Welcome.
This video is the second of three parts
explaining sustainable business model innovation process.
It is focused on the second phase
of the sustainable business innovation process termed designing.
In this phase a firm seeks to take the knowledge gathered in the first identifying stage
and enter a design process to formulate new constructions
of business models that have a sustainable value proposition,
value delivery, and sustainable value capture.
After watching this video, you will recognize the type of organizational practices
that are required for you to design your own sustainable business model.
Let's take a dive into the phase to understand what it entails.
This stage begins with identifying
who will play a role in the design process and in what way.
This exercise will leverage the stakeholder mapping of stage one
and the set of people from both inside and outside of the firm.
This network can be a source of ideas, flag up critical problems,
and give some validation of concepts.
When creating the co-innovation network it is important to manage expectations
of those involved and ensure that confidentiality agreements
are in place, if necessary.
Stakeholders might also require some reward
for their participation such as early access to the outcome.
Business model design commonly utilizes a tool called
the business model canvas to build up the elements relating to value proposition,
value delivery, and value capture.
This canvas acts the templates of nine different building blocks
that together describe how a business model will work.
It can be used as a hands-on tool for groups to creatively think about
and discuss business model elements.
It also steers you to answer critical questions on how the business model will function.
Many scholars have now adapted this design tool
for use in creating sustainable business models.
Firms may also begin their design process by considering common archetypes
of sustainable business models.
Bocken and her colleagues identify eight primary categories
with multiple opportunities within each firms can select from to form the start
of their design thinking.
Each of these groupings have a different value proposition,
delivery, and capture configuration.
Their relevance for the firm will depend on aspects such as product type,
consumer preferences, access to financial capital,
and technical competencies available.
An example of an archetype is a business model that focuses
on delivering functionality to the user instead of transferring ownership.
In this model, a consumer pays for access to a product
or service instead of purchasing it.
For instance, a consumer may wish to use an electric drill
just for a day to hang up some pictures and prefer to pay a small amount
for daily access rather than a more expensive purchase for continued ownership.
By retaining ownership of the drill the company now
has control over the material resources.
The drill can be used multiple times by different uses,
repaired and its components reused when it becomes obsolete.
The firm is also incentivized to now create products
that last as opposed to traditional business models
that need products to fail in order to generate repeat sales.
When designing a new sustainable business model,
questions should be asked about the assumptions it rests upon
and the key uncertainties identified.
This may be economic, political, societal, technological, legal, or industry factors.
Will a new piece of legislation support or disrupt the model?
Will consumers continue to care about a particular concern?
Will the local economy take a significant downturn?
By identifying these uncertainties and considering how they are connected,
scenarios of the future may be created.
The aim here is not to control those futures but instead to gain an understanding
of how the business model might operate under different contexts.
This exercise may lead to amending the design of the business model
to make it more resilient or help choosing between competing designs.
Drawing a systems map, such as the example given on the screen,
directly utilizes the system analysis from stage one.
This map will give an understanding of how the newly designed business model
will impact the socio-ecological system in which it is embedded.
This is an opportunity to consider if it may produce an undesirable feedback loops
but also consider if the business model can be adapted to offer improved system benefits.
Conducting a lifecycle assessment enables the comparison of the environmental impacts
of new business model designs.
A lifecycle assessment considers aspects such as energy use, material inputs,
and pollution releases to help guide the choices within business model design
and in selecting between formulated business models.
An assessment can also be done to understand if the new business model design
offers environmental improvement versus the market incumbent.
Thank you for joining us for this second part
of three videos looking at the sustainable business model innovation process.
And I look forward to seeing you for part three, focused on the implementing phase.
Happy innovating.