workshop at International Program Green Sustainable Economy at UCN Aalborg, 2013. Contribution from Hogeschool Utrecht, HU University of Applied Sciences Utrecht

1. New Business Models for
Sustainability
International program
Green Sustainable Economy
University College Aalborg
Menno de Lind van Wijngaarden

2. Program
n Sustainability
n Business picking up the challenge
n Innovation for sustainability
n Social Entrepreneurship
n Circular economy
n Base of the pyramid

3. What is sustainability?

4. Sustainability
n The problems at hand:
n Pollution
n Resource depletion
n Natural ecosystems
n Resources
n Inequity
n Population growth
n Consumption growth

5. Sustainability approaches
n Mitigation strategies “If we act now we can
save the world as we know it”
n E.g. CO2 offset, Emission Trading Schemes
n Adaptation strategies “ be ready for a big
disruption”
n E.g. low carbon strategies, zero footprint

6. Program
n Sustainability
n Business picking up the challenge
n Innovation for sustainability
n Social Entrepreneurship
n Circular economy
n Base of the pyramid

7. The role of business
The culprit?
The answer to the solution?

8. Business as driver of change?
n Quick in response to external threats
n Know-how in-house, industrial networks, in
public-private partnerships.
n Capital available for investment
n Pressure over suppliers
n Influence over customers
n Round tables, covenants, standardizations
with competition

9. From obligation to opportunity
1945-1960’s
Pollution:
Denial or “part
of progress
1970’s-1980’s
End-of-Pipe
regulation.
Pay to reduce
negative
impact (trade-
off)
1980’s-2000
Greening:
pollution
prevention,
product
stewardship
(eco-
efficiency)
2000-present
Beyond
greening:
Clean
technology,
Base of the
Pyramid

10. Perspectives on Business
Different perspectives of business in the sustainability context

11. Areas of Business Investment
Areas of business investment in sustainability today

12. Sustainable value framework

13. Program
n Sustainability
n Business picking up the challenge
n Innovation for sustainability
n Social Entrepreneurship
n Circular economy
n Base of the pyramid

14. What is innovation?

15. The process of innovation
n Idealized process of innovation
n In real life innovation will not be this neatly
categorized
Insight /
Research
Develop
ment
Design
Market
Evaluation
Produc
-tion
engineer
-ing
Market /
Pilot
testing
Full scale
manufac
-ture &
launch
Innovation
Research and Development Commercialization

16. Innovation

17. The functions of a business model
Business Model
Invention
Value Creation
Value capture

18. Innovation and organization
n How can you foster innovation in your
organization?
n Business should have “ absorptive capacity”
n “the ability of a firm to recognize the value of
new, external information, assimilate it and
apply it to commercial ends”

19. Corporate culture
n In general, firms with a strong record of
innovation have a corporate culture that
values and promotes:
n Outward-looking orientation
n Facilitating communication
n Openness to new ideas
n Challenging established ideas
n Acceptability of failure
n Promotion of evaluation and reflection

20. Program
n Sustainability
n Business picking up the challenge
n Innovation for sustainability
n Social Entrepreneurship
n Circular economy
n Base of the pyramid

21. Example of Social Entrepreneur
n Muhammad Yunus
n Founder of the Grameen bank, it’s model of
microfinance inspired hundreds of banks to develop
similar business models
n Received the Nobel peace price in 2006

22. Social entrepreneurship
n Growing phenomena, because…
n Growing inequity
n Weak institutions, retrieving governments
n Scandals in corporate world
n Need for inspiration!

23. What is Soc. Entrepreneurship?
n Relative new research field therefore broad definition.
n ‘a process involving the innovative use and
combination of resources to pursue opportunities to
catalyse social change and/or address social needs.’
(Mair and Marti, 2006)
n Often a focus on the entrepreneur (the change agent);
personality, qualities, values and visions.
n Characterized by
n Social impact (Social return on investment)
n Innovation (business model)
n Market orientation (performance-driven,
competitive, co-operation across sectors.)

24. Example
• Restaurant chain ‘Fifteen’
• Founded by Jamie Oliver in 2002
• Each restaurant recruits unemployed and under-qualified young people, aged
between 18 and 24, from the local area and trains them to become qualified chefs
through an Apprentice Program.
• 220 have graduated since the start and more than 90 per cent of apprentices stay in
the business.
•The profit of the restaurants goes into the chef apprenticeship scheme

25. Philanthropy v.s. SE
Philanthropy Social Entrepreneurship
Spontaneous charity Reasoning about social return
Honoring sacrifice and justifying
weak results
Need for talent and expertise to
address challenges
Pure giving Business like approaches
Relieving suffering Solving the problem and its cause
Caring for people Empowering people
Dees, J. G. (2012)
But not just a bipolar strategy;
Some problems ask for philanthropy, others for SE
Most SE start with charity
The two different cultures can also be aligned.

26. Program
Sustainability
Business picking up the challenge
Innovation for sustainability
Social Entrepreneurship
Circular economy
The Natural Step
Natural capital
Cradle to Cradle
Base of the pyramid

27. Circular economy
Industry should move to closed loop systems
in alignment with laws of nature:
Circular Economy:
The Natural Step
Natural Capitalism
Cradle to Cradle

28. The Naturel Step
The Natural Step Karl-Henrik Robèrt
The Four System Conditions... . . . Reworded as The Four Principles of Sustainability
In a sustainable society, nature is
not subject to systematically
increasing:
To become a sustainable society we must...
1. concentrations of substances
extracted from the earth's crust
1. eliminate our contribution to the progressive buildup of substances
extracted from the Earth's crust (for example, heavy metals and fossil
fuels)
2. concentrations of substances
produced by society
2. eliminate our contribution to the progressive buildup of chemicals and
compounds produced by society (for example, dioxins, PCBs, and DDT
)
3. degradation by physical means 3. eliminate our contribution to the progressive physical degradation
and destruction of nature and natural processes (for example, over
harvesting forests and paving over critical wildlife habitat); and
4. and, in that society, people are
not subject to conditions that
systemically undermine their
capacity to meet their needs
4. eliminate our contribution to conditions that undermine people’s
capacity to meet their basic human needs (for example, unsafe working
conditions and not enough pay to live on).

29. Example
After receiving criticism on formaldehyde off-
gassing , use of PVC, paper and chlorine use
for catalogue, IKEA decided to work with The
Natural Step in 1992.
It is now the basis for their environmental
program; step by step environmental impact
reduction of all products.

30. Natural Capitalism 3 principles
• Buy the time to deal with the growing challenges
facing the planet by using all resources far more
productively. (=eco-efficiency)
• Redesign how we make all products and
provide services, using such approaches as
biomimicry and cradle to cradle.
• Manage all institutions to be restorative of
human and natural capital

31. Natural Capitalism
Increase productivity of natural resources
Whole system design
Adopting innovative techniques
Redesign production according to biological
models
Closed loop systems
Zero waste
Change the business model
Not selling lifts/elevators, but “leasing vertical
transportation”

32. Example: Interface Inc. carpet
Ray Anderson, CEO
Changed business
model
From selling to leasing
Evergreen lease “Floor
Covering Service”

33. Innovation of Business Models
From waste as a cost to a waste as an asset
Recycling factory in Kampala, Uganda pays cash p. kilo
plastics, has lead to numerous local initiatives, 43 people
working in the factory, hundreds make a living collecting. The
clean end products are sold to China for fibers of fleece and
carpets. The environment benefits too.
From car lease to mobility services
Athlon car lease, the biggest lease company of the
Netherlands closed a deal with the Dutch Railway, NS. It
offers now clients a car lease plus NS Business Card. Athlon
wants to become a mobility broker in 2020.

34. Cradle to Cradle
The Next Industrial Revolution?

35. Waste = Food Principle

36. Waste = Food
Design producs and processes in such a way:
that resources remain available for human
use or the natural environment
That they are save for the environment and
can be reused: Waste = Food
Non renewables are valuable resource for
technosphere (food for process)
Non reusables are decomposable in the
biosphere (food for organisms)

37. Cradle to cradle book
Cradle to cradle: remaking the
way we make things
Written by Architect McDonough
and chemist Braungart
Published in 2002

38. resource
raw material
component
assembly
consumption
disposal
Cradle to Grave Cradle to Cradle
resource
raw material
component
assembly
consumption
disposal

39. Cradle to Cradle
In contrast to Cradle to Grave concept
Reduce, reuse, recycling (3 R’s)
Reducing: ‘poisoning’ at a slower rate
Reuse: products are not designed for this
purpose
Recycling: down cycling and potentially
dangerous

40. Cradle to Cradle
Focus on:
Design, start from the root of the problem
Biological processes, like ecological
systems
Not Eco-efficiency (3 R’s) but Eco-
effectiveness
Waste = Food principle
Biological nutrients and technical nutrients

41. What about the book?
Do you notice something about the physical
appearance of the book?

42. The Book itself
No Paper, but synthetic resins
Non toxic, recyclable (up cycle)
Superior durability and performance
Waterproof
Ink can be washed of
• As an example of their
concept: the book is a
‘technical nutrient’

43. C2C in Business
Ideas has followers among “big business”:
Nike, Ford Motor Company, Herman Miller
2 documentaries in NL attracted attention of
business

44. Example of certified C2C
Diapers fully recyclable, compostable and
flushable
No use of chlorine, plastics, latex, perfumes,
inks and dyes.
It takes up 500 years to biodegrade for a
normal disposable diaper in a landfill

45. C2C in the Netherlands
Happy Shrimp Farm
Heat exchange system with E.ON Power Plant
Biological filter bed
No damage to marine ecosystems
http://www.happyshrimp.nl/

46. Happy Shrimp Farm
Went bankrupt 23-06-2009
Shrimps didn’t grow fast enough, harvests too
small
2 partners are in conflict
600.000 debt at ING bank

47. Program
Sustainability
Business picking up the challenge
Innovation for sustainability
Social Entrepreneurship
Circular economy
Base of the pyramid

48. Bottom of the Pyramid

49. Bottom of the Pyramid
Concept of C.K. Prahalad
4 billion people at bottom of economic
pyramid, with income less then $ 1.500 PPP
Can be seen as a latent market of goods and
services
Aggregated there is a huge potential

50. Bottom of the Pyramid
Removal of poverty penalty (=high prices due
to, local monopolies, inadequate access, poor
distribution, strong traditional intermediaries)
Find access to BOP market (urban easier than
rural areas)
Create capacity to consume (e.g. single serve
packaging)

51. Bottom of the Pyramid
Three A’s
AFFORDABILITY (single serve package)
ACCESS (high intensity of distribution)
AVAILABILITY (consumption when capacity is
there)

52. BOP market requirements
Innovative
High price performance
Conserving resources
Focus on functionality
Deskilled work / operation
Education of customers
High performance / endurance

53. Critique on BoP
By co-author Stuart Hart
Too many same products at lower prices, no
new approach
environmental unsustainable products and
services “dumped” on BoP market
Poor are not just consumers, should be
considered as partners in mutual learning

54. From Bottom to Base

55. New Business Models
Conclusions:
Business as a driver for change, when primed for
innovation.
Government and regulating authorities needed for
leveling playing field, stimulation of innovation
Circular economy principles needed for
environmental solutions
Base of the Pyramid, social entrepreneurship for
social solutions

56. Thank you
Be the change that you want to see in the world.
Mohandas Gandhi