Sustainable Business Models: Rethinking Value and Impact

Companies of all types face unprecedented threats from global problems such as climate change, and growing demands from investors and other stakeholders to operate sustainably and deliver greater benefit to environment and society. Conventional business models focused on delivering customer value and company profits are too narrow to help companies meet these challenges. This chapter offers sustainable business models (SBMs) as an alternative strategy tool to enable companies to address these challenges and position themselves to thrive in the future. SBMs expand the scope of value propositions by adding other stakeholders and considering impact as well as value, enabling companies to strategize for long-term sustainability within their business model. SBMs employ more sophisticated value creation mechanisms that often combine different value creation logics in unique ways, resulting in business models that are difficult for competitors to copy. Finally, SBMs make it possible for companies to strategize not merely for their own value capture, but for value sustenance that plans for lasting benefit from value creation for both firm and stakeholders. Without this long-term perspective, sustainability is unlikely. SBMs are not easy—they require a systemic and long-term focus that often runs counter to the short-term view fostered by the broader economic system. However, when designed and executed well, their multiple benefits outweigh their challenges.