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INNOVATING BUSINESS MODELS FOR SUSTAINABILITY: AN ESSENTIAL
PRACTICE FOR RESPONSIBLE MANAGERS
Kennedy, S. and Bocken, N.
Reference:
Kennedy, S., Bocken, N. 2020. Innovating business models for sustainability: an essential
practice for responsible managers. In: Laasch, O., Jamali, D., Freeman, E., & Suddaby, R.
(2019, forthcoming). The Research Handbook of Responsible Management. Cheltenham:
Edward Elgar.
ABSTRACT
Business model innovation for sustainability offers responsible managers a practice that
enables the (re-)consideration of how they care for and deliver value to stakeholder
constituents, and deliver positive solutions to key sustainability challenges such as climate
change, biodiversity and poverty. In this chapter we seek to provide an overview of key
themes within the field of business model innovation for sustainability in relation to
responsible management. In particular, we give consideration to conceptualisations of
business models for sustainability, identification of patterns of business model components,
understanding the innovation process, unpacking the innovation challenges, and providing
tools and frameworks. Based on this overview we offer three opportunities for responsible
management research to further help responsible managers to innovate business models for
sustainability; (1) developing context sensitivity to connect business models to the needs of
socio-ecological systems; (2) enhancing approaches to experimentation through new tools
and frameworks, and; (3) investigating new ways of innovating business models for
sustainability through changing components of value proposition, creation and capture.
KEYWORDS: Business model innovation; Business transformation; Experimentation;
Responsibility; Sustainability; Sustainability transition; Systems Thinking; Tools.
INTRODUCTION
In the new geological epoch of the Anthropocene, human activity is key to the future health
and wellbeing of our Earth systems (Steffen et al, 2018). Yet in 2017, over 15,000 natural
scientists from across the globe gave the second warning to humanity about the plight of our
ecological systems (Ripple et al, 2017). Their warning; we have failed to significantly
address ecological challenges and are not taking “the urgent steps needed to safeguard our
imperilled biosphere” (p. 1026).
The global ecological crisis has not gone unnoticed by managers. It is sparked a new ‘green
revolution’ driven by normative reasons for action in response to the ecological destruction,
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but also by instrumental reasons of a better way to do business (Nidumolu et al., 2009).
Innovation is at the core of this revolution, and is the primary vehicle through which
responsible managers seek to discover win-win opportunities to pursue financial,
environmental and social goals (Hart and Milstein, 2003). Innovations in solutions such as
renewable energies, electrification of mobility, green bio-based chemistry and sharing
platforms are all attracting significant managerial attention as essential ways to green their
way of doing business.
Yet, innovations that radically improve environmental performance of firms are rare, as are
those that fundamentally challenge the way our production and consumption systems operate
(Boons et al, 2013; Ritala et al., 2018). Instead, managers tend to favour small revisions to
existing products and services, such as the use of fewer materials and energy, that result in
only incremental improvements to environmental performance (Kennedy et al., 2017).
Worse still, these gains may in reality be outweighed by rebound effects in production or
consumption (Parguel et al., 2017; Zink and Geyer, 2017), leading to no absolute
environmental improvement to our ecosystems.
In response, the concept of business model innovation has recently began to attract much
attention from sustainability management scholars and managers alike and have entered into
popular discourse (Lüdeke-Freund et al, 2016; Massa et al., 2017; Schaltegger et al, 2016a).
By innovating the business model, a manager has the opportunity to reconceive how the firm
creates, delivers and captures value for the organization and its stakeholders (Richardson,
2008). Innovation may go far beyond its products and services, and even force the
reconsideration of a firm's’ governance, ownership structures and agreed purpose. This opens
up the potential for radical improvements to sustainability performance and goes beyond
managers only considering techno-fix solutions to our environmental challenges (Boons et al,
2013; Schaltegger et al, 2016a). Transformations in the business model, like moving from
selling products to selling services, or even ‘outcomes’ (e.g. ‘clean air’ or ‘clean laundry’
rather than air conditioners or washing machines), have been linked to potential gains of up to
50-90%, depending on the design of the new business model (Tukker, 2004).
In this chapter we seek to provide an overview to the field of business model innovation for
sustainability in relation to responsible management. Responsible management focuses on
the duty of care that ‘normal’ individual managers need to practice as part of their everyday
jobs (Laasch, 2018b). As a discipline it integrates the three subject areas of; sustainability
(managing socio-ecological systems in relation to their threshold limits), responsibility
(managing relationships with stakeholder constituents), and ethics (managing moral
dilemmas) (Laasch and Conway, 2014). Henceforth, ‘responsible managers’ (Prahalad,
2010) assume responsibility for these three domains and integrate them into their managerial
practices.
While ‘being responsible’ may be a company strategy, it is translated into action by
individual managers. Managers need to apply a locally relevant frame to strategy and
develop the new practices, capabilities, products and services that will operationalise
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corporate ambition (Wright and Nyberg, 2017). Business model innovation for sustainability
offers responsible managers a practice that enables the (re-)consideration of how they care for
and deliver value to stakeholder constituents, and deliver positive impacts to key
sustainability challenges such as climate change, biodiversity and poverty. Responsible
managers may initiate, drive, operationalise and/or eventually scale up new or revised
business models for sustainability. Managerial roles such as marketing, product design and
financing will all have an important bearing on the successful outcome of business model
innovation for sustainability. Henceforth, it serves to decentralise the responsibility for
sustainability within companies away from stand-alone ‘sustainability silos’ (Geradts and
Bocken, 2018) toward an organization whereby all managers are ‘responsible’ (Laasch,
2018a).
Key research themes explored in this chapter include; the conceptualisation of business
models for sustainability (Stubbs and Cocklin, 2008), identification of patterns of business
model components (Bocken et al, 2014; Lüdeke-Freund et al, 2018a, 2018b), understanding
the innovation process (Roome and Louche, 2015), unpacking the innovation challenges
(Rizos et al, 2016) and providing tools and frameworks (e.g., Joyce & Paquin, 2016). Upon
consideration of these themes we seek to offer fruitful directions for both responsible
management scholars and practitioners interested in understanding the role of business model
innovation for sustainability. More specifically we offer three areas for future research; (1)
developing context sensitivity; (2) enhancing approaches to experimentation, and; (3)
investigating new ways to innovate business models for sustainability.
CONCEPTUALIZING BUSINESS MODELS FOR SUSTAINABILITY
A business model seeks to capture the logic of how a firm creates value and the impacts of
doing so (Schaltegger et al, 2016a). This concept has attracted significant scholarly attention
since the mid-1990s as a unit of analysis and way to create explanations of how companies
‘do business’ (Massa et al, 2017; Wirtz et al, 2016; Zott et al, 2011). More recently, business
models have drawn the attention of scholars for sustainable management as a concept to help
analyse how managers can change firm operations to offer increased value to society and the
natural environment. This alternate focus on business models is a welcome counter to a
prevailing bias in the discourse toward techno-fix solutions and striving for ever more eco-
efficiency (Schaltegger et al, 2016a).
Definition. There is no one standard or commonly used definition of business models for
sustainability (for a selected review see Lüdeke-Freund et al, 2016). Scholars constructed
definitions according to activities, processes, building blocks, the concept of value, or by
developing conceptual templates or tools (Lüdeke-Freund et al., 2016). Yet, most definitions
centre on the requirement for managers to consider a broader set of stakeholders beyond
shareholders, and consider creating environmental and social value alongside economic
value. We define business models for sustainability as; how an organization creates, delivers
and captures value for its stakeholders in a way that supports a safe and just operating space
for humanity and all living entities to flourish.
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While much of the terminology is debatable (e.g. just, what should be preserved etc), and
academics call for more cumulative theory work (Dentchev et al., 2018), our definition
combines two core concepts. Firstly, it recognises that sustainability of socio-ecological
systems resides between living within environmental ceilings (Rockstrӧm et al, 2009; Steffen
et al., 2015) and above social foundations (Rawforth, 2012; 2017). For business models to be
sustainable, the outcomes (e.g. cleaner rivers, better connected communities) of their outputs
(e.g. products, waste) should aid the capacity of actors to manage the socio-ecological system
in relation to these thresholds (Walker and Salt, 2002).
Secondly, it utilises the three central components of business models; value proposition,
delivery and capture. These three components are well established in the ‘conventional’
business model literature (e.g. Richardson, 2008; Teece, 2010) and have proven useful to
describe and analyze how a firm creates value. Through purposeful changes to each or all of
these three components, managers may innovate toward a business model for sustainability.
We now address each three components in turn.
The value proposition describes what value is being offered to customers and to all other
stakeholders through its products and services. The value proposition can be seen as the
reason why customers would buy the product or service, and why other stakeholders would
be supportive of the firm's activities. Business models for sustainability offer environmental
and/or social value alongside financial value (Boons and Lüdeke-Freund, 2013), focusing on
how the product or service meets the needs of various stakeholder groups. Managers may
innovate through changing the product or service offering, such as a food company switching
from delivering the value of satisfying customers hunger, to offering products that provide
customers with healthy nutrition.
The value creation and delivery refers to how the firm brings the respective value to the
customer and other stakeholders. Managers need to consider all the aspects that enable the
activities of the firm to be carried out such as the people and resources required, and the
flows necessary for the activities. Innovation may include changing the energy inputs of
manufacturing to using renewables such as solar or wind, or altering how the product reaches
the marketplace by low-carbon transportation. In the increasingly popular area of circular
economy, collaboration is also considered to be essential in creating and delivering new
forms of value (Brown et al., 2019). For example, new partners may need to be identified to
support product take-back and product reuse and recycling, or service providers may need to
be found to support a rental or leasing model (e.g. for transport, maintenance and cleaning).
Value capture asks managers to consider how the firm will retain value and how value will be
distributed between its stakeholders. A business model for sustainability requires firms to
capture sufficient financial value to cover operational costs, but also that financial and
environmental or social value is captured by stakeholders in a fair and equitable manner.
Managers may consider changes to value capture such as altering how it earns financial
revenue to be more inclusive for disadvantaged members of society, or redistributing the
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wealth generated by the firm. From an environmental perspective, managers may seek to
find ways in which the firm can do more ‘net good’, such as planting more trees than they use
for paper production. A final rather fundamental consideration is the ‘growth ethos’ and
whether a manager can spark internal reconsideration of a firm’s growth goals. For example,
can ‘infinite’ growth based on consumerism and planned obsolescence be questioned
(Bocken and Short, 2016; Raworth, 2017), and can the manager consciously consider which
‘unsustainable product or service’ it is replacing through its business purpose (e.g. replacing
fossil-fuel cars with hydrogen fuel ones; Wells, 2018)?
Business Model Patterns. Much scholarly attention has focused on understanding the
configurations of the components forming business models for sustainability (Bocken et al,
2014; Lüdeke-Freund et al, 2018a). This work has sought to identify patterns in how
business models for sustainability operate in order to create classifications. These
classification or ‘archetypes’, can themselves be used by responsible managers to inspire
innovation or used within the innovation process to aid idea generation of a new sustainable
business model. Since initial seminal categorisations on Product Service Systems (PSS;
Tukker, 2004) and, later, business models for sustainability (Bocken et al., 2014), several
reports have started to develop business model for sustainability frameworks for managers to
use (e.g., Clinton and Whisnant, 2014; Lüdeke-Freund et al., 2016). These frameworks have
been extended to offer managers more specific guidance in fields like circular business
models (e.g. Bocken et al., 2016; Lüdeke-Freund et al., 2018b) and sharing business models
(Laamanen et al., 2018; Ranjbari et al., 2018).
MODES OF INNOVATING BUSINESS MODELS FOR SUSTAINABILITY
Managers may innovate a business model in four principal ways; creation, extension,
revision, and termination (Cavalcante et al., 2011). Indeed, business model innovation may
be more incremental (e.g., and adjustment or adaptation) or radical (a full redesign) (Ldeke-
Freund et al., 2016) and challenge only one or multiple building blocks of a business model
(Osterwalder & Pigneur, 2010).
Firstly, a manager may choose to terminate a dysfunctional business model. Termination
may imply the closing of a business unit or indeed a complete company. Traditionally
managers would take this decision based on financial considerations of unprofitability, cash
flow struggles or inadequate return on assets employed. Few management studies have yet to
considered when and how managers decide to terminate a business model due to its negative
social or environmental impacts (Roome and Louche, 2015). However, emerging research is
developing tools to support such decision-making processes, for instance by formulating an
‘environmental value proposition’ that, in addition to the customer offering, shows the
positive impact the company is intended to have on the environment (or society) through the
way business is done (Manninen et al., 2018). Such tools may help focus direction on new
business models to pursue and old ones to terminate. Other research is exploring conscious
decisions on whether the business would modify or destroy unsustainable business models
and how (e.g., Bocken et al., 2013). Yet, how managers may deal with the ‘internal conflict’
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of competing business models inside an organisation (Chesbrough, 2010) and new
sustainable ones replace olds ones deserves more of a research focus.
Secondly, a manager may seek to extend an existing business model. Extension refers to
adding activities to an existing core that remains unchanged, such as adding product lines or
new services such as product repair. Extensions are incremental adjustments that are low in
risk as the proven functional core of the existing business model is maintained (Luüdeke-
Freund et al., 2016). Such innovations can be seen as ‘greening’ business models, and
largely defensive or accommodative strategies driven by cost and risk reduction (Schaltegger
et al., 2012). For instance, new regulation on extended product responsibility may require
firms to offer customers the service to return used products free of charge.
Thirdly, an old business model can be revised. Revision implies radical changes to how the
business model currently operates (McDermott and O’Connor, 2002). Triggering events such
as new commercial opportunities, new market entrants or new disruptive technology may
spur a manager to reconsider the logic of how it creates value and significantly change one or
more of the core components of the existing model (Cavalcante et al., 2011). Alternatively, a
manager may feel the need for a business model revision as a result of organisational learning
(Achtenhagen et al., 2013). Revisions to business models require questioning the dominant
logic of a firm and hold greater risk than extensions, making them less favourable to
managers (Christensen, 1997).
Finally, a brand new business model can be created. This refers to turning an idea or vision
into a commercialised practice for the first time through the design and implementation of
business model components. This change has a high degree of risk as the business model is
unproven and needs validating (Chesbrough, 2010; Christensen, 1997).
Building upon the common conceptualisation, innovating business models for sustainability
may be defined as innovations that; “create significant positive and/or significantly reduced
negative impacts for the environment and/or society, through changes in the way the
organisation and its value-network create, deliver value and capture value (i.e. create
economic value) or change their value propositions” (Bocken et al, 2014: 44).
Unlocking the Innovation Process. Few management studies have investigated the actual
process through which responsible managers may revise or innovate new business models for
sustainability. Roome and Louche (2016) empirically investigated two longitudinal case
studies of business model revision and offer a process model comprising of four stages;
identifying, translating, embedding, and sharing. In both cases the new sustainable business
model then resulted as emergent outcomes from a transformation process, rather than
sparking the beginning of change within a firm. Schaltegger et al. (2016b) conceptualise a
co-evolutionary process for developing business models that seek sustainability
transformations of markets. The authors use a three step evolutionary process of variation
(search for solutions), selection (elimination of unsustainable business models, positive
selection of sustainable ones) and retention (growth and diffusion of sustainable business
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models) to theorise the necessary interaction between market incumbents and sustainability-
driven niche players to transform the mass market.
Yet, the extent to which the innovation process for revising or creating new business models
for sustainability is different than for traditional business model innovation remains poorly
understood. Likewise, the organisational practices used by managers within this process
continues to be somewhat of a ‘black box’. Many questions remain for management scholars
to pursue, for instance; Does sustainability alter the front-end practices of the innovation
process changing search heuristics to new types of solution sets? (Kennedy et al., 2017); Do
managers continue to use a form of stage-gate approach (Girotra and Netessine, 2013) to
filter business model ideas?, and; Does additional environmental and social checkbox criteria
suffice to guarantee ‘sustainable’ end results? Such questions could be pursued by engaging
with traditional innovation theory, an approach seemingly unfavoured by scholars in the field
who typically have sought to create new theory of business models for sustainability that are
empirically grounded in the phenomenon.
Required Attributes and Information. Early empirical work sought to explore the attributes
and information required to manage business models for sustainability (Birkin et al, 2009;
Stubbs and Cocklin, 2008). Stubbs and Cocklin (2008) employed a dual case method to
identify structural (e.g. processes, business practices) and cultural (e.g. norms, behaviours)
attributes needed to operate a sustainable business model. Structural characteristics identified
include capabilities on sustainability reporting, alignment of performance management
system and internal practices to eliminate waste. Cultural attributes include a community
spirit, sustainability mindset and a long-term focus. Birkin et al (2009) made use of the
theory of constraints as an investigative method into the information necessary for sustainable
business models within seventeen Nordic organizations. The authors identified four classes
of information on which the companies operate and appraise their sustainable business
models, namely mass balance, life-cycle impacts, stakeholders and ecological resilience.
However, more work is needed to assess the impact of sustainable business models
(Manninen et al., 2018) in particular because some of the (positive or negative) impacts play
out on a longer time-frame.
Challenges to Innovating Business Model for Sustainability. Innovating business models for
sustainability is characterised as a challenging and risky process for managers with high
degrees of uncertainty. The consideration of social and environmental dimensions alongside
economic concerns may cause complexity in the innovation process, as managers seek to
provide value on all three fronts (Boons and Lüdeke-Freund, 2013). Ambiguity may also be
high, due to questions such as whether the business model will actually improve
environmental and social performance once all design choices have been made and the
customer behaviour of the product is known. Scholars have identified a range of additional
challenges including; dealing with the absence of ‘green’ supply of materials (Stubbs and
Cocklin, 2008), unsupportive regulatory conditions (Linder and Williander, 2017), managing
conflict with the existing incumbent business model (Stubbs and Cocklin, 2008), lack of
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guiding managerial tools, and added administrative burden to verify green claims (Rizos et al,
2016).
Frameworks and Tools. A practitioner oriented stream of research has sought to provide
managers with frameworks and tools to use for innovating a new business model for
sustainability. Inspired by the popular business model canvas by Osterwalder and Pigneur,
(2010), a number of scholars have developed design canvases specific to supporting the
incorporation of environmental and social considerations (Jonker, 2014; Joyce and Paquin,
2016; Upward and Jones, 2016). Other tools have sought to map the sustainable value
creation opportunities to multiple stakeholders (Bocken et al., 2013), combine business model
innovation with the capital model of integrated reporting (Lüdeke-Freund et al., 2016) or take
a clear multidisciplinary approach by integrating sustainability and design science (e.g.
Baldassarre et al., 2017; Geissdörfer et al., 2016). Moreover, several tools are emerging on
new concepts such as the circular economy, to assist managers in transitioning their business
models to slow and close resource loops (e.g., Achterberg et al., 2016; Nußholz, 2018;
Whalen et al., 2018).
FUTURE DIRECTIONS FOR RESPONSIBLE MANAGERS TO INNOVATE
BUSINESS MODELS FOR SUSTAINABILITY
While innovation of business models for sustainability is attracting the attention of
responsible managers and is considered a promising area of research for management
scholars to improve our general understanding of business models (Massa et al, 2017), our
understanding of the innovation process itself and how business models may effectively
improve the sustainability of socio-ecological systems is far from complete.
We believe there remains much scope for management scholars to help responsible managers
to innovate business models for sustainability. We offer three opportunities for responsible
management research in this area; (1) developing context sensitivity to connect business
models to the needs of socio-ecological systems; (2) enhancing approaches to
experimentation through new tools and frameworks, and; (3) investigating new ways of
innovating business models for sustainability through changing components of value
proposition, creation and capture.
Developing context sensitivity. Revised or completely new business models offer excellent
opportunities for firms to move beyond incremental innovations, and deliver radical
improvements to sustainability performance. However, they will only be effective if they are
developed in way that is sensitive to the local, regional and planetary socio-ecological
systems in which they operate. A new business model may seem more ‘sustainable’ to a
manager if they now can offer value to the customer with a reduced environmental footprint,
but we can only actually understand if this is the case if we know how the socio-ecological
system behaves, its thresholds and the impact of the business model. For instance, a firm
may feel its business model is sustainable by offering a lease model in order retain ownership
and enable the recirculation of materials. However, customers may feel that they have
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increased spending power due to not having pay for the product up-front, and buy additional
products that offset the environmental savings of our business model. Alternatively, our
business model may deliver on its proposed environmental savings, but these may not be
aligned with the environmental space available (e.g. remaining carbon budget), and do little
to move the economic system to within its environmental limits.
One approach to develop context sensitivity is for managers and responsible management
scholars to use systems thinking. Systems thinking posits that socio-ecological systems are
comprised of elements that are interconnected and interact to “produce their own pattern of
behavior over time” (Meadows, 2008: 2). If responsible managers are able to identify system
elements and form an understanding on their relationships, they are then better placed to
make interventions through their business models that make the intended positive change to
the behaviour of the system.
Only a limited number of management studies have yet to use systems thinking to understand
business model innovation for sustainability. Extant research has used systems thinking to
build a conceptualisation of business models for sustainability through system dynamics-
based representations (Abdelkafi and Täuscher, 2016), and has offered empirical insights to
how a responsible manager can use systems thinking to best understand where to intervene
within a system to improve its sustainability (Marshall and Brown, 2003). Yet, work in this
area is sparse and we currently know little on how responsible managers may incorporate
systems thinking into the business model innovation process. For instance, responsible
managers may place more emphasis on finding solutions that support the capacity of other
actors to manage the socio-ecological system in accordance to its ecological thresholds.
We encourage both conceptual and empirical work to provide insight to the process of how
responsible managers may apply systems thinking for context sensitivity business models and
enact on understandings of how socio-ecological systems behave. Management scholars may
also help responsible managers apply systems concepts such as system delays, self
organisation and emergence into their new business model creations through provision of
new innovation tools. To achieve this, we invite responsible management scholars to look at
integrating insights from natural and social sciences to help build and understand context
sensitive business models. Insights from the natural science are vital to both understand the
effects on the environment, but also to draw inspiration from nature for innovation through
biomimicry. The social sciences can similarly offer much knowledge to the innovation
process, including insights into how people interact with products and services, and through
what functionality their needs may be satisfied. The research challenge is to find workable
combinations within the innovation process, whereby complexity is leveraged rather than
overwhelming managers.
Enhancing approaches to experimentation. Experimentation is essential to allow responsible
managers trial new business models for sustainability, validate ideas to change components
of value proposition, creation and capture, and essentially find out which configuration works
best (Weissbrod and Bocken, 2017). Through experimentation responsible managers gain the
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insights and confidence needed to make the decisions to fully revise old business models or
replace them with new ones. Yet, there is currently little research on the type of
experimentation that is needed by responsible managers pursuing sustainability transitions:
What are they testing and what insights and certainty are they hoping to receive from the
testing?
One important area for experimentation of business models for sustainability is likely to be
value capture. Responsible managers will want to gain insight that their newly innovated
business model achieves the desired positive impact. Developing context sensitive
understandings is again key, in addition to understanding how new business models for
sustainability may influence former dominant models offered by the organization or other
actors within the industry (Wells, 2018). Experimentation may help provide responsible
managers with insights to mitigate potential negative rebound effects (Zink and Geyer, 2017),
and to understand the inclusivity and scale of outreach that the model may achieve.
Moreover, experimentation may offer responsible managers answers to how they may be able
to scale-up the positive impact of new business model designs (Yunus et al., 2010).
New methods and tools are needed that focus on supporting responsible managers to
experiment with business models for sustainability (Antikainen et al., 2017; Weissbrod and
Bocken, 2017). Research is beginning to offer a variety of tools ranging from ‘sustainable’
business model canvases (Jones and Upward 2014; Joyce and Paquin, 2016), conceptual
templates (e.g. Nußholz, 2018), physical game-based tools (Whalen et al., 2018) to
experimentation approaches e.g. based on ‘lean start-up’ thinking (Antikainen et al., 2017;
Weissbrod & Bocken, 2017). Yet, much more collaboration is needed between responsible
management research and practice is needed to develop tools that will be both useful and
utilized to responsible managers. Many tools currently remain unused (Baumann et al.,
2002), while others lack rigorous ‘user testing’ with responsible managers in their
development (Bocken et al., 2019).
Investigating new modes and forms of innovating business models for sustainability. Most
extant studies on business models for sustainability have been conducted by responsible
management scholars engaged with considering the natural environment aspects of
sustainability (Schaltegger et al, 2016a). There remains an excellent opportunity for
scholarly integration with the field of social innovation, that has largely remained distinct and
separate (Seelos and Mair, 2005; Yunus et al., 2010). Merging of the fields may lead to the
emergence of new conceptualizations of business models for sustainability and the discovery
of unique ways of innovating business model components.
Moreover, it is increasingly recognised that a completely new forms of business are required
that challenge the current economic paradigms of ‘infinite growth’ (Raworth, 2017; Wells,
2018). Responsible managers are being challenged to think more radically toward innovating
business models with strong sustainability benefits and are capable of overthrowing
redundant old ones with negative social and environmental impacts. ‘Slow consumption’ and
sufficiency business models is a promising area of research and practice, currently
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challenging business-as-usual models across multiple industry sectors. Sufficiency business
models have already manifested themselves in the form of ‘premium models’ such as in the
fashion industry whereby higher prices are charged in return for good quality materials and
life long warranties. ‘Frugal design options’ that reduce overall resource use across the
product life cycle from raw materials usage to manufacturing and product usage are options
pursued mainly in developing and emerging countries (Bocken and Short, 2016; Lüdeke-
Freund et al., 2016), but could also serve as an inspiration for innovation in more developed
economies.
The diffusion of service models, that move away from ownership to offering access and
performance of the product instead (Tukker, 2004), have gathered pace entering into markets
such as mobility, washing machines and lighting. Developed economies are already
dominated by the service sector, accounting for 70% of the value added in Europe (OECD,
2019), yet extant empirical studies on innovation of business model for sustainability are
currently dominated by the investigation of firms that create and manufacture tangible
products. Critical differences to product-centered models, including dependency on materials
and energy, and the potential indirect environmental and social effects (Rosenblum et al.,
2000) mean that our understandings developed through studying manufacturing firms may
not be directly transferred.
Consequently, we invite scholars to give more attention to the service sector, and pure service
models to unlock the innovation process and explore to what extent innovation practices may
be differ from product centered counterparts. Furthermore, sufficiency driven business
model innovations focused on slower forms of consumption are only likely to become
mainstream and scale through systems level change and collaboration at the micro
(consumers), meso (companies, cities) and macro (national, policies) levels. Hence,
responsible management researchers need to build on the body of emergent work by
understanding the interlinkages between business models and how transitions in society occur
(e.g. Sarasini & Linder, 2018).
CONCLUSION AND CALL FOR ACTION
In this chapter we present an overview of how responsible managers may innovate business
model for sustainability. Responsible management scholars are finding the business model
concept a useful unit of analysis to understand how a business operates and delivers value to
its customers and wider set of stakeholders. Studies have ably conceptualised business
models for sustainability and have gained empirically grounded insight to configurations of
business model components for value proposition, creation and capture. This work has
served responsible managers as a foundation on which they may generate ideas to redesign
business models for sustainability or formulate novel new ones.
Responsible management scholars have examined the managerial practices of innovating a
business model for sustainability in order to unlock the steps that need to be taken (Roome
and Louche, 2015) and the challenges that managers face (Rizos et al., 2016). Studies have
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sought to help responsible managers navigate the process by providing tools and frameworks
(Lüdeke-Freund et al., 2016) that invite business model design to deliver economic,
environmental and social value.
Yet, despite the growth in scholarly and managerial engagement with innovating business
models for sustainability, we currently do not see evidence of positive impact toward
sustainable socio-ecological systems (Barrett et al., 2018; Steffen et al, 2015). To address
this challenge, we have offer three opportunities for future research and practice in this
chapter; (1) developing context sensitivity; (2) enhancing approaches to experimentation,
and; (3) investigating new ways to innovate business models for sustainability. We believe
that these should be pursued by interdisciplinary approaches, that integrate scientific fields
such as business management and environmental science, in collaboration with practice of
responsible managers.
Finally, we urge that innovating business models for sustainability should not be the sole
preserve of managers with functions directly related to ‘innovation’ within an organization,
such as product design. Instead, we encourage all responsible managers within organizations
to consider acting as sustainability ‘intrapreneurs’ (Geradts and Bocken, 2019) and discover
how they may enact change to business models for sustainability.
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