20 Sustainable Business Models

20 Sustainable Business Models Business models- the underlying structures that dictate how a company is run, what it creates and how it delivers it- is the bedrock of our modern oconomy. However, many existing business models are woefully outdated, relying heavily on the assumption that vital resources- specifically natural, human or social capital- are limitless in supply. Societal benefit and overall sustainability are usually relegated to an afterthought at best. Therefore, to create a truly sustainable world that can grow and thrive over time, we need to develop new, sustainable business models that operate within natural limits and are sensitive to their roles as social, economic and environmental linchpins. In this infographic we aim to outline 20 distinct types of business model innovation, with an emphasis on sustainability and environmental impact. Environmental Impact Rematerialization Closed Loop Production In this model, a company's source material is derived from recovering waste, which the company redevelops and markets as a new product. Though Usually requiring complex technology to do properly, companies using this model properly severely reduce their wastage bill and can be a boon to other companies whose output they recycle in the process In this model, the materials used in a creating a product are continuously recycled through the production system. Every effort is made to ensure that waste is kept to a minimum, with a heavy focus on recycling and re-using materials. Few outside inputs are needed in this process Phsteal to Vartual Produce on Demand Depending on the product, some companies can afford to only make a product once it's consumer demand has been quantified and confirmed. This helps tremendously from an environmental standpoint- by presenting a streamlined, balanced approach to supply and demand, the company can cut down significantly on extraneous materials in the production cycle. This model eliminates brick & mortar infrastructure to dramatically reduce the resources needed to supply the customer. A popular model amongst online start-ups, this system significantly boosts environmental sustainability but also limits the number of jobs available at the company, drawing concerns about social sustainability in the process. Co-Operative Onersip Social Impact Companies are owned and managed by members and often take broader stakeholder concerns in to account, including the needs of employees, customers, suppliers, the local community and even the environment. From a social standpoint, co-op worker models often provide a sense of ownership to employees, who are incentivized by the greater role they play in the running of the company. Buy One, Give One This model suggests that companies sell a particular product then use a portion of their profits to donate a similar product or service to those in need. Customers are then incentivized to buy the produc not just because of the benefits of purchasing it but also for the personal uplift that comes from being generous. These models often depend on a strong brand story to draw in consumers and to ensure that they spread the word. Inclusive Sourcing Indlusive sourcing involves working with small farmers and producers in order to create stronger market connections, increase the farmers' skills and job education and make for better overall links in the supply chain. Indlusive supply chains can also help legitimize a company in local markets, and help produce more 'ethical' products. This in turn creates better traceability and supply consistency vis better sourced products Subscription Madel Financial Innovation In subscription models, the customer must pay an ongoing fee in order to gain access to the product or service. Its application is simple- the customer pays a fee and the company receives recurring revenue and long-term relationships with the customer. Crowdfunding This model enables an entrepreneur to tap the resources of his/her network in order to raise money in small increments from a group of people rather than report to a primary shareholder. Crowdfunding enables alternative and more niche ideas that may not fly with a mainstream investor but holds particular sway with a particular group or minority. They often have a social impact or community development angle to them, and like the co-op model, completely upends the traditional power structures of business. %24 Innovative Product Financing Freemium In this model, consumers lease or rent an item that they can't afford or don't want to buy outright. Often, the lease agreement can lead to ownership, which is sometimes called a "progressive purchase." While this model is not new, it is used in innovative ways for environmentally friendly products-it is particularly popular in the renewable energy industry-and leads to positive social impacts in the long term. In this model, a product is provided free of charge, but money is required for extra 'premium' features or goods. A freemium model is sometimes used to build a consumer base when a critical mass is needed to make the product valuable to consumers. Although this model, when evaluated independently, doesn't necessarily offer a greater impact, it has been utilized to extend product lifecycles and incentivize engagement by customers, which is why it has been included in this list. Pay For Success This model employs performance-based contracting, typically between providers of some sort of service and the government, to fund anticipatory initiatives to prevent negative outcomes. The intent is to save the government money and improve communities by preventing negative outcomes. This model opens the door for financing from private investors, encourages more efficacious use of government funds, and incentivizes better performance by product/service providers. Building a Marketplace Companies using this model to build new markets for their products in innovative and socially responsible ways, indluding delivery of social programs, partnerships, adapting to local markets, and bundling with other services like microfinance and technical assistance. Here, the novel exchange manifests in the creation of a new market where there was none before. Building a marketplace involves much more than merely creating and marketing a new product. In this model, consumers usually need to be educated about the product or service and how or why it might be of value Microfinance Microfinance involves providing small loans and financial assistance to low-income borrowers without access to a bank account, redaiming the costs on borrowers interst rates. The model has spread widely in developing countries in the last decade as a way to advance financial inclusion and financial literacy. Many believe that when microfinance loans are given to entrepreneurs and small businesses, it can alleviate poverty and drive greater prosperity for families and communities. Differential Pricing Some customers are simply not willing or able to pay as much as others for the same product. Realizing that customers may want the same product but have different payment thresholds, companies sometimes subsidize those who can't afford to pay as much by charging others higher prices. The model has most recently been put to use in developing world contexts where many consumers need essential services (e.g., health, education) but cannot afford the market price. Institutions that offer different prices enable access to a greater number of consumers from a range of economic levels. Micro-Franchise This model leverages the basic concepts of traditional franchising, but is specifically focused on creating opportunities for the poor to own and manage their own businesses. This model has become popular in developing economies where it is often risky to start a small business. Sometimes called a "business in a box," the micro-franchise model entails less risk for the would-be entrepreneur because it utilizes a tried and tested model. Here, as in the inclusive sourcing model, the exchange between company and employee becomes much more dynamic than merely a payment for services both are incentivized to engage more deeply. With a micro-franchise model, the knock- on benefits are felt within the company's value chain as well as within the communities the company operates within. Employees gain more than a job- they become entrepreneurs. Base of the Pyramid Shared Resource Diverse Impact The sharing economy has changed the way consumers think about ownership and created a new level of engagement between perfect strangers in cities around the world. Shared resource models enable customers to access a product, rather than owning it, and use it only as needed. Because the product is shared, the model enables efficient, productive use of a resource that might otherwise sit idle. This model differs from product as a service in that usually product users depend on the participation and good behavior of other users for the model to operate effectively. Product as a Service In this model, consumers for the services that a product provides without the responsibility of replacing or disposing of it. The company takes ownership of the lifecycle of the product, whereas that responsibility used to lie with the consumer. This model shifts the burden of product repair and replacement to the company, and offers customers top product performance at all times, creating more accountability within the broader system for product disposal, and higher likelihood of product repair, reuse and recycling. Alternative Marketploce An alternative marketplace occurs when a firm circumvents a traditional method of transaction or invents a new type of transaction to unleash untapped value. Alternative marketplaces can reveal unused resources, disintermediate hierarchical systems, and in unique cases, create new channels for exchange. The model often, but not always, manifests through technology network innovations, like using the Internet to make a marketplace more transparent or using cellular phones to transform airtime into money. Ultimately, alternative marketplaces provide a platform for exchange that matches unused supply and unmet demand. Behaviour Change A significant component of the sustainability agenda is convincing consumers to change their ingrained buying habits. Business models designed to stimulate behavior change for sustainability are a relatively new concept, but demonstrate that profitable models can coincide with decoupling from resource use. These models aim to reduce consumption, change purchasing patterns or modify daily habits. Most often, they empower consumers with knowledge about their consumption, helping them track product or service use, often using game dynamics to create competition between customers. In the model, the nature of the transaction between consumer and company becomes nuanced: it is less about selling more goods or services and more about building brand trust and engagement. Companies employing this model aim to increase "stickiness" with the customer, making him or her less likely to buy from another good/service provider Braught to you by SB Coil Engimering Lid www.sbcivils.co.uk Ltd Sources: http://sustainabilityadvantage.com/2010/07/20/3-sustainability-models/ http://www.sustainability.com/projects/business-model-innovation http://www.pachamama.org/blog/models-of-sustainability-sweden-runs-out-of-garbage