Axel Sommer Managing Green Business Model Transformations < ) Springer
Contents List of Figures List of Tables List of Abbreviations XIX XXIII XXV Part I: Introduction 1 The Emergence of Green Business Models 3 1.1 The Green (r)evolution 3 1.2 The Origins of the Business Model Concept 4 1.3 Green Business Models as a Means towards Competitive Sustainability 5 2 Purpose of this Work and Research Approach 7 2.1 Current State of Research 7 2.1.1 Overview of Relevant Research Domains 7 2.1.2 Research Gap 12 2.2 The Central Research Question 13 2.3 Definition of Scope 14 2.3.1 Definition of the Term "Green" in this Work 14 2.3.2 Types of Corporations in Scope 15 2.3.3 Green versus Conventional Business Models 15 2.3.4 Analytical Focus Regarding the Transformation Process 17 2.4 Structure of this Work 17 2.5 Research Approach for the Practica! Part 19 Part II: Theoretical Foundation of Green Business Model Transformations 3 Environmental Sustainability in Business 23 3.1 Sustainability Defined 24 3.1.1 The Macroeconomic Perspective: Weak versus Strong Sustainability 24 3.1.2 Corporate Sustainability 27 3.2 The Relevance of Corporate Sustainability for Economic Success 29 3.2.1 Critical Views on Corporate Sustainability 29
XIV Contents 3.2.2 Evidence for the Value Creation Potential of Corporate Sustainability 31 3.2.3 The Business Case for Environmental Sustainability 36 3.3 Building the Business Case for Sustainability 39 3.3.1 Overview of Environmental Sustainability as a Management Issue 40 3.3.2 Current Perceptions on Environmental Issues 40 3.3.3 Stakeholders' Relevance for Environmental Management and Competitiveness 42 3.3.4 Possible Courses of Corporate Action to Tackle Environmental Issues 44 3.4 Corporate Environmental Strategies 45 4 The Business Model Concept as a Unit of Analysis for Management Science 49 4.1 Strategy and its Relation to Business Models 49 4.2 Definitions and Elements of Business Models 52 4.3 Recapitulation of the Business Model Ontology by Osterwalder 56 4.3.1 The Product Pillar 57 4.3.2 The Customer Interface Pillar 59 4.3.3 The Infrastructure Management Pillar 62 4.3.4 The Financial Aspects Pillar 65 4.4 The Business Model Composition Applied in this Work 67 4.4.1 Value Propositions 69 4.4.2 Target Croups 69 4.4.3 Key Resources 70 4.4.4 KeyProcesses 71 4.4.5 Financial Logic 72 4.5 Understanding System Behaviour 73 4.5.1 Background and Basics of Systems Thinking 73 4.5.2 Practical Application of Systems Thinking 75 4.5.3 Systems Archetypes 78 4.5.4 Dynamics for Growth with New Business Models 83 4.6 Business Model Change and Evaluation 88 5 Towards a Taxonomy of Green Business Models 93 5.1 Existing Business Model Classifications 93 5.2 Basic Considerations for Developing a Taxonomy of Green Business Models 95 5.3 Four Generic Business Model Types Differentiated by Aggregated Environmental Impact 99 5.3.1 Type 0: Reference Case 100 5.3.2 Type 1: Incremental Improvement 100 5.3.3 Type 2: Discontinuous Improvement 101 5.3.4 Type 3: Strong Sustainability 102
Contents XV 5.4 Distinguishing the Four Business Model Types in Practice 102 5.4.1 Challenge 1: Define Scope of Environmental Impacts 103 5.4.2 Challenge 2: Determine Weights for Environmental Impacts... 104 5.4.3 Challenge 3: Distinguish Discontinuous vs. Incremental Improvement 104 5.4.4 Proposed Solution: 4-Step Assessment Procedure 105 5.5 Green Business Model Prototypes 106 6 Organisations, Change, and Innovation 109 6.1 Organisation Theory 109 6.1.1 Organisations as Rational Systems 109 6.1.2 Organisations as Natural Systems 111 6.1.3 Organisations as Open Systems 112 6.1.4 Complexity Theory and Organisations 116 6.2 Theoretical Perspectives on Organisational Change 118 6.2.1 What Is Organisational Change? 118 6.2.2 Typologies of Organisational Change 118 6.2.3 Four Generic Types of Process Theories for Change 119 6.2.4 Organisational Growth and Crisis Stages 123 6.2.5 Punctuated Equilibrium Theory 125 6.2.6 The Garbage Can Model 126 6.2.7 The Theoretical View on Change Applied in this Work 128 6.3 Change Management 131 6.3.1 Choosing the Appropriate Type and Pace of Change 132 6.3.2 Roles in Change 135 6.3.3 Organisational Inertia 139 6.3.4 Resistance to Change as a Change Management Issue 143 6.3.5 Practical Guides for Change Management 148 6.4 Theoretical Perspectives on Organisational Innovation 150 6.4.1 What Is Organisational Innovation? 150 6.4.2 Typologies of Organisational Innovation 151 6.4.3 Innovation in Large and Established Companies 152 6.4.4 The Sources of Innovation 154 6.4.5 Innovativeness and Absorptive Capacity 155 6.5 Innovation Management 157 6.5.1 Antecedents and Challenges of Successful Innovation Management 157 6.5.2 The Process of Innovation 158 6.5.3 Using Sustainability as a Catalyst for Innovation 167 Part III: Towards a Practical Management Approach 7 A Survey on Green Business Model Transformations 171 7.1 A Plea for Green Business Model Transformations 172 7.1.1 Normative Justification 173 7.1.2 Economic Justification 173
XVI Contents 7.2 Vignette 1: Green Food - Niche or Inevitable Transformation? 177 7.2.1 Prosta' s Turbulent Quest for Profitability through Greener Products 178 7.2.2 Nestle and its Delicate Path towards Sustainability 182 7.3 Vignette 2: Off-Grid Solar-Powered Lighting for the Base of the Pyramid 184 7.4 Vignette 3: Energy Savings in Buildings - Performance Contracting Services 188 7.5 Vignette 4: Green Corporate Platforms for Growth - GE Ecomagination 190 7.6 Vignette 5: The Chemical Industry - Sustainability Services and Green Chemistry 194 7.7 Vignette 6: Sustainable Transport Industries - Airlines and Shipping 196 7.7.1 Green Airlines - An Oxymoron? 196 7.7.2 Maersk - Challenging Conventional Wisdom within the Shipping Industry 200 7.8 Vignette 7: Electric Cars - An Inconvenient Revolution 203 7.8.1 First Mass Market Success - The Toyota Prius Hybrid 204 7.8.2 The First Wave of Fully-Electric Vehicles for the Mass Market 206 7.8.3 The Electric Car Game Is a Business Model Game 208 7.9 Industries Not Covered in Case Vignettes 212 7.10 Environmental Performance Assessment of Case Study Examples... 213 7.10.1 Significant Green (Type 2) 215 7.10.2 Conditional Significant Green (Type 2) 216 7.10.3 Non-significant Green (Type 1) 217 7.10.4 Non-green (Type 0) 219 8 Managerial Implications of Survey Results 221 8.1 Overview of Managerial Implications 221 8.2 Snap-Shot Analyses of Boundary Conditions 222 8.2.1 Industry Level: Business Model Paradigms and Patterns of Firm Behaviour 223 8.2.2 Business Model Level: Economic Effects of Environmental Sustainability 229 8.2.3 Company Level: Change Capabilities and Eco-Mindedness 234 8.3 Dynamic Patterns of Business Model Transformations 237 8.3.1 The Trade-Off between Economic and Environmental Performance within and between Alternative Types of Business Models 237 8.3.2 First Mover Advantage Pattern 240 8.3.3 Creative Destruction Pattern 242 8.3.4 Collective Opportunity Pattern 245 8.3.5 Complementary Competition Pattern 246
Contents XVII 8.3.6 Green Backlash Pattern 247 8.3.7 Green Movement Pattern 249 8.4 Corporate Journeys towards Green Business Models 250 8.4.1 Motivation and Initial Situation 251 8.4.2 Strategie Orientation 252 8.4.3 Transformation Paths 255 9 Managing Green Business Model Transformations - A Framework for Management Practice 259 9.1 Framework Overview 259 9.2 Phase I: Embracing Ambiguity 262 9.2.1 Problem Context 262 9.2.2 Scenario Flanning 265 9.2.3 Management Tool: Accelerated Green Scenario Flanning 270 9.2.4 Green Scenario Prototypes 273 9.2.5 Change Management Challenges 284 9.3 Phase II: Rethinking Old Certainties 285 9.3.1 Problem Context 285 9.3.2 Management Tool: Executive Ideation Workshop 286 9.3.3 Management Tool: Crowd Ideation Event 294 9.3.4 Change Management Challenges 297 9.4 Phase III: Translating into Business Impact 298 9.4.1 Problem Context 298 9.4.2 Designing Business Models 299 9.4.3 Management Tool: Business Model Refinement Heuristic 301 9.4.4 Change Management Challenges 317 9.5 Phase IV: Flanning for Action 319 9.5.1 Problem Context 319 9.5.2 Management Tool: Economic Model 320 9.5.3 Management Tool: Strategie Plan 326 9.5.4 Management Tool: Change Plan 328 9.5.5 Change Management Challenges 331 9.6 Phase V: Making it Happen 332 9.6.1 Problem Context 332 9.6.2 General Considerations for Implementing Green Business Model Transformations 333 9.6.3 Specific Considerations for Different Corporate Journeys 334 9.6.4 Change Management Challenges 337 9.7 Phase VI: Finding New Signals 338 9.7.1 Problem Context 338 9.7.2 Optimising the New Business Model 339 9.7.3 Finding New Signals 340 9.7.4 Change Management Challenges 341 9.8 Recapitulation of the Management Framework 342
XVIII Contents Part IV: Conclusion and Outlook 10 Conclusion and Outlook 349 10.1 Summary 349 10.2 Limitations 350 10.3 Future Research 350 Reference List 353 Appendix 1: List of Interviews 391 Appendix 2: Gase Study Protocol Excerpt 393 Appendix 3: Industry Profiles of Relative Environmental Impact 399