Sustainability in business has many benefits, one of them being newly developed business models. This article is part of a series to discuss the benefits of what happens when organizations work with sustainability in their core operations
Develop New Business Models
Working with sustainability makes you think differently, helping to create new products and services, which establishes new business models. This is a natural result when trying to not wreck the planet. Sometimes these business models create entirely new divisions or companies, and other times it brings forth more services to be provided by the organization, or more products. What creates these new business models is through analysis of your organizations operations. You may find that a keyingredient to your product may be doing more harm than good, or you may find that in order to reduce waste and cut unnecessary expenses, a whole new idea comes along.
Best Buy Example
The implementation of technical support is an easy and understandable example to use. Best Buy, a large electronics retailer in North America, discovered missed business opportunities in their business model by being unable to technically support the customers who purchase their technological equipment (computers, televisions, etc.). The lack of support created frustrated customers and unnecessary returns of products that could have an easy fix.
To address this gap, Best Buy acquired a tech service known for repairing technology called Geek Squad. Geek Squad fulfilled an all-in business model for Best Buy, where customers could buy new technologies and return to have them fixed or upgraded as needed. Repairing the technology instead of returning it resulted in less waste and lower CO2 footprints (some waste in retailing is returned back to the producer, some is donated/sold to resellers, and some is thrown away/recycled, it all depends on the contract with the producers and regulations.)
Recently announced, IKEA is piloting the rental of office furniture instead of selling it. When the business is done with the furniture, it’s returned to IKEA, who plan to sell it in the as-is section of the store or use it for parts. If the pilot is successful, it may even be expanded to IKEA kitchens for office spaces.
“The idea behind this,” said Torbjorn Loof, Managing Director of Inter IKEA, “is to prolong the shelf-life of the furniture and our products because after the furniture has been returned, instead of throwing it away, we will restore it and re-sell it.” – EuroWeekly News states.
In this scenario, IKEA is turning a product into a service (and possibly back into a product again). Turning products into services is a way to decrease waste created by society.
Sharing Economy Example
The sharing economy, however, is a key example of entirely new business models. Over the past 20 years, the sharing economy has seen exponential growth. If you’re unfamiliar with the term, the sharing economy is where products, such as cars, bikes, and scooters are used within the community of users, typically within a geographically defined area. Traditionally, operating in the sharing economy have required a membership fee, however through the technology of smartphone apps, some bikeshare and scootershare no longer require a membership.
When looking specifically at transportation in the sharing economy, many of the players in this field are actually owned by some of the worlds largest companies. Many automobile manufacturers own some form of a carshare division, seeking new business models as a way to keep their products relevant in areas where the demand is low (or could be better.) The most interesting part of the sharing economy is the speed at which it’s evolving; what was station-based 10 years ago is now becoming free-floating, where users can leave their rented item nearly anywhere they want.
The end result? The sharing economy has shown that personal car ownership is decreasing in areas that they operate in while increasing use of public transportation and bicycle use. (In some cases, it has even sparked even more new business ideas and models – check out what BMW and Daimler, traditionally competitors, are doing together.)
New business models don’t always imply that the people behind them are in a sustainable mindset. But when these models include sustainable initiatives or have a sustainable purpose, you can call that a win. When working with sustainability, you’ll be able to better assess your products, services, procurement processes, and waste processes to identify gaps in how your organization functions, assess your business model, or maybe even add a new one to identify missed opportunities. Not only will this help your bottom line, it may also help grow jobs, brand loyalty, and help increase a more sustainable economy.
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