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Model Behavior: Exploring Business Model Innovation for Sustainability

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What is business model innovation? How does it impact sustainability? Which models are disrupting industries, beyond car sharing and distributed energy? A new research report, Model Behavior: 20 …

What is business model innovation? How does it impact sustainability? Which models are disrupting industries, beyond car sharing and distributed energy? A new research report, Model Behavior: 20 Business Model Innovations for Sustainability, released by SustainAbility earlier this year, brings clarity to this oft-hyped space and identifies and analyzes 20 emerging business model innovations that are having a positive social or environmental impact.

Mark Lee, Executive Director of SustainAbility, and Lindsay Clinton, Senior Manager in SustainAbility's New York office, who led and co-authored the research, will host this webinar to share research findings and engage in a discussion about business model innovation.

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  • 1. sustainability.com London | New York | Oakland Sustainable Brands Webinar March 12, 2014 Business Model Innovation for Sustainability Confidential and Proprietary This presentation has been produced for Sustainable Brands only.
  • 2. Introduction 2 Welcome from SustainAbility SUMMARY SLIDES MODEL BEHAVIOR INTRODUCTION Lindsay Clinton Senior Manager, SustainAbility Co-author Model Behavior Mark Lee Executive Director, SustainAbility
  • 3. Model Behavior explores the role and practice of business model innovation in the context of sustainability. -  Over 100 companies reviewed -  More than 80 examples of business model innovation -  5 areas of innovation -  20 distinct business models The report offers a closer look at what’s occurring in each of these models to produce more sustainable outcomes. www.sustainability.com/model-behavior Introduction 3 Model Behavior SUMMARY SLIDES MODEL BEHAVIOR INTRODUCTION 20 Business Model Innovations for Sustainability
  • 4. 4 Structures to create, deliver and capture value Source: Alex Osterwalder’s Business Model Canvas. SUMMARY SLIDES MODEL BEHAVIOR INTRODUCTION
  • 5. 5 Framework: Innovating for sustainability SUMMARY SLIDES MODEL BEHAVIOR INTRODUCTION
  • 6. 6 The 20 Models SUMMARY SLIDES MODEL BEHAVIOR THE 20 MODELS Environmental Impact §  Closed Loop Production §  Physical to Virtual §  Produce on Demand §  Rematerialization Social Innovation §  Buy One, Give One §  Cooperative Ownership §  Inclusive Sourcing Base of Pyramid §  Building a Marketplace §  Differential Pricing §  Microfinance §  Micro-Franchise Diverse Impact §  Alternative Marketplace §  Behavior Change §  Product as a Service §  Shared Resource Financing Innovation §  Crowdfunding §  Freemium §  Innovative Product Financing §  Pay for Success §  Subscription Model
  • 7. Key Takeaways from the Research
  • 8. Every exchange in a value chain provides opportunities for innovation and impact. 8 Takeaway 01 SUMMARY SLIDES MODEL BEHAVIOR KEY TAKEAWAYS FROM THE RESEARCH By identifying and analyzing the points of exchange, an established business can find areas of promise for business model innovation.
  • 9. Companies that have demonstrated a business model innovation have often done so by shifting incentives in the value chain. 9 Takeaway 02 SUMMARY SLIDES MODEL BEHAVIOR KEY TAKEAWAYS FROM THE RESEARCH When a business understands what each stakeholder wants or needs and responds creatively, or perhaps even radically, business model innovation begins to take shape.
  • 10. The largest companies tend not to be the source of new models, but they can help evolve and scale them. 10 Takeaway 03 SUMMARY SLIDES MODEL BEHAVIOR KEY TAKEAWAYS FROM THE RESEARCH Larger companies can help to bring new models to maturity. through acquisition or mutually-beneficial partnerships, or the adoption of new ideas into a given industry.
  • 11. Business model innovation doesn’t happen in a vacuum. 11 Takeaway 04 SUMMARY SLIDES MODEL BEHAVIOR KEY TAKEAWAYS FROM THE RESEARCH We must recognize how any model - sustainable or not - is dependent on surrounding conditions, and that new models are often enabled by, or arise organically from, changes in those conditions.
  • 12. Models with the Most Promise
  • 13. SUMMARY SLIDES MODEL BEHAVIOR MODELS WITH THE MOST PROMISE 13 Closed-Loop Production Closed Loop Production: The material used to create a product is continually recycled through the production system. Spotlight: Novelis Novelis aims to develop an almost entirely closed-loop business model by sourcing more recycled aluminum, coordinating post-production scrap take back, arranging end-of-life product takeback, and building more of its own recycling operations and processing facilities.
  • 14. SUMMARY SLIDES MODEL BEHAVIOR MODELS WITH THE MOST PROMISE 14 Product as a Service Product as a Service: Consumers pay for the service a product provides without the responsibility of repairing, replacing or disposing of it. Spotlight: Rolls Royce plc Rolls Royce handles service and maintenance of the products it manufactures; rather than charging per transaction, the company uses a model focused on achieving outcomes for each customer.
  • 15. SUMMARY SLIDES MODEL BEHAVIOR MODELS WITH THE MOST PROMISE 15 Inclusive Sourcing Inclusive Sourcing: Retooling the supply chain to make a company more inclusive, focusing on supporting the farmer or producer providing the product, not just the volume of the product sourced. Spotlight: Walmart For several years, Walmart has sourced more food directly from farmers, cutting out middlemen and enabling some farmers to boost their income. In some countries, this has meant fresher, more local produce.
  • 16. SUMMARY SLIDES MODEL BEHAVIOR MODELS WITH THE MOST PROMISE 16 Alternative Marketplace Alternative Marketplace: When a company circumvents a traditional method of transaction or invents a new type of transaction to unleash untapped value. Spotlight: ITC e-Choupal: This rural agribusiness arm of the Indian conglomerate ITC provides Internet access and market pricing information that can boost farmers’ earnings and eliminate middlemen.
  • 17. Lindsay Clinton SustainAbility clinton@sustainability.com Twitter: @lindsclint