Expiration date for traditional business models

The past few days have been very information intensive for me in the area of sustainable business and sustainability marketing. Besides the lectures of this course I attended Ben & Jerry’s ‘Join Our Core’ lecture series where start-up entrepreneurs pitched their business ideas and various sustainability experts held speeches concerning their area of expertise. It seems like we are not the only one’s who keep their heads busy thinking about possible solutions to our current global problems. In addition, I think there is no single sane person in this world that can say that everything is all right in this place. The same can be said about our current way of doing business and understanding business models.

In the end it seems that all sustainable business related questions end up with the concept of value creation. Until now, value has been straight forward to measure and following the principles of neoclassical theory of economics. It has been all about financial indicators and profit. However, when responsibility and sustainability issues are getting more prominent, the traditional understanding of value is under scrutiny. While our understanding of the world broadens, so does our understanding of business. Instead of shareholders we’ve started to talk about stakeholders. Instead of economic responsibilities, we have started to talk about social and ecological responsibilities. Instead of economic value we have started to formulate a concept of shared value.

Shared value is very much linked to the concept of business model because business model tells us how the company creates and delivers value. Shared value doesn’t only consist of the economic value of the company but also of the social and environmental value the company delivers for the community. Thus, businesses can’t perceive themselves operating in a vacuum anymore where they can ignore all other aspects of the society. That means they have to adjust their business models better to match the world they are operating in. It also means that CSR can’t be a separate strategy of the company, it has to be integrated into every part of the company and its business model. Shared value does not only benefit the community but it also improves the financial performance of the company if the company focuses on the right issues that are closest to its core competences. The only challenge is, how should we measure and audit shared value…

Here’s an inspiring award winning ad from Chipotle Mexican Grill. It reflects really well how old paradigms and path dependencies can be broken and the future can be found from the start.

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