Moving towards better planning of business model innovations for sustainability: A global perspective

In the past few decades, corporations have intensified innovations to further their industrial sustainability agenda. An important role of sustainable business models is recognized in driving and implementing these innovations... [ view full abstract ]

In the past few decades, corporations have intensified innovations to further their industrial sustainability agenda. An important role of sustainable business models is recognized in driving and implementing these innovations (Bocken, Short, Rana, & Evans, 2014). In recent years, theoretical literature on sustainable business models has grown; however, there is still a lack of key indicators determining when these business models are an economic success (for consumers and providers) as well as being ecologically sustainable at the same time. Furthermore, in the absence of measurable indicators, it is hard to identify a business model innovation as being sustainable, from a sustainability perspective.

The present study is an attempt to address this research gap by reviewing practical examples of a wide range of business model innovations for sustainability focusing on: (i) prolonging product lifetimes; (ii) facilitating systems for product reuse, repair, remanufacturing and end-of-life product collection (as in circular economy); (iii) offering product warranties; (iv) providing contracts for supplying spare parts and/or upgrading the product’s functionality; and (vi) collaborative consumption. The examples include a variety of products including vehicles, transport, housing, household appliances and tools, consumer electronics, textiles, and industrial equipment. Data on these examples was collected through products’ websites, published reports, news articles and journal papers.

Sustainability-driven business model innovations within various product sectors are qualitatively analyzed based on three criteria: (1) the scope of a business model in covering multiple sustainablility dimensions; (2) the potential impact of a business model to substantially contribute to net reductions in physical resources and energy demand through upscaling or wider adoption; and (3) the current economic affordability of the business model for a wide section of consumers. The study addresses the following research questions:

• Which (studied) product groups are critical from the resource consumption as well as greenhouse gas emissions perspectives?  
• What are the impacts of sustainable business models on the existing value chains? 
• What policy instruments are required in order to support sustainable business model innovations for wider adoption?

This study proposes a set of indicators that could be useful in assessing the performance of business model innovation for sustainability. The study identifies some key business cases that could contribute to high levels of physical resource and energy reductions in the UK’s economy. The study also offers some important insights into opportunities and barriers, such as legal and economical, for a wide implementation of this type of business models in the UK.

Bocken, N. M. P., Short, S. W., Rana, P., & Evans, S. (2014). A literature and practice review to develop sustainable business model archetypes. Journal of Cleaner Production, 65, 42–56. doi:10.1016/j.jclepro.2013.11.039