-in-a-world-of-finite-resources-2/
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By Christophe Sempels and Jonas Hoffmann

We have jumped into an era of scarce resources. The related impacts will crescendo in the coming decades but this already raises a clear issue: how to operate in a world where Earth’s resources will have to supply the needs and desires of around nine billion humans by 2050? This question urges companies to rethink business as usual and to find new ways to decouple creation of wealth from the use of resources and energy. There is only one path to ensure such a challenge: innovate. This article introduces why and how sustainable business model innovation can be a great driver of value creation and how it may reorient growth toward a desirable future.1 More specifically, three ideas are presented to instigate leaders to become actors of such innovations: eco-efficiency, circular economy and the transition from a good-centered logic to service-oriented one (see Figure 1).

 

A Strong Need for Business Model Innovation

The business model being the process of value creation, distribution and capture, it is at this stage that sustainability can fully uncover its value creation potential for a company.

Because business models are designed in a volume-based approach most of the time, they are simply unsuited to integrate sustainability in order to create value. How can an energy supplier, whose income relies on a volume of sales of kWh or m3 of gas, encourage the overall reduction of energy consumption without sawing the branch on which it sits? How can a car manufacturer drastically reduce its steel consumption while generating its turnover by the volume of cars sold? In these situations, the business model does not allow financial and environmental performance to converge naturally and synergistically. Similarly, how can a lively industrial fabric be maintained in developed economies while it is possible to produce it at a much lower cost in developing economies? How can companies be encouraged to favor quality ingredients or sustainable raw materials when, in these times of crisis, cost reduction is on everyone’s lips?



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