Abstract and Figures

Sustainable business model innovation is about creating superior customer and firm value by addressing societal and environmental needs through the way business is done. Business models require intentional design if they are to deliver aspired sustainability impacts. Scant research has been done on 'ecologies' of different business models in order to understand and improve these and create positive impact on the environment, society, economy and other key stakeholders. Hence, in this paper a novel framework is presented to enable a systemic form of sustainable business model experimentation. The framework is based on the recognition of three key issues which have not yet been sufficiently incorporated in the literature on sustainable business models: construct clarity, boundary setting and uncertainty about outcomes. These concepts are discussed first. Building on earlier work, the resulting framework incorporates potential side-effects and boundary setting based on the concept of an 'ecology of business models'. Second, an approach is proposed that could stimulate more profound forms of sustainable business model innovation: The Ecology of Business Models Experimentation map. Third, the approach is illustrated through two cases. The approach could help minimize symbiotic dependency on less sustainable business models; help destroy unsustainable business models by outcompeting them; and maximize contributions to favourable institutional infrastructures for more sustainable business models. This paper contributes to research on sustainable business model innovation, design and experimentation by providing a potential approach for 'business model ecology redesign'.
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Sustainable business model experimentation by
understanding ecologies of business models
Nancy Bocken a ,b, c*, Frank Boons d,, Brian Baldassarre b,e
a Lund University, IIIEE, Tegnérsplatsen 4, 223 50 Lund, Sweden, *nancy.bocken@iiiee.lu.se
b Delft University of Technology, Industrial Design Engineering, Product Innovation Management, Landbergstraat 15, 2628 CE
Delft, Netherlands.
c School of Business and Management, Lappeenranta University of Technology, Finland.
d University of Manchester, Sustainable Consumption Institute & Alliance Manchester Business School, Manchester M13 9P,
UK
e THANKS, Amsterdam, the Netherlands
Author accepted version. Please cite as: Bocken, N.M.P., Boons, F., Baldassarre, C. 2019. Sustainable
business model experimentation by understanding ecologies of business models. Journal of Cleaner Production,
208C, 1498-1512 (VSI: Sustainable Circularity)
ABSTRACT
Sustainable business model innovation is about creating superior customer and firm value by addressing societal
and environmental needs through the way business is done. Business models require intentional design if they are
to deliver aspired sustainability impacts. Scant research has been done on ‘ecologies’ of different business models
in order to understand and improve these and create positive impact on the environment, society, economy and
other key stakeholders. Hence, in this paper a novel framework is presented to enable a systemic form of
sustainable business model experimentation. The framework is based on the recognition of three key issues which
have not yet been sufficiently incorporated in the literature on sustainable business models: construct clarity,
boundary setting and uncertainty about outcomes. These concepts are discussed first. Building on earlier work,
the resulting framework incorporates potential side-effects and boundary setting based on the concept of an
‘ecology of business models’. Second, an approach is proposed that could stimulate more profound forms of
sustainable business model innovation: The Ecology of Business Models Experimentation map. Third, the
approach is illustrated through two cases. The approach could help minimize symbiotic dependency on less
sustainable business models; help destroy unsustainable business models by outcompeting them; and maximize
contributions to favourable institutional infrastructures for more sustainable business models. This paper
contributes to research on sustainable business model innovation, design and experimentation by providing a
potential approach for ‘business model ecology redesign’.
----
KEYWORDS: Sustainable business models; business model for sustainability; experimentation; collaboration;
business model design; sharing economy.
HIGHLIGHTS
3 issues in sustainable business model design are identified:
Construct clarity, boundary setting and uncertainty about outcomes
A framework to enable systemic business model experimentation is presented:
The Ecology of Business Models Experimentation (EBME) map
The cases of THANKS and HOMIE are used to illustrate the EBME map
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1. INTRODUCTION
Sustainable business models are currently a major focus in academic literature, and also among business
practitioners and policy makers dealing with the ecological and social impact production and consumption systems.
Yet there is uncertainty about the outcome of business model innovations for sustainability (Mont, 2002; Tukker,
2004; 2015; Lüdeke-Freund & Dembek, 2017). Sustainable business model innovation is about creating superior
customer and firm value through addressing societal and environmental needs (Boons & Lüdeke-Freund, 2013).
To this end, a company should actively seek to create positive societal and environmental value and optimise value
for itself as well as for a wider network of stakeholders, including Society and Environment as stakeholders, thus
optimising value for the ‘system’ (Stubbs & Cocklin, 2008). However, creating ‘shared value’ across stakeholders
is difficult to realise in practice (Porter & Kramer, 2011). Tools such as the Triple Layer Business Model Canvas
(Joyce & Paquin, 2016), Flourishing business canvas (Upward & Jones, 2016) and Value Mapping Tool (Bocken
et al., 2013) have been developed to support a systemic view on sustainable business modelling.
We argue for a more inclusive perspective when experimenting with sustainable business models (Weissbrod &
Bocken, 2017). This follows from considering three key issues: construct clarity, boundary setting and uncertainty
about outcomes. These issues were identified from reviewing literature on sustainable business models and build
on findings in earlier work of the authors in this field (e.g., Boons, 2009; Boons & Lüdeke-Freund, 2013; Bocken et
al., 2014; Boons & Bocken, 2018). We argue that taking these into account in a meaningful way in the process of
(re)developing business models, will increase positive societal and environmental outcomes, as well as financial
viability.
The first issue is construct clarity: there is a lack of clarity concerning the context in which sustainable business
model experimentation takes place and consequently on the sustainable business model construct itself (Boons,
2013; Schaltegger et al., 2016). Business model innovation potentially optimises only specific elements such as
the value proposition, value creation and value delivery, and value capture (Richardson, 2008) rather than
increasing systems-wide impact. This is related to the lack of clarity on what constitutes a business model, which
has been identified in the literature on business models in general, as well as for business model innovation (Zott
et al. 2011; Foss & Saebi 2017; Ritter & Lettl 2018). In the sustainable business model literature the problem is
similar, with the added complication of multiple definitions of sustainability (Schaltegger et al., 2016; Boons &
Lüdeke-Freund, 2013).
The second issue follows from the first one, and concerns boundary setting: since there is no fixed frame of
reference on the context in which sustainable business model innovation takes place, it is extremely difficult to
assess the impact of sustainable business models. In fact, the expected, unexpected and direct and indirect
positive and negative impacts resulting from a business model vary depending on how boundaries are traced
around the system of analysis. Here the lack of construct clarity complicates an adequate assessment of
comprehensive impacts. This issue is not only an academic problem; it relates to expectations of sustainable
business models in practice. This leads into process-oriented interpretations of sustainable business models, in
which boundaries are not given, but rather become defined in the process of business model innovation. Thus,
Boons and Lüdeke-Freund (2013) define sustainable business models as a process of engaging affected
stakeholders to achieve consensus about what impacts should be considered rather than defining key indicators
for impact from the start. This implies that boundaries are drawn in the process of defining, modifying and sustaining
a business model, and implication that resonates with systems theory. This approach allows the inclusion of
rebound effects in assessing impacts. Rebound effects refer to “a behavioral or other systemic response to a
measure taken to reduce environmental impacts that offsets the effect of the measure.” (Hertwich, 2005, 86). A
simple example would be taking the measure of installing energy saving lightbulbs. If this leads users to leave on
lights longer than they used to, then the potential energy saving is offset by a behavioural change instigated by the
measure.
The third issue is a consequence of the first two, and concerns uncertainty about outcomes: since it is difficult to
assess the impact of sustainable business models, concrete outcomes cannot easily be predicted, and thus
implementing a new business model can lead to undesired rebound effects. While recently studies question the
size of rebound effects (Gillingham et al., 2013), the size of such effects depend on what system boundary is drawn
(Sorrell, 2007), leading to uncertainty about outcomes. This relates to the extent to which desired impacts can and
will be managed. For example, in a business model focused on ‘creating value from waste’, waste streams
elsewhere may be sustained rather than reduced (Bocken et al., 2014). Regarding systems boundaries, the work
of Flood (2002) is relevant. His approach allows organizations and stakeholder groups to critically assess their own
system boundaries and those of actors they affect to develop more inclusive ways of dealing with shared problems
and opportunities. We posit that this approach can be fruitfully employed in the process of business model design
and experimentation. This invokes a perspective where innovation is not a form of managerially controlled design
(as is sometimes implicit in the business model innovation literature), but rather a process of collaborative learning
and experimentation (Roome & Louche 2016). In this process of experimentation, the system boundary becomes
a topic of consideration, as it affects who is involved in the process of developing the business model for
sustainability. Often sustainable business model innovation is initiated by a focal firm but will quickly involve other
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stakeholders such as customers, supplier and partners, NGOs, and the government, who jointly shape the new
business model (Bocken et al., 2013; Keskin et al., 2013).
The aim of this paper is to develop and illustrate a framework for sustainable business model experimentation that
addresses these interrelated issues. The framework enables sustainable business models that minimise negative
impact and generate significant positive value for a network of stakeholders, including society and environment,
and not only the firm (Stubbs & Cocklin, 2008; Bocken et al., 2013). Boons and Bocken (2018) present an ‘ecology
of business models’ to create greater awareness of business model interdependencies in business model design.
Building on this, and other work on sustainable business models and experimentation, and insights on changing
interactions and boundaries and rebound effects in business models, this paper explores a novel method to help
design and experiment with business models that create greater positive environmental and societal value overall.
The approach is illustrated with two case companies of start-ups aiming to pursue sustainable business model
innovation.
2. LITERATURE REVIEW
We review the literature on sustainable business models to clarify how the three interrelated issues introduced
above have been dealt with up till now. Section 2.1 deals with the impact of sustainable business models and
uncertainty about outcomes. Section 2.2 is about the sustainable business model construct and boundaries and
Section 2.3 is about ways to develop new business models using (joint) experimentation. Business experimentation
is about businesses exploring the diverse possibilities they could create value from and understanding what works
in which particular situations in a real-life business context (Bocken et al., 2017; 2018b) and relevant as an
approach to deal with the three issues. Drawing on this, in Section 2.4 a conceptual framework is created that could
support sustainable business model design and experimentation.
2.1 Impact of sustainable business models
Sustainable business models arguably hold the promise to deliver ‘systems-level’ innovation (Boons & Lüdeke-
Freund, 2013), but such models need to be designed with upfront intent to deliver the desirable impacts (Mont &
Tukker, 2004). Several categorisations of sustainable business models have been created by academics and
business practitioners ((Boons & Lüdeke-Freund (2013), Bocken et al. (2014), Clinton and Whisnant (2015) and
Wells (2013), Accenture (2014), Bakker et al. (2014), and Bocken et al. (2016)). Building on this work a more
profound understanding is needed about the actual impacts of such business models. Table 1 summarises potential
positive and negative effects associated with sustainable business models and shows that despite the potential
environmental or societal benefits of each innovation, unintended negative consequences are materialise, which,
through greater awareness, may be mitigated.
Business models come with intended and unintended consequences, of which rebound effects are of particular
importance (Hertwich 2005). The size of rebound effects depend on what system boundary is drawn, but in areas
like space heating and personal automotive transport direct rebound effects have been observed across different
studies, indicating that energy savings in one area will lead to ‘energy spending’ in other areas (Sorrell 2007).
Therefore, consumers who are saving money through a car sharing business model, might spend more money
on other ‘stuff’ or flights (see e.g. Chitnis et al., 2013; Verboven & Vanherck, 2016). Second, companies rely on
other business models to sustain theirs. Maxwell et al. (2011) in Verboven and Vanherck (2016) refer to the
necessity for resource intensive infrastructures (e. g. telecommunications) for product service systems. However,
while the boundaries of the business model expand, the total impact might be mitigated if the company chooses
the most sustainable alternatives. The company Tesla for example has been contributing to the market for
electric vehicles through supporting the development of an electric charging infrastructure together with, and
benefitting public and private actors (Wieland et al., 2017). The startup company Riversimple is moving away
from car ownership to access aiming to replace fossil-fuel based car technology with hydrogen-fuel based
technology through its business together with various stakeholders (Wells, 2018; Bocken & Short, 2016). The
business model innovation thus has to be viewed in its wider influencing context (Boons & Bocken, 2018). We
argue that designing better business models requires insight in relevant rebound effects and the potential for
companies to influence these impacts.
Environmental
Social
Economic
1.
Maximise
material &
energy
efficiency
2.
Closing
resource
loops
3.Substitute
with
renewables
and natural
processes
5. Adopt
a
steward-
ship role
6.Encourage
sufficiency
8. Inclusive
value
creation
9. Develop
sustainable
scale up
solutions
Short
definition
Do more
with fewer
resources,
Reuse
materials
and
Use of non-
finite
materials and
Proactive
ly
engage
Solutions that
actively seek
to reduce
Sharing
resources,
knowledge,
Delivering
sustainable
solutions at a
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Table 1 Summary of sustainable archetypes and impacts (adapted from Lüdeke-Freund et al., 2017, based on Bocken et
al., 2014 and Ritala et al., 2018).
2.2 Sustainable business model innovation and boundaries
Boundary setting is essential to any innovation challenge for a business: in which areas does a company want to
innovate and how far can (and should) its impacts reach? Boundaries are also essential in areas such as Life Cycle
Assessment (LCA), a systematic approach to understand and manage an organizations impact on sustainable
development by using a life cycle perspective that can prevent negative impacts from being shifted elsewhere
within the life cycle (ISO, 2016). A limited number of studies have used LCA (principles) to assess the
environmental impact of new sustainable business models (e.g., Goedkoop et al., 1999; Lindahl et al., 2014;
Manninen et al., 2018). However, more work is needed to assess the full impacts of sustainable business models
(Tukker, 2015).
It is almost impossible to draw a clear line on where responsibility of a business lies, especially in the context of
business model innovation, which implies that system boundaries will be redrawn. Critical systems theory (Ullrich,
2003) provides an approach to deal with the complexities of human interaction where system boundaries are an
issue that require ongoing work. It builds on the work of Habermas and Luhmann (1971) which posits that human
beings necessarily reduce the complexity with which they are confronted, by employing system boundaries which
generating
less waste,
emissions
and
pollution
products;
turn
waste
into
feedstoc
ks for
other
products/
processe
s.
energy
sources
with all
stakehol
ders to
ensure
their
long-term
health
and well-
being
end-user
consumption
ownership
and wealth
creation,
inclusive
value
generation
large scale to
maximise
benefits for
society and
the
environment
Innovations
within this
archetype
Lean
manufactur
ing
Demateriali
zation
Increased
functionalit
y
Cradle-
to-cradle
Industrial
symbiosi
s
Extended
producer
responsi
bility
Cleantech
Renewable
energy (e.g.
solar, wind)
Biomimicry
Commun
ity
develop
ment
Biodivers
ity
protectio
n
Choice
editing
Consumer
education
Demand
management
Slow fashion
Frugal
businesses
Collaborative
platforms
Collaborative
consumption
Peer-to-peer
and Sharing
models
Open
Innovation
platforms
Incubators
Slow/ patient
capital
Typical
positive
impacts
Enhance
efficiency
and
improve
resource
use
Cost
savings
Reduces
waste
Turns
waste
into
value/
new
business
lines
Generate
new
revenue
streams
Reduces use
of finite
resources,
waste and
pollution
Supports
long-term
energy
supply
Contributes
to ‘green
economy’
Ensuring
long-term
well-
being of
planet
(e.g.
forests)
and
society
(e.g.
health)
Ensuring
long-term
viability
of the
value
network
Actively
reduce
consumption
Encouraging
community
sufficiency,
sustainable
living
Long-term
customer
loyalty, and
new repair
and service
markets
Sharing
resources,
skills and
knowledge
and distribute
wealth
Leverage
resources
and talents
Create new
business
opportunities
Achieve
scale from
small
sustainability
pilot or start-
up to large
scale project
or business
Create
industry-wide
change for
sustainability
Create
breakthrough
innovation
Possible
negative
side-effects
May
generate
incremental
change
only
May lead to
rebound
effects
May lead
to job
losses
May lead
to
quicker
sales
cycles
and more
material
use
May
sustain
waste
streams
because
‘waste=v
alue’
‘Carbon lock
in’ and
NIMBY
prevent
uptake
Embedded
footprint of
production
(e.g. solar
panels)
Lack of
recyclability
consideration
of (solar-
based)
products
More
product/
service
usage
If not
combine
d with
efficiency
improve
ments, it
may
have
negligible
environm
ental
impact
improve
ment
Potential
price
premium for
consumers
Remaining
niche
because it
goes against
“growth”
principles
If not
combined
with
efficiency
improvement
s, it may lead
to limited
environmenta
l
improvement
May induce
more
product/
service use
due to wider
accessibility
Focus on
scale might
detract from
sustainability
purposes
Risk of
unproven
radical
innovation
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exclude actors, interests and contextual events from consideration. In social interaction, system boundaries are
relevant as they may not overlap completely, or even conflict, resulting in miscommunication and lack of
understanding and legitimacy. Based on this work different strands of theorizing on social systems, Flood (2002)
describes an approach which allows organizations and stakeholders to critically assess their own system
boundaries and those of actors they affect, to develop inclusive ways of dealing with shared problems and
opportunities. This approach could assist in the process of business model innovation, being a multi-stakeholder
and value-stream process, where business boundaries are challenged, new value is created and partnerships are
formed in a process of collaborative learning and experimentation (Kraaijenhagen et al., 2016; Roome & Louche
2016).
In the context of business models, intentional design combined with continuous attention to system boundaries as
employed by stakeholders, is needed to deliver sustainability; and in assessing impact, it is crucial to acknowledge
that business models are intertwined, and their sustainability impact is affected by other business models (Boons
& Bocken, 2018). To this end, Boons and Bocken (2018) introduced the idea of an ‘Ecology of Business Models’
arguing that business models would need to be understood in their wider context:
The shaping of individual business models takes place in an institutional context, which provides rules
that are conducive to certain forms or providing products and services.
Such shaping occurs in the context of other business models
Some of which compete with the new business model, while others are complementary, or even provide
vital inputs for the new business model.
The ecological impact of a business model is difficult to assess as this impact is shaped by the
interaction with other business models.
This eventually determines the material, energy and labour flows associated with the provision of
products and services.
To understand how the provisioning of goods and services impacts on the natural ecosystem a closer
look is taken at a localized business ecosystem rather than an individual business model.
This list was based mainly on a critique of ‘sharing business models’ (Belk, 2014), which feed on the existence of
other (potentially unsustainable) business models. However, it is argued here that this list is also suitable in the
broader business model context, as business models are interdependent by nature. Business model design
considerations are thus influenced by interactions with other business models; the value chains, products and
infrastructures used, sustained and competed with (see Table 2).
Table 2. Ecologies of business models business model design considerations. Adapted from Boons & Bocken (2018)
Business model
design consideration
Examples
Product design
- Design for low embedded carbon footprint (material/ resource use per product)
- Product reusability (e.g. reparability,)
- Product use phase (e.g. energy and water use in the product use phase)
Value chain
- Forward logistics
- Reverse logistics
Infrastructure
- Dependency on existing infrastructures (e.g. buildings, networks)
- Building ‘sustainable infrastructures’ (e.g. electric car charging network)
Business model
dependency
- Dependency on other products (e.g. mobile phones)
- Dependency on existing value chains (e.g. delivery networks)
- Dependency on infrastructures (e.g., public spaces)
Interactions with
existing business
models
- Neutral A and B do not affect each other
- Mutualism growth in A stimulates growth in B
- Symbiosis A benefits from presence of B
- Competition A detracts from growth in B and vice versa
- Parasitism A is harmed by presence of B
- Dominance A controls the resource flows to B, C, D
Rebound effects
- Any unforeseen negative (or positive) effects not yet captured in the above considerations
2.3 Experimentation with new sustainable business models
Business experimentation for sustainability is context-sensitive and aims to either explore the diverse possibilities
that a business could create value from (inside-out view) or understand how context factors pose specific
requirements to new business models (outside-in view) (Lüdeke-Freund et al., 2016: Bocken et al., 2017). It is a
systematic approach to identifying, testing and learning about value creation strategies that could be adopted by a
business (Weissbrod & Bocken, 2017). The label ‘experimentation’ highlights the iterative nature of a process of
trial and error, a reality which is absent from terms such as business model design and business model innovation.
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Business experimentation has originally been developed to create better value propositions for customers in a low
resource/ time/ cost way for start-ups (Ries, 2011; Blank, 2013). Rather than performing a full-scale pilot,
companies would engage in smaller activities such as A/B split testing (e.g. running two different advertisements
to investigate which one gets most traction), mock-up web pages (to test demand for a new service) or focus groups
(Ries, 2011; Osterwalder et al., 2014). Schuit et al. (2017a) applied these techniques to a range of sustainable
start-up firms, pursuing sustainability as part of their business purpose. More recently business experimentation
has been suggested and applied to a sustainable business context as a key capability to transition to a sustainable
business (Antikainen et al., 2017; Weissbrod & Bocken 2017). Chesbrough (2010) also suggested that large
businesses need to experiment with their business models to remain competitive. Such experimentation would
need to take into account sustainability goals to address the world’s most pressing sustainability challenges.
The purpose of experimentation is to test assumptions about the future business; build legitimacy across
stakeholder groups (internal and external) by joint collection and dissemination of information; and have a low
resource, low visibility to others, and low-cost method to do so, in turbulent business environments with increasing
pressures (Miller, 2016; Schuit et al., 2017b). In a business setting, experiments focus on testing ‘hypotheses’
about the potential future business: e.g. what type of customers are interested in a new service and how does the
proposition need to be formulated? (Ries, 2011). While business model experimentation is traditionally described
through a build-measure-learn loop (Blank, 2013; Ries, 2011), it has also been framed as an iterative interplay
between analysis and design (Baldassarre et al., 2017; Keskin, 2015). Keskin (2015) explicitly refer tostakeholder
interactions and design experiments’ while Baldassarre et al. (2017) introduce a ‘talking, thinking, testing’
experimentation loop. Furthermore, according to Keskin (2015) and Schuit et al. (2017a) this experimental interplay
takes place through specific practices of analysis and design.
Moving beyond a focus on start-ups, experimentation is expected to become increasingly important in turbulent
business environments. Recent literature suggests that experimentation building on lean start-up principles of
‘build, measure, learn & pivot, an iterative approach to trialling new business models, could be a useful starting
point for sustainable and circular business model experimentation (Antikainen & Valkokari, 2016; Weissbrod &
Bocken, 2017).
2.4 Research gap and framework
To date, research on sustainable business models has largely focused on conceptualizing sustainable business
models though a strategy perspective (Boons & Lüdeke-Freund, 2013; Bocken et al., 2014; Upward & Jones, 2016;
Joyce & Paquin, 2016). However, work from more than a decade ago (Mont, 2002; Tukker, 2004) argued for the
need to ‘design’ better business models (in particular, product service systems), which has been reiterated as a
research agenda (Tukker, 2015). To achieve the most beneficial environmental and social effects through a viable
business model with a superior value proposition (Boons & Lüdeke-Freund, 2013), the business model needs to
be consciously set up to do so. Yet in a dynamic and complex environment (Eisenhardt & Martin, 2000), this
requires experimentation to ensure long-term business competitiveness (Chesbrough, 2010) and start addressing
sustainability issues as fundamental ways in which business is done (Stubbs & Cocklin, 2008).
2.4.1 The Ecology of Business Models Experimentation map
The Ecology of Business Models Experimentation (EBME) map (Figure 1) brings together the notion of interaction
and influence in product/ service and business model design from Boons and Bocken (2018) and ISO (2016), as
well as insights from sustainable business modelling and experimentation for sustainability (Schuit et al., 2017a,
b).
The EBME map seeks to address the issues of construct clarity, boundary setting, and rebound effects associated
with sustainable business model design identified in this paper as follows. The experimentation process starts with
an input, which could be a new sustainable business idea or a current business model to improved. The
experimentation process starts with an analysis of dependencies with other business models. Here, the purpose
of the firm is stated or reiterated: e.g. what are the aims and how can the business pursue these? (Stubbs &
Cocklin, 2008). The notion of an ‘Ecology of business models’ forms the basis to experiment by analysing and
designing sustainable business models. The relationships between the ‘organisms’ in an ecology are routed in the
fact that they make use of an interrelated set of resources and infrastructure (Boons & Bocken, 2018). This can be
defined in terms of dependencies. To explain, businesses may depend on other products (e.g. mobile phones for
apps), existing value chains (e.g. delivery networks) or on infrastructures (e.g., public spaces) to exist (Table 2).
After the analysis phases, design phases follow, where potential options to modify, destroy or create dependencies
and innovate sustainably through new partnerships are explored. Ultimately, these lead to a revised business
model, put in context within and ecology of business models, which represents the output of the process. It has to
be kept in mind that the experimentation process is iterative nature, meaning that there is constant interplay
between analysis and design based on a set of experimentation practices.
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Figure 1. The Ecology of Business Models Experimentation (EBME) map. Developed from Pfeffer and Salancik (1978);
Boons (2002); Maxwell et al. (2011); Stubbs and Cocklin (2008); Boons and Bocken (2017); Bocken et al. (2013); Ries (2011);
Schuit et al. (2917), and Weissbrod and Bocken (2017). Note. BM refers to Business Model
Table 3. Key questions associated with different steps
Phase
Questions / steps
Relevant sources
Analyse
1. What are the sustainability aims of the business? This question is about the
business purpose in light of which business models it seeks to replace or
‘destroy’ which contribution it wants to emphasise, or symbiotic dependencies
(e.g. on fossil fuels) the business seeks to minimise.
- Stubbs and
Cocklin, (2008);
Bocken et al.,
(2013)
2. To what extent does the business model depend on others and how? This
question helps to identify the key dependencies between the focal company’s
business model and others it depends on? (building on the idea of
interlinkages between business models)
- Pfeffer and
Salancik (1978);
Maxwell et al.
(2011); Boons &
Bocken (2018)
3. What is the nature of the dependencies, i.e., what are the interactions with
those business models? (building on concepts such as competition, symbiosis
and other ecological relationships)
- Pfeffer and
Salancik (1978);
Boons &
Bocken (2018)
Design
4. How can positive value be increased and negative value reduced? The current
value captured, negative value (value missed, destroyed) and potential new
value opportunities are identified here (building on the value mapping tool in).
- Bocken et al.
(2013; 2015)
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Here, an exploration of potential partners also takes place: Who can you
partner up with to create more positive value through your business model?
Experiment
Use activities such as conversational interviews, co-creation sessions, or A/B Facebook or website
testing as practices to experiment by discovering and testing new business model possibilities.
- Ries (2011)
Weissbrod and
Bocken (2017);
Schuit et al.,
(2017a, b)
Step 1: What are the sustainability aims of the business?
The first step is about defining the sustainability aims of the business. Such aims can be defined by exploring,
managing and reconfiguring dependencies through business experimentation - a key idea from the management
literature (Pfeffer & Salancik 1978). It is proposed that dependencies can be destroyed, modified or created:
1. Modify: Reduce dependency on less sustainable business models (e.g. is it possible to use electricity
from renewables instead of fossil fuels within the business model of an electric car sharing service?);
2. Destroy: Seek to destroy unsustainable business models by outcompeting them on their key resources
(e.g. Can we develop up a car sharing service to destroy the car ownership model?);
3. Create: Maximize contribution to favourable institutional infrastructure for more sustainable business
models (e.g. Can we create a platform-based business model to boost adoption of existing car sharing
services?)
These concepts are used in a novel way to frame the company’s purpose or aims (Step 1, Table 3 and Figure 1).
Step 2: To what extent does the business model depend on others and how?
The second step is about identifying the types of dependencies in place from existing infrastructure, products/
services and resources (Table 1). The most profound dependencies relate to existing infrastructures: the fact that
business models are embedded in the same institutional infrastructure. This infrastructure is to some extent a result
of the presence of the particular business models in the ecology. For example, an electric car sharing service is
dependent upon the infrastructure of electricity production and distribution and this context determines the actual
impact. Business models are embedded in a particular context of governance mechanisms through which they
become linked (Iaione, 2016). This notion stems from the observation that dependencies are seldom symmetric.
Given that asymmetric dependency translates into risk and reduced bargaining power, the dependency perspective
on supply chain relations is based on the idea that dependencies need to be managed in a way that reduces risks
and improves stable access to resources at the lowest (transaction) costs possible. Using the purpose and aims
as a basis, the current business dependencies are explored (Step 2, Table 3 and Figure 1).
Step 3: What is the nature of the dependencies?
The third step entails giving a closer look at the dependencies that were identified and determine their nature.
According to Pfeffer and Salancik (1978) and Boons (2002) and Boons and Bocken (2018), three high-level forms
of dependencies are possible. The first is neutrality: when both business models do not affect each other. The
second is competitive dependency, a situation in which business models compete for the same resources, including
time of users. A third form is symbiotic or mutualistic dependency. This occurs when the output of one business
model constitutes an input for another or when the presence of one business model leads to growth in another.
Such dependency occurs for instance between business models that deliver smart devices, the provision of
wireless services, and the designers of software for such devices (apps). Growth in each of these facilitates further
growth in the others. Step 3 in Table 3 and Figure 1 deals with such dependencies.
Step 4: How can positive value be increased and negative value reduced?
While the first three steps are about analysing business model dependencies, the fourth and final step is about
business model design and it is done by exploring how positive value can be increased and negative value reduced,
around the four business model dimensions from the value mapping tool (Bocken et al., 2013), namely value
created, captured, missed, destroyed, and new value opportunities (Step 4 in Table 3 and Figure 1). The different
forms of value are related to multiple stakeholders at the same time, also including society and the environment.
This final design step is geared towards the generation of new business models based on partnerships and
collaborations that foster shared value dimensions for multiple stakeholders across multiple business models. For
example, a web platform to access innovative car sharing services can stimulate sales of individual car sharing
companies; or a partnership between a public transport company and a bike sharing company in cities can increase
the uptake of both services. In this example, negative value is potentially reduced because the combination of bike
sharing and public transport constitutes a viable alternative to the use of self-owned cars for commuting. The result
is an ecology of sustainable business models that represents context, gives a frame of reference for a more realistic
sustainability assessment and ultimately reduces uncertainty about outcomes in the design phase.
The next section will lay out the case studies that were developed to demonstrate the approach in Figure 1.
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3. METHODOLOGY
This paper explores how organisations can design and experiment with sustainable business models to optimise
sustainable value creation for a network of stakeholders, by creating and building on a greater level of
consciousness about the dependencies and interactions between business models. The research objective is
addressed through a case study methodology, which is the preferred strategy for exploratory research on
contemporary issues (Yin, 1994). To gain an understanding of the business experimentation process two illustrative
cases are presented: THANKS and HOMIE. These are also used to explore the application and usefulness of this
the EBME map. The two case companies had gone through multiple experiments for sustainability and are
analysed from two angles:
1) What constituted the process of experimentation? What practices did actors use to explore opportunities
for value creation and capture and how did sustainability enter into those practices?
2) What dependencies with other business models are important for the business model as it unfolded?
The two cases are illustrative in nature and build on various sources: the recollections of the authors about the
process and practices, company data, public data (e.g. company website) and discussions with stakeholders (e.g.
co-founders) to verify the process and practices, based on the logic on cases presented by Thomas (2011). Two
of the authors are co-founders of the start-ups analysed, which provides an opportunity for unusual data access.
This allowed for an understanding of the processes and practices of experimentation as well as the dependencies
with other business modes considered. A limited number of cases may be justified when cases are unusually
revelatory or provide unique access (Eisenhardt & Graebner, 2007; Yin, 1994).
The case approach was retrospective (Thomas, 2011) and investigated whether design and experimentation with
sustainable business models took into account the broader perspective presented in Figure 1. The analysis
consisted of plotting the case company activities, processes and rationales onto the EBME map. The text in section
4 and Figures 3 and 4 were verified with others involved in the start-ups (other co-founder plus the CEO at HOMIE
and a service designer and concept developer for THANKS) for validation purposes. The multiple inputs helped
create a rich picture of the processes of experimentation, taking into account the multiple viewpoints from those
most closely involved with the start-ups.
3.1 Sample of case companies: THANKS and HOMIE
THANKS is a new venture which started in 2014 at Delft University of Technology within the framework of the
Climate-KIC Netherlands. Background research revealed a market opportunity for energy saving solutions focused
on sustainable behavioural change within large office buildings. The objective of THANKS was to develop the
business model for a new venture providing a service to encourage energy saving behaviour at the workplace. The
idea eventually evolved into a business model built around the following concept: empower office workers to make
an impact by making a small donation to NGOs (using the sustainability budget of their company) every time they
perform a sustainable action (e.g. taking the stairs instead of the elevator). This mechanism simultaneously brings
a benefit to NGOs, who receive donations, and to companies, who engage their employees and improve their
public image. In parallel, data about sustainable actions is collected and sold by THANKS to company clients
through a monthly service subscription.
HOMIE is a new venture which started in 2016 as a spin-off of Delft University of Technology. It is also part funded
by the Dutch government (STW Take-off grant). The aim of HOMIE is to provide consumers access to high quality
appliances while stimulating sustainable consumption patterns through a pay per use business model. HOMIE
started with offering customers washing machines on a pay per use basis: washing machines are installed in
customers’ homes for free and they only pay each time they use the washing machine. The company thus adopts
a pure pay per use business model and only charges the customer when the washing machine gets used. A low
temperature wash costs less than a high temperature one to stimulate sustainable consumption. Moreover, paying
per wash aims to make people more conscious about often they wash.
4. RESULTS
4.1 THANKS case
Sustainability aims and starting point
THANKS aims to provide a service to encourage energy saving actions at the workplace, while creating broader
interest and engagement into sustainability issues. Its starting point was an identified market opportunity for energy
saving solutions centred on sustainable behavioural change within large office buildings. This environmental
objective is coupled with the social objective of creating awareness on broader sustainability issues while fostering
healthy practices at the individual level.
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Business experimentation practices
The business model was developed through an iterative interplay of analysis and design phases based on a set of
experimentation practices (Blank, 2013; Keskin, 2015). The experimentation practices were carried out in a series
of three iterations, which gradually saw the initial idea developing into a more structured business model. The first
iteration entailed the following practices: interviewing the energy manager of a company, creating booklets to gather
feedback from twenty office workers, conducting a day of ethnographic observations into an office space,
conducting a creative session with ten office workers, running a brainstorming session. The second iteration
entailed the following practices: digital service prototyping to test the concept, conducting follow up interviews with
ten office workers, interviewing the sustainability manager of one company, interviewing a manager from a non-
profit organization, running a brainstorming session. The third iteration entailed the following practices: physical
service prototyping to test the concept, conducting follow up interviews with four office workers, interviewing five
sustainability managers from different companies, running a brainstorming session. All the practices within these
three iterations were periodically complemented with additional online market research.
Analysis of dependencies and interactions with other business models
During the analysis phases, the experimentation practices aimed at gradually uncovering and understanding
potential dependencies and interactions of the business idea with other existing business models (Boons &
Bocken, 2018). Specifically, the focus was put on dependencies and interactions of the prospective service and
business model aiming to nudge employees into energy saving actions at the workplace. It was progressively
learned that for many companies, energy saving is part of a broader Corporate Social Responsibility (CSR)
strategy, which is a key business model activity to foster long term competitive advantage through employee
engagement and improved public image. It was learned that donations to NGOs are often an important part of CSR
next to all those energy efficiency initiatives that were found as complimentary or in competition with the idea under
development. THANKS started exploring how it could contribute favourably to existing business models (such as
those by NGOs) rather than detracting from these. Furthermore, employee engagement also emerged as a key
activity of the Human Resources department (HR), which is interested healthy behavioural patterns beyond simple
energy saving actions. Hence, THANKS wanted to increase positive contributions within the business. From the
HR’s perspective, tracking sustainable / healthy behaviour provides a financial business case, because such
metrics can be related to health insurance fees for the employees. Finally, NGOs also have a business model of
their own. A large part of their revenue streams relies on company donations but their value proposition to society
and the environment involves as well raising individual awareness. There was a possibility for THANKS to
strengthen the internal business prospects as well as better supporting complimentary business models (NGOs).
Increasing positive and reducing negative value
During the design phases, the experimentation practices aimed at gradually embedding triple bottom line
sustainability into the business model using a value mapping lens (Bocken et al., 2013; Hall, 2011). Specifically,
the focus was put on constructing mutually beneficial interactions amongst the business model of donating
companies, beneficiary NGOs and the new venture being started.
The value opportunity was found in a gap of value missed inside CSR activities belonging to the business model
of companies donating to NGOs. Specifically: such donations aim to foster employee engagement but fall short
here because employees are not directly involved with transactions. In parallel, experimentation activities
highlighted a strong drive from their side to make a sustainable impact on a personal level, presenting an
opportunity to engage them individually. This was achieved by empowering them to donate small amounts from
the CSR budget to NGOs every time they made a sustainable or healthy action (taking the stairs, going vegetarian
for lunch). Consequently, a sustainable value proposition was defined: on the environmental side, measuring and
reporting the impact of employees’ sustainable actions inside office buildings; on the social side, raising
sustainability awareness of employees, empowering them to make an impact and encouraging them to perform
healthy actions on a daily basis; and on the economic side, making a more efficient use of the companies’ CSR
budget (Baldassarre et al., 2017).
Value creation largely builds upon pre-existing CSR processes and related business interactions with NGOs.
Concerning infrastructure, experimentation practices with prototypes highlighted the need for a physical interface
to allow employees making the donations. This point was addressed through the design of a hardware-software
combination based on employee badges and a network of NFC sensors designed ad-hoc in order to partly leverage
onto existing infrastructure and behavioural patterns. This was necessary to foster acceptance but also resulted in
value destroyed, namely the physical resources needed to build the sensor network. Finally, value capture is based
on charging service costs to companies.
Sustainable business model output
The output of the sustainable business model design and experimentation process consisted of the development
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of THANKS - the name for the new venture and related business model. The main feature of the business model
of THANKS is that it is based on a dependency. Without NGOs, this business model could not exist and at the
same time, it strengthens the business model of NGOs and company clients by reinforcing a symbiotic relationship.
The business model of THANKS builds upon the mutually beneficial interaction of these two other business models:
the business model of donating companies and the business model of recipient NGOs in the context of CSR. By
plugging into this interaction with its own business model, THANKS reinforces the mutualistic interactions and
creates two more, namely the interaction between THANKS and companies and the interaction between THANKS
and NGOs. In the first mutualistic interaction, THANKS provides employee engagement and data to companies,
receiving service subscriptions in turn. In the second mutualistic interaction, THANKS gives mission support to
NGOs receiving in turn sales channels to better reach its target customers. This interaction of three business
models (Figure 2) fosters triple bottom line shared value creation, where THANKS and its company clients
represent the economy-oriented stakeholders whereas the employees and NGOs represent society and the
environment. Figure 3 summarises the THANKS case using the EBME experimentation map.
Figure 2. THANKS business model and symbiotic dependencies in a schematic way
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Figure 3. THANKS case using the EBME experimentation map
4.2 HOMIE case
Sustainability aims and starting point
HOMIE started off with an environmental proposition a circular business model that aims to drive sustainable
consumption as well. However, it quickly started to develop a social proposition too by purposely offering affordable
high-quality appliances and also catering for lower-income households. Its customer groups roughly include
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customers who care about sustainability; those looking for affordable options; those who are looking for flexibility;
and those who do not value product ownership and are seeking for alternatives.
Business experimentation practices
The experiments at HOMIE centred around the following high-level work streams: technical prototyping and value
proposition refinement (e.g. advertising experiments, desk research, mailings, washing habit interviews, and pay
per use pricing) to create a fitting customer proposition while stimulating sustainable behaviour (Bocken et al.,
2017).
The first technical experiments were focused on developing a prototype that works, i.e., developing a connected
washing machine that enables a pay per use business model. While the company did not have a direct partner yet,
and mainly focused on testing new potentially ‘risky’ business models for incumbents to stimulate sustainable
consumption and the circular economy, HOMIE decided to buy an existing quality washing machine and ‘hack’ it
to enable pay per use. This meant that for the time being, design for a circular economy (e.g. design for easy repair
and remanufacturing) was out of scope as the company focused on testing the user case and driving sustainable
consumption (see also Manninen et al., 2018). However, through being close to the customer and through its pay
per use business model, it could easily facilitate good use practices, maintenance and repair.
The value proposition experiments initially included workshops and testing of different advertisements to
investigate which value proposition would appeal most to the customer. Variations on advertisement focus (e.g.
saving money, the environment, and combinations) were tested online for best fit with the business model and
customer traction. Furthermore, based on interviews with prospective customers, a pricing scheme was developed
to encourage customers to wash at lower temperatures. For example, a cold wash is significantly cheaper than a
hot wash, to stimulate to stimulated lower temperature washes. By paying per use, it was expected that customers
would also wash less due to increased awareness and salience (Thaler & Sunstein, 2009). While many
experiments of those experiments happened at the same time, each customer received similar interventions as
part of the experimentation process (Table 4). The interventions in Table 4 are aimed at finding out whether the
pay per use business model could actually reduce the number of washes and could stimulate lower temperature
washes. Each customer would go through the same cycle to be able to compare the data and interventions which
are based on behaviour change and sustainable consumption research (Bocken et al., 2018a). In this way, the
impact of introducing a pay per use business model coupled with interventions and the impact on sustainable
consumption can be tested.
Table 4. HOMIE - Sample of customer interventions for each HOMIE customer (based on Bocken et al., 2018a).
Timing
Design
intervention
Description summary
Pre-wash
Interview
Before washing machine installation, customers are interviewed to gain
insight on their washing behaviour.
Month 1 (M1)
Free month
The first month is considered a test month, in which users get a full
month of washing for free.
Feedback M1
No specific feedback. Customers can access their usage information on
the website but this information is not proactively shared.
Month 2 (M2)
Introduce pay-
per-use
The first paid month of washing.
Feedback M2
Introduce
informative
mailing
Feedback received: Washing behaviour basics: Amount of washes,
Temperature, Types of washes
Month 3 (M3)
The second paid month of washing.
Feedback M3
Comparison
current vs
previous month
Feedback received: Washing behaviour basics + Comparison washing
behaviour (Individual compared washing behaviour between M1 and M2)
Month 4 (M4)
The third paid month of washing.
Feedback M4
Introduce social
comparison
Feedback received: Washing behaviour basics + Comparison Washing
Behaviour + Social Comparison (Individual washing behaviour compared
to average of your user type)
Month 5 (M5)
The fourth paid month of washing.
Feedback M5
Introduce goal
setting
Each user receives specific & personalised washing goal, aiming to
lower the number of washes and total energy consumption.
Analysis of dependencies and interactions with other business models
During the experimentation phase, the scope of HOMIE’s business experimentation practices became more
focused, because of the lack of time and resources to test everything. HOMIE’s focus in the first year was on
investigating whether the pay per use business model works in general (with customers, practicalities etc) and
whether it would drive sustainable consumption patterns. Because HOMIE is a start-up, it could not yet influence
all aspects like product design, which is done by large incumbent appliance manufacturers; due to the lack of
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facilities, resources and R&D capabilities to redesign existing appliances, so this is yet out of scope.
HOMIE through its business model now creates parasitic dependency: the business model relies on OEM
manufacturers. Furthermore, although HOMIE wants to challenge existing take-make-dispose business models,
by experimenting with a pay per use business model, HOMIE also keeps in place existing business models by
creating dependencies: it acquires existing washing machines via retailers and manufacturers and develops a ‘pay
per use’ model using these. It also started off using customers’ WiFi networks, creating another dependency.
However, because the WiFi dependency is less reliable, HOMIE is looking into developing its own connectivity with
partners.
Increasing positive and reducing negative value
During the business model design phases, experimentation focused on driving sustainable consumption patterns
(Table 4). The experiments started with interviews to test user behaviour, followed by a free month, then introducing
the pay per use model, followed by providing informative mailings, social comparisons, introducing goals, and then
multiple feedbacks simultaneously. By using knowledge from sustainable design and behaviour change literature
on effective interventions (e.g. Bhamra et al., 2008; 2011; Thaler & Sunstein, 2009) interventions were gradually
introduced starting with relatively basic ones (information) to more ‘advanced’ ones (social comparison and goal
setting) after having introduced pay per use. Each customer is compared against him or herself hence the
months of intervention correspond to when the customer enters their contract with HOMIE.
Information about user behaviour is regularly collected to verify the sustainability outcomes of the business model
and interventions. An earlier conference paper demonstrated that the pay per use business model led to more
sustainable consumption patterns, but the introduction of mailings showed mixed effects (Bocken et al., 2018a).
Through its business model experimentation and close contact with the customer HOMIE also found out that
customers have a lot of questions about how to do the laundry. This initial value missed was turned into an
opportunity: the close ties with the customer and mailings gives the company the opportunity to create more positive
impact and reduce negative impact by giving advice on the laundry process. In some cases, the aspired
sustainability benefits led to (accidental) misuse of the washing machine a form of value destroyed. Customers
sometimes overloaded machines to reduce the number of washes (saving money and the environment), which led
to failure of the machine. However, this knowledge was used in later mailings to educate customers.
Although HOMIE does not design and (re)manufacture, it does try and influence longevity of the washing machines
in other ways. As a form of maintenance and cleaning the washing machine, HOMIE started to offer a free 90 º C
wash once every so often to improve the longevity of the washing machine. In this way, HOMIE seeks to influence
product longevity and further stimulate sustainable behaviour.
Sustainable business model output
The (ongoing) output of the experimentation process is the startup HOMIE, a business operating a business-to-
consumer pay per use business model for home appliances in the Netherlands installing appliances in people’s
homes for free. While the business has largely focused on building its own infrastructure and capabilities, the next
stage of the business consists of partnering. HOMIE is exploring partnerships with washing machine manufacturers
(to streamline the business model and influence product design), tracker designers (to reduce reliance on customer
WiFi), banks (financing and facilitating pay per use) and various other societal actors (e.g. building societies,
student associations etc.). The partnering work is the important next phase of experimentation in the business
model to optimize positive value creation in the start-ups network. Figure 4 summarises the HOMIE case using
the EBME experimentation map.
15
Figure 4. HOMIE case using the EBME experimentation map
5. DISCUSSION AND CONCLUSIONS
Sustainable business models are a popular theme in academic literature as well as with business practitioners and
policy makers (Lüdeke-Freund et al., 2016; Lüdeke-Freund & Dembek, 2017). While experimentation has been
recognised as an important trigger for climate change transitions (Hildén et al., 2017) and is an important feature
of transitions research (Schot & Geels, 2008), the research on experimentation with new sustainable business
models with business as the driver for resolving societal and environmental issues, is still emerging (e.g. Antikainen
et al., 2017; Bocken et al., 2017). Moreover, the impact of ‘ecologies of business modelsand the wider context in
which business model innovation takes place to create positive impact is poorly understood (Boons & Bocken,
16
2018). This paper presents a novel framework, “The Ecology of Business Models Experimentation map” to enable
a systemic form of sustainable business model experimentation and create positive impact across networks of
organisations. Through its orientation on extended experimentation rather than instantaneous design, the proposed
framework resonates with a processual perspective on sustainable business models, i.e. the sequence of events
through which a firm, in conjunction with other actors, shapes the business model along a shared definition of
sustainability (Roome & Louche, 2016; Schaltegger et al., 2016).
We argue that the three key issues identified in this paper - construct clarity, boundary setting and uncertainty
about actual outcomes - need to be at the heart of such an experimentation, or learning process (Roome & Louche,
2016). Building upon Flood (2002), we provide guidelines to support practitioners in the process of experimentation
and joint sustainable business model innovation:
1. As a multi-actor process of shaping future outcomes, individuals (representing organisations) involved in
the joint development of a sustainable business model need to critically assess the system boundary they
(implicitly) draw on when thinking about their activities. This means that they need to clarify their notion of
the business model and see how it aligns with other stakeholders. This requires mental models and
framings to deal with such complexity. Our approach in Figure 1 provides such a mental model: building
on an ecology of business models it serves as a tool to acknowledge and work with this complexity.
2. As a multifaceted process, involved actors need to develop ways of integratively working on and
periodically assessing the evolving business model in terms of efficiency, effectiveness, value created,
and fairness. This includes the precise definition of these terms, i.e. they need to find joint understandings
of value created, fairness, efficiency and effectiveness. This relates to work on sustainable business
experimentation (Weissbrod & Bocken, 2017) which calls for regular ‘check-ins’ to understand whether
key sustainability goals are still being met through the evolving business model innovation process. The
EBME experimentation map may be used for such joint assessments.
3. As a process in time, involved actors need to be aware of the relevance of timing of activities, as well as
the reality that it takes time to develop, and some involved actors have a different sense of time that needs
to be accommodated. This relates in part to different time horizons: it may take a longer time for customers
to adopt new behaviours than firms are used to in assessing the viability of an offering. It also relates to
the fact that involved firms may have different investment timelines. In that case, the boundary work
involved in business model experimentation is about findings ways of accommodating such differences.
The questions below (also in Table 3) provide a starting point to reflect on the fundamentals of the business and
interactions with others, while helping to identify ways to collaborate with stakeholders and improve sustainable
value creation systematically.
1. What are the sustainability aims of the business? This question is about the business purpose in light of
which business models it seeks to replace or ‘destroy’, which contribution it wants to emphasise or create,
or negative dependencies the business seeks to modify or minimise.
2. To what extent does the business model depend on others and how? This question helps to identify the
key dependencies between the focal company’s business model and others it depends on.
3. What is the nature of the dependencies, i.e., what are the interactions with those business models? This
step considers neutrality, competition and mutualism as overall dependencies.
4. How can positive value be increased and negative value reduced? The current value captured and
created, negative value and potential new value opportunities are identified here. An exploration of
potential partners also takes place: Who can you partner up with to create more positive value through
your business model?
Taken as reflective steps in a multi-actor experimentation process, these questions provide an input to sustainable
business model development.
The illustrative cases of THANKS and HOMIE shed light on how such questions are addressed in the business
model development processes of two start-ups. Through experimentation and greater awareness of the ecology of
business models in which they are situated, they are able to contribute to greater levels of value creation. Whereas
start-ups have been identified in the literature who take such an integrative approach, such as Riversimple (Wells,
2018), the framework in Figure 1 could support future development of sustainable business models with greater
overall sustainable value creation.
5.1 Limitations and future research
A small number of start-up cases operating only in the Dutch context constitutes an empirical limitation of this work.
Furthermore, the EBME map has only been used as an illustrative tool to map cases retrospectively and as such
provides an illustration of the approach rather than a compressive assessment of its merits. In future research, it
could be explored and applied as a brainstorming or action-research type of tool and method to support redesign
of ecologies of business models and businesses more generally. Although challenging, this could be done as a
multi-actor approach, common in transitions research (Kemp et al., 2007), involving stakeholders from adjacent
businesses, but also public actors to explore barriers and opportunities. Finally, the EBME map was initially
developed with an environmental focus in mind because issues such as rebound effects have predominantly been
17
explored from an environmental perspective. While the cases also include examples of practices of social
sustainability, the approach could be extended to more prominently include social impacts.
To conclude, this work aims to contribute to research and practice on sustainable business model design and
innovation. Perhaps analogously to the work on life cycle thinking and assessment, it calls for a broadening of
systems boundaries and taking a systems-view on such innovation. The framework and process presented in
Figure 1 would provide just the starting point to achieve this. Future work can expand on the frameworks and
processes explored in this paper to develop better business models with a wider positive societal and
environmental impact. This calls for further research on sustainable business model design and experimentation
taking a systems-level perspective. While the topic of experimentation is not new and has been discussed in
business (Chesbrough, 2010) and entrepreneurship literature (e.g. Blank. 2013), transitions research (e.g. Schot
& Geels, 2008) and as an overall approach to start necessary climate change mitigation transitions (Hildén et al.,
2017), this paper has provided an experimentation approach with a central role for business actors in sustainability
transitions. Fruitful future research avenues could be the integration of this work with transitions management
literature, which has proposed the embedding of a business model perspective to elucidate the dynamics of
innovation (Sarasini & Linder, 2018). Finally, it is recommended that sustainability assessment, design and
experimentation work take into account ecologies of business models to create systems-level change for
sustainability.
ACKNOWLEDGEMENTS
We would like to thank Hidde-Jan Lemstra and Colin Bom for their support with the HOMIE case; We would also
like to thank Diego Mazo and Vittorio Garofano for support with the THANKS case.
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... Additional complexity arises due to CBMs inherent uncertainties (Antikainen and Valkokari, 2016;, doubts on the quality, quantity and timing of product returns if the new model incorporates reverse logistics, uncertainties in customer perceptions on used or remanufactured products, or even uncertainties associated about safety and risks of these circular products , unknown residual product value or the impact of future legislation (Guldmann and Huulgaard, 2020). To cope with these uncertainties, business model experimentation and other methods of quick learning are recommended (Bocken et al., 2019a, though also require firms to be equipped with necessary skills. Additional challenges to incumbent firms are the internal resistance to change of organizational (linear) inertia (Bashir and Verma, 2019) and the complexities of managing a current (linear) BM while developing a new (circular) BM, i.e. organizational ambidexterity (Foss and Saebi, 2016). ...
... Regarding the inherent CBMI uncertainties , this topic should build on available CBMI literature as it is field-specific. On the subject of systemic change as an effect of the process, SBMI literature has explored this topic conceptually ( Bocken et al., 2019a ;Bocken and Short, 2016 ;Boons and Lüdeke-Freund, 2013 ), however, we did not identify empirical research on the topic. ...
Thesis
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... Bocken, Schuit, and Kraaijenhagen asserted that key activities of the firm should focus on the execution of the firm's value proposition [13]. is means that a company should not promise its esteemed customers what it cannot deliver, as delivering on its value proposition is what differentiates it from its competitors in the market, giving it an edge over other industry players. Bocken, Boons, and Baldassarre support the above claims, citing that the key activities of the business are the actions, processes, programs, or projects undertaken by the firm to deliver on its outlined value propositions to the customers [14]. As such, a firm's management must question various aspects of its operations and activities to ensure that each one of them delivers on the promises set for the firm. ...
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... It is a blueprint of the organisation's plan and sets the course for success. In academic literature, industry and policymakers focus on the sustainable business model to ensure it aligns with the realities [10]. In addition, a business model influences perceptions of firm resources such as knowledge, skills, and abilities to establish the appropriate resources, stakeholders, and issues to be tackled for growth [11]. ...
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... By using smart data, this development has to be exploited for anchoring new, sustainable business models [84]. Designing better business models requires insight into rebound effects and the potential for companies to influence sustainability impacts regarding environmental, social, and economic segments [85]. The main challenges in building the sustainable business model are the balance between profits, social and environmental benefits, reconfiguration of resources and processes for new business models, integration of technologies with business model as a multidimensional and complex task, and usage of the existing business modeling methods and tools [86]. ...
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... Therefore, the fourth step shows how to create a Sustainable Business Model based on customer journey projection. Several authors mention and use the Sustainable Business Model (Bocken, 2021;Bocken et al., 2018) as a guide in creating a model, which includes the elaboration of the values of all stakeholders in the environment, which is actually the goal of product-service systems. The starting point in model development should be a clear classification of the type of business model that the company plans to develop. ...
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Chapter
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Business models—the underlying structures of how companies create, deliver and capture value—form the engine of our economy. They determine the speed at which economies grow, and the intensity at which our resources are consumed. They determine the number and type of jobs in our cities, the provenance of the products we buy, and the price of the food we eat. They contribute to the quality of our communities and our lives.
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Business model innovation is increasingly seen as a means to promote sustainable forms of production and consumption, having been linked to technological innovations in electric vehicles and the circular economy. Business models are an organisational phenomenon that concern focal firms and their networks. However, there is no theory of the firm in transition theory, such that the role of business model innovation in wider transformative processes is unclear. This paper aims to redress this issue by combining a business model perspective with core concepts and constructs from transition theory. We elucidate sources of change and inertia that issue from new and existing business models, illustrating our arguments by focusing on mobility services, which have the potential to radically transform road transportation via new business models. We derive new lines of inquiry that can be used to examine the dynamics of business model innovation in the context of sustainability transitions.
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The circular economy (CE) can be a driver for sustainability and CE can be promoted and supported by the creation of new and innovative business models, which embed CE principles into their value propositions throughout the value chains. This study focuses on the environmental value propositions of the CE business models. The term environmental value proposition refers here to an absolute value being a promise of environmental improvement, which a company provides to the environment by its impacts throughout the whole value chain. The aim of this study is to outline a framework for evaluating the environmental value propositions of CE business models. The framework consists of an environmental value propositions table (EVPT) and a step-by-step approach towards an evaluation process. The framework was tested in three CE business model cases. The outlined framework enables a better understanding of circular economy principles, combining them with the environmental value proposition. With the framework, companies can plan and design new CE business models or they can verify intended environmental benefits and analyse their contribution to sustainability. The biggest challenges, when applying the framework, were related to the estimation of environmental benefits gained from the environmental value propositions at the system level. In the future, intensive scientific work should concentrate on developing environmental assessment methods specifically for companies developing new CE business models.
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In this study, we examine the diversity of sustainable business models adopted by the largest global corporations — those listed in the S&P 500 index — over the period 2005–2014. We examine press release communications during this period, which represent public data about business-relevant events. We expect that examining this communication can reveal longitudinal patterns in the adoption of sustainable business activities and models. Empirically, we utilize academic and practitioner expert panels to build a set of keywords across nine sustainable business model archetypes and utilize automated content analysis to examine the breadth and nature of a firm's sustainable business activities and practices. We find evidence of the increasing prominence of different types of sustainable business models over time. In particular, the results show that large capitalized firms have mostly adopted the environmentally-oriented archetypes, and to much lesser extent the societal and organizational ones.