Tap the joint potential of business models and shared value creation creation.
Practitioners and researchers have witnessed the rise of two new, yet very popular, concepts: business model innovation and shared value creation. To better understand their joint potential, this NBS South Africa report examines how business models can provide a platform for sustainability and shared value creation.
Prepared by Florian Lüdeke-Freund, Lorenzo Massa, Nancy Bocken, Alan Brent, and Josephine Musango, the main report provides a synthesis of the literature and practice of business models for shared value. The report provides insights related to the idea of business models for shared value, including:
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A view of business as an engine of societal progress.
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A broader notion of value — from primarily economic to also social and environmental.
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A system-level perspective on value creation — from being predominantly centred on customers and shareholders to embracing firm’s stakeholders.
Key Components of the Comprehensive Report
Geared at researchers, the main report starts from expectations for business models for sustainability and shared value, briefly presenting major topics found in academic literature. With the goal of offering a language and a way of thinking to support the identification of opportunities for shared value and to support the design of innovative business models, the researchers introduce two frameworks.
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The Hourglass Model, pictured below, synthesizes and structures the most important elements of sustainability-oriented and shared value creation on a systems level.
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A Roadmap Model links strategic considerations with opportunity identification (by means of a dedicated tool, the Sustainability Strategic Roadmap), while it supports corresponding business model innovation (by means of another dedicated tool, Business Model Thinking framework).
FIGURE 1. THE HOURGLASS MODEL
It presents “archetypes” to support such innovation processes by offering role models to draw on. These archetypes may be used as conceptual and practical reference points. One section of the report is dedicated to social enterprise business models. The report concludes by examining conditions needed to develop business models for sustainability and shared value.
Examining Business Models in the South African Context
Some cases in this report take a South African perspective. South Africa is the only country worldwide with a constitution that recognizes sustainable development as a human right. Publicly listed companies are obligated to report in detail on their sustainability activities and performance. Yet, according to the country’s Department of Environmental Affairs and United Nations Environment Programme, South Africa’s society and its development path indicate unsustainable patterns, environmentally, socially, and economically. South African companies face diverse and interlinked business and societal challenges in terms of sustainable and shared value creation. Studying these companies offers insights into challenges and solutions that companies around the world can learn from.
Towards Nested Business Models
The report highlights the importance of moving from the traditional business model view to an embedded view that positions the business model within the nested system of the natural environment, society, and economy. A basic set of normative principles is proposed to support business model designs that acknowledge this embeddedness.
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