Why do sustainable business models fail?
Hello everyone and welcome to The School of Business, Economics and Law at the University of Gothenburg and this lunch webinar, I'm Marie Örninge, I work as an event manager at The School and we have quite a lot of events here, and we have researched within many different fields and some will be presented on open online events like this one and you are always welcome to join, if you follow us on Facebook you check our web or LinkedIn you will find invitations, today I have the privilege to welcome Rick Middle you can, there is Rick who is an assistant professor at the unit for Innovation Entrepreneurship at the department of Economy and Society at The School and Rick's research is focused on business model innovations and Rick is responsible for the master of Science Program in Knowledge Based Entrepreneurship and today Rick will explain to us why do sustainable business models fail, Rick will talk about 40 minutes, and after the presentation, there will be time for questions from you, so please post questions in the chat function, but make it as short and clear as possible to make it easier for us and Rick will answer as many questions as he can so welcome Rick the screen is yours all right. Thank you very much, Marie, and welcome everyone to this launch webinar on why do sustainable business models fail, it's a great pleasure to be here with you today just before Christmas to talk about this slightly provocative topic around you, know why do sustainable business models fail, I know it's a provocative question, but I will come back to that and I'll explain to you why I think it's important to kind of talk about the failures as well so you already heard a little bit who I'm, but I just want to be able to kind of introduce me a little bit more specifically, so that you know who you actually been looking at and listening to, as such so my name is Rick Middle as Marie said assistant professor for the unit of Innovation Entrepreneurship, where a research education er around these two fascinating topics of innovation entrepreneurship is kind of like clustered I originally come from the Netherlands, I moved to Sweden in 2009, and I've been here now more than 10 years, so many different ways more Swedish than Dutch but that's a little bit more about my background, I have a PhD in Industrial Engineering and Management, and from there through research education kind of moved from more engineering operations management into the world of innovation and entrepreneurship, so what I do in my capacity over here, I'm of course a teacher, so I teach in our two master programs that we have the Innovation Management program, as well as the Entrepreneurship program on different courses related to innovation management entrepreneurship, but also business modelling, and that's a little bit where my biggest interest is at the moment when it comes to research, so not to kind of purely thinking about innovation as to how we can innovate our products, how can we innovate our processes, how can we innovate, and the way we can like deliver our process as such, but how can we actually, capture create and deliver value in indifferent kind of ways, business models provide the opportunity to well increase the number of innovations that are actually possible to kind of work with, because you can sell you can produce products in a different kind of ways, and they will have a different kind of outcomes, so it depends on the business model, and that kind of spurred my interest in moving into a level called sustainability, as well I'm a proud member of let says the sustainability board here at homosexuals command The School of Business Economics and Law, so I'm a great advocate of sustainability, so with that said the title might be a little bit strange, provocative so, if you're kind of advocating sustainability so much, why do you want to talk about failure? what are you know, why is it interesting to look at the failures, aren't it more important to talk about the successes, about what is actually the impact of sustainability, absolutely, you're absolutely right, but I think it's also important that we actually look at the cases where we don't because where we don't succeed reason for that is because I think if we look at popular news items, if you look at academic research, if we look at what we see in connected news we are very often see the success stories, and of course, then sustainability is linked to doing good for society, doing good for the environment, from an organizational perspective, if we manage it well it can lead to, you know being more attractive as an employer, it could lead to a kind of efficiency, be more effective, so there's a different kind of reasons why of course, it's important to look at the success stories, but as we all know or hopefully we all know is that when it comes to innovation, when it comes to business modelling, but also when it comes to integrating sustainability in the way we capture the way we create, and the way we deliver value not everything is kind of like working, so success in that particular kind of the way it's a great motivator, but it's also a lousy learner, as we kinda know, because what we do well today might not be the things that we should be doing for tomorrow, so and that's why we have to look a little bit more at the cases, okay why do we actually feel, in order to be able to learn from this, in order to kind of really assess, why do certain innovations, why do certain business models, why do certain sustainability initiatives are not really kind of working out so what I want to present to you today is not so much, let's say efforts or let's say results of a clear research that I've done, but it's more as part of let's say an idea that I've been working with for trying to get up a certain research agenda or trying to get some kind of research program up, and running, and for there are I would like also to reach out to all of you to kind of see what your interest is in the topic, and maybe hopefully we can do something together in the future, because if this is kind of like a topic that it interests you as well I hope that we could kind of like you know interact, not only as part of this particular kind of session, but also afterwards to kind of see well you know maybe it's good to look at this kind of failures, maybe it's good to kind of see what companies should potentially do differently, or how can they even be become more effective in pushing sustainable business models through their organization, so I'm reaching out a a little bit on out to you as well, because I think that's also part of let's say what we need to do as a University, not only to talk about the academic research, and the high quality academic research that we, of course, do here at the Handelshögskolan, but also to kind of start with you know developing research ideas and, research agendas, so this is a little bit what I try to hope to give to you today, some of my ideas based upon the research that I've done on business modelling, but trying to connect it more to a sustainability kind of agenda and I hope that we can have a little bit of a discussion afterwards, as well, so that's enough about me, so what I want to do for today is you know talk about these two keywords, the S-word and the F-word, and I will come back to those as well, and as I said I'm a great advocate of sustainability part of the board, so I really kind of like applaud let's say every kind of social sustainability initiative those organizations can go through, and I hope of the course that many of these kinds of sustainability initiatives can like to succeed, but on the other hand I think we also have to be realistic, then when within an organizational firm a lot of these kinds of ideas, will not make it to let's say become implement in the marketplace, and that's what we know from innovations it's not only about coming up with something new, but there needs to be this reduction to practice, there needs to be some kind of implementation in the marketplace, so with that said, we know that many of these ideas that we kind of come up about you know think about sustainability is actually not really kind of like working out there are some very interesting research that is done by professor Gasman in this particular area and he looked at 1919 different ideas that people within different kind of organizations came up with, out of these 1919 ideas only twelve of them actually became a success, so we know that some were in the process of coming up with an idea towards sustainability, towards innovation we will be losing a lot of these great ideas along the way for different kind of reasons so a lot of these ideas will actually fail, so why is this happening, I want to share with you some of these ideas from both innovation management, from the business model innovation and sustainability for that kind of matter, of what are the typical reasons, why these kind of sustainable business models ideas actually do fail, in order to be able to learn from it and to really kind of see what can we do differently, how can we twist, how can we tweak how can we explore, how can we do things in a different kind of way to make it actually a success because that's the most important thing for when it comes to failures, we need to learn from it so the two words, the S-word and F-word will be part of let's say my presentation that I would like to focus on, so what I would like to do here now is kind of start here, and recommend this particular kind of article to you, because I think it's a very interesting the article, that talks about the path towards sustainability, how organizations are working you know with sustainability, and how they could use it as a driver for their innovation because I think that's an important part of let's say what organizations need to do how can or how should sustainability come in terms of all the innovative work that an organization is actually doing, this particular model that's been developed by the Nidomula et al. kind of talks about five different phases, it is not the highest phase is the ultimate truth that's what you know all companies should aim for depending on the industry, depending on the company, depending on let's say the marketplace, companies can choose to kind of innovate in different kind of phases, so on the lowest level we see you know where sustainability can be seen as our compliance: compliance as an opportunity with new regulations coming in, with new kind of rules coming in, this might create opportunities for innovations towards products, towards a new kind of technologies, green technologies, and so forth the next phase that the article discusses is; how can we actually make our value change more sustainable, and this has been a lot of the focus in many organizations in many kinds of industries, and there's been a lot of research on this particular kind of the part, so how can we increase the sustainability aspects as part of our overall value chain, as an organization, not only being responsible anymore for what happens inside the organization, but also more and more having to take responsibility for what's happening in their supply chain, for example there are many industries that have been working a lot with this, for example, if you take the clothing industry, the fashion industry which of course has been in the news, as such having, and needing to take their responsibility in this particular kind of part, but when you think about sustainability the value chain, the supply chain provides another kind of possibility, the other part is how will design sustainable products, how can we design sustainable services, for example, a lot of is happening, for example nowadays within the packaging, how can we reuse, how can we you know all packaging and start using it for new packages as such great initiatives a lot of things are kind of moving into that kind of a direction on how to create and develop more sustainable products, and how to think about this whole cradle to grave kind of concept a lot of really interesting kind of examples, the next phase as the article describes it talks about this this business model, and that's a little bit what I would like to do later on in this particular lecture or this seminar as well, to talk a little bit about the business models, so how can we create business models that under one hand provides, and create value for an organization, but at the same time create value for the society, for the social aspects, and how do we balance this I will provide you with an example from Michelin, but there's another great example, for example, interface using garments to develop new kind of clothing, but they're actually buying up now old fishing nets, as well fishing nets being a huge, having a huge impact on the whole ecosystem at in the oceans, fishes are being caught up so they're actually buying up old fishing nets and they're actually producing a new kind of garments around this, so they have been able to develop a business model that is kind of both viable for them, feasible to do as well as it addresses a different kind of desirability, kind of aspects in terms of the social impact, the societal impact as such and then the last part is what we referred back to as what we call these new practice kind of platforms, more specifically focused, and a lot triggered by digitalization, for example, a lot of things are happening out on the energy efficiency of buildings, and trying to create complete different kind of platforms, so there also we see that for example digitalization sustainability innovation is going hand in hand and developing new opportunities for organizations but just to kind of challenge, this a little bit kind of you know when we talk about the S-words in more in terms of businesses, we very often refer back to sustainability, and this is just a source that I found from Athens which is a very interesting article around sustainability, and how can you develop the business model, for sustainability as such and when they talk about sustainability, and the sustainable value they basically refer back to the triple helix that all of whom you are so familiar with, so one part of this is what we call sustainability, how can companies work with sustainability, how can they actually or how do we need to think about sustainability, but the other part of the S-word is what we call sustainable competitive advantages, now we're going back to Porter and all the famous management gurus, how can we as companies create sustainable competitive advantage when we talk from with innovation management we very often talk about using innovation as a trigger, not only to stay in business for today but also to keep in business for tomorrow, so sustainability becomes an important part, but how do you bring these actually together, and the cross doesn't mean that you should not but the cross basically means this is actually more difficult to do than what people sometimes think or what sometimes also kind of like research kind of like shows, again we within our academic institutions, we try to focus a lot of on these positive cases as a way to tell like oh this is important, and this is what is actually possible, but it's actually more difficult to do, and that is a little bit what I wanted to kind of to focus on with you for today, how can we bring sustainability, and sustainable competitive advantage together, and what is actually sometimes holding back organizations from doing that, because if we can take away these barriers, if we can take away this kind of challenges, we will be able to kind of pushing more sustainable business models out in the marketplace or in society, and I think that's all what we really want, and that's all we really can like need giving, let's say the difficult times that we're kind of living today, so just to give you a little bit of a an idea around let's say what do I refer back to as sustainable business models, what do you actually really talk about, so when these are just three definitions of a kind like you know a potential a lot of a different kind of, possible definitions around sustainable business models and it's interesting if you start looking at sustainable business models, let's say the first kind of initiatives around business models towards sustainability or sustainable business models they were already kind of coins like you know 10 -15 years ago, but I think over the last two or three years what we have seen is that the amount of publications on this particular kind of field has increased significantly, so we see that there's when it comes to sustainable business model, and trying to advocate the necessities to have more sustainability connected to business models as well is actually increasing significantly in the in academia not only of course in academia, but also let's say in the business world in society in general as such, but still one of the latest kind of research that has been done is still advocates there's still a lack of understanding of let's say, how we actually implement these sustainable business models, how do you actually go about trying to get them to work so Stubbe and Cocklin 2008 which is one of the more early ones, they talked about sustaining business model as using both systems, and firm-level perspective, and I think that's an important aspect to take into consideration when we talk about sustainable business models, it's not only from a firm-level perspective as a firm, but you also need to take a much larger kind of kind of larger kind of group of stakeholders into consideration, this is also very clearly that comes back in the other definitions from Lüdeke-Freund, and Geisdoerfer where they actually really talk about the company, and society or this multi-stakeholder perspective so as an organization, as a firm, as a startup company, you need to look beyond let's say kind of like your own tier, your the first year or maybe or potentially you're second or your thirty, so you really need to kind of extend, let's say your perspective on, let's say how, and to what extent can our business model or the sustainable business model makes a contribution and it's about bringing together let's say both the economic part as well as the Triple Bottom Line in terms of the social, and environmental part, and really trying to bring these three connect together in a way that is viable, that is feasible, and that there is a great impact when it comes to the models as such, not only a financial impact, but also societal kind of impact and this is also something that Geisdoerfer is really kind of like pushing forward in his article around, and they have done like a literal review on let's saying business, model business innovation, but also towards the kind of sustainability, so it's both the creation of this monetary in terms of revenues, in terms of profits, which of course is important for the existence and the livelihood of organizations, but also this non-monetary value in terms of how can we actually support towards society, how can we make a positive impact towards the social community, and so forth and how can we reach out to this broader kind of range of state kind of stakeholders and I really like this particular last part of let's say Kai Starver where there's actually a long-term perspective in there, so not something as kind like a one-ninth, because we all know these terms about well are we doing good because we want to look good or do we really do good because we want to mean good, this whole greenwashing kind of perspective and I think that's an important part that guys offer in their definition around sustainable business models are adding as well so we're in this for the long-term, we really mean serious, so it's not something where the public might say well are they doing it because they really mean good or are they just doing so because it kind of looks good so that it can actually be used as kind of reporting, and it can actually end up in their sustainability report at the end of the year, so this long-term perspective I think it's a very important part of let's say sustainable business models as well so another thing that I just wanted to kind of show to you is a recess that has been done it kind of started with a Bocken et al. in 2014, and what they found is basically eight generic business model strategies, the resource was copied by Ritala et al. in 2018, and they looked at more at the top 500 kinds of the large kind of organizations, and basically, they confirmed what Bocken et al. had all found as well, but they added the ninth elements, and what these kinds of
what these two researchers actually kind of like have shown, is that when you look at from a company perspective and this is both for let's say small to medium-sized enterprises, as well as for larger kind of organizations, so why do they actually engage in sustainable business models, what is their rationale of actually doing so, what causes them to kind of invest in sustainability, and to kind of think about sustainable business models as such and what Bocken et al. has also they kind of talk about these archetypes and there's a different kind of rationals different kind of strategic intents that organizations can have when they actually would like to work with more sustainable business models so the first part is when it comes when we talk about maximizing material, and energy efficiency, so how can we use less energy, how can we use less material or more environmental friendly materials, in the way we develop our products, in the way we develop our services, so really to kind of critically reflect upon the material and energy usage as such the second archetype that they talked about in their research is closing this resource loops so how can we close, and this is very much connected to for example circular economy, a lot of these cradles to crave kind of initiatives that we see, and it's is more and more being developed, more and more organizations are using that which is great, but it's very much aimed at how to kind of close the loops of reuse remanufacturing, recycling as such, so we see more organizations taking responsibility for their products their products after use, and how can they actually kind of take it back and how can we use it in a different kind of way, another archetype or another strategy towards sustainable business models is what we call substitute renewables and natural kind of processes, how can we use renewable, and natural kind of processes for to be replaced by, you know the conventional waste, so solar energy for example of the heating this is how you know the natural process can actually be substitute conventional ways of healing so how do we actually use natural process, natural materials in a different kind of way to connect substitutes, to have it more efficient, to have it more effective, to have a better kind of impact for the business, and to have a great impact on the society, and the environment as such then we move into the social parts as part of this triple helix kind of models towards kind of sustainable value, we see that more and more organizations are actually delivering functionality rather than ownership and this is not only in sustainable business model this is kind of like a trend that we see in business models, as such as well so, and it goes back to the classical save from Peter Drucker a customer doesn't buy a product it only buys a utility, you need to buy a product because the product does something for you so if you can take actually the ownership away from let's say from an individual or from a customer and then still be able to provide functionality, that is something where it could be beneficial for the customer as such, but it can also be better beneficial for the social system, so that ownership is not really kind of like part of that, and again it takes more of kind of you know the perspective of companies taking responsibility for what's happening towards with their products adopt a stewardship role, so for example taking back this is very often what we see for example when we talked about closing resource loops organizations taking in a very active very promotional kind of driven stewardship role like if you use our materials, if you use our kind of the product you can actually give it back to us we will take care of that, and really be kind of like more of kind of an advocate towards sustainability, as such and trying to really push on let's say the importance of sustainability and thinking about not just to connect throwaway products, but actually trying to bring it back another part is what we call encourage sufficiency, and again a little bit connected to the stewardship role, this is where about companies take a very active, and a leading role in providing information and this is very active in terms of providing information about how much natural resources it will cost to produce a certain product or what they have done in order to kind of increase the the efficiency of let's say natural resources so this is also then about you know-how can we encourage sufficiency, the other in terms of more kind like the economic particular kind of part are the reapers repurpose for society, and the environment as such the aimed at utilizing resources of an organization, for example, staying aligned with you know a battery loop this might be a way to kind of to repurpose, you know products re-knowledge products to connect not to throw away battery packs, but just to kind of reuse it for a different kind of the way, this inclusive value creation is what we see primarily has been identified by Itala as a way for let's say primarily larger kind of organizations of how to interact with a larger set of stakeholders, and how this particular kind of the company can actually create, it's almost connected to this open innovation kind of paradigm of how to bring a different kind of stakeholders in the sustainability work that you do, and trying to piggyback on different kind of ideas that might be out there as such, and another part is what we call this development sustainable scale-up solutions, so how can we develop near different ideas, but also can we scale it to a different kind of industries and different kind of marketplaces as such, so we see that organizations are applying a different kind of strategies towards sustainable business models as such, and just a quick example just more for your own this is, for example, from Michelin used to and still of course are you know selling their tires it's very very much about trying to maximize the total sales volume, trying to sell as many ties as possible towards different kind of customers either individual customers or businesses as such, and that was normally this one-off kind of the transaction, so you bought a tire, and that was kind of like your relationship the waste of the tires were something that has been done and been taken care of by another kind of organizations a couple of years ago Michelin changed this particular kind of model especially towards their more industrial consumers, and the larger kind of organizations where they really kind of focused on the energy efficiency of tires, as such, so they put a different kind of sensors in the tires as such and they came up with different kind of service on how to use tires in a more energy-efficient kind of way, so that at least for the customer perspective they could use the tires longer over, a longer period of a lifetime, and this was not by done by a particular kind of one seal, but the customers for let's say or more the businesses that were buying Michelin ties they were paying like a monthly fee for this, to get this in kind of information about energy efficiency, about tire efficiency, and so forth, and they were paying a monthly fee when the tires were breaking down Michelin also came in, and made sure that the tires were placed, replaced in a timely manner they were taking part in this kind like responsibility for the re-usage remanufacturing of the tires as such, and took their particular kind of the role, so in that way, they not only addressed, you know specific needs from their customers but they also had a larger kind of stakeholders to kind of taking that is the overall society, that's the environment as such and that particular way addressing to the sustainabilities are the goals that have been set by the U.N, so if you're familiar with the business model Canvas you already can see that when it comes to sustainability in business models what we normally see is that we will add two additional fields to the business model Canvas as such one more to what's beneficiaries, so not looking at the direct customers, but also who are the customs of the customers were the beneficiaries to kind of increase this kind of multiple stakeholders perspective, and then to kind of talk about different kind of goals not only in terms of revenues, and profits but more to talk about sustainability goals as such, but I mean as I said even though we see a lot of fantastic initiatives, and even though we see a lot of kind of movement, and in terms of sustainability which I very much applaud which is great we also know that when it comes to innovation, when it comes to the business model, and when it comes to sustainable ideas within inside an organization, it doesn't always work, it sometimes it actually fails, and to a certain extent and again this is a little bit of a provocative we should be happy that certain things are failing, because one hand we know success is a lousy learner, it's a great motivator, but it's lousy learning, so sometimes we actually do fail with this kind of things so we can't push every single idea in terms of a commercial kind of product where we address both economic values, societal value, and environmental value, but the word failed is basically an abbreviation, the word fail has a meaning, and the word fail basically, means the first, attempt, in, learning, so I think this is a very important thing that we should keep in our mind when we actually, talk about failures, so it's not about blaming, it's not about shame, it's not about negative consequences, I think organizations should see failures more as an opportunity to really learn from it, so why did it not work out, what did we miss with, whom should we have reached out, how can we repackage this particular kind of business model, this kind of particular of the idea in a different way, and I think that is when I look at many kinds of organizations this is not really kind of happening normally, what we try to do is when somebody fails we're trying to sweep it under the carpet, I think when it comes to sustainability, we should actually make it heard we should actually talk about it, so why did it not work out, we did it for t the best kind of intentions, we did all our homework but it still failed, why is that actually the case because not only in this way, if we actually, start learning from our failures we really can make a difference, and of course we already make a difference, but I think the the difference that we can make can actually be increased significantly by actually focusing on let's say trying to learn from our failures, so what I hope that you know many start organizations start to do when they work with innovation or when they work with business modelling or when they work with sustainability is that they actually start thinking about the different kind of projects so what is the type of learning that we want to get from this project, what is that we want to know, and it's not only for the firm as such, but especially when we talk about sustainability we need to take this multiple stakeholders into consideration, so what is that we learn when it comes to the environment, what is that we want to learn when it comes to society, how can we address these aspects a little bit more specifically, so I think this is an important part and even though that the whole title of this particular seminar was; why do they actually fail, why do the sustainable business model actually fail, it's really about how can we actually learn from sustainable business models that have not yet made it to the marketplace that have not been implemented as such, so what I think and this is a little bit based upon what I've seen from both innovation management, what I've seen from let's say business modelling, and what I see in let's say sustainability of sustainable business models, I think that when it comes to sustainable business models, and there's a few challenges and I said this is just my my ideas around it, and what I really hope is that we can have a discussion afterwards, but also that we can maybe hopefully have a discussion after this particular kind of session trying to understand what are the challenges of let's say organizations when they work and try to work with sustainable business models, so the first part I want to talk about is what we call the acceptance problems, so this is sometimes what we refer back into let's say when we talk about innovation as the messenger problem, and what we see when it comes to innovation, when it comes to business models, but also when we come to talk about, let's say sustainability is that we have a very clear kind of answer that we normally see, so if you come up with a new idea towards innovation sustainability, sustainability or sustainable business models it's very often that you get a reaction like oh that's a great idea, but there's always a but when these kinds of things this is happening inside an organization where organizations have a difficult time of actually accepting new kind of ideas, so why should we do this? you know we're doing good, why should we fish in the same pot, how can we actually prove that there is you know for us as a business also an economically viable thing to do, so they're still a very much kind like you know what we call an immune system as such where these sustainable ideas towards business modelling are not always directly accepted so you need to be able to kind of excel it's not a direct acceptance that you get you need to be able to convince, you need to be able to argue for that inside an organization I think that's to a large extent also externally that we see where there might be a higher level of scrutiny when it comes to the public when an organization is pushing out a sustainable business model, so why do they do this are they doing that because they want to look good or are they actually doing something good, so there's a somewhat still kind of the scrutiny so and I think this has a lot to do with you know, for example, the mindset inside an organization so this is what we call the acceptance problems it's a great idea, but there's always there's always a but and I really believe that this should really turn into a discussion rather than saying like it's a great idea, but more turn it into a discussion around that's a great idea and I think if you have that kind of discussion inside an organization you will actually have the right kind of preconditions around how to make sustainability, and how to work with sustainability more specifically, the other thing that I want to bring up as a challenge for why sustainable business models are failing is what we call the networking product organizations not only insight in order to be able to deal with the immune system, but also outside they need to network with multiple stakeholders, and it's not only the stakeholders that they know, that they work with today, but they need to cast the web much much further than that, so this is what we call the networking problem, so how do you actually have this what we've seen from the previous definitions around sustainable business models how can you actually create new kind of networks, how can you interact with new kind of networks, how do you bring let's say actors stakeholders in the discussions around sustainable business models that you normally would not talk to, so it's I think it's important that you know organizations are networking with other kind of actors than what they're currently doing as such which is difficult which is a challenge in itself, but in order to really to understand the impact and the benefits that sustainable business models have I think it's a very important part to take this overall kind of perspective around sustainable business models, the other the part that I want to kind of focus on is what we call the lamppost problem this is the lamppost the problem of innovation, but I think it's also very much true for sustainable business models we're approaching the end, so but I'll tell you a little bit of kind of like a joke before we kind of move into what I think companies should be doing more of so the lamp post problem for innovation, and for sustainable business goes a little bit like this I said I'm not the best joke teller, but I hope that you can bear with me, I was this weekend I love football, so I was actually in a bar with some of my friends watching a match, and at a certain moment in time I saw it on my watch it was already kind of like 11 o'clock, and I said to to my friends, so really really sorry but I have to go you know I have two kids they're waking up to six o'clock in the morning and I want to spend some quality time with them on a Sunday morning, Sunday afternoon, so I said goodbye to my friends, and when I was kind of like walking down the street back home I saw this guy, he was hanging on to a lamppost, and you know, you could see that he was drunk, but he was constantly doing like this it's almost like he was kind of looking for something and I asked him like okay, can I help you, because I thought well I better help him out, and to see you know if I can help him find what he was looking for he was like yeah yeah, I lost my keys, I lost my keys, all right you lost your keys, you know what I can help you, so I started looking down on the floor for some time, and after you know ten seconds it was obvious the keys were not there, so I raised myself up again, and asked the guy who's still hanging on to the lamppost said like I'm really really sorry, but I can't find your keys there so where did you see the keys for the last time, and he did something like that yeah over there, but if they're over there why looking here, and he says here are more lights and this is a very typical problem when it comes to innovation but I think it's also very typical when it comes to sustainable business models, we're trying to look into the places that we know that we have information about but are we really trying to solve the real problem, are we really looking beyond the primary focus of the company, are we really kind of taking this multiple stakeholder perspective into consideration, are we really thinking about reaching out into different kind of networks and not only to look at the places that we know, so I think that the land post problem is very particularly true for sustainable business models as well so but just to leave you with a little bit of a kind of like a positive note I think a very the important thing what I would like to focus on what I have been focusing on when it comes to innovations are how can we actually legitimize, because when we talk about new ideas sustainable business, and models we know that they need to be sold, they need to be sold to the organization, they need to be sold to the marketplace, they need to be sold to society, and when it comes to new ideas it's very difficult to use typical KPIs that we use for that matter of financial KPIs but also some of our social KPIs our social return and investment calculations that we have nowadays, so we really need to think more about how can we actually legitimize going back to the three challenges that I've shown to you before, how can we actually convince others that you know this is actually a good way of doing this, so what I know and what I've seen when it comes to innovation social sustainable business models, but also social and innovative social entrepreneurship really think about let's say not only the formal structure of an organization, the formal organization of the organization, but also think about the informal networks, who can you kind of talk to who can you relate to, so thinking about trying to build up a fan club, raising the communication, raising the awareness that's something that you can do internally, but it's also something that you can do externally for that you need to be connected to different kind of networks, for that, you need to search beyond the land post as such, and in that way you can go actually, go beyond let's say the acceptance challenge, and sometimes, you need to shift focus sometimes, you need to kind of getting another kind of perspective into the into consideration, and sometimes, you have to jump out and try to do something very very different, and find another place where this is accepted so with that said I know that that's now quarter two and I promised Marie to connect stuff I want to thank you for attention, as I said it's a slightly provocative kind of title I'm very much aware of this, but what I really wanted to do there is kind of show you today some of the things that I found with regard to innovation business modelling, and sustainable business models and to really kind of trying to learn from why does the sustainable business model not always work, what are the issues that our companies are actually facing, and I'm hoping also to be able to reach out to you, so if you're interested in this topic, if you have let's say interest in this or you want to like continue the discussion together with me feel free to reach out to me, here are my contact details, here's my email address, so feel free to contact me whenever you want, so that we can actually continue the discussion trying to learn from our failures and in that way make even a bigger impact on let's say on sustainability, so thank you very much for today. Thank you, Rick, for a very interesting presentation and we will move forward directly to questions there are lots of questions in the chat, and we have invited a colleague to Rick senior lecturer Erik Gustafsson to help us moderate the questions, so hello Eric are you there. I am here, and I hope that you can both hear, and see me now, there are a lot of questions coming in so I will do my best to cover some of them to the best of my ability luckily for all of you of course, as Rick has said if you do have more questions afterwards do let him know, and he might be able to answer them then, but I will try to condense this down into a couple of sort of main topics I think that we can talk about, and I would want to actually start off with a bit of a question around definitions Rick, so we've been talking about or you should say I have definitely not been talking I've been listening, but about words like sustainability, the difficulty of the complexity of terminology, like sustainability, how about the term business model, what is a business model, and why is it that we need to think about business models when we talk about sustainability. Absolutely, no I think it's a good question I think you know of course, there's a lot of academic debate around let's say a different kind of definitions around sustainability, and business models as such, I would argue that the same discussion is very important for any kind of type of organization to have a clear understanding of what does sustainability mean for us as an organization, how do we relate to sustainability as well as, how do we actually think about business modelling as such, so but I'll try to get back to that in in a short while, let's say for myself a very simple, but a very powerful definition is the one from Alexander Osterwalder from the book on let's say Business Model Generation, and what he basically or how he actually basically defines the business model is the rational of an organization on how to create deliver, and capture value so the basic notion around business modelling is about well you can have a product for example you know you can have a pen, but you can you know of course sell the pen to somebody as a one-off but you can also say well maybe like what Michelin does, but also what Rolls-Royce is doing with power by the hour which is a very classical famous success story about business model changes are, well what if we can like you know give the pen work away for free how can we actually capture value then, how can we create value, so it's really kind of like thinking about, and challenging the way organizations are creating delivering, and capturing value so why I think this is also not only purely an academic kind of discussion, but also an important discussion for businesses is, I mean I teach some now than innovation management, and normally when I asked different participants in our courses what does innovation mean to you I probably get 10-15 different kind of answers, and that's interesting because if as an organization we can't align the way we think about innovations we basically are running in a different kind of directions we're basically taking different kind of perspective, so as an organization's the discussions around how do we define sustainability, how do we define business modelling, but also how do we define innovations, isn't important, because it kind of sets the direction, and I think when it comes to sustainable business models some kind of sense of the of direction that we need to take or need to have as an organization is a very important part because otherwise, we know that people are running indifferent directions, they will do different kind of things and you create the kind of like this cowboy culture in an organization, and we all know about Enron which is basically had a cowboy culture, and it did not really go too well so having a clear definition of these, you know interesting terms inside an organization is also, and I think it's also important especially when it comes to, you know dealing with the acceptance the challenge, for example, those organizations are clear, well this is our stance, this is the way we want to work with sustainability, this is the way we want to work with business modelling, this is the way we want to work with innovations, as a way to kind also, legitimize the initiatives that they do so I think it's a very important discussion that needs to happen inside an organization or in general, I would say it's not only purely an academic kind of discussions in that way yeah so I hope that answered the question I definitely think so, and I think it addresses something really important which also is highlighted in some of the comments in the chat, which of course has got to do with definitions, as you very much say that we have to bear in mind that different people will define concepts in different ways, and so when we interpret the results that we also need to bear this in mind, a question that is linked in a sense though is that when you were talking about business models, and you talked about you know previous research that has been done on say um sustainable business models and you talked about the research by Ritala and so on, and the different dimensions or different categories that they put out in terms of environmental social, and economic business models, and strategies for that, and essentially the way that this research comes across is as though these are separate funnels, but we also have questions about okay, but how do we then create links in between these, how do we go about in working with business models that perhaps address both environmental aspects, and economic sustainability, for example, or for that matter all three, so what is your idea on that.
Yeah, no I think it's a really good question so I'll just go back and share my screen, so then I can go back to this particular slide, so I think it makes it a little bit easier for everyone to go into my answer, so this is what you're kind of referring to, and even though that's you know the way this particular model is kind of shown is as nine you know archer types what they basically call it or business sustainable business model strategies, I would really argue, and that's also part of the year the discussion that's you know it's in the paper, they're not really kind of mutually exclusive, they can actually build upon each other if you can like play them in a good way so because when we talk about sustainable business models it's not only purely about the economy, but it's also not only purely about society, it's not only purely about environmental, it's about the combination combination of different kind of aspects so, for example, if you would think about how can we substitute with renewable energy or how can we create better kind of energy efficiency or material efficiency for example, it can also be connected with you know a stewardship role that you actually are an active part of the community taking back and working with that, it can also be connected to the strategy around encouraged efficiency where you actually provide a lot of information and then again it could also be connected to inclusive value creation, for example, where you invite a different kind of stakeholders into a kind of discussion, so I think it's an excellent question and I really would let's say argue that these different kind of strategies are not mutually exclusive, they actually work together, but I think as an organization or as a company or as you know as a business or anybody who's kind of interested in sustainable business model strategies you have to you know you have to make a certain choice so I think if you want to start with business model innovation, and business more sustainable business model strategies select one of those strategies in there, and use kind of more of kind of like an interesting kind of approach towards developing this different kind of your idea around sustainability, so for example, maximize material energy, and efficiency encourage sufficiency, and be inclusive around this particular one because that is kind of like what you can actually use, that's where you can actually make an impact it's definitely not part of my recommendations to work with all different nine strategies at the same time, because again this goes back to is how do you know the public look upon us, how do we want to be known, what is it that we would like to work with, and also how do we actually measure our impact, because I think that's it's not something that we've really kind of discussed very in-depth, but I think that's important the part is how do we then actually measure our impact that we have with the strategies as such, and does it actually make sense environmentally, socially, and economically it is to continue with this particular kind of part so these are definitely not mutually exclusive, they actually work hand in hand, but you have to make a choice, and don't try to do that all at the same time, because I think the important thing around the sustainable business model is a little bit like the same with what we see in product innovations, we go out, we test our products, we go back, we learn, we update, we redesign, and then we try it out again, so we go through this iterative time of cycles this is very important for business models, and sustainable business models as well that we go through this iterative kind of cycles of development, so make a choice, try it, test it go back, trying to learn from it sometimes it will succeed excellently, sometimes it actually might fail, how can we actually learn from it, and again this goes back to this first attempt in learning what failed actually stands for, I think when you have this kind of initiative really make sure that you're very clear about what is that I really want to learn even if I don't succeed what is the learning that I would like to kind of reap as part of the benefits there? Very good, and an elaborate answer I feel, and also in many ways of course also an answer that spurs even more questions, but I think we can hopefully find a good way to tie this together, so now we've talked about as you say sort of links to how innovation in general works or for that matter businesses work in general, and you have chosen a topic or a title for this presentation which is of course then; Why Sustainable Business Models Fail, and at the same time we of course also know that other types of businesses fail right, other types of business models fail quite frankly most businesses and business models fail, so is there a uniqueness you would say to the failure of sustainable business models and is it even the case that they fail even more, and why would that in that case be the case. I think that's an excellent question, and I think the biggest the uniqueness of sustainable business models is that it's more under the scrutiny of the public for example, we see very similar kind of reasons why, for example, innovative ideas fail, why business models in general fail, why digital business models fail, but I mean they have a very different kind of rational, it's more in terms of the economic part, how can we turn this into a valuable business model for us as an organization, how can we actually be profitable, I think when we talk about sustainable business model the uniqueness of that is you know as an organization since you're kind of reaching out to a larger kind of degree of stakeholders, you're much more under the scrutiny of the public so all of a sudden you're not only kind of thinking about the economic part of it, you also have to think about the social part, you have to think about the environmental part, so it's not only the customers, but it's the beneficiaries that you can't talk about, so the potential repercussions of let say business model failures might actually be much larger than for example with purely looking it from economic value kind of perspective, of course then also the potential benefits with sustainable business models is actually much higher in that particular kind of way, so it's a little bit of a kind of balancing act, but I think the the main decide the decisive kind of you know difference here is that when it comes to the sustainable business model, when it comes to social innovations, the public scrutiny, the accountability that you have to take as an organization for the initiatives that you have is one of the the biggest kind of differences, and it's something that organizations really need to kind of think about, and they really need to think through about again what are the implications of this, and how do we, for example, communicate ourselves in a good way, not only to our customers but also to the beneficiaries, or the beneficiaries of the beneficiaries to society as a whole. I think that's a great answer and unfortunately, I see and here she appears right on time, because I realize that it's now only one minute, I will leave the word to Marie, I think and hope that you feel that you got some answers, but as you see there's a lot of questions that want to be answered, and hopefully this person some really interesting discussions for the future. Yes, thank you so much, first of all, Rick for teaching us about the challenge with the sustainable business models, and thank you Eric for the discussion, and moderating the questions I believe we have quite a few questions that we didn't have time to answer, now we will take care of them in one way or another to and get you to feedback on them, and I also want to thank you, of course, all attendees has been with us today there been really a lot of people connecting to us and on behalf of The School of Business, Economics and Law at The University of Gothenburg I want to wish you all a Merry Christmas, and we hope to meet you again next year, thanks for today bye bye.