About business models and sustainability

Monday’s lecture introduced and discussed the concept of business models and sustainability. A simplified definition for business model could be “telling a story about how an enterprise works”. Business model includes both narrative and numbers and it explains, for example, how a company makes money and delivers value to customers. Business model, however, differs from company’s strategy by not taking competition into account in its definition.

An interesting term discussed in the lecture was path dependence – company’s previous investments and its repertoire of routines that may act as constraints on its future plans and behavior. In other words, company’s history and certain routines may prevent it from acting differently in the future and thus lead to continuing to do things the same way as usual. As habits are hard to break, even more so are ideologies behind those habits. Strong ideologies actually often are behind path dependence results the firms to act in a similar manner for long periods without the possibility to change their actions. These ideologies and slowly changing habits are critical also when talking about company’s sustainability and development towards being more sustainable.

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