STRATEGY – 4 breakthrough business models for the coming decades

14 February 2017

The brains behind the Triple Bottom Line and People, Planet, Profit share the frameworks for success in the next few decades. Worth taking note.

John Elkington is a world renowned sustainable business guru. He co-founded the award winning SustainAbility consultancy in the UK. In 2008 he founded Volans. Last September Volans released a new report. It argues that sustainable development must move beyond issues of trust and reputation. It is now vital to long-term competitive advantage, security and survival.

The report states: “If capitalism is to survive and thrive, today’s extraordinary must become tomorrow’s ordinary. One key question: How quickly will this happen? Our message in this report: Quicker than most of us imagine. Why? Because the sustainability agenda is beginning to push into the commercial mainstream. But, even more importantly, an old economic order is now coming apart at the seams, with a new one struggling to be born.”

So what are the business models that are shaping this emerging economic order?

1. Social

Pursuing positive social impact towards the Sustainable Development Goals.

Businesses must deliver social value as a core part of their activities. This goes beyond risk mitigation and socially orientated programmes and initiatives. In other words, you can’t achieve this just by complying with the law and giving money to your local rescue helicopter. Leading businesses are analysing the Social Return on Investment of their entire operations.

Some are using Community Footprinting to turn negative impacts into positive ones. SBN is using a version of this tool modified for New Zealand. This helps our members understand their community impacts and the levers they can pull to positively contribute to meeting and addressing the social divide.

Is your business making the world a better place for the people it impacts? This is the shift towards genuine shared value, where everybody benefits. It begins with the shareholders, the staff and the customers. But it must go way beyond that, to local people, your region, your country, your suppliers, investemtns and the whole of human society.

This can be challenging for businesses replacing people and high street stores for algorithms and warehouses. The latest annual Harvard Business Review CEO rankings took into account what it called “environmental, social and governance performance”. This saw Amazon CEO Jeff Bezos fall from first place to 87th.

Within the Sustainable Business Network (SBN), we have members working in this kind of model. They include Akina, Conscious Consumers, Ekos, Fairtrade and Kaibosh.

Each is specifically set up to create social value. It is not an afterthought or side-effect. It is their reason for existence.

2. Lean

Tomorrow’s business models must use resources effectively. They must create no waste and maximise value.

It’s a highly competitive world. Resources are becoming increasingly scarce. Squeezing every ounce of juice out of every aspect of your business is becoming vital.

The zero-waste approach to manufacturing was pioneered as the ‘Toyota Way’ by the car company from 1948-1975. It has since been adopted by many sectors of the economy. Lean now includes principles like the ‘Minimum Viable Product’.

The question to ask is not, “can this product be built?” But: “should this product be built?” and “can we build a sustainable business around this set of products and services?”

SBN members are already embracing this approach. The network is also beginning work on rethinking New Zealand’s food waste. Inzide Commercial distributes the innovative Interface brand of carpets. LMAC consultants specialise in showing other companies how it’s done.

3. Integrated

Business models must be deeply and existentially connected to society and nature.

This means integrating an understanding of social and environmental risks and opportunities. It takes in multiple departments and supply chains. It cuts across sectors. It requires us to stop seeing businesses as so much of a separate entity.

A fully integrated company monitors how its work contributes to positive impacts on the social and environmental systems around us. Unfortunately we have a long way to go on this. As the report points out: “There is generally little or no link between the data and impacts that individual companies report and that which is counted, analyzed and reported by their competitors, customers, other industries and the overall economy.”

SBN’s Smart Procurement Project is one way in which our network promotes this kind of integration. It also does it through the standardised sustainability tools offered to members. An increasing emphasis on the Sustainable Development Goals will aid this worldwide.

4. Circular

All businesses must strive to become completely circular. They must be designed to sustain products, components and material inputs and outputs at their highest utility and value at all times.

Our economy should be restorative and regenerative by design.

Companies in the SBN network that are exploring circular options include Philips. The lighting company is developing a ‘pay per lux’ system. You pay for the light you need while Philips takes care of the technology.

SBN is specifically promoting this model in much of its work on efficiency and waste. In particular, it is showcasing what can be achieved in its Circular Economy Model Office project. This provides information and inspiration for applying circular principles to office building and refurbishment.

The report stresses that these models need to be applied now exponentially. Otherwise we will not meet the pressures placed on our economies in the coming decades.

“We need to drive a process of convergence across the different elements that now make up the global sustainability industry,” it says. “We find ourselves potentially moving through one of history’s great turning points. To push into the new opportunity spaces, we must work out how to let go of what we know and explore key aspects of what comes next.”

Rachel Brown is CEO of SBN. She says: “It’s been a while since I have seen the kind of interest in this space. What is shifting in the rest of the world is shifting for New Zealand too. Whether you are a big exporting business, a local tourism operator or a small local business.

“To do things radically differently we have to frame our thinking in radically different ways. These examples provide us with ways of doing that here in New Zealand. I still believe we can learn and lead. NZ has a natural advantage over others – now’s the time to run with that.”

To read the full report, click here.