About the Better Business Model Canvas
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A 30 minute video of this talk is available on the Strongly Sustainable Business Model Group's youTube Channel: http://youTube.com/ssBusinessModelTV http://www.youtube.com/watch?v=ApOkQhbvJSc. In these slides Antony Upward, Sustainability Business Architect introduces the new better Strongly Sustainable Business Model Canvas and introduces the 14 questions it asks to help design better businesses. As usual, recommended downloading the presentation and viewing in slideshow mode with the speakers notes handy If you'd like to stay in touch with our work on Strongly Sustainable Business Models then please - Watch our ~3 minute introduction - http://about.SSBMG.com - Watch our other videos - http://youTube.com/ssBusinessModelTV - Like our facebook page - https://www.facebook.com/StronglySustainableBusinessModels - Join the linkedin group: http://forum.SSBMG.com - Give us your ideas via our survey (http://survey.SSBMG.com) or just sign-up for email updates (http://signup.SSBMG.com) - Visit our website: http://www.SSBMG.com
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About the Better Business Model Canvas
- 1. AbouttheStronglySustainableBusinessModelCanvas Version1.022013-11-20 ©EdwardJamesConsultingLtd.SomeRightsReserved. 1 www.SSBMG.com ThisworkislicensedunderaCreativeCommonsAttribution-NonCommercial-ShareAlike3.0 UnportedLicense.Permissionsbeyondthescopeofthislicensemaybeavailableathttp:// www.EdwardJames.biz/Permissions Antony Upward, MES, CMC* antony@EdwardJames.biz @aupward #SSBMG ssBusinessModelTV * Masters of Environmental Studies in Business Model Design and Sustainability; Certified Management Consultant About the Strongly Sustainable Business Model Canvas Introducing a Better Visual Tool to Design Better Businesses YorkU Schulich School of Business SB-OMIS6700 - Mgt of New Technology Prof. David Johnston, November 20, 2013 Builds on many Builds on manyslides; download and slides; download andview in slide show view in slide showmode for improved mode for improvedcomprehension comprehension Hidden slides Hidden slideswith additional with additionalinfo!info! SpeakerSpeaker Notes &Notes & Refs.Refs.
- 2. 2 • To view and download the slides, including speakers notes and references, see the link below the video • To skip the background to focus on the description of the Strongly Sustainable, Business Model Canvas jump to ~8 minutes 30 seconds
- 4. 4 = Do Good & Do Well Why are Better Businesses Better? Less Risk More Innovation
- 6. 6 Previous Best Practice • Have Idea + Get Money + Hard Work + Hope + Luck Not… • Efficient • Effective • Reliable
- 7. 7
- 8. 8 Lots about money, and the people you financially transact with… …(almost) nothing about everyone and everything else
- 9. 9 © Antony Upward / Edward James Consulting Ltd., 2013 Some rights reserved. Permissions available at www.EdwardJames.biz/Permissions Introducing…The Strongly Sustainable Business Model Canvas V1.031
- 10. 10 The Profit-First Business Model Canvas: 9 Questions to be Profitable
- 11. 11 Example of a Profit-First Business Model: Montreux Jazz Festival
- 12. 12 3. Channels3. Channels But…does this help to design a better business? 1. Customer Segments 1. Customer Segments 2. Value Propositions 2. Value Propositions 4. Customer Relationships 4. Customer Relationships 5. Revenue Streams 5. Revenue Streams 7. Key Resources 7. Key Resources 6. Key Activities 6. Key Activities 9. Cost Structure 9. Cost Structure 8. Key Partners 8. Key Partners What’s Missing?
- 13. 13 1. Revise Definitions… A description of how an organization defines and achieves success over time. A Business ModelA Business Model: the logic for an organization’s existence: who it does it for, to and with; what it does now and the future; how, where and with what does it do it; and how it defines and measures its success. “A Business Model describes the rationale of how an organization creates, delivers and captures value [in monetary terms]” Value isValue is the perception by a human or non- human actor of a need being met; measured in aesthetic, psychological, physiological, utilitarian and / or monetary terms. From To Value is created when needs are met via satisfiers that align with the recipients world-view, and destroyed when they don’t Necessary, but not Sufficient
- 14. 14 2. Add Real Context of Business Context: Environment (Physical / Chemical / Biological) (Monetary) A Business (Social/Technology) Context: Society © Antony Upward / Edward James Consulting Ltd., 2013 Some rights reserved. Permissions available at www.EdwardJames.biz/Permissions Context: Financial Economy
- 15. 15 “Just” Being Profitable is Not Simple “And that, in simple terms, is how you start a profitable small business”
- 16. 16 2. Customer 4. Learning & Growth 3. Internal Processes 1. Financial 3. Add Useful Perspectives Perspectives on a business from the profit-first Balanced Scorecard
- 17. 17 4. Learning & Growth 3. Internal Processes 1. Financial 3. Add Useful Perspectives Who does a firm do it to, for and with? What does a firm do now and in the future? How, where and with what does the firm do it? How does a firm define and measure success (in Environmental, Social & Monetary units)? © Antony Upward / Edward James Consulting Ltd., 2013 Some rights reserved. Permissions available at www.EdwardJames.biz/Permissions
- 18. 18 Context: Environment (Physical / Chemical / Biological) (Social/Technology) (Monetary) All Organizations in a Business Model Context: Society 4. Relate Real Context & Perspectives to Business Models Financial Economy Context: © Antony Upward / Edward James Consulting Ltd., 2013 Some rights reserved. Permissions available at www.EdwardJames.biz/Permissions A Business
- 19. 19 4. Contexts & Perspectives Profit-First Canvas • Missing: any conception of the boundary between the focal firm, the other organizations in a business model, the economy, society and the environment Strongly Sustainable Canvas • Firm boundary clearly indicated. • Economic, social and environmental sources and sinks of all components of a business model can be identified – materials, energy, services, actors, etc. Hidden Slide Hidden Slide
- 20. 20 …Context&Perspectives Flattened © Antony Upward / Edward James Consulting Ltd., 2013 Some rights reserved. Permissions available at www.EdwardJames.biz/Permissions
- 21. 21 5. Adjust and Add Missing Detail • Nothing deleted from profit-first canvas • Any profitable business model can, indeed, must still be describable • All 9 questions remain, but extended and modified • Adjustments and additions recognize business drivers of ‘unintended consequences’ and ‘externalities’ in profit-first approach • Allows for systematic identification of risks and opportunities missed by profit-first canvas – Adjustments generalize profit-first ideas – Additions bring new ideas required to design better businesses See “Thesis Working Paper #2: Strongly Sustainable Business Model Canvas – Summary Comparison to Business Model Canvas” for more detail. Available to First Explorers (see end of presentation for details). The Strongly Sustainable Business Model Canvas: 14 Questions to Do Good & Do Well
- 22. 22 5a. Stakeholder Perspective Firm boundary Environmental, social & economic contexts Pool of all potential stakeholders The fundamental needs of the actors Desired relationships with all stakeholders All chosen stakeholders Who does a firm do it to, for and with? Value proposition delivery channels for all stakeholders
- 23. 23 5a. Stakeholder Perspective Profit-First Canvas • Missing: – All your possible customers and all other possible stakeholders – The fundamental needs of all your stakeholders • How can you design great value propositions without this? Strongly Sustainable Canvas • Add: actors – the pool of all potential stakeholders • Add: needs – the fundamental needs of the actors; the needs that our value propositions must satisfy for the business to be successs • Adjust: Add all other stakeholders to customers • Adjust: Add channels to all stakeholder, not just customers • Adjust: Add all desired relationships with all stakeholders, not just customers • Recognize all stakeholders have variety of environmental, social and economic relationships Hidden Slide Hidden Slide
- 24. 24 5b. Product, Learning & Development Firm boundary Environmental, social & economic contexts What does a firm do now and in the future? Value Propositions that combine environmental, social and / or economic factors for all stakeholders now and in the future Value Propositions consider value created (+ve) and value destroyed (-ve)
- 25. 25 5b. Product, Learning & Development Profit-First Canvas • Missing: – Value propositions for stakeholders other than customers – Conception that a value proposition may be perceived negatively, harm the ability of an actor to meet their needs Strongly Sustainable Canvas • Adjust value propositions to include those for all stakeholders • Adjust value propositions to consider both value created (+ve) and negative destroyed (-ve) • Recognize value can be generated by any combination of environmental, social or economic elements Hidden Slide Hidden Slide
- 26. 26 5c. Process Firm boundary Environmental, social & economic contexts How, where and with what does the firm do it? Ultimate source & sink of all tangible resources Ultimate enabler for all activities All resources and activities have environmental, social and economic aspects With all stakeholders Governance
- 27. 27 5c. Process Profit-First Canvas • Missing: – Which stakeholders have power over what a firm does , how, where and with what is it done – Ultimate source and sink for all materials – the biosphere – Ultimate enablers all activities – eco-system services – Partnerships with all stakeholders – not just suppliers of resources – Consideration of factors other than monetary cost for resources and activities Strongly Sustainable Canvas • Add: Decisions – aka Governance • Add: Bio-Physical Stocks • Add: Eco-System Services • Adjust: partnerships to add all stakeholders, not just suppliers • Recognize that all resources and activities in a business model have economic, social and environmental aspects Hidden Slide Hidden Slide
- 28. 28 5d. Measurement Firm boundary Environmental, social & economic contexts Definition of acceptable success Measures of process outcome and / or performance How does a firm define and measure success (in Environmental, Social & Monetary units)? Economic, social & environmental valuation of assets (Tri-profit Balance Sheet) Measures of prices (for value propositions), costs, revenues and profits in economic, social & / or environmental terms (Tri-profit P&L)
- 29. 29 5d. Measurement Profit-First Canvas • Missing: – Place to record definition of acceptable success – Measurement of process performance (time, quality, etc.) – Assets required or desired to be grown – Ability to define how non- financial value can be calculated Strongly Sustainable Canvas • Add: Definition of Acceptable Success • Add: Process Measurement • Add: Assets required and desired • Adjust: Pricing, Cost, Revenue and Profit to recognize measurements may have a economic, social and/or environmental aspects (Valuation Method, Cost, Revenue and Tri-Profit) Hidden Slide Hidden Slide
- 30. 30 StronglySustainable BusinessModelCanvas V1.031 © Antony Upward / Edward James Consulting Ltd., 2013 Some rights reserved. Permissions available at www.EdwardJames.biz/Permissions
- 32. 32 StronglySustainableBusiness ModelCanvas–14Questions V1.032 © Antony Upward / Edward James Consulting Ltd., 2013 Some rights reserved. Permissions available at www.EdwardJames.biz/Permissions
- 33. 33 Comparing Profit-First & Strongly Sustainable Business Model Canvases V1.031 + + Δ + Δ + + + + + Δ Δ Δ + + Δ Δ Δ Δ Δ Δ + Hidden Slide Hidden Slide
- 34. 34 Tonight’s Case • Place sticky notes on the strongly sustainable business model canvas to design your proposal for an improved Freshtec business model – Two groups – ~75 mins • Debrief / closing discussion on 1.Freshtec’s Approach 2.Did the Strongly Sustainable Business Model Canvas Help? • Does well; needs to do better – ~15 mins • Will be videoing you at work and your feedback Harvard Business School Case Study #9-511-059 by Jose Alvarez and Ryan Johnson – FreshTec: Revolutionalizing Fresh Produce
- 35. 35 Next Steps on the Journey to Bring the Better Business Canvas to the World…
- 36. 36 Become a “First Explorer” – Enables commercial use of the new Canvas now 12 organizations around the globe have joined so far Join the quest – Crowd-funded collaborative book project Working Title: Strongly Sustainable Business Model Innovation – 13 International co-authors identified – Crowd-funding starting in 2014 Individuals and Organizations Backers also get immediate commercial rights to use new Canvas Everyone else will have to wait for the book – Self Publish 2015 Canvas released under a Creative Commons License free for commercial use Connect to like-minded colleagues – Linkedin and Facebook 100+ Members from around the globe Help bring Sustainable Business Innovation to the World!
- 37. 37 Be Informed: http://signup.SSBMG.com Share your ideas for the book: http://survey.SSBMG.com www.facebook.com/ StronglySustainableBusinessModels @aupward #SSBMG Strongly Sustainable Business Model Group forum.SSBMG.com info@SSBMG.com www.SSBMG.com Learn More – ~3 minute Audio/Visual Overview about.SSBMG.com • Videos – youTube.com/ssBusinessModelTV • Learning Map – wiki.SSBMG.com/home/learning-map • Blogs – blog.SSBMG.com – slab.ocad.ca/blogs/antony-upward
- 38. 38 Learn more: http://www.naturalstep.ca/gold-standard Join a Key Related Project
- 39. 39 Possible Table of Contents
- 40. 40 Copyright • All images used under applicable creative commons licences – see notes on each page © Antony Upward / Edward James Consulting Ltd., 2013. Some rights reserved. – Permissions available at www.EdwardJames.biz /Permissions – This work is licensed under a Creative Commons Attribution- NonCommercial-ShareAlike 3.0 Unported License.
- 41. 41
Hinweis der Redaktion
- Thank-you David for that kind introduction. Its good to be here! (So as David said, my name is Antony Upward, and I’m a sustainability business architect with Edward James Consulting and a co-founder of the Strongly Sustainable Business Model Group at the Ontario College of Art and Design University’s Strategic Innovation Lab.) Tonight I’d like to introduce you to a new visual tool for designing all kinds of businesses that are fitter for the future: the strongly sustainable business model canvas. In the videos available on our youTube channel you can learn more about the 3 year research project conducted here at York in the Faculty of Environmental Studies and Schulich School of Business that created the canvas, and the plans to bring it to the world via crowd-funded collaborative project. Like all our videos, the link to view and download the slides I’m using tonight, including all the speakers notes and references, is included below the video. So let’s get started Antony Upward (http://antonyupward.name) is a Sustainability Business Architect with Edward James Consulting (www.EdwardJames.biz). Antony is the creator of the Strongly Sustainable Business Model Canvas, the result of a 3 year research project at York University's Schulich School of Business and Faculty of Environmental Studies. Antony is a co-founder of the Strongly Sustainable Business Model Group (http://www.SSBMG.com) at the Ontario College of Art and Design University's Strategic Innovation Lab. Together, they will shortly be launching a crowd-funded collaboration project to bring a Strongly Sustainable Sustainable Business Model Innovation Toolkit to market (to receive notifications about the project - join their mailing list - http://signup.SSBMG.com) Twitter: @aupward #SSBMG YouTube: http://youTube.com/ssBusinessModelTV Facebook: https://www.facebook.com/StronglySustainableBusinessModels Linkedin: http://www.linkedin.com/groups/Strongly-Sustainable-Business-Models-5005769/about Web: www.SSBMG.com / www.EdwardJames.biz Email: info@SSBMG.com
- 1: Today most business people, go to work every day with the goal of maximizing profit. And this profit is used to do all kinds of good things for many people: education, pensions, health care, roads, fire services, public transit, police and so on. 2: But business people are starting to see that despite all the benefits the unintended social and environmental impacts of their operations are growing larger and larger. Businesses are creating some bad outcomes for a lot of people and our environment. Increasingly business people understand that these bad outcomes are preventing humanity and other life from flourishing; Their children and grandchildren are hurting and they can see it is getting worse! 3: Not only that, but everyday they can ALSO see increasing risks to their company’s supply of raw materials, their social license to operate, as well near-term profit and long term viability. 4: And worse, they can see they are missing out on opportunities to innovate in response to all these challenges. 5: Result: The thing they say they cared about most, profits, are in trouble!
- 1. Contrast this with a business that focuses on doing good – environmentally, socially and economically – for all its stakeholders. 2. Why might this make a better business – one that is more likely to consistently do well for itself? 3. First better businesses do a better job at managing risk. Businesses that a solely focus on making money are very surprised when they are impacted by events that arise first outside the markets in which they generate profit. Things like climate change, water shortages, income inequality, and other mega-forces now starting to impact firms world-wide. Ultimately only focusing on doing well will have unintended consequences that will impact profits. 4. Second they do a better job of understanding and exploiting the opportunities that are arising because of these same mega forces. For example opportunities for new value propositions or new operational efficiencies. Finally, because they do a better job of managing risk and exploiting new opportunities, these businesses are more resilient. They are more likely to survive and flourish for the long term. So better businesses are simply better and fitter for our increasingly uncertain future. They create less unintended social and environmental consequences, and can actually proactively create outcomes that enable the possibility of flourishing for us, our children, our grand-children and the world around us. ____________ For a list of the mega-forces, risks and opportunities See Fig. 49 on PDF p.133 de Boer, Y., van Bergen, B., McKenzie, M., Averchenkova, A., Gladwin, T. N., Lyon, T., & Bunch, R. (2012). Expect the Unexpected: Building Business Value in a Changing World. KPMG International. http://www.enterrasolutions.com/2012/06/kpmg-identifies-10-megaforces-that-will-shape-the-business-landscape-part-1.html As a former oil company executive and now archbishop of the Church of England said recently “Businesses are vehicles for wealth creation, without which there can be no wealth distribution. However, businesses cannot contribute to their full potential to a good society [, a healthy environment] and human flourishing if they have no regard for the society and environment in which they operate, and if individuals in business have regard only for themselves”. Globe and Mail “Bonuses incur wrath of Church of England” (page B9, 2013/4/13) http://www.istockphoto.com/stock-photo-12372891-success-team.php?st=e968fda
- So if you have decided to create a better business you need to design a strategy and a business model to meet that goal… How do you do that? Not only that… but How do you do it well? How do you produce a high quality design for your better business? And what’s the best way to do this design work? how can you be efficient at designing your better business? ______________ Image in the public domain: https://upload.wikimedia.org/wikipedia/commons/f/fb/Architect.png
- 1. The previous best practice answers to how you design a business can be summarized as follows You have an idea which you write up in a business plan You convince people to give you money You work hard And Cross your fingers. 2: And this approach is still very widely used, despite the fact that it doesn’t relibably produce profitable businesses. Clearly, compared to other fields of design, like designing cars where we’re now pretty good at producing reliable cars, this approach for designing business has some problems! 3: Indeed some people have likened this approach for designing businesses to deliberately burning piles of money. Of course some business failures are because those businesses are not fit for purpose. But I think we’d all acknowledge there are significant financial, social, personal and environmental costs when firms go out of business. It is clearly not a good thing when a business fails – whether you’re an employee, a customer, a supplier, an investor, or a member of a community where a business is located. Can’t we more reliably design successful businesses? _______________________ "In entrepreneurship [unlike, say, in car design] we still rely on real-life crash tests which leads to costly failures” Compare how we design cars with how we design businesses today; today in business its like we do a rough sketch of a car (the business plan), get someone to put up the cash, then we spend the cash to build the car, and then wonder why most of the time the wheels fall off the first time we drive it! (and until recently this approach was considered a best practice!) Osterwalder, A. (2011). The new business models: designing and testing great businesses. Lift 11, Geneva, Switzerland. 1-87. slide 19 [minute 3.00-3.30] (http://liftconference.com/lift11/program/talk/alex-osterwalder-new-business-models and http://www.slideshare.net/Alex.Osterwalder/lift11-presentation I think as business people and members of societies that largely depends on our ability to reliably create wealth I find this previous ‘best practice’ A) Humbling B) Rather worrying
- With this question in mind, nearly 10 years ago Alex Osterwalder and Prof. Yve’s Pignuer set-out to improve things.... Using the process of design to more efficiently, effectively and reliably create businesses that would be profitable. 1. The result of their work was the business model canvas: a paper based visual design tool to more reliably design profitable businesses. 2. This tool has a solid theoretical underpinning, that Osterwalder described in his 2004 PhD. 3. And it is described in a highly accessible way in their now very popular book, Business Model Generation. As of Summer 2013 it’s sold over 700,000 copies in 26 languages and has been in the top 10 Amazon business books since its 2009 launch. 4. And most recently it has been complemented by an iPad / web app that enhances the usability of the canvas Now, before we ask for the money for our business we know that if we answer the 9 questions the business model canvas asks, the likelihood is our pile of cash will actually create a profitable business, and not go up in smoke. (And in turn this increases the efficiency of the designer!) Clearly this a big step forward over the previous best practice! ____________________ http://www.businessmodelgeneration.com/ There is a 2 x 1.5m version available via a creative commons licenses for free commercial use at www.businessmodelgeneration.com Osterwalder, A., & Smith, A. (2012). Strategyzer: Your Business Model Toolbox on Strategyzer . Switzerland: Business Model Foundry GmbH. Smith, A., Osterwalder, A., Business Model Foundry GmbH, & Hortis - Le Studio. (2011). Business Model ToolBox. Apple AppStore / Switzerland: Business Model Foundry GmbH. Osterwalder, A. (2010, 2011). Business Model Canvas. Switzerland: Business Model Foundry GmbH. Osterwalder, A. (2004). The Business Model Ontology: A Proposition in a Design Science Approach. (Ph.D., l’Ecole des Hautes Etudes Commerciales de l’Université de Lausanne). , 1-172. ‘ http://www.slideshare.net/Alex.Osterwalder/bmgen-the-story-of-a-bestselling-management-book http://jeffreykrames.com/2010/02/20/a-new-business-model-and-a-new-bestseller/
- But the business model canvas only focuses on the questions that drive monetary profitability. It ignores almost all the other things that are important if you want to design a better business. In other words the current best practice business design tools and method ignore the unintended consequences; they consider them as so called ‘externalities’. Put another way, the existing tools and best practices for creating businesses don’t ask the questions that need to be answered if you want to create a better business, one with fewer unintended consequences, or if you want your business to create the conditions for human and other life to flourish. This means it’s hard to create a better business with these existing tools So how can we efficiently and reliably design better businesses?
- This was the question I set out to answer in my recently completed 3 year graduate research project, conducted here at York. 1. I went all the way back to Alex Osterwalder’s ground breaking 2004 PhD where he defined an ontology for profitable business models. 2: Then I used all the natural and social science about how to design businesses that do good and do well, to extend Osterwalder’s original work to create an ontology for Strongly Sustainable Business. But, like Osterwalder, I knew I needed to simplify and make a tool that was easy to use, but without loosing any of the rich possibilities for designing better businesses that I had learned about. 3: So, again following Osterwalder’s lead, I used my ontology to power a new easy to use visual design tool, but this time one that could to help design better businesses: The Strongly Sustainable Business Model Canvas. The Strongly Sustainable Canvas asks 14 questions that if answered well significantly increase the likelihood of creating a better (strongly sustainable) business model. This is the tool you’ll be using shortly, so I want to spend a few minutes walking you through this improved canvas for designing better businesses.
- To do this I want to go back to Osterwalder’s Canvas – which I now refer to as the Profit-First Business Model Canvas! The 9 questions the Profit-First Canvas asks are the ones you must answer to increase the likelihood of creating a profitable business These questions are based on the best scholarly knowledge we have about the necessary and sufficient conditions required to have a higher quality profitable business design As I mentioned, prior to the Profit-First Canvas, tools to help design businesses were few and far between: so clearly its a big improvement over earlier best practice. If profitability is your primary goal, using the Profit-First Canvas can improve your efficiency and reduce your risk when you design your business model. Since a lot of business people aren’t concerned about the unintended consequences of business the profit first canvas is now very widely used. ___________________ http://www.businessmodelgeneration.com/ There is a 2 x 1.5m version available via a creative commons licenses for free commercial use at www.businessmodelgeneration.com
- So what does a business model described using the Profit-First Canvas look like. This is an example of the Montreaux Jazz Festival that Alex Osterwalder prepared as part of his PhD thesis… (Do a Brief Walk through) __________ Constructed from pp.103-117 Figure 52 of Osterwalder, A. (2004). The Business Model Ontology: A Proposition in a Design Science Approach. (Ph.D., l’Ecole des Hautes Etudes Commerciales de l’Université de Lausanne). , 1-172.
- So the 9 questions give us a common language to discuss, describe, and improve our profit-first business model designs… and that’s clearly a good thing! 1. But, as we’ve discussed these questions aren’t so useful if our goal is to create a better business. From my research I knew that financial viability is a critical component of better business. So it’s not that the 9 questions are wrong or inappropriate. To have a better business you must be profitable, so you still need to answer these same 9 questions 2: No, what I realized was that while the 9 questions were necessary, they weren’t sufficient if you wanted to design a better business. So what was missing to create a new better business design tool?
- The first thing I realized from comparing the literature on better business to the profit-first literature was that there was some important differences in how things are defined. 1. People focused on creating profitable businesses have suggested that a business model… p. 14 Osterwalder, A., & Pigneur, Y. (2009). In Clark T. J., Smith A. (Eds.), Business model generation: a handbook for visionaries, game changers, and challengers. Amsterdam: Alexander Osterwalder & Yves Pigneur. 2. But this definition becomes quite problematic if one is trying to create a better business, which recognizes, if only to a small degree the need to create different types of value for lots of different stakeholders. 3. For example recent work that identifies the relatively few fundamental human needs and the relatively large number of satisfiers suggests that the definition of “value” needs to be far more universal – measuring value in monetary terms is no longer sufficient*. (walk through slide) 4. And of course this means that we need a broader understanding of how value is created and destroyed. Value is Created when needs are met via satisfiers that align with the recipient’s world-view. Destroyed when previously met needs go unmet due to: the withdrawal of satisfiers, the application of inappropriate (pseudo) satisfiers, or the application of satisfiers that do not align with the recipient’s world-view. 5. In turn, this understanding of value, suggests that a business model is something more than simply a description of monetary value creation, delivery and capture… (walk through slide) 6. Which we can simplify as… __________________ * This based largely on the works of Manfred Max-Neef, whose ideas of Fundamental Human Needs (unchanging at all times and places) and large number of satisfiers of those needs (which are highly context dependent) Max-Neef, M., Elizalde, A., & Hopenhayn, M. (1991). Human Scale Development: Conception, Application and Further Reflections [Desarollo a Escala Humana: una opción para el futuro]. Uppsala, Sweden; New York City, New York, U.S.A.: Dag Hammarskyöld Foundation; The Apex Press, an imprint of the Council on International and Public Affairs.
- The second thing I realized from comparing the literature on better business to the profit-first literature was that the profit-first canvas questions don’t recognize the true context for a business. 1. The real context for business isn’t just the economy…. 2. Because of course the economy, the financial system, is something created by society; And society has far broader concerns than simply money. Societies care about the well-being of people, and seek to help everyone achieve their potential. In other words the highest purpose of a human society is to give all its members the possibility of flourishing. 3. But the context of business doesn’t stop there because society is entirely dependent upon the environment. Without clean air, water, and healthy soil society would go bankrupt and we would ALL about out of business. So, a sustainable business model is one whose definition of success recognizes and must relate to all these contexts: the economy, society AND the environment.
- From looking at the profit-first literature I also reached another conclusion. Businesses, even ones just seeking profitability, are not simple! There is an awful lot to juggle. Then from the strongly sustainable literature I saw that when you put a business into its real contexts a really inconvenient truth emerges: there are even more things to think about if you want to do good and do well. _____________ http://2.bp.blogspot.com/-xToytUgrp2M/TzILZebtZ2I/AAAAAAAABgE/sqAM5qV-8Io/s1600/starting+a+small+biz.jpg
- So the third thing that is missing from the profit-first canvas is a way of dealing with this additional complexity. One common way of dealing with complexity it to break things into more manageable parts or perspectives. From my earlier professional experience I knew that one of the most well known set of perspectives on a business, often used to implement new strategies, is the Balanced Scorecard*. 1: The balanced scorecard has four perspectives, but it too just focuses on profit. So I had to adjust the four perspectives (Financial, Customer, Internal Processes, Learning & Growth) in light of the real contexts of business. ___________ *Kaplan, R. S. (1996). In Norton D. P., NetLibrary I. (Eds.), The balanced scorecard: translating strategy into action. Boston, Massachusetts, U.S.A.: Harvard Business School Press. In fact Alex Osterwalder also used the Balanced Scorecard approach in his PhD Business Model Ontology, but it was dropped from the profit-first canvas Note the sustainability extensions proposed for the balanced scorecard fundamentally do not recognize the true context for the business, but ‘tack-on’ the environment as an afterthought and largely ignore the larger society. Figge, F., Hahn, T., Schaltegger, S., & Wagner, M. (2002). The Sustainability Balanced Scorecard - linking sustainability management to business strategy. Business Strategy and the Environment, 11(5), 269.
- So, what does that look like? 1: First is the Stakeholder perspective “Who a firm…”. You’ll note we change the order we talk about things from the Balanced Scorecard: Finance no longer comes first; and, we have to generalize some of the names of the perspectives to properly recognize all three contexts. In this case we changed customer to stakeholder. Now we can talk about all the stakeholders of a firm, not just the ones who pay. 2: Second is the Product, Learning and Development perspective “What does a firm…”. These are the firms value propositions. Note how we’re no longer just concerned with today’s value propositions but also the value propositions related to a firms continued development over time. 3. Third is the Process Perspective, “how, where and with what does a firm do it”. Note that since we’ve recognized society and the environment we now need to explicitly think about how we do things, which stakeholders are involved, and where things are done. 4. Fourth and last is the measurement perspective. “How does a firm define…” This generalizes away from just the financial view of value to include the broader definition of value we discussed a moment ago.
- The fourth thing I got from all the literature I reviewed was that we need to include all the businesses in a business model – all the organizations in a value system or value network – to both the real context and the perspectives. Just including the “focal” firm of a business model and its context is not sufficient to design a better strongly sustainable business. To do this we start with the real context for business – the environment, containing and enabling society, which in turn defines and operates the economy; And we see how an individual business relates to all these contexts, 1: Now adding the four perspectives makes understanding how a business relates to these contexts more manageable. 2: And then lastly we can add all the organizations involved in a business model and how each needs to relates to all four perspectives and all three contexts (in the example shown we have a business model of a value system consisting of three firms)
- This hidden slide provides details of what the literature on better, strongly sustainable, business suggests was missing from the 9 questions the profit-first canvas asks.
- 1: Now this three dimensional view is great… but its rather hard to work with as a visual design tool… so in the strongly sustainable canvas we flatten it to two dimensions Remembering that the context boxes are nested within one another.. mimicking the reality that the environment really does contain society, society really does create the economy. In summary a business can’t be successful if the economy doesn’t work; the economy won’t work if society is broken, and society can’t function if the enviroment is damaged. Then we see how the four perspectives of the firms in a business model have multi-faceted relationships directly with all three contexts Remember that none of these contexts nor the border of the firms involved in a business model is considered by the questions in the Profit-First Business Model Canvas This is the primary reason why business models designed with the profit-first canvas are very likely to have unintended consequences and externalities – and as a result these business models will systematically contain risks which the tool does nothing to highlight to the business model designer!
- The fifth and final realization I got from comparing the literature on strongly sustainable and profit-first business models was that considerable amounts of important detail were missing from the questions profit-first canvas asks. But as I’ve mentioned I also realized that of course being profitable is still a critical element of a better strongly sustainable business. 1. So I concluded that since the profit-first canvas has proven itself both academically and practically a better business model design tool must still completely include all 9 original questions. 2. As I worked my way through the implications of adding the contexts and perspectives to the 9 original questions, I saw that what was missing was the ideas you need to consider in order to avoid the so called ‘unintended consequences’ and ‘externalities’ of profit-first businesses. It is by adding the drivers of these inconvenient impacts, that enables a better business model designer to systematically get a more complete view of the risks and opportunities in their business model. 3. Overall the adjustments to the 9 questions tend to generalize them: as we’ve already seen we’re no longer interested in just customers, but all stakeholders. We no longer interested in only measuring a business financially, but also socially and environmentally. 4. However, there were also 5 brand new ideas that were just plain missing from the profit-first canvas; without these ideas the literature suggested it would not be possible to describe many important aspects of better businesses. 5. So the net result is that we move from 9 questions that you have to answer well to create a profitable business, to 14 questions that you have to answer well to have a better business – one that does good and does well. Ok, let’s look at the new set of 14 questions in each of the 4 perspectives of the strongly sustainable canvas in turn.
- So here is the detail within the stakeholder perspective. 1. First you can see how the stakeholder perspective relates to all three contexts. Remembering that the economic is nested within the social within the environmental we see that most of the details in the stakeholder perspective relates to all three contexts – economic (blue), social (pink) and environmental (green). But we also see that some details on the right may only have a social and environmental or just an environmental context. For example an NGO’s actor representing the needs of non-human life. 2. Next we see that actors and their needs are outside the boundary of the business model. This is important because it allows us to consider all the potential stakeholders and how each stakeholder may be related to a single actor. For example, how many of our customer and supplier stakeholders, are in fact just single actors who play both roles in your business model. Or which actors have we historically not recognized as legitimate stakeholders; perhaps an NGO, who might attack us in public if we don’t recognize them in the future. Now actors have fundamental needs – ranging from sustenance through things like affection and identity to transcendence. Considering the fundamental needs of all the potential stakeholders gives us a chance to think about how our value propositions will satisfy or fail to satisfy those needs. 3. Next we have all the stakeholders: the actors we are going to legitimate as our stakeholders of our business by forming relationships with them: customers, employees, suppliers, owners, communities, etc. 4: Moving to the left: Relationships allows us to consider the nature of the relationships and the equity we want to create and maintain in our relationships with each of our stakeholders (think goodwill); 5. Finally, channels. This allows us to think about how the value propositions for each of our stakeholders will be delivered to them. For customer’s we’re all familiar with channels such bricks and morters retail, or web-store, etc., but what about the channels to reach the other stakeholders? For example managers are a key channel for the delivery of employee value propositions, and purchasing departments are a key channel for supplier value propositions to be delivered.
- This hidden slide provides details of what the literature on better, strongly sustainable, business suggests was missing from the 9 questions the profit-first canvas asks.
- Next the detail within the product, learning and development perspective. 1. Again you can see how the product learning and development perspective relates to all three contexts. Remembering that the economic is nested within the social within the environmental we see that we expect more of the details in this perspective to relate to all three contexts – economic (blue), social (pink) and environmental (green). And we leave the door open to the possibility that some value propositions may only have a social and environmental or even just an environmental context. 2. Next we see that we expect, that all the value propositions in a business model are inside the boundary of the firms involved in that business model. 3. Building on the definition of value, we expect value propositions to combine environmental, social and / or economic factors for all stakeholders now and in the future: we need to consider all the dimensions of value, not just the things people will pay us for. 4. And we also expect value propositions to consider both value an organization intends to create (+ve) and any value that any actor may feel is being destroyed (-ve), making it harder for them to fulfill one or more of their needs.
- This hidden slide provides details of what the literature on better, strongly sustainable, business suggests was missing from the 9 questions the profit-first canvas asks.
- Next the detail within the process perspective. 1. Again you can see how the process perspective relates to all three contexts. But some details, such as the partnerships, resources and activities may only have a social and environmental or just an environmental context. For example the activity of delivering a product using an gasoline powered truck: the combustion event in that truck’s engine is pure chemistry, it uses oxygen from the atmosphere and results in a range of other chemicals being placed into the air. There is no social or economic value involved. 2. And uniquely in this perspective, as you can see on the left there are some details that only have a environmental contexts and that these details are outside the boundary of the firms in the business model. I’m going to come back to these two details in a moment. 3. Next we see that we need to think about the governance arrangements in our business model, i.e. which of our stakeholders have power, the rights to decide, and about which topics? Who can decide who our stakeholders are? Who can decide what our organization will define as success? Who can decide what our value propositions are? Who can decide how where and with what we create and deliver our value propositions? 4. The next detail are the formalize partnerships we need with our stakeholders to secure access to the resources we need or to undertake the activities required to create and deliver our value propositions. The normal example is partnerships with suppliers. But we need to consider other formal partnerships – like employment contracts with employees, or customer contracts (given how many customers now enter their own orders directly this can be a very important aspect of a business model). 5. Then we have all the resources required and the activities needed in order to create, deliver and continuously improve our value propositions (many of our stakeholders want us be in business for a long time) . Note how because these two details relate to all three contexts we need to consider not only resources and activities from an economic perspective (how many dollars they cost), but also in social terms (how fulfilled will an employee be doing a given activity) and environmental terms (how much CO2 will be emitted by this activity, or where will this resource, like a final product, go once our customer has finished with it). 6. Last but far from least there are two critical details introduced a moment ago. Bio-physical stocks are everything in the biosphere – all plants, animals, rocks, minerals, water, air, ores, fossil fuels, etc. These stocks, are largely finite, since we live on a finite planet. Further, they are the shared source of and ultimate destination for ALL materials in all business models of all firms on the planet. We need to remember there is NO endless supply of materials that will always be available (regardless of cost). Further we also need to remember there is no “away” we can dumb things when they are no longer of economic value. In better business models we need to carefully consider the impacts of gaining control over a biophysical stock to use as a resource in our business model, and then what happens to that resource over its complete life-cycle. (e.g. a strongly sustainable business will be help to create the circular economy and won’t have a take-make-waste business model) 7. If bio-physical stocks are the source and sink of all resources in all business models, far less appreciated, is the fact that these same stocks are also critical to enabling all the activities in all business models in all firm. Bio-physical stocks are the infrastructure for eco-system services. Eco-system services are all the natural processes that, based on the bio-physical stocks, generate benefits we and our businesses need to survive and thrive. Eco-system services include things like Photo-synthesis that generates food, fibre and wood and turns CO2 into the Oxygen we breath Animal reproduction that provides leather, meat, eggs, milk, etc., and The regulation and filtering of water that marshland provides, The best list of eco-system services I found shows there are 24 eco-system services (with 33 sub-categories) that deliver flows of benefits critical to the sustainability of our business models. __________ This list was developed by the World Business Council for Sustainable Development (WBCSD) Hanson, C., Ranganathan, J., Iceland, C., & Finisdore, J. (2012). The Corporate Ecosystem Services Review: Guidelines for Identifying Business Risks & Opportunities Arising from Ecosystem Change, version 2.0. Washington D.C, United States of America: World Resources Institute in collaboration with the Meridian Institute and the World Business Council for Sustainable Development (WBCSD).
- This hidden slide provides details of what the literature on better, strongly sustainable, business suggests was missing from the 9 questions the profit-first canvas asks.
- Finally the detail within the measurement perspective. 1. Again you can see how the measurement perspective relates to all three contexts. But we leave the door open to the possibility that some measures may only have a social and environmental or even just an environmental context. 2. Next we see that we expect, unsurprisingly, the majority of the measurements in a business model to be inside the boundary of the firms involved in that business model. After all we’re defining and measuring the success of the firms in the business model! 3. Depending on the governance arrangements we discussed earlier, its important for the stakeholders with the requisite decision rights to consider what this businesses definition of acceptable success is going to be. Of course this is going to have an economic dimension, but it may also have important social and environmental aspects too. For example some social entreprenurs have set themselves a formal goal of improving the hapiness of their stakeholders. 4. Some aspects of the definition of success may well be defined in terms of the performance or outcome of the processes – things like quality or how long things take. 5. Next we need to consider the balance sheet aspects of measurement – i.e. what are the total stocks of assets required and desired to be created by this business. And of course these assets could be from any combination of the five capitals: natural, human, intellectual, social or manufactured. 6. And last, but far from least, is the profit and loss aspect of measurement – i.e. what are the flows of costs and revenues, as determined by prices, that lead to profits or losses in a given time period. And of course all of these measures could be in environmental units (e.g. Kg of CO2e), social units (e.g. measures of well-being), and / or the monetary units we’re all familiar with. The conceptual sum of all the revenues and all the costs in all the various units creates the tri-profit (or loss) for the organization.
- This hidden slide provides details of what the literature on better, strongly sustainable, business suggests was missing from the 9 questions the profit-first canvas asks.
- So finally, here it is, The Strongly Sustainable Business Model Canvas with all the details shown. This new better canvas turns the 3 contexts, the 4 perspective and the 14 questions into a visual design tool, with space for sticky notes for your answers – just like the Profit First Canvas. But unlike the profit-first canvas, this new canvas asks both the necessary financial and the other sufficient questions that systematically enable you identify more risks and spot more opportunities. By answering all 14 questions well the new canvas gives you the possibility of designing a better business – one that does well by doing good.
- So how about an example… here we have the Timberland Company business model, described using the new better canvas (This is based on publically available information as of fall 2011). This is a photo of a 2m x 1.5m will sized strongly sustainable business model canvas. If you download the slides you can zoom into the image to read the details! ____________________ For more on the Timberland Example please see http://www.slideshare.net/AntonyUpward/strongly-sustainable-business-model-ontology-example-timberland-summary-v40 (or http://yorkspace.library.yorku.ca/xmlui/bitstream/handle/10315/20777/SM6b-SSBMO-Example-Timberland-Summary_v1.022__8.5x11_.pdf?sequence=14) For an even deeper dive please consult the following supplementary materials from my thesis http://yorkspace.library.yorku.ca/xmlui/bitstream/handle/10315/20777/SM6a-SSBMO-Example-Timberland-Detail_v1.022__44x44_.pdf?sequence=13 http://yorkspace.library.yorku.ca/xmlui/bitstream/handle/10315/20777/SM7-SSBMC-Example-Timberland_v1.03__24x20_.pdf?sequence=16
- To help I also wanted to leave you with this handout (1 per group) that has the 14 questions clearly shown (these 14 questions group some of the details I’ve just walked through) We’ll also leave this on screen while you tackle the case. _________________ These are the 14 necessary and sufficient questions to create better businesses. These are 14 questions that must be answered well to create a strongly sustainable business model derived from a broad review of all the natural, social and managerial science that I had studied. They include the 9 questions from the profit-first canvas, suitably modified based on the real context for business. So, as I mentioned, any business model you can describe using the profit-first canvas you can also describe with the strongly sustainable one; nothing has been removed. Also just like the profit-first canvas, to come up with good answers to the questions, you first need to have an idea for your business – which tonight is being provided by our case. But now, unlike the profit-first canvas the we must consider our proposed answer to each question in relation to each of the 3 contexts and the 4 perspectives. Some people I’ve spoke with find it useful to think about these questions as a way to help you construct a story about how your better business is going to be successful. Your answer to each question becomes part of your narrative, part of your sustainable business model story. Of course having a concise and complete story about your business can be very helpful: It allows you to quickly tell your story to all the other people whose help you need in order to succeed, not just customers, but investors, suppliers, employees, communities and governments… in-fact the strongly sustainable canvas helps you tell a story which is attractive to all your stakeholders (In short, using the Strongly Sustainable Canvas can increase your confidence by helping you remember all the things you need to think about so your business will do good and do well!)
- This hidden slide summarizes the differences between the (profit-first) business model canvas and the strongly sustainable business model canvas shows clearly their similarities and differences…. Build 1-16 + = New concept / detail in SSBMC which doesn’t appear in BMC Δ = Change / extended concept / detail in SSBMC which does appear in some form in BMC (as indicated by green arrow). For more details please see “Thesis Working Paper #2: Strongly Sustainable Business Model Canvas – Summary Comparison to Business Model Canvas” for more detail. Available to First Explorers (see end of presentation for details).
- So what are the next step to bring the better, strongly sustainable, business model canvas to the world to help create more better businesses?
- There are three things I’d like to share: 1. My thesis, which contains the canvas, is licensed under a creative commons license. But this has a commercial restriction. So if you want to start using the Canvas today you need join our “First Explorers” program. There is just a simple mutual NDA and sharing agreement to sign because we want to encourage as many people as possible to start to use the new canvas. (There is no cost involved). 2. Next you can join us! We’re launching a crowd-funded collaborative project to create the toolkit to design better businesses. The project will then publish a book that explains the toolkit, including the new canvas, the known good answers to the 14 questions and steps to use the canvas effectively. The core team for the book now consists of an international group of 13 co-authors. And of course, we’re using the Strongly Sustainable Canvas to design the business model for the project and for the business we plan to launch to further enhance the toolkit after the book is published (i.e. the app, toolkits for specific industries and class-room use and so forth)! 3: The details of the crowd-funding is now being planned. But we can already say that we’ll be seeking both individuals and organizations to back the project. As one of several incentives, our backers will also get immediate commercial rights to use the new canvas, and have input into the content of the book. 4: We hoping to publish in 2015, and when we do, the final version of the new Canvas will be released under a Creative Commons License free for commercial use (BY-SA) (again just like the profit-first canvas) 5: Finally, perhaps you’d like to connect, share and learn from other people involved in our project creating better tools to design better businesses… We have both a Linkedin group and a Facebook page to help with this, so we hope to see you there soon!
- I hope you found this introduction to the better, strongly sustainable, business model canvas useful, and I hope you want to stay in touch with our work as we bring these better tools to the world, and perhaps even get involved yourself… All the links to connect with our project are shown on this slide, and below the video there is a link to download the slides (which have all the speakers notes and references in them) Thank-you
- Finally, I also wanted to mention another story that is also being written right now, one which beautifully inter-twines with the stories I’ve just told you. If the Strongly Sustainable Canvas asks the questions that when answered well, can enable flourishing….(slow down) how do we know the businesses people are designing are actually enabling flourishing? For this we need a benchmark against which to measure actual business results; but this is not a typical measurement of business performance. We don’t want to continue to measure business results as we do today by comparing a businesses performance against past results, against self-defined future goals, or against businesses who are thought to be “leaders”. No, we need a benchmark of actual business performance against the boundary conditions that increasingly science tells us create the possibility for flourishing. Creating this science based benchmark is the goal of a new international, collaborative project of The Natural Step Canada; The Gold-standard Benchmark for Sustainable Business. As you can see there are a growing list of partners in this project, including the Strongly Sustainable Business Model Group, several of whose members are deeply involved in this project. I know the Natural Step would love you to get involved in this project too! ___________________ For more details of the Gold Standard Work see: http://www.naturalstep.ca/gold-standard http://www.naturalstep.ca/amazing-possibilities-for-a-gold-standard-benchmark-for-sustainable-business http://ecoopportunity.net/2013/02/the-sustainability-gold-standard-the-pathway-to-capitalism-2-0-event-summary-feb-7-2013/ (Video)
- As a working title we’re calling the crowd-funded collaborative book we’re planning to write and publish in 2014: “Strongly Sustainable Business Model Innovation” This slide gives an outline of the table of contents with section 2 describing the strongly sustainable business model canvas, section 3 describing how to answer the 14 questions the canvas asks well, so you will score highly, for example, on the B Lab Benefit Impact Assessment Survey, align with the BALLE localist principles or the Framework For Strategic Sustainable Development Sustainability Principles (3 environmental and *NEW* 5 social), plus Transition Towns, Institute for Local Self-Reliance, etc. and the emerging “Gold Standard” section 4 describes how to use the canvas to create a strongly sustainable business model section 5 provides more case studies…