Insight
Building a better world with a new business model
[Article reprinted from BMI - The Strategy.Click here for the original article】
The ultimate challenge for companies in the current decade is to transform their existing business model into a sustainable one. The core of this transformation lies in translating sustainability into customer value.
American entrepreneur Ray Anderson founded Interface, a carpet tile company, in 1973, and for the first 20 years of its existence, Interface did not consider the environmental impact of carpet production. It wasn't until 1994, when Anderson read American author Paul Hawken's book Business Ecology, that Interface's approach to business changed; Anderson suddenly realized that Interface's "draw-produce-waste" model was no longer tenable, and began to vigorously pursue a business transformation. Next, Interface embarked on a series of bold innovations, reaching a major milestone in 2018: achieving carbon neutrality for all of its products.
Imbalanced business models
Anderson is a visionary entrepreneur who, at a time when issues like carbon dioxide emissions, climate change, deforestation, and the scarcity of raw materials were rarely on the radar of corporate executives, was pushing for a transformation of the business model from linear to cyclical. Today, more and more CEOs share Anderson's vision. Business leaders and consumers are realizing that the prosperity we've enjoyed for the past 70 years was built on a system of unbalanced business models, and we're now beginning to see the consequences of that system. In the world of linear business models, products go through a life cycle of being produced, purchased, used, and ultimately discarded, with raw materials being consumed and waste piling up. To make matters worse, the planet is warming at an unprecedented rate. At the same time, hundreds of billions of euros are being spent on health due to unbalanced diets, lack of exercise and other reasons.
The earth's burden is getting heavier and heavier.
It would be no exaggeration to write a book on the consequences of an unbalanced business model, but here are just a few examples. Every year, more than 11 million tons of plastic waste enter the sea. In addition, oil spills and the use of pesticides kill millions of shellfish, fish, birds, seals, dolphins and sea turtles. Half of the coral reefs have already disappeared due to warming and acidification. These facts are worrying because more than half of the oxygen we breathe is produced by the oceans. But it's not just the oceans, the consequences of linear business thinking are becoming increasingly difficult to ignore on land. The Greenland ice sheet is melting seven times faster than it did thirty years ago. Cities in Southeast Asia are covered in a thick haze due to the burning of coal, and the number of days without blue skies is increasing by the year. In Western countries like Holland, where large-scale farming has left biodiversity at 151 TP3T as it was two centuries ago, it's just like the documentary "An Inconvenient Truth", isn't it?
The widening gap between the rich and the poor
Apart from the environment, human health is also under threat, but not only because of air pollution, but also because of the unhealthy food that surrounds us. As a result of a long-term diet high in sugar and fat, about 30% of the world's population is overweight. As a result, more than 2.2 billion adults and children suffer from health problems, more than double the number in 1980. Furthermore, systemic imbalances have also led to a growing gap between the rich and the poor around the world. In the U.S., for example, the average annual salary of the CEOs of the top 350 companies in the U.S. is more than $17 million, an increase of 1,000% since 1978, yet the average salary of the U.S. labor force has only grown by 12% (adjusted for inflation) since 1978. The wealth of the top 400 richest Americans exceeds the combined wealth of the poorest 150 million Americans. Even more alarming is the fact that the wealth gap is even worse in the Middle East and Central America.
Climate change, the obesity epidemic, and the widening gap between the rich and the poor require solutions to reverse these major societal trends. We believe that business can be an important driver, so what can business do? First, they need to be bold. They need to have the courage to change their business models from linear to circular, from product-oriented to service-oriented, or from shareholder-oriented to stakeholder-oriented.
Sapindus Fruit
Fortunately, there are more and more sustainability initiatives. Unilever, for example, is investing €1 billion over the next ten years to produce cleaning products and detergents that do not contain petrochemicals. Dutch company Seepje (which employs just 15 people) has already achieved this goal. Seepje produces detergents from Nepalese sapindus fruits, but without compromising on quality, their products clean as well as well-known detergent brands. Fast food leaders such as McDonald's and Burger King are offering veggie burgers, something that would have been unthinkable a decade ago. IKEA is also experimenting with a "furniture as a service" business model that allows furniture to last longer. And start-up Fittar has launched a mirror fitness program that allows customers to work out at home. These are just a few of the many examples of green products and services.
Value Added
The vision of "becoming a more sustainable business" has become an aspirational goal for almost every major corporate board in recent years, but building a sustainable business model is not as easy as it seems. Raw materials, packaging, distribution, customer base, partners and revenue model: everything must be in place. If you can achieve this, you can really add value to your business, and your customers will want to pay for it. As it happens, BMI knows all about this kind of transformation.
About BMI・Strategy
Business Models Inc is a global, locally-operated strategic design consultancy specializing in business model innovation and service design. We help corporations and start-ups develop sustainable, innovative business models through customized projects to achieve leadership in a rapidly changing world.
BMI-Fangliao has two best-selling books
Produced by Patrick van der Pijl, CEO and Founder of BMI - The Business Model Generation, the book has been translated into 36 languages around the world and has been recognized by USA Today as one of the 12 best business books of all time.
Design a Better Business is a new tool, skill, and mindset for strategy and innovation. Applying design thinking to strategy and innovation, Design a Better Business takes readers from the initial idea to scaling their own business through a practical approach that has earned it the #1 spot on Amazon's Strategy New Releases list.