Sustainability is the order of the day and the future. Bertrand Piccard’s initiative beyond 1000 solutionsimpressively shows that sustainability and profitability in the business world do not have to be contradictions at all. A business model can set the right direction.
Product first and then Process – Or Business Model right away?
When it comes to doing business sustainably, the first focus is often on a sustainable product or service. This is the value proposition the end customer comes into direct contact with. The process of manufacturing and consumption are also very important and are often optimized in the next stage. The ultimate goal is to have a business model that is focused on sustainability. This encompasses the entire process of how value is created, delivered to the customer and also monetised.
The Patagonia clothing company has been living sustainability consistently and successfully since 1973. They started with sustainable products and then optimised the production process for environmental impact. At Patagonia, sustainability is now the business model. Their company purpose is: Use the company to protect the environment (website). They live sustainability throughout the product life cycle. All activities and the value proposition are aligned with it. This is an inspiring vision and its implementation will be exciting to follow. Because your product will probably never be as sustainable as not producing the product in the first place. That means a reduction in consumption or more durable quality are the order of the day. And Patagonia promotes both (articles). So you do anti-advertising for your product but strengthen your brand.
But you can also start with the business model and set the first course. Because there are business models that fundamentally promote a sustainable approach to the environment or an appropriate consumption. The goal is to use natural resources only to the extent that future generations can also satisfy their needs. It is definitely worth to consider sustainability when adapting or creating a new business model.
Possible Business Models
But what are sustainable business models? I used the Business Model Navigator’s list of business models (Gassmann et al., 2013) for my comparison because the names are relatively self-explanatory. The list includes 60 business models. I have not listed models that have no discernible connection (positive or negative) with sustainability.
| Business model | Sustainability | Notes |
| Add-on | Rather yes | Better, more suitable solutions for customers |
| Crowdsourcing – solving problems with third party support | Yes | Better, more suitable solutions for customers |
| Flat Rate | Rather no | Tends to lead to higher consumption. |
| Fractional Ownership or Sharing Economy | Yes | By sharing, a product is used more often, which is resource efficient |
| Leverage Customer Data | Rather yes | Potentially better, more appropriate solutions for customers |
| License – unused IP | Rather yes | Knowledge is a resource that can make valuable improvements in other areas. |
| Make More Of It – use unused resources for other purposes | Rather yes | Knowledge is a resource that can make valuable improvements in other areas. |
| Mass Customization | Yes | Potentially better, more appropriate solutions for customers |
| Open Business Model – collaboration outside the company | Yes | Better, more suitable solutions for customers |
| Pay per Use | Yes | Promotes lower consumption |
| Rent instead of buy | Yes | More resource-efficient when product is shared. |
| Self-service | Yes | Satisfaction or customization on customer generally high. |
| Trash-to-cash – reuse unused products | Yes | The core idea of sustainability and circular economy, a re-use of resources |
| Two-sided market | Yes | Efficiency, more suitable offers |
| User designed or produced – produced with customer input | Yes | Satisfaction with product generally high. |
| Virtualization – virtual services for traditionally physical services | Rather yes | Tends to be more resource-efficient |
| Performance based contracting | Rather yes | Can be used to reward sustainable solutions |
| Prosumer – customers become producers | Yes | Satisfaction with product generally high. |
Of course, the assessment depends very much on the product or service and must be evaluated on a case-by-case basis. Generally sustainable, however, are business models that enable improvement in the following areas:
- Better use of resources through marketplaces (matchmaking), sharing of products, use of resources in other areas or outside the company.
- More suitable solution for the customer’s needs through Customization, Built to Order. This includes values that have been co-designed or produced by the customer. This generally eliminates waste and tends to have a longer useful life. It also improves the customer’s experience and relationship.
- Cost and revenue structure can be used to target and reward sustainable behavior.
Sustainability is the right thing to do, there is no way around it. Customers, investors, employees and the environment are increasingly demanding it. It is even more effective to link sustainability with the individual company purpose.
evores supports you in planning a sustainable business model or sustainable products and services. As an environmental engineer, I can competently accompany you in many topics of sustainability and efficiency. Let’s co-create a sustainable future.
More information about the described business models:
Gassmann, O., Frankenberger, K., Csik, M., Gassmann, O., Frankenberger, K., & Csik, M. (2013). Geschäftsmodelle entwickeln- 55innovative Konzepte mit dem St. Galler Business Model Navigator. Geschäftsmodelle entwickeln.
Osterwalder, Alex, Pigneur, Y., Etiemble, F., & Smith, A. (2020). The Invincible Company. Strategyzer.com.
Osterwalder, Alexander, & Pigneur, Y. (2010). Business Model Generation. Self Published. https://doi.org/10.1523/JNEUROSCI.0307-10.2010