Business models – or, to put it more simply, how businesses make money – are undergoing a transformation. Traditionally, business models assumed that resources were in virtually limitless supply. However it’s increasingly becoming clear that we need to rethink this approach. Innovative companies are looking at new ways of doing business that integrate sustainable principles into their underlying structures.
In a recent article we looked at new approaches to business models, based on experience within our own Network and a report from UK think tank SustainAbility. This report identified 20 different business models emerging around the world. We’ve done our own research and here are five new business models we love in New Zealand, using categories from the SustainAbility report:
1. Shared Resources
Businesses based on the concept of ‘shared resources’ enable customers to access a product, rather than own it, and use it only as needed.
Some great examples in New Zealand include Rentaholic (a person-to-person rental website); Yourdrive (person-to-person vehicle rental service); Swap or Trade It (website facilitating trading of goods or services between people); and cityhop (car share company).
An online rental marketplace, Rentaholic was conceived amidst a growing awareness of excessive consumption.
“It's about making the most of our assets, extending the life cycle of products, lowering consumption and strengthening community ties," says Deirdre Dawson, Chief Rentaholic.
2. Differential pricing & microfinance
These models improve access to finance and resources for low-income earners. Differential pricing models charge more to people who can afford to pay, in order to subsidise those who can’t. Microfinance is the provision of small loans to low-income borrowers who don’t have access to a traditional bank account.
Little Sun lamps are a high-quality, solar-powered LED lamp that have been created to benefit off-the-grid communities and create local jobs in the Pacific region. Little Sun, whose NZ partner is Moxie Communications, is an effective way to help the thousands of people in the Pacific region who have no access to light.
This involves developing innovative ways to source materials from recovered waste, creating entirely new products.
Examples from New Zealand include: Rekindle (makes furniture and other useful objects from waste wood, developing employment opportunities for young people at the same time); Last Seen (upcycles waste textiles into well-designed homeware); NZ Post Group (upcycled its old uniforms into designer apparel for resale); and Lovenotes (making stationery from waste paper).
Amanda Judd, founder of Lovenotes says, “rematerialisation has redefined our business at every layer of its being. It has changed the materials we use, but also it has changed our business model from being one based on products and consumption, to one based on service and reusing. This creates a completely different experience for the user; it's empowering, participatory, and tangible in terms of the good being done.”
4. Innovative Product Financing & Product as a Service
Innovative product financing refers to businesses that cater for consumers who want to rent an item that they can’t afford or don’t want to buy outright. Related to this, ‘Product as a Service’ models are those where consumers pay for the service a product provides without having the responsibility of repairing or disposing of it.
A great New Zealand example is: Vector’s SunGenie (consumers pay a fixed monthly cost for solar panels while Vector owns and maintains the system).
5. Closed Loop production
In closed loop models, the material used to create a product is continually recycled through the production system.
We love Inzide, whose Interface carpet tiles are manufactured from old fishing nets.
“At Inzide, we use nature’s simple principle, ‘waste = food’. Our waste, as well as others such as old fishing nets, is the ‘food’ we use to make our carpet tile. This provides a constant source of raw materials. Our ‘ReEntry’ product stewardship scheme which is acknowledged by the Ministry for the Environment, takes any Interface carpet tile back at the end of its life,” says Robb Donze, Inzide Managing Director.
If you’re an SBN member and you have an innovative business model we’ve missed, please let us know so we can add it to the list.
Meanwhile, if some of the sustainability terms in this article don’t quite roll off the tongue, you can check out their meaning in our glossary of sustainability.