[Note: This is the 26th post in our “Papers in Brief” series. This series offers a special service as it explains the core ideas of chosen research papers in a nutshell.]

Papers in Brief (XXVI) by Nancy Bocken, Frank Boons and Brian Baldassarre

Bocken, N., Boons, F. and Baldassarre, B., (2019), ”Sustainable business model experimentation by understanding ecologies of business models”. Journal of Cleaner Production, Vol. 208, pp.1498-1512. https://doi.org/10.1016/j.jclepro.2018.10.159

Background and relevance

There are high expectations on new business models as drivers for sustainable development.  However, the actual impacts of new business models on society, the environment and the economy are debatable, and can in some cases even be adverse. Sustainable business models need to be designed to create the envisaged positive impact (Mont, 2002; Tukker, 2004).

A new way of investigating the real impact of new business models is the ‘Ecologies of Business Models’ concept, which analyses the symbiotic and competitive relations between new and existing business models. This concept is introduced in Boons & Bocken (2018). It is based on notions of ecological dynamics in natural eco-systems, to advance understanding of how new business models reinforce existing ones or jeopardise these. This will help to understand the real impact of new business models by understanding interlinkages between new and old business models. For example: to what extent does a car sharing business model reduce the environmental impact of personal mobility, or boost impact by sustaining car dependence?

Knowing the relationships between different business models, e.g. whether they are neutral, in competition, or symbiotic, will facilitate the understanding of whether such business models live up to normative expectations.

The present paper (Bocken, Boons, Baldassarre, 2019) develops a framework to support the experimentation with novel business models to ensure greater system-wide societal and environmental impact, by addressing the issues of construct clarity, boundary setting, and rebound effects typically associated with sustainable business model design and innovation.

Construct clarity relates to a lack of clarity concerning the context in which sustainable business model experimentation takes place and on the sustainable business model construct itself. The issue of boundary setting follows from this: since there is no fixed frame of reference on the context in which sustainable business model innovation takes place, it is difficult to assess the impact of sustainable business models. The third issue is a consequence of the first two, and concerns uncertainty about outcomes: since it is difficult to assess the impact of sustainable business models, concrete outcomes cannot easily be predicted, and implementing new business models can lead to undesired (rebound) effects.

We therefore develop a framework for sustainable business model experimentation that addresses these interrelated issues. The framework enables sustainable business models that minimise negative impact and generate significant positive value for a network of stakeholders, including society and environment – not only the firm. Building on the ‘ecology of business models’ (Boons & Bocken, 2018) and other work on sustainable business models and experimentation and insights boundaries and rebound effects, this paper explores a novel approach to help design and experiment with business models that create greater positive environmental and societal value.

Research method

The paper first presents a novel framework to seek to address the issues of construct clarity, boundary setting, and rebound effects associated with sustainable business model design: The Ecology of Business Models Experimentation (EBME) map (Figure 1). It brings together the notion of interaction and influence in business model design and life cycle principles, and insights from sustainable business modelling and experimentation.

This paper explores how organisations can design and experiment with sustainable business models to optimise sustainable value creation for a network of stakeholders, by creating and building on a greater level of consciousness about the dependencies and interactions between business models. The research objective is addressed through a case study methodology. To gain an understanding of the business experimentation process two illustrative cases are presented: THANKS and HOMIE. Two of the authors are co-founders of the start-ups analysed, which provided an opportunity for unusual data access. This allowed for an understanding of the processes and practices of experimentation as well as the dependencies with other business modes considered. The case studies are also used to explore the application and usefulness of the EBME map. The two case companies had gone through multiple experiments for sustainability and are analysed from two perspectives:

1. What constituted the process of experimentation? What practices did actors use to explore opportunities for value creation and capture, and how did sustainability enter into those practices?
2. What dependencies with other business models are important for the business model as it unfolded?

Figure 1. The Ecology of Business Models Experimentation (EBME) map (Bocken et al., 2019 – full references on which this builds in paper). Note: BM refers to Business Model.

Results

Experimentation is an important process and trigger for sustainability transitions and is an important feature of transitions research. However, research on sustainable business model experimentation as the driver for resolving societal and environmental issues is still emerging. The “Ecology of Business Models Experimentation map” enabled a systemic form of sustainable business model experimentation to create positive impact across networks of organisations. The following questions used with the EBME map can help guide the analysis and design of business models:

1. What are the sustainability aims of the business? How does it modify, destroy or create relations with (un)sustainable business models?
2. To what extent does the business model depend on others and how?
3. What is the nature of the dependencies? (e.g. neutral, competition, symbiosis)
4. How can positive value be increased and negative value reduced?

The paper gave further insights into the experimentation processes of HOMIE and THANKS and revealed potential future partners and activities to optimise the business models further for sustainability.

The EBME map may support multi-actor processes of shaping future outcomes by critically assessing the system boundary individuals (implicitly) draw on, when thinking about their activities. Second, involved actors need to develop ways of integratively working on assessing the evolving business model in terms of efficiency, effectiveness, value created, sustainability and fairness. The EBME map may be used for such joint assessments. Finally, as a process in time, involved actors need to be aware of the relevance of timing of activities, and different preferences. The EBME map may support finding ways of accommodating such differences. Further research on sustainable business models may build on this system-level perspective.

References

Bocken, N., Boons, F. and Baldassarre, B., (2019), ”Sustainable business model experimentation by understanding ecologies of business models”. Journal of Cleaner Production, Vol. 208, pp.1498-1512. https://doi.org/10.1016/j.jclepro.2018.10.159

Boons, F. and Bocken, N., (2018), “Towards a sharing economy–innovating ecologies of business models”. Technological Forecasting and Social Change, Vol. 137, pp.40-52.

Mont, O., (2002), “Drivers and barriers for shifting towards more service-oriented businesses: Analysis of the PSS field and contributions from Sweden”. The Journal of Sustainable Product Design, Vol. 2(3-4), pp.89-103.

Tukker, A., (2004), “Eight types of product–service system: eight ways to sustainability? Experiences from SusProNet”. Business strategy and the environment, Vol. 13(4), pp.246-260.