Business model innovation is the process of transforming the fundamental ways in which a company creates, delivers, and captures value. It is an art of continuously changing an organization’s model in order for them to remain competitive in today’s changing business environment. Business model innovation can help businesses to improve their customer experience through lower costs, or product consumation by introducing a new product or service that addresses a previously unmet need.
Furthermore, many businesses today have developed a sustainable model innovation that involves integrating sustainability in their traditional business models that aims to create value for all stakeholders while preserving the planet’s resources for future generations in addressing existential, environmental or societal issues.
But what are the crucial steps in creating a Sustainable Business Model Innovation?
- Evaluation of the Business Model
Evaluating a business model is a process that involves analyzing the weaknesses and strengths of the current business model, including the effectiveness, and sustainability through which a company creates and delivers value to its customers as well as the impact of the business practices on the welfare of people while ensuring financial viability.
- Innovation of the Business Model
Innovation is the ‘key ingredient’ for building a sustainable business model, including exploring innovative ideas that align with sustainability, like business partnerships, or product innovations to transform the current business model. Overall, it is not just product or service innovation, but a transformation of how a business operates and delivers value to its stakeholders.
- Modularity of the Business Model
The modularity of a business model refers to its ability to be separated into distinct modules that later can be combined in various ways to create different outcomes. This means creating clearly defined modules or components, each serving a specific function of the business. These modules can include products, services, technologies, processes, or even organizational structures that businesses need in order for them to be less interdependent, and also protected from future risks or losses.
- Transparency of the Business Model
Successful business must be transparent about social and environmental impact, including reporting on sustainability initiatives, environmental practices, and social responsibility efforts. However, they also have to be alert and monitor the external environment, and draw scenarios of possible futures as well as to know what’s going on in the current business market.
Conclusion
Sustainable business model innovation is a strategic necessity in today’s world. By integrating environmental, social, and economic considerations into their core strategies, businesses can create long-term value while mitigating risks and enhancing resilience. Embracing sustainability is about future-proofing operations and thriving in a rapidly changing global landscape. Ultimately, businesses that prioritize sustainable business model innovation are better positioned to succeed in the long run, benefiting both society and their own business success.
Refferences :
- Sabita Bhalla, ‘’7 Step Process to Build A Sustainable Business Model‘’ , (2023), https://greentechpreneur.com/7-step-process-to-build-a-sustainable-business-model/#:~:text=7%20Step%20Process%20to%20Build%20A%20Sustainable%20Business,the%20Benefits%20of%20a%20Sustainable%20Business%20Model%20
- Tima Bansal, ‘’5 Principles of a Sustainable Business Model’’ , (2011) https://nbs.net/five-principles-of-a-sustainable-business-model/
- Daniel Pereira, ‘’Business Model Innovation: Strategies and Examples for Successful Transformation’’ (2023) https://businessmodelanalyst.com/business-model-innovation/
- David Young and Martin Reeves, ‘’The Quest for Sustainable Business Model Innovation’’ (2020), https://www.bcg.com/publications/2020/quest-sustainable-business-model-innovation
Author: Ljupka Janevska
