Business Model Innovation for Sustainability

Abstract

A systematic approach to innovating business models can help identify new business models that encourage sustainable use of products and services, or facilitate wider adoption of new environmentally friendly technologies. This article provides a brief summary of a conceptual framework (fully described in Girotra and Netessine 2014) that we have developed to systematize the study and identification of new business models. Our approach advocates that the key to identifying new business models is understanding the context of decision making in existing models and the associated inefficiencies. We propose a three step approach: First, existing business models must be audited for identifying information and incentive misalignment inefficiencies that destroy value. Next, new business models can be identified by changing the context of the decision associated with the most consequential of these inefficiencies. We conjecture that four elements of the decision context are most significant: What decisions are made, When they are made, Who makes them, and Why they are made. We provide a set of idea triggers to stimulate brainstorming of new business models by changing one of these four Ws. Finally, we advise that generated business models should be analyzed and experimented with to identify the most promising ones. We close the article by describing the design of a pedagogical program based on this framework.