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Purpose – Although business models that deliver sustainability are increasingly popular in the literature, few tools that assist in sustainable business modelling have been identified. This paper investigates how businesses might create balanced social, environmental and economic value through integrating sustainability more fully into the core of their business. A value mapping tool is developed to help firms create value propositions better suited for sustainability. Design/methodology/approach – In addition to a literature review, six sustainable companies were interviewed to understand their approaches to business modelling, using a case study approach. Building on the literature and practice, a tool was developed which was pilot tested through use in a workshop. The resulting improved tool and process was subsequently refined through use in 13 workshops.
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A value mapping tool for sustainable business modelling
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Corporate Governance, Vol. 13 Iss: 5, pp.482 497
DOI: http://dx.doi.org/10.1108/CG-06-2013-0078
Bocken, N.M.P †1, Short, S.1, Rana, P.1, Evans, S.1
1 University of Cambridge, Department of Engineering, Institute for Manufacturing,
17 Charles Babbage Road, Cambridge CB3 0FS, United Kingdom.
Email: nmpb2@cam.ac.uk
Abstract
Purpose Although business models that deliver sustainability are increasingly
popular in the literature, few tools that assist in sustainable business modelling have
been identified. This paper investigates how businesses might create balanced social,
environmental and economic value through integrating sustainability more fully into
the core of their business. A value mapping tool is developed to help firms create
value propositions better suited for sustainability.
Design/methodology/approach In addition to a literature review, six sustainable
companies were interviewed to understand their approaches to business modelling,
using a case study approach. Building on the literature and practice, a tool was
developed which was pilot tested through use in a workshop. The resulting improved
tool and process was subsequently refined through use in 13 workshops.
Findings – A novel value mapping tool was developed to support sustainable business
modelling, which introduces three forms of value (value captured, missed/destroyed
or wasted, and opportunity) and four major stakeholder groups (environment, society,
customer, and network actors).
Practical implications This tool intends to support business modelling for
sustainability by assisting firms in better understanding their overall value
proposition, both positive and negative, for all relevant stakeholders in the value
network.
Originality/value The tool adopts a multiple stakeholder view of value, a network
rather than firm centric perspective, and introduces a novel way of conceptualising
value that specifically introduces value destroyed or wasted/ missed, in addition to the
current value proposition and new opportunities for value creation.
Keywords: Business model, Business model innovation, Sustainability, Sustainable
business model, Sustainable value, Value creation
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1. Introduction
Sustainable development is “development that meets the needs of the present without
compromising the ability of the future generations to meet their own needs”
(Brundtland, 1987). This implies a need for economic, social and environmental
sustainability. A growing global population, coupled with changing consumption
patterns creates significant challenges to health, wellbeing and the natural
environment - it presents challenges of eradicating poverty, while moderating over-
consumption of emerging and developed countries, which will require new socio-
economic systems that take into account the inter-linkages between population,
consumption and the environment (The Royal Society, 2012).
The global challenges are significant: by 2050 the global industrial system is targeted
by governments to double its output while using 50% of current resources and
generating 20% of current CO2, which requires radically new approaches that may be
termed “industrial sustainability” (EPSRC Centre for Industrial Sustainability, 2013).
Evans et al. (2009) summarise some of the main approaches to achieve industrial
sustainability: The Industrial Ecology model (Graedel, 1996); Cradle-to-Cradle, a
form of industrial ecology formulated by McDonough and Braungart (2002); The
Natural Step by Robèrt (2002); Sustainability by Design (Ehrenfeld, 2008), and the
natural capitalism model by Lovins et al. (1999). Other industrial sustainability
concepts include: cleaner production (minimising manufacturing emissions, waste,
water, and energy use; Yacooub and Fresner, 2006); eco-innovation (creating
competitive goods, services and processes which minimise life cycle use of resources
and toxics; Reid and Miedzinski, 2008) and Corporate Social Responsibility (CSR)
(businesses committing to behave ethically and contribute positively to economic
development and society; Holme and Watts, 2000).
Industrial sustainability efforts to date assist industry to move in the right direction,
but broadly assume that business can continue largely as usual under current
assumptions of growth and incremental improvement. While they may reduce un-
sustainability (Ehrenfeld, 2009), the rate of change such initiatives offer appears
inadequate to address growing global challenges. A fundamental paradigm shift
seems necessary, in which business activities and consumption patterns are far better
aligned with environmental and societal needs.
Business model redesign may be a key to radically improve sustainable performance
to create greater environmental and social value while delivering economic
sustainability, as suggested by Stubbs and Cocklin (2008), Porter and Kramer (2011),
Yunus et al. (2010), and FORA (2010). Existing approaches to sustainability may be
good for specific aspects of design and delivery, but business model innovation offers
a more holistic perspective that incorporates all three dimensions of sustainability
(social, environmental and economic) within business planning.
This paper investigates how companies might rethink and develop their business
models to achieve enhanced industrial sustainability, and specifically investigates:
What new tools could be developed to assist companies to embed sustainability into
business modelling?
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To address this question, a tool and process are developed to assist in sustainable
business modelling. The literature on sustainable business models, tools and value
creation is reviewed in section 2 to explore the limitations of existing approaches. The
methodology to develop a tool is introduced in Section 3. Section 4 discusses the
development of and rationale behind a proposed value mapping tool. Refinement of
the final tool and workshop process to assist in sustainable business modelling are
described in Section 5. Section 6 discusses potential uses of the tool in practice,
followed by concluding comments in Section 7.
2. Literature background
This section discusses the existing discourse on business models and emerging
literature on sustainable business models and value innovation. Although the literature
is evolving, few tools and processes appear to support business model innovation for
sustainability.
2.1 Business Models
Key authors such as Chesbrough and Rosenbloom (2002), Richardson (2008), Zott
and Amit (2010), Teece (2010) and Osterwalder and Pigneur (2010), have contributed
to the literature on business model innovation and more particularly, business
modelling processes. There appears to be reasonably good conceptual understanding
of business models, albeit, with several differing perspectives (Teece, 2010; Zott et
al., 2011). Teece (2010) describes that the essence of a business model is in defining
the manner by which the enterprise delivers value to customers and entices customers
to pay for value and converts this into profit. Osterwalder and Pigneur (2010) describe
the following elements of a business model: customer segments and value proposition
(value proposition), channels, customer relations; key resources, activities and
partnerships (how to create value); and revenues streams and cost structure (how to
capture value). Zott and Amit (2010) present the business model from an activity
system perspective, viewing the business model as a network. This exemplifies an
emerging view that business models need to be developed with a network-centric
rather than a single firm-centric perspective.
2.2 Sustainable Business Models
Sustainable business models seek to go beyond delivering economic value and include
a consideration of other forms of value for a broader range of stakeholders. They have
been defined as business models that create competitive advantage through superior
customer value while contributing to sustainable development of the company and
society (Lüdeke-Freund, 2010). Stubbs and Cocklin (2008) assert that sustainable
business models use both a systems and firm-level perspective, build on the triple
bottom line approach to define the firm’s purpose and measure performance, and
include a wide range of stakeholders – in particular environment and society.
An example of a type of sustainable business model is a Product Service System
(PSS) which shifts the business focus from designing, producing and selling physical
products, to selling a system of products and services, to fulfil specific client demands
(Manzini and Vezzoli, 2002). PSS has the potential to generate environmental
benefits (Goedkoop et al., 1999) by internalising within the firm the negative
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environmental and social externalities associated with the product provision (Tukker
and Tischner, 2006). This is reflected by Den Ouden (2012), who argues that by
choosing the boundaries of considered ecosystems, ‘externalities’ can become part of
the firm’s decision-making.
Sustainable business models as a prerequisite must be economically sustainable.
According to Schaltegger et al. (2011) the objective in sustainable business modelling
is therefore to identify solutions that allow firms to capture economic value, whilst
generating environmental and social value, thereby establishing the business case for
sustainability.
2.3 Value Innovation and Stakeholders
At the core of business model innovation is re-thinking the value proposition, that is,
the product /service the firm offers to its stakeholders. Conventionally, business model
innovation has been about creating new forms of customer value, focusing on use
value (customer benefits such as functionality, convenience, and well-being, which
are often intangible); and how the firm captures value through transaction value
(economic or exchange value, paid by the buyer to the producer; generally defined
financially, although it may also include intangible benefits such as market access)
(Bowman and Ambrosini, 2000; Allee, 2011).
To create a sustainable business, a holistic view of the value proposition is required
that includes benefits and costs to other stakeholders (besides customers and the firm)
and specifically to society and the environment. Building on Donaldson and Preston
(1995), six stakeholder types can be observed for sustainable business models and
modelling: customers, investors and shareholders, employees, suppliers and partners,
the environment, and society. As Allee (2011) suggests, the consideration of value for
these stakeholder groups needs to be extended explicitly. This involves understanding
tangible and intangible value flows between stakeholders towards identifying
relationships, exchanges and interactions, and opportunities for greater collaborative
mutually beneficial value creation. Porter and Kramer (2011) define this enhanced
approach as ‘shared-value creation’.
2.4 Research gap: Tools for Business Model Innovation for Sustainability
Business model innovation for sustainability seeks to extend the delivery of positive
value to all stakeholders. Many tools have been developed to assist in eco-design of
products, and more generic business modelling tools have been identified. However,
few tools if any have been shown to assist firms in the practical design of value
propositions for business models for sustainability.
In the area of eco-design, a wide range of guideline, evaluative, comparative and
trade-off tools have been developed (see Baumann et al., 2002; Byggeth and
Hochschorner, 2006; Bocken et al., 2011 for some reviews). The tools may assist in
evaluating the environmental aspects (e.g. durability, reusability) of products to
improve design, although few tools focus on idea generation (with some exceptions,
e.g. Bocken et al., 2011).
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The ‘business model canvas’ (Osterwalder and Pigneur, 2010) is a popular framework
to support the generic business modelling process. While being well-conceived and
academically grounded, it has a narrow view of the value proposition focusing only on
the customer. As such, it seems poorly suited for assisting a firm in generating wider
sustainability across the full stakeholder network including suppliers, local
communities, and the wider society and the environment (which may be represented
by NGOs or the government). Expert facilitation would be required to adapt the tool
to different (i.e. sustainability) contexts. Similar limitations can be observed of other
popular tools for value proposition innovation, such as blue ocean strategy (Kim and
Mauborgne, 2005).
Network-centric tools for business model innovation (which go beyond considering
customer value) are less developed, and are generally conceptual to date. Tools such
as Allee’s (2011) Value Network Analysis (VNA) offer an approach to value
transformation and understanding value creation, which might assist in business
modelling. However, VNA maps are complicated and time-consuming to develop, and
not specifically intended for business modelling. Den Ouden’s value framework (Den
Ouden, 2012) offers an approach for developing a value proposition that benefits a
network of stakeholders for ‘meaningful innovations’ using perspectives on value
from economics, psychology, sociology and ecology. Den Ouden’s framework
explores value across user, organisation, business ecosystem, and society for business
innovations. However, the concepts and terminology may be too complex to engage
workshop participants in a business environment.
To summarise, existing tools generally tend to focus on just one dimension of
sustainability (e.g. environment, economic value), and fail to engender a holistic
perspective that incorporates all three dimensions of sustainability within the business
planning process. Moreover, current tools and methods are either conceptual or have
not been used widely in industry, and generally rely on a well-trained (external)
facilitator.
This paper identifies a need for a tool to assist firms in better understanding
sustainable value creation within their business activities, and assist them in
developing new business models with sustainability at their core. Such business model
development should seek to better balance value creation for all stakeholders to
eliminate conflicting demands and negative outcomes for any of the stakeholders.
This paper introduces a tool and process to systematically rethink the positive and
negative value created for all stakeholders through the business model.
3. Research method
Despite the shortfalls in tools and methods in the literature, there are an increasing
number of practical examples of firms successfully exploring and innovating for
sustainability. Case studies followed by a testing phase through the use of workshops
were conducted to develop, test and improve a proposed tool.
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3.1 Case study analysis
Case studies were conducted by interviewing six firms perceived to be actively
engaging in business model innovation for sustainability, and collecting company
documentation and articles from the popular press discussing their activities.
The selected firms were spread across a range of industry sectors, and include start-
ups, small and medium size enterprises (SMEs) and multinational companies (MNCs).
Recommendations from sustainability experts in academia and practice including
rankings, indices and sustainability awards and media coverage on sustainability
leaders were used to identify companies at various stages of transformation towards
sustainability (from best in class to aspiring). The criteria for the selection of the firms
were as follows:
Recognition by industry peers as providing leadership in sustainability (at
minimum)
Actively engaging in business model innovation for sustainability
The above criteria assisted in establishing the suitability of the six firms (Table 1).
Founders and senior staff of the firms were interviewed using a semi-structured
interview technique. Interviews typically lasted 2-3 hours, and the following themes
were explored:
The role of sustainability in the company, sustainability governance and how
sustainability has evolved in the business
The drivers for sustainability and why the company has gone further than most
Sustainability within the business modelling process (if there is such a process)
How their sustainability innovations were conceived and developed
Table 1. List of interviewees.
Note. Case studies took place between October 2011 January 2012
3.2 Workshops to further develop the tool
Based on the literature and case study analysis, a tool was developed (Section 4) to
assist in sustainable business modelling, which was tested through workshops. The
tool was used with the six case study companies in Table 1 (sessions 1-6 in Table 2)
and with other organisations of varied scales. It was decided to first test the tool with
the six case study companies to evaluate whether it would have helped them in their
Manufacturing
sector
Evidence of sustainability in
business operations
Organisation
type, location
Interviewees
1 Automotive
PSS and novel governance
system
Start-up, UK
Joint interview with the
founder and engineer
2 Cleaning
Breakthrough cleaning
mechanisms with significantly
reduced water and energy use
Start-up, UK
Technical director
3 Furniture
A business philosophy against
consumerism, promoting social
and environmental awareness
SME, UK
Managing director
4 Agriculture
On a journey to a PSS
Multinational,
Germany
Joint interview with
service engineer and
product manager
5 Food
Industrial Symbiosis using
waste as an input
Multinational, UK
Sustainability director
6 Printing
Take back systems and refillable
and reusable packaging
Multinational, UK
Technical director
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thinking to develop their current sustainable business model and whether it could help
them move to an even more sustainable business model.
The aims of all the workshops included: to test the effectiveness of the tool; to explore
opportunities to refine the tool; and explore facilitation methods to best use the tool.
At the end of the workshops, structured feedback was gathered from participants by
using a workshop evaluation schedule to evaluate perceived usefulness and help refine
the tool and the facilitation process for using the tool.
Organisation
type, location
Type of
participants
Number of workshop
participants (not
authors)
Additional tool or
process elements
tested
Multinational, UK
Industry
1
Start-up, UK
Industry
2
Use of expanded
introduction to tool
Start-up, UK
Industry
1
Use of blank
stakeholder segments
Multinational,
Germany
Industry
3
SME, UK
Industry
1
Multinational, UK
Industry
1
Alternative processes
of facilitation
International, UK
Industry
2
Alternative processes
of facilitation
International,
Netherlands
Mix of non-profit,
business and
academics,
Netherlands,
10 (1 large group, 1
topic)
Examples to prompt
discussion. Multiple
stakeholders as
participants
International,
Netherlands
Mix of non-profit,
business and
academics,
Netherlands,
15 (1 large group, 1
topic)
Examples to prompt
discussion. Multiple
stakeholders as
participants
Multinationals,
Italy
University, Italy,
Engineering
graduates
10 (2 groups of 5
students to explore two
separate company cases)
Simplifying the tool
and process
Various, SME to
Multinational, UK
University, UK,
Engineering and
Management
undergraduates
30 (6 groups of 5
students, each with own
case)
Simplified tool and
process, using
examples
Various, SME to
Multinational, UK
University, UK,
Engineering and
Management
graduates
40 (8 groups of 5
students, each group
with own case)
Simplified tool,
using examples
Various: start-up,
SME,
Multinational, UK
Industry
15 (3 groups of 5)
Using predefined
prompt questions
Table 2. List of workshop participants.
Note: Workshops took place between June-November 2012 and are listed in chronological order
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4. Development of a value mapping tool
This section presents the findings from the case studies and explains the rationale and
development of a value mapping tool.
4.1 Findings from the case studies
Several common themes emerged from the case studies, which further confirmed the
need to develop a tool for mapping value.
First, there is a common recognition by the interviewees (Table 1) for the need for
innovation to embed sustainability in the business by considering environmental and
social value, which is not typically done because of an economic/ customer focus in
conventional businesses. Second, there are limited tools that can be used by
companies to develop novel business models and forms of value across the
stakeholder network. Innovation has been approached generally in an ad-hoc,
experimental manner, rather than using specific tools or a prescriptive process. Third,
innovations often target negative impacts of business, and seek to reduce waste. This
appears distinct from seeking new opportunities for customer-orientated value
creation. Interviewees were not aware of tools that might enable users to explore both
simulatenously to improve the business model. Finally, innovations often involve
development of new collaborations extending beyond the traditional company
network, not uncommonly involving new actors from industry sectors not
traditionally linked to the firm (e.g. partnerships with NGOs).
The literature review and case study research identified the need to distinguish
different forms of value. Figure 1 shows a conceptual portfolio for value innovation
opportunities for a firm and its stakeholders developed in this research.
Figure 1. Opportunities for value innovation
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At the core of this portfolio is the value proposition of the network, which represents
the benefits delivered to stakeholders for which payment or another value exchange
takes place. In delivering the value proposition, individual stakeholders and networks
collectively may destroy value. Value destroyed can take various forms, but in the
sustainability context is mostly concerning damaging environmental and social
impacts of business activities (e.g. pollution). These are often referred to as ‘negative
externalities’ in literature, but it is felt that this terminology could artificially distance
these impacts from the firm. Missed value opportunities represent situations where
individual stakeholders squander or fail to capitalise on existing assets, resources and
capabilities, are operating below industry best practice, or fail to receive the benefits
they seek from the network. This might be due to poorly designed value creation or
capture systems, failure to acknowledge value, or inability to persuade others to pay
for the benefit. New value opportunities help expand the business into new markets
and introduce new products and services that offer enhanced benefits to stakeholders.
Beyond customers, this might involve seeking to enhance employee wellbeing or
making positive contributions to the environment.
4.2 The Value Mapping Tool
A “value mapping tool” is conceived to help companies create value propositions to
support sustainable business modelling. The tool adopts a qualitative approach to
value analysis. Although quantitative analytical tools are useful supportive tools, often
used in the area of sustainability (e.g. Life Cycle Assessment and scenario analysis;
see Allwood et al., 2008) the proposed use of the value mapping tool at the business
modelling level does not necessitate such quantitative detail, because its primary aim
is to stimulate idea generation and discussion.
The tool has the following specific aims:
Understand the positive and negative aspects of the value proposition of the value
network (i.e. the network of stakeholders involved in creation, delivery and
receipt of value associated with provision of a product/service);
Identify conflicting values (i.e. where one stakeholder benefit creates a negative
for another stakeholder), so that action can be taken to tackle these;
Identify opportunities for business model redesign and realignment of interests to
reduce negative outcomes and improve the overall outcome for the stakeholders in
the value network - especially for society and the environment
Ease of use and the limited need for expert facilitation was considered in the
development of the tool. Based on the insights on value innovation, a value mapping
tool was developed as shown in Figure 2.
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Figure 2. Value Mapping Tool
The circular form of the tool was developed over a series of discussions and a pilot
study, to facilitate a system-perspective of value, encourage equal consideration of all
stakeholder interests, and explore the inter-relatedness between different stakeholders.
Alternative formats such as tabular format were tested during the pilot study, but the
circular tool was considered most effective to engage the participants and better
stimulate creative lateral thinking.
The novel design aspects of the tool include:
Four representations of value to facilitate a systematic value assessment,
representing the forms of value in Figure 1. Identifying them separately
encourages a more thorough exploration of the current business model, and assists
in identifying areas requiring change or improvement.
Stakeholder segments to facilitate a multiple stakeholder view of value.
Current business modelling processes and tools focus on the customer value
proposition. The proposed tool seeks to expand the range of stakeholders or
recipients of value, including the environment and society. Each segment
represents a stakeholder group.
A network centric rather than firm centric perspective to encourage the
optimisation of value in a network (i.e. considering all actors involved in the
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design, production and distribution of a product or service). The firm is
represented as “employees and shareholders” to facilitate a network perspective.
Organisations while brainstorming may want to consider competitors and competing
value propositions while using the tool. However, the tool is intended to map out and
transform the business model of a firm to deliver sustainability, rather than serving the
purpose of competitor analysis. Hence, competitors are not explicitly included.
5. Results from workshop evaluation trials
As discussed in Section 3.2, a series of 13 workshops were conducted to test the tool
shown in Figure 2. The objectives of the workshops included: investigation of the
effectiveness of the tool for exploring positive and negative value outcomes of the
existing busines model and suitability of the tool for providing a structure for
systematically considering how to modify the business model to tackle negatives and
identify new opportunities. Additionally, techniques to facilitate the workshop and
stimulate brainstorming and supporting tools were investigated.
5.1 Simplified Version of the Value Mapping Tool
Overall, the tool and its design and use were understood and well received. It was
considered helpful in focusing on destroyed and missed value, understanding
exchange of value across the network, and for capturing sustainability and business
model innovation opportunities. Particularly, the tool was thought to be good in
engaging participants of each firm to generate ideas and priority areas for
sustainability. However, upon reflection of the main results, it was found that a
simplified version of the tool could be developed – including fewer stakeholder
segments by grouping some stakeholder types together, and merging the value
destroyed and missed rings.
The number of stakeholders were reduced to four (environmental, social, customers,
and network actors) to reduce the time required for the workshop. It was observed that
several stakeholder segments led to similar discussions and value maps. For example,
environmental NGOs and environment can be merged without significant loss of
detail and government, community, and employees can be grouped under ‘society’ to
explore societal values. Building on definitions of value in Section 2, a distinction is
made between those stakeholders that are part of the value-creating network refered to
as ‘network actors’ (the focal firm, investors, suppliers, partners, distribution channels,
and in some cases also media, academia and other specific participants) and those that
receive the direct benefits or impacts of the product or service (customers,
environment, society). Customers are distinct from society as they receive specific
benefits which may not be societal (e.g. owning a sportscar may bring considerable
personal benefits to the user, but these are not societal benefits). However, some
customer benefits (e.g. communal green spaces in cities) have a wider positive
societal impact (e.g. creating the sense of community). Recognising these potentially
conflicting and reconciling ideas of value is an essential part in redesigning the
business model.
During some of the workshops, the brainstorming on ‘value missed’ and ‘value
destroyed’ led to similar ideas being generated, creating significant, and sometimes
unbeneficial debate over exactly which ring they best fitted. Upon further
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consideration, the two rings were merged into one to reduce this debate. Some detail
and opportunity for discussion is lost in making this simplification, but if time is
limited for the workshop this seems a reasonable compromise. Hence, depending on
time availability Figure 2 might be used for deeper thinking on various forms of value
(distinguishing value missed and destroyed) while Figure 3 might be used for a
quicker, higher level assessment.
Figure 3 shows the simplified tool (Appendix A shows a populated example). This
simplified tool was used during workshop sessions 11 and 12 in Table 2.
Figure 3. Simplified value mapping tool
5.2 The Value Mapping Process - Using the Tool
This section discusses how the value mapping tool might be used in practice. Either
of the two forms of the tool presented here may be used. The simplified tool is
appropriate for a shorter workshop, but may not provide quite as much depth and
discussion as the original tool. The choice of tool is dependent on the time available
and level of analysis desired. Based on the workshop experiences, a value mapping
process is proposed, applicable to either of the two tools in Figures 2 and 3.
Pre-workshop preparation:
Invite appropriate participants to represent each of the main stakeholders or
stakeholder groupings considered relevant to the business. Ideally these would be
representatives of each group, but this may not always be possible due to logistics,
Customers
(Use+Value;+perceived+
and+actual+benefits+
and+impacts)
Network+actors
(Transaction+Value;+
e.g.+focal+firm,+
investors,+suppliers,+
partners,+distributors,+
media,+research+
institutes)
Society+
(Societal+Value;+
Societal+benefits+and+
Impacts)
Environment
(Environmental+Value;+
Environmental+
benefits+and+Impacts)
Purpose
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confidentiality, or other considerations. At least there should be a proxy
representation (e.g. procurement manager as proxy for suppliers, sustainability
manager as proxy for environment, marketing manager as proxy for customers) to
develop various perspectives on value.
A discussion should take place with the workshop participants to determine the
general level of awareness and understanding of key issues in sustainability.
Workshop process:
The workshop process follows several steps:
Depending on the familiarity with sustainability a short or long introduction of the
key global sustainability challenges (as highlighted in Section 1) is given.
A short introduction is given on the tool with an example of a populated tool. Real
business examples will help illustrate the terminology of value captured, missed,
value, new opportunities and how value forms might be transformed.
Subsequently, workshop participants should define the unit of analysis as the
product or service, or portfolio of products and services offered by a business unit,
firm, or industry. For large companies a focus on individual business units or
product lines can make the process more manageable.
Stakeholder groups are identified by the participants, and placed in each segment
of the tool, and representatives of each group are nominated. For the more
complex version of the tool, the starting point is generic stakeholder types, but the
tool may be populated with additional specific stakeholders.
The purpose is discussed: the top-level description of why the organisation is in
operation (e.g. fairtrade intends to improve the living standards of workers and
communities in global supply chains). The focus is on the offering, rather than the
firm, to support a network or system perspective.
A facilitated brainstorming is then used to populate the tool (a guide for
facilitators with example questions is available upon request from the authors).
Each stakeholder segment is populated in turn with the various forms of value
generated for that stakeholder, starting at the centre of the circle and working
outwards: from purpose and value proposition, to value destroyed and missed,
through to exploring new opportunities for value creation.
By following this progression each step builds upon and is informed by each
preceding step facilitating ideas for transformation as illustrated in Figure 1. For
instance, missed value can be explored for opportunities to create new value.
After this core part of the process, the ideas voted to be most promising might be
used for further brainstorming.
Facilitation:
A set of pre-defined prompt questions (available upon request) helps to reduce
dependency on the external facilitator and navigate the discussion.
Consider a methodical approach (e.g. colour-coding) to writing on post-its as
illustrated in Appendix A.
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Project the tool on a wall or screen to save paper during the group brainstorms.
Capturing the final results with a camera ensures all details are recorded.
Transcribing the final details in a tabular form containing a row/ column for each
individual brainstorm (e.g. value missed, opportunity) was found to be helpful.
6. Discussion
The value mapping tool assists companies in embedding sustainability into the core of
the business model through an improved understanding of the value proposition. It
supports an iterative process for analysing sustainable value creation opportunities
from a multi-stakeholder perspective.
The tool and facilitation process can be constructively used as a stand-alone tool to
assist firms and their stakeholders in exploring forms of value and generating ideas on
where and how to transform the value proposition, but it can also be used as part of a
more comprehensive exercise of value mapping and transformation in conjunction
with supplementary tools. These tools could extend the analysis of value and
opportunities; assist in prioritising (e.g. Bocken et al., 2012), exploring potential
transformation paths and planning the evolution of the business model (e.g. Phaal et
al. 2004; Osterwalder and Pigneur; 2010). The following sections discuss potential
value mapping tool applications and supporting tools.
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6.1 Applicability for the value mapping tool
The two versions of the tool presented in this paper may suit different situations. The
more comprehensive tool (Figure 2) takes longer to use, but allows for a more indepth
investigation of value exchanges across a detailed list of stakeholders, including
specific ones (e.g. important partners, customer segments) that may be identified by
the workshop participants. The more comprehensive tool stimulates more discussion
and debate. Conversely, the simplified tool (Figure 3) provides less depth but appears
sufficient for a quick assessment of key issues. Overall, it was observed that both
versions have an engaging, easy to use format for group discussion.
The workshops (Section 5) were conducted with a variety of organisations in different
environments. The proposed value mapping tools are conceived to facilitate
exploration of sustainable value within multi-stakeholder network collaborations.
Dauvergne and Lister (2013) highlight an increasing number of large corporations
initiating collaborative sustainability governance within networks. This involves
engaging proactively with a broader range of stakeholders, often including non-
industry actors (e.g. WWF partnering with Coca-Cola) and competitors to establish
industry-level sustainability consortia (e.g. The Sustainable Apparel Coalition). In
such applications, the tool could be expanded to include all specific stakeholders, and
as discussed by Dauvergne and Lister (2013) could be used in visioning exercises to
explore stakeholders’ views of value. The tool could be used to assist students in
thinking about broader issues of sustainability and in exploring case studies on
sustainable business models, making it suitable for educational purposes. For policy
makers it could serve as a framework for macro-level analysis of industry.
The value mapping tool has been tested with non-profits and students and might be
adapted to suit specific workshop objectives. Planned future testing in a range of
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15!
sectors, companies, non-profits, social enterprise would help to understand the wider
applicability and versatility of the tool and improve the process.
6.2 Business analysis tools
Business analysis tools might help to extend the analysis of value opportunities by
considering potential changes in technology, legislation, social change, environmental
pressures and competition that affect the business environment. Phaal et al. (2012)
suggest a ‘modular toolkit’ that is used in a workshop setting to support strategic
technology and innovation management. Tools such as SWOT (to assess strengths,
weaknesses, opportunities and threats), PEST (to assess macro-level political,
economic, social, and technical factors), competitor analysis (to assess emerging
threats and opportunities) and scenario analysis might be used. These tools assist in
understanding the current system and identifying requirements for the future that will
affect the development and transformation towards a sustainable business model. Such
analysis may be supplemented with social and environmental analysis tools such as
Life Cycle Analysis to gain deeper insights in the social and environmental impacts of
a product (e.g. Allwood et al., 2008). Although the value mapping has been proven to
be useful on its own, these tools might give additional support in identifying forms of
positive and negative value over time.
6.3 Tools for transforming the value proposition
During normal workshop facilitation, examples may be given to stimulate idea
generation, but more structure can be given to this process. A potential practical
approach to facilitate this innovation process as suggested by Short et al. (2012) uses a
typology of business model archetypes to describe innovations for sustainability. This
typology (Table 3) was used to prompt generation of new ideas in workshop sessions
8, 9, 11 and 12. This approach assists participants in seeking ways to transform
negatives into positive outcomes, to tackle conflicting stakeholder demands and seek
new ways to create sustainable value. Moreover, the archetypes facilitate learning
from cross-industry perspectives.
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Table 3. Sustainable business model archetypes. Adapted from Short et al. (2012)
6.4 Developing the plan for implementing the new value proposition
It was observed that the transformation of a company’s value proposition generally
requires a sequence of continuous improvement steps to develop new capabilities and
change “how the company does business” engaging the workforce and managers,
suppliers, customers, and the company’s broader stakeholders. The evolution of the
business model may take time because of the need for reconfiguration and
coordination of activities, resources, partnerships and revenue models (Osterwalder
and Pigneur, 2010). Therefore, after the value mapping brainstorm, a group discussion
can take place to plan future actions. An example of a strategy tool to facilitate this
process and plan future actions is roadmapping. Phaal et al. (2004) view roadmaps as
powerful communication tools, which allow people from various functional
backgrounds to work together on a shared future vision. This may be useful to support
the transition to sustainable business models.
7. Conclusion
Business model innovation seems a key to delivering future sustainability. The tool
developed in this paper (presented in two formats) is intended as a primary step in a
business modelling process for embedding sustainability into the core purpose of the
firm and its network of stakeholders. The apparent simplicity of the tool is an
important strength ensuring ease of understanding and use. It is effective in raising
awareness of the often conflicting values and negative outcomes of business activities,
to support organisations on the journey towards sustainability.!However, the tool does
Sustainable Business Model Archetypes
1. Maximise material and energy efficiency
(Do more with less resources, generating less waste, emissions and pollution)
2. Create value from ‘waste’
(Turn waste streams, emissions, and discarded products into feed stocks for other products and processes, and
make best use of under-utilised capacity)
3. Deliver functionality, rather than ownership
(Provide services that satisfy users’ needs without having to own physical products)
4. Encourage sufficiency
(Solutions that actively seek to reduce consumption and production)
5. Adopt a stewardship role
(Proactively engaging with all stakeholders to ensure their long-term health and well-being)
6. Re-purpose the business for society/environment
(Focusing the business on delivering social and environmental benefits, rather than economic profit
maximisation)
7. Integrate business in the community
(Integrating business back into local communities through employee ownership and collaborative approaches to
business)
8. Develop scale-up solutions
(Delivering sustainable solutions at a large scale to maximise benefits for society and the environment)
9. Radical innovation
(Introduce system change through introduction of radical new technologies to facilitate a greener economy)
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17!
require some facilitation to get the best results - in part because of the need for
sustainability innovation to look outside existing business practices, where external
participants and facilitators can help to bring that new perspective.
The tool is envisaged to have applicability to all organisations, from exploring
opportunities for new start-ups, assisting in redesigning business models of
established large corporations, to use in public sector and non-government
organisations. Preliminary workshops have demonstrated the potential for
conceptualising and assisting in value transformation. As the tool is just one step in a
business modelling process, further work is recommended to refine and enhance a
complete toolset to assist in developing complete solutions to transform the business
model. More tests are planned to further understand the applicability and suitability of
the tool in different contexts.
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Appendix A. Populated example of the tool for LED lights
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Conference Paper
Full-text available
Researchers and practitioners highlight the importance of business for progress in sustainable consumption and production (SCP). In this context business models are discussed as meta factors that can support the adoption of cleaner products and processes, sustainable supply chains and further contributions towards SCP. The article is about business model innovation and the creation of private and public benefits. From a strategy perspective business model innovation is an approach to design, implement and change business models to create and secure competitive advantage. It is supposed that business models can also support eco-innovations. If companies subscribe to sustainability strategies, their business models can help bridging technological innovations, organizational aspects and market positions. Furthermore, the business model itself can become subject to eco-innovation and thus support the realization of business cases for sustainability. The article follows a theoretical, deductive approach. A conceptual framework is developed that combines sustainability strategies, eco-innovation, the role of business models and pivotal ideas about value creation with regard to private and public benefits. This approach is discussed as essential driver of eco-innovations. Starting with sufficiency, efficiency and consistency strategies helps identifying primary challenges and is assumed to be the obvious first step towards a broader research agenda on ‘business models for sustainability’. The framework includes definitions such as ‘business model eco-innovation’ and ‘extended customer value’ and propositions about how these concepts interrelate. It allows for developing further theoretical and empirical research topics. The review shows that the state-of-the-art literature is far from offering such an agenda.
Technical Report
Full-text available
This report is the result of two years of analysis and debate within the wider framework of the Europe INNOVA Sectoral Innovation Watch project. It sets out a conceptual framework for further analysis and policy development on eco-innovation; it brings together the available evidence on eco-innovation in a coherent framework; and it proposes a set of policy options for a more structured integration of ecoinnovation into mainstream policy. The report's authors have benefited from the advice and steer of a panel of high-level experts on eco-innovation.
Book
Innovation Design presents an approach to designing shared value for businesses, non-profit organizations, end-users and society. The societal and economic challenges we are currently facing - such as the aging population, energy scarcity and environmental issues - are not just threats but are also great opportunities for organizations. Innovation Design shows how organizations can contribute to the process of generating value for society by finding true solutions to these challenges. And at the same time it describes how they can capture value for themselves in business ecosystems that care for both people and planet. This book covers: creating meaningful innovations that improve quality of life, engage users and provide value for organizations and other stakeholders, guiding the creation of shared value throughout the innovation process, with a practical and integrative approach towards value that connects ideas from economics, psychology, sociology and ecology, designing new business models and business ecosystems to deliver sustainable benefits for all the involved parties and stakeholders, addressing both tangible and intangible value. Innovation Design gives numerous examples of projects and innovations to illustrate some of the challenges and solutions you may encounter in your journey of designing meaningful innovations and creating shared value. It also offers practical methods and tools that can be applied directly in your own projects. And in a fast-changing world, it provides a context, a framework and the inspiration to create value at every level: for people, for organizations and for the society in which we live.
Article
The developed world, increasingly aware of "inconvenient truths" about global warming and sustainability, is turning its attention to possible remedies-eco-efficiency, sustainable development, and corporate social responsibility, among others. But such measures are mere Band-Aids, and they may actually do more harm than good, says John Ehrenfeld, a pioneer in the field of industrial ecology. In this deeply considered book, Ehrenfeld challenges conventional understandings of "solving" environmental problems and offers a radically new set of strategies to attain sustainability. The book is founded upon this new definition: sustainability is the possibility that humans and other life will flourish on Earth forever. There are obstacles to this hopeful vision, however, and overcoming them will require us to transform our behavior, both individually and collectively. Ehrenfeld identifies problematic cultural attributes-such as the unending consumption that characterizes modern life-and outlines practical steps toward developing sustainability as a mindset. By focusing on the "being" mode of human existence rather than on the unsustainable "having" mode we cling to now, he asserts, a sustainable world is within our reach.