Sustainable Product & Business Model Innovation

Sustainable Product & Business Model Innovation

Dr. Robert Gerlach Lecture Notes Steinbeis University Berlin, 2018 Module: Integrative General Management

About

This is a summary of the lecture notes for the “Sustainable Product & Business Model Innovation” course taught at Steinbeis University Berlin by Dr. Robert Gerlach. The methods taught in this course have been applied and implemented in practice in a wide range of industries and can be downloaded for free at threebility.com. The concepts taught in this course have been introduced in several other universities. If you are a university lecturers wishing to introduce these methods into your curriculum, please get in touch.

Contents

1. Learning Objectives 2. Introduction to Sustainable Innovation 3. Tools & Methods for Sustainable Innovation 4. Deep Dive, 38 Business Models 5. Conclusion & Further Reading

3

Contents


4

By the end of this course you will:

1.

Understand the economic & ecological opportunity of sustainable product & business model innovation

2.

Know about and be able to apply a wide range of tools and best practices for sustainable product & business model innovation

3.

Have gained insights into a large number of successful sustainable business models

5

Most importantly:

4.

You should be keen to make a positive impact in organisations, startups or with your own business

6

Contents


7

Why Sustainable Innovation?

8

Sustainability is an urgent need

It now takes the Earth one 1.6 years to regenerate the resources we use in 1 year.

9

But sustainability is also a business opportunity

10

Overview of sustainability opportunity: push & pull

Pressure from government & society

Transformation of business mission

▪

▪

▪ ▪

Tightening governmental regulation Positive government incentives Pressure through social activism

Market pressure ▪ ▪ ▪

Rising & extremely volatile commodity prices (energy, raw materials) Pull from investors Threat of disruption

▪ ▪

Drive towards circular economy models Digital transformation ‘Green’ supply chain partnerships

Emerging business Opportunities ▪ ▪ ▪ ▪

Customer demand Technological advance Process optimisation Risk reduction

Source: R. Gerlach, “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015

11

Sustainable Innovation is a powerful enabler to grow profits and de-risk your business

Positive business impact of sustainable business practice

Costs • Optimised use of energy and resources • Optimised processes & supply chain • Lower taxes

Employees

Brand

• Improved ability to attract, retain & motivate employees

Product

• Stronger brand and greater pricing power

• Opportunities to seize the innovative high ground via disruptive sustainable innovation

• Improved customer loyalty

• Improved employee productivity

• Lower churn rate

Higher Margin

Speed & Risks • Pre-empting regulations via proactive innovation, Risk Management

Investment • Greater access to investment capital • Lower cost of capital

Higher Revenue

Increased Profits

Higher Valuation

Improved business case drivers and increased return for shareholders Source: R. Gerlach, “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015

13

Most importantly: sustainability drives innovation

Sustainability recognised as strong driver for innovation

New Boundary conditions Additional boundary conditions stimulate thinking about new approaches to solving known problems

New perspective

New Focus

Helps companies approach situations differently, enabling them to see situations from a different point of view

Can help companies to focus on new areas for product development with previously untapped market potential

Companies who are leaders in sustainability are more than 400% more likely to be innovation leaders

Innovation is a key driver for economic growth


15

Current state of sustainability in the corporate world

16

Sustainability recognised as important by many CEOs….

93% 93 69% 69

of global CEOs

believe that investor interest in sustainability will become an increasingly important factor for securing business finance

76 76%

of global CEOs view

sustainability as important for the future of their companies

84% 84

63% 63

of global CEOs report that they

of CEOs expect

sustainability to transform their industry within five years

are actively investing in and employing connected and digital technologies to advance sustainability.

of global CEOs believe

embedding sustainability into core business will drive revenue growth and opportunities.

54% 54

of companies’ sustainability

heads anticipate that they will see “significant” or “transformational” change in their firms’ sustainability management practices by 2015

*Source: The UN Global Compact-Accenture CEO Study on Sustainability

17

…and almost every company now has CSR department

In the traditional understanding of corporate social responsibility (CSR), a business reacts to and complies with laws, ethical standards and national or international norms.

18

But there are limits to a reactive CSR model

Corporate Social Responsibility in the traditional sense is only a partial solution … One that can be misused to create an illusion of responsibility

19

We need a fundamental shift in our thinking…

Let’s compensate for the unsustainable things we do

Let’s make financial sacrifices to be more sustainable

towards

towards

Let’s fundamentally change the way we do business

Let’s capture new business opportunities to become more innovative

20

And broaden our horizons

Reasonable progress & strong existing incentives

Work to do

Horizon 1 Reduce CO2 footprint of your own company

Horizon 2 Design innovative products and services to reduce CO2 footprint and promote sustainability during product use

21

„It’s more important to offer sustainable products & services than to look green“

The Goals of Sustainable Product & Business Model Innovation

23

Sustainable Product- & Business Model Innovation refers to the design of products, services and business practices that maximize sustainability effects whilst at the same time being profitable.

Whilst CSR is often reactive, Sustainable Product- & Business Model Innovation is proactive and a strong driver for business growth!

24

Intensity

Key to 21st century sustainability: resource decoupling

Business activity growth needs to be decoupled from resource usage and – by extension – environmental impact.

Business activity Resource decoupling Resource Use / Environmental Impact 1970

2017


Time

25

In order to make a positive long-term impact, we need to …

1.

Reduce resource & energy consumption

2.

Maximise societal & environmental benefit

3.

Promote a closed-loop system where nothing is wasted

4.

Promote delivery of functionality / experience over ownership

5.

Encourage a system built on collaboration & sharing.

All of this whilst remaining profitable and competitive!!!

26

It can be done - profitably!

Green Products line, stablished 2004, by 2010 already accounted for 37.5% of overall sales, with the target for 2015 to reach 50%.

Charges 15 to 30 % more for sustainable products because its customers are able to generate increased product margins through green products.

Raised fraction of recycled equipment from 5% in 2004 to 45% in 2008, reduced recycling costs by 40%. Recycling became profit centre and contributed $100M to Cisco’s bottom 4 years later.

Pre-empted government ban on lead solders in electronics products by experimenting with alternatives for 10 years. By time of ban, HP complied with regulations before other companies were able to do so.

Sustainable product line yields significantly higher growth rates and margins than standard product lines.


27

4 Trends Driving Sustainable Product & Business Model Innovation

28

Circular is Natural

The Circular Economy – The problem with waste

•

Wasted resources are energy and materials that cannot be continually regenerated and are gone forever when used

•

Products with wasted lifecycles have artificially shortened life cycles (in-built obsolescence)

•

Products with wasted capability sit idle for much of their lives (e.g. cars)

•

Wasted embedded values are components, materials & energy that are not recovered from disposed products

Source: Waste to Wealth – The Circular Economy Advantage, 2015

30

The Circular Economy - more than just recycling

Source: Ellen MacArthur Foundation circular / Braungart & McDonough and Cradle to Cradle (C2C)

31

Sources of value creation in the Circular Economy

Source: Ellen MacArthur Foundation circular economy team

32

Potential economic impact of circular economy Europe only

3%

of additional annual

€ 0,6 trillion per year benefit by 2030 to Europe's economies

productivity growth

€ 1,2 trillion additional non-resource and externality benefits

7 % GDP

increase

relative to current development scenario

Source: Ellen MacArthur Foundation circular economy team

33

Technology is a Sustainability Enabler

Example: Internet of Things as a catalyst for sustainability

Real Time Traffic

Industry 4.0

Smart Home

Ecosystem

Autonomous Driving

Society

Wireless Networks

Smart City Economy

IT-for-Green

Cloud Computing

Agriculture 4.0 Car Sharing

Smart Grid

From optimised processes to improved decision making – connected technologies are a driver for sustainability. They also offer high potential scalability of sustainability effects. Source: R. Gerlach, “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015

35

Internet of Things and ICT offer high return on invest

70 -20 %

GtCO2 emissions

60

ICT Savings Potential

50 40 30

Currently, ICT has a carbon footprint comparable to the complete global air traffic (~2%). At the same time ICT has the potential to reduce greenhouse gas emissions by the year 2020 by 20%! *

20 10 0 2030 with Business as usual ICT Footprint

2030 with ICT enabled abatement

The savings potential of ICT amounts to 12 GtCO2 – more than the total emissions of China today

All other GHG emissions

High return on sustainability investment: 20% CO2 savings potential vs 2% energy use At the same time, ICT could generate $11 trillion in economic benefits by 2030*

*Source: GeSI, SMARTer 2030, 2015

36

High business potential across all major industries

Industry

Sustainability Lever Substitution

Optimisation

Incentivation

Other (i.e. Decision Making, Life Cycle, Waste)

Transportation

Car Sharing, Virtual Mobility

P2P Parking, Intermodal transp.

EcoDriving, Pay-HowYou-Drive

ITS, intelligent POI, C2C/C2X

Telco, IT, Entertain

Cloud Infrastructure, ePaper, VoD

Energy efficient devices, Green IT

HW-SW Life Cycle Mgmt. Modularisation

Production & Eng.

Automation

Robotics, Industry 4.0, stand-by oper.

Production Process Mgmt., 3D Printing

Energy & Construction

Grid-Decentralisation

Smart Home, Smart Grid

Supply Mgmt., Demand Mgmt.

Health Care

Tele health

Goods & Services

Virtual goods, E business

Green material selection via CAD* plus LCA**

Public Sector

E-Governance, EBureaucracy

Agent Based Policy & Service Models, Big Data

Raw Materials, Agric.

Quantified Self, Health Applications

Agriculture 4.0

Big Data driven Smart Health

Supply Chain Mgmt. & Life Cycle Mgmt. *Computer Aided Design, ** Life Cycle Analysis


37

Sharing is Profitable

The Collaborative & Sharing Economy is on the rise

Peer 2 Peer Transportation

Industrial Symbioses

Collaborative finance

Peer 2 Peer Accommodation

On demand household services

On demand business services

By 2025, many areas of the sharing economy predicted to rival the size of traditional counterparts, with platforms in 5 main sectors generating revenues over €80 BN and enabling nearly €570 BN of transactions in Europe alone.* *Source: PwC, 2016

39

The Great Unbundling

Established industries are increasingly threatened by innovative startups – example recycling industry

Source: R. Gerlach “Digital Business Innovation in the Recycling Industry”, mm1, 2017

41

Startups are threatening complete recycling value chain and accelerate the unbundling process of the industry

Waste acquisition

Waste sorting

Waste usage

Collection of a defined set of waste and extraction of valuable resources

Smart sorting of waste & assortment of resources

Transformation of waste into valuable resources or consumer products

Re-Commerce Platforms Broker activity between waste providers & resource processors; allows for comparison of offers of valuable resources and therefore increase transparency in the market

Logistics optimization Logistics support and optimization of processes within the recycle value network


42

Example: Rubicon Global – a cloud-based platform connecting businesses and independent haulers

Producers of waste

Independent haulers

Recycling Companies

▪ Rubicon supports businesses of all sizes to get out of existing waste disposal contracts

▪ Haulers acquire their business by bidding on the disposal job

▪ Manufacturing companies buy valuable materials from haulers

▪ The app helps haulers to optimize their routes and get real-time information on their truck fleet

▪ Materials are reused and recycled

▪ Businesses can arrange for trash pick up within one hour via Rubicon‘s app ▪ Disposal job auctioned on the Rubicon platform

+ + + +

On demand pick-ups Cost reduction (~30%) Customized reports CSR management

+

Low-cost acquisition of new customers

+ +

Increase route efficiency

+

Cost-efficient acquisition of valuable resources

+

Diversion of waste from landfills

Customized reports

Investors Marc Benioff - Founder & CEO of

Leonardo Di Caprio –

- Hollywood actor –

Current valuation 500+ Mio. $


0

Contents


44

Introduction

45

Let’s be realistic: there are a lot of challenges standing in the way of sustainable innovation

Challenges to Corporate Sustainable Innovation ▪ Lack of methods for systematic sustainable product innovation ▪ Lack of or wrong KPIs and lack of data on impact of current initiatives ▪ Sustainability is seen as a cost creator, not a business driver ▪ Disconnected from core business strategy, often reactive ▪ Sustainability seen as primarily a marketing tool ▪ Disconnect between pubic claims to action & organisational practice ▪ Lack of resources ▪ Lack of accountability & incentivisation /performance measurement ▪ Insufficient regulation, i.e. to internalise external costs ▪ Sustainability addressed in silos (CSR department, with little influence) ▪ Value of short term gains over long term benefits (short termism)

47

What do we need to do?

48

We need tools which

▪ Clarify the link between sustainability, business opportunities and risk ▪ Translate sustainability targets into specific product design / daily activities

▪ Script simple guidelines that are specific, measurable and achievable ▪ Are applicable at different levels of hierarchy (from CFOs to product designers) ▪ Accurately measure the right Sustainability KPIs

49

We need an organizational and employee mindset where

▪ Every employee recognises his ability to actually make a difference by developing solutions to address one of the most important issues of our time ▪ Sustainability is not seen as a mere PR tool, but walking the talk becomes the goal ▪ Integrated thinking predominates the organisation: Sustainability cannot be managed from a silo ▪ Short term and long term interests are balanced

50

We need processes which

▪ Can be realistically incorporated into day-to-day practice & become part of governance processes ▪ Incentivise collaboration with other stakeholders, such as regulators, competitors and those within the supply chain

▪ Address the ‘why are we doing this’ question and explain the importance of sustainability in everyday terms, rather than abstract notions

51

We need targets & incentives to

▪ Link overall sustainability goals to individual business unit ambition ▪ Link the achievement of sustainability impact by employees to his or her targets & performance measurement

52

We regulation which

▪ More aggressively incentivises companies to internalise external costs to the environment ▪ Incentivises companies to shift the balance from short term to long term strategies, i.e. via financial regulation

53

Key challenges addressed in this lecture Directly addressed in this course

▪ Lack of methods for systematic sustainable product innovation ▪ Lack of or wrong KPIs and lack of data on impact of current initiatives ▪ Sustainability is seen as a cost creator, not a business driver ▪ Disconnected from core business strategy, often reactive ▪ Sustainability seen as primarily a marketing tool ▪ Disconnect between pubic claims to action & organisational practice ▪ Lack of resources ▪ Lack of accountability & incentivisation /performance measurement Indirectly addressed ▪ Insufficient regulation, i.e. to internalise external costs ▪ Sustainability addressed in silos (CSR department, with little influence) ▪ Value of short term gains over long term benefits (short termism)

54

How to start

55

Step by step is the key to success

Be realistic not idealistic – take sustainability step by step

2) Pragmatic Approach

1) Business as Usual None by definition

Implications

Actions

•

•

Anticipating regulations

•

Organisational transformation

•

Successive improvement of sustainable efficiency & portfolio

•

Complete transformation towards sustainable business & portfolio

•

Opportunistic PDP & BMDP– Sustainable and cost-sensitive

•

Preempting and shaping regulations

•

Fully sustainable PDP & BMDP

Positive

Positive

Positive

•

•

Increasing innovation capability

•

•

Improving perception of product quality

•

Reducing risk (environmental, LtO)

•

Increasing attractiveness for new talent

Low investment costs

Negative

•

Missed opportunity to innovate & grow

•

Abandoning sustainability-sensitive customer segments

•

Jeopardizing License to Operate (LtO)

•

Increased challenge to attract top talent

Negative •

Investment Opportunity Risk

3) Radical Turnaround

None low high

Increasing Market share by being early adopter

Negative •

Extensive amount of resources needed

•

High investment costs

•

Increasing Risk

Medium investment volume required medium medium low

high high high


57

Sustainable Innovation as a kick starter

Sustainable Product- & Business Model Innovation is not sufficient, but can be a key enabler for the pragmatic approach, kick starting the sustainable transformation of a company

Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015

58

Tools, Methods & Best Practices for Sustainable Product Innovation

59

We need to change the product design process

It is vital to incorporate sustainability at the very beginning of the product- and business model design process Psychology

Commercial

$

Technology

Sustainability

Holistic product- & business model design

It is much easier to design a product sustainably from the start than to change it later on 61

How to incorporate Sustainability into the design process Product & Business Model Innovation Themes Conception • Empathise with user • Identify problem • Create idea for solution & business model

Concept Validation • Define hypotheses • Validate Hypotheses

Building

Test & Learn

• Define (rapid) • Definition of prototypes, paper Iterate metrics & KPIs prototypes and • Test functionality, MVPs process, usability, • Build, test & learn customer acceptance

Selection of tools & methods Design Thinking Standard Tools and Methods

Value Proposition Canvas Sustainable Business Model Canvas Sustainability Levers Framework Sustainability-SWOT Analysis Sustainable Product Development Script

Tailored Tools & Methods for Sustainable Product Development

Lean Startup Method

Life Cycle Assessment Sustainability Balanced Score Card (S-BSC)

(Post) Launch • Launch if deficiency free • Marketing & growth • Continuous mgmt. and improvement



Building

Test & Learn





Lean Startup Method



Think green from the start!

Anchor: Consider all aspects of product life cycle from start

Sustainable Product Development Script

Product

$$$

Value & LT Extension

Smart Usage

Energy Efficiency

S-PDP Design for

Substance

Manufact-

& Material

uring

• Take into account complex and interacting aspects of the complete product life cycle, considering economy, ecosystem and society • Each major aspect, i.e. Smart Usage, is treated along an integrated sustainability approach and according to the latest industry consensus and standards

End of Life treatment

Emissions

Packaging & Packing

Batteries


65

Lean Startup Method

66

Value Proposition Canvas

Value Proposition

Customer Segments

GAIN CREATORS

GAINS CUSTOMER JOBS

PRODUCTS & SERVICES

PAIN RELIEVERS

PAINS

67

Sustainable Business Model Canvas Positive Impact (Maximise) 2nd

3rd

Who are possible partners in becoming more sustainable? How can we make the whole supply chain sustainable, transparent and circular? Can we cooperate with partners form other industries to form an industrial symbiosis?

Sustainable Value Creation Which are our key activities? How can we adjust them (e.g. manufacturing) to ensure sustainability? Which enabling sustainable technologies can be used?

Can we shape anticipated environmental regulations by partnering and cooperating with relevant regulatory bodies?

Sustainable Tech & Resources

Owner:

Version:

Negative Impact (Minimise)

What are positive and order effects of your product on planet, society, the economy or your organisation (e.g. brand)? How can these impacts be maximised along the complete product life cycle?

Sustainable Partners

Project:

What are negative 1st, 2nd and 3rd order effects, and how can these be minimised? Is harmful waste generated that requires expensive disposal? Are there rebound & induction effects or new technological risks?

Sustainable Value Proposition Which problem do we solve, which value do we create? What are function & form of our product or service? Can we solve our customers‘ problems more sustainably? Can we transform sustain-ability into customer value? Is ownership necessary or is the product as a service model applicable? Can we extend the product life cycle?

Which 1) natural, 2) energy and 3) technical resources do we need?

Sustainable Customer Relation Which customer relationships satisfy customer expectations and are sustainable? How can we make current relationships more sustainable?

Responsible customers Who are our customers? How can we enable them to act sustainably? Which target customers may help to promote our sustainable solution?

Sust. Channels

End of Life

How can we make our distribution channel more sustainable and circular?

What happens at the end of the product life cycle?

How do we best communicate the sustainable aspect of our product / service?

Can the product be profitably recycled, upcycled, reused, refurbished?

Can we substitute any for more sustainable resources?

Cost Structure & Additional Costs What are the required costs and investments for my endeavour? Which resources / activities are the least sustainable? Do sustainable alternatives exist? Is switching economically reasonable?

Subsidisation Do tax bonuses & subsidies or 3rd party funding exist for my endeavour?

Revenue & Sustainability Premium Which are existing and possible revenue sources? Are customers willing to pay a premium for sustainability? Can we create a unique advantage due to sustainable proposition elements? Do price structures exist that incentivize sustainable customer behaviour?

Threebility

threebility.com

The Sustainable Business Model Canvas by Threebility is licensed under a Creative Commons Attribution 4.0 ShareAlike International License.

6868

Impact Canvas

Project:

Positive Impact (Maximise)

Owner:

Version:


Technology / Product (direct 1st order effects) Capture (e.g. of waste or emissions)

Resource use during production Energy / resource and emissions during use

1

2

Waste generated during disposal

Application of Technology / Product (indirect 2nd order effects) Substitution (e.g. of paper through digitalisation)

Induction (of resource consumption, e.g. energy)

Optimisation (e.g. of energy usage & processes)

Obsolescence (e.g. via shorter product life cycles)

4

3 Societal & Structural Change (systemic 3rd order effects) Incentivisation (e.g. of fuel saving drive styles)

Rebound effects (e.g. via additional consumption)

Decision making (e.g. via agent based models)

New risks (e.g. via rising network vulnerability)

5 Threebility

6 threebility.com

The Sustainability Impact Canvas by Threebility is licensed under a Creative Commons Attribution 4.0 ShareAlike International License.

1 Maximise capture of waste or emissions

Focus: enabling technology only, e.g. HW, Software etc.

Main Principles

Risks

•

•

Unstable future supply of resources

•

Immature technology

Wherever possible, use materials for your product which are considered „waste“ and are currently polluting the environment

•

If feasible, engage in „industrial symbiosis“ with relevant industrial partners

•

Explore the potential of long-term or permanent capture of greenhouse gasses in your product

Benefits for provider and consumer •

Potentially lower manufacturing costs

•

Potential eligibility for subsidisation

•

Benefits for brand

Threebility

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Examples: • •

Glasses (Sea2See), Shoes (Adidas) and Fashion (Ecoalf) made from recycled ocean plastic (Sea2See) Plastic partially made from captured greenhouse gasses (Newlight Technologies)

70

2 Minimise Life Cycle Impact of technology

Focus: enabling technology only, e.g. HW, Software etc.

Main Principles

Risks

•

Design for longevity and resilience, i.e. via modularity

•

•

Design for timeless product appeal

•

Identify and utilise product as a service strategies

LCA time and cost extensive, longterm performance of materials may be unknown

•

Use low eco-impact raw materials

•

Set up costs of recycling system

•

Optimise production processes

•

Increased durability as threat to future sales

•

Decarbonise distribution processes


Preempting of tightening regulations

•

Higher customer appeal for eco-aware customers

•

Energy and material savings

•

Lower manufacturing costs

•

Independence of volatile commodity prices

Threebility

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Examples: • • •

Modular phone (Fairphone) Pre-emptive replacement of lead solders ahead of law banning the use of lead solders (HP) Electronics recycling as profit centre (Cisco)

71

3 Maximise Optimisation and Substitution Potential

Focus: application only, e.g. household equipped with smart home

Main Principles

Risks

•

•

Rebound effects

•

Difficulty to assess impact of substitutive processes

Optimisation •

•

Improve technology to optimise energy, fuel or capacity usage

Substitution •

Identify potential disruptive qualities of application

•

Digitalise, virtualize, dematerialise


Higher customer value

•

Higher market potential

Examples: • • • •

Threebility

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Reduced passenger car fuel consumption (Smart Drive) Reduced home energy consumption (Nest) Paperless billing, virtual meetings Managed services (sharing economy)

72

4 Minimise in built obsolescence and induction

Focus: application only, e.g. household equipped with smart home

Main Principles

Risks

•

•

Challenge to internalize external costs

•

Difficulty to adapt life cycles of products of different providers

Induction •

•

Identify and minimize previously non existent forms of resource consumption

Obsolescence •

Match real software life cycles to HW life cycles


Lower energy and resource usage

•

Lower obsolescence induced replacement costs

Examples: • • •

Threebility

threebility.com

Rising paper consumption due to cloud connected printers Shorter product life cycle of STBs due to faster SW development cycles Shorter Smartphone life cycles though rising App performance

73

incentivisation and improved decision making 5 Maximise rd Focus: 3 order effects only, e.g. societal and structural change

Main Principles

Risks

•

•

Importance to not patronize users with excessively high ‘nudge’ frequency

•

Complexity of decision processes

Incentivisation •

•

Use gamification elements (personification, virtual incentives and rewards, community challenges) to ‘nudge’ users towards sustainable behavior patterns

Decision making •

Create improved management tools to enable user directed optimization through better decisions


Soft mentoring (‘nudging’) of user towards beneficial behavior

•

More efficient decision processes

Threebility

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Examples: • •

Driving behaviour tips and incentives to save fuel (Smart Drive) or insurance (PHYD) Improved policy decision making via Agent Based Models

74

5 Deep Dive – Behaviour Science & Nudging Nudging: A concept of behavior science arguing that positive reinforcement and indirect suggestions to achieve behavior change can be more effective than direct instruction.

High potential for sustainability related behaviour change

75

5 Example of Nudging in Gamification Context

Goal of Gamification: Behaviour change of user via intelligent incentivization (‘Nudging’).

Target user behavior: •

High retention

•

High, continuous and increasing engagement

•

Lowering of energy and heating consumption

•

Implicit support for product marketing

Challenges: •

Gamification cannot replace high quality UX – it is only a tool

•

Points and badges alone insufficient (‚Pointsification‘), the goal is a holistic gamified app App UX (‚Ludification‘)

•

• •

Short term excitement is easy, but not sufficient – long term engagement is goal, but hard Need to find balance between intrinsic and extrinsic motivation Need for continually increasing challenges

Rules for Success: •

Base gamification concept on “Start with why” principle: big picture story first!

•

Find a balance between short-term and long term incentives

•

Less is more

•

Avoid to build a “Super Nanny”

•

If based on HMI, aim for self-ironic personified character

76

Marketing of Sustainability Related Product Features

5

Keeping up with the Joneses: social comparison as an effective nudge

77

5 Example of Smart Home App Gamification Concept.

Release 1

Release 2

Further Releases

Points

Goals

Friends

Comparison w. neighbors

Custom Savings Plan

Community Challenge

Streak

Compare demographics

Bets

Accumulated consumption

Compare by location

Virtual Currency

Accumulated savings

Individual challenge

Reminder Personification (Charme, Self irony, Humor), Big Picture and Quantified Self Character

Source: mm1

78

rebound effects and new risks 6 Minimise rd

Focus: 3 order effects only, e.g. societal and structural change

Main Principles

Risks

•

•

Challenge to internalize costs of rebound effects

•

Difficulty to assess complexity of related risks

Rebound effects •

•

Take into account increasing resource consumption on aggregated scale (Jevons paradox)

Risks •

Prevent over-optimized processes at expense of resilience

•

Take into account rising complexity of systems


Examples: •

Reliable products and services •

Threebility

threebility.com

Smart Vending machine with reduced energy consumption increases aggregated vending machine spread and energy use Over-optimised processes for vehicle management can be prone to complete breakdown

79

4 Jevons paradox: improvements in product efficiency

may lead to higher overall energy use due to higher sales

Dramatically reducing power consumption of individual vending machine

VS Dramatically increasing total power consumption of combined number of vending machines

80

What do you and others see changing? What are the sustainability relevant big trends?

Challenges •

Natural resource scarcity

•

Water availability

•

Waste & hazards

•

Global warming

•

Climate variability and extremes

Project:

Opportunities & Threats

Environmental & Social Challenges & Trends

Key question

Steps

The Sustainability SWOT Analysis

Where are environmental challenges threatening future business value, and how can you address these threats?

T •

Threats Consider both direct threats as well

Action

How can our strengths address environmental challenges? Who has similar weaknesses or faces similar risks?

S •

Which insights will influence senior company stakeholders most? What can be a short/mid/long term strategy?

Prioritise

Strengths •

Start with traditional list of your companies’ strengths, extend the list

chain Look upstream and downstream and

Version:

Strengths & weaknesses

as threats to partners in the value

•

Owner:

•

identify opportunities for joint action

Prioritise according to company vision and strategy

to the partners in your value chain

•

Identify strong messengers

Consider core & transferable

•

Emphasise findings that would

strengths (i.e. R&D, Eng.)

resonate with CEO and senior

Details

management

Trends •

Innovation & technology advances

•

Demographic & social shifts

•

Global economic dynamics

•

Political & regulatory requirements

O Opportunities

W Weaknesses

•

•

•

Look at threats that currently are not

threebility.com

•

Start with risks resulting from

Categorise generated insights

addressed

environmental challenges impacting

according to where and when you

Consider the business value that can

markets (e.g. operations, regulation,

can act

be created with new products, services and business practices

Threebility

Act

commodity prices) •

Include partners in list

•

If needed, consider gathering more insights before planning action

Source: mm1 & Metzger et. Al., 2012

81


Concept Validation

Building

Test & Learn

(Post) Launch

• Define hypotheses • Validate Hypotheses

• Define (rapid) prototypes, paper prototypes and MVPs • Build, test & learn

• Definition of metrics & KPIs • Test functionality, process, usability, customer acceptance

• Launch if deficiency free • Marketing & growth • Continuous mgmt. and improvement




Lean Startup Method


Validation

Validation is King (Especially for sustainable business models which are under double scrutiny) 83

The #1 reason product initiatives fail: confirmation bias “The first principle is that you must not fool yourself - and you’re the easiest person to fool.” ~ Richard Feynman

3 largest risks: 1. Problem does not exist 2. People do not care about solution 3. There is no business case

Formulate your hypotheses: “Which assumptions, if proven wrong, invalidate concept?”

Design Experiments to test hypotheses:

What is the fastest & cheapest technology/method to test my hypothesis? 84

Methods for hypotheses validation

Competitor Research: • Do similar initiatives exist? • Are they successful?

• What are the numbers?

User Testing: How: • Talking to users • Structured user interviews

What: • Individual hypotheses

• Product idea

• Over the shoulder testing

• Concept

• Do their customers like product? Why?

• Focus groups

• Paper prototype

• Who are their customers?

• Web analytics

• Landing page

• A/B Tests

• Concierge MVPs

• Customer development

• MVPs

• If they failed, why?

• (Product)

#1 rule: be courageous and try to falsify, rather than confirm 85

Deep dive: Customer development

Problem interview: ask 10-20 users: • 3 largest problems in your business today? • Most difficult part about X? Walk me through the last time it happened? • How much does this problem cost you?

• Magic wand question.

Solution interview: 10 – 20 diff. users: • Walk user through a “a day in their life without your product” (pausing/prompting) • Walk user through “a day with your product” (pausing/prompting) • How does it compare? (gauge emotional response)

Important rules: Do not try to sell Ask objective measurable questions Use mom test Pauses are important 86



Building

Test & Learn





Lean Startup Method



Design Thinking

88



Building

Test & Learn





Lean Startup Method



Your Narrative Matters

Lets save the environment

Change of story

Let’s have some fun and be cheeky smart

“Sustainability is dead. Or at least the entire language we use to talk about it should be buried.” ~ JUCCCE Chairwoman Peggy Liu “A good story and a well-formed argument are different natural kinds. Both can be used as means for convincing another. Yet what they convince others of is fundamentally different: arguments convince one of their truth, stories of their lifelikeness.” ~ Jerome Bruner

90

Elements of a successful narrative

91

For an effective narrative, start with Why

Anchor your narrative here

Why

How What 92



Building

Test & Learn





Lean Startup Method



Life Cycle Assessment (LCA) / Cradle to Cradle Analysis

LCA is a technique to assess the eco impact linked to all stages of a product or service

Mining

Primary

Mfg

Distribution

Use

Disposition

1 Goal & Scope Definition

2 Inventory Analysis

Interpretation

3 Impact Assessment 94

The Sustainability Balanced Score Card (S-BSC)

1 Financial Perspective

1.

Define all environmental/social aspects related to the business, irrespective of strategic relevance

2.

Define strategic relevance of these identified environmental aspects for the company strategy

• Definition of financial targets • Direct or indirect reference for perspectives 2-5 • Low relevance for environmental and social perspectives

2 Customer Perspective

Vision & Strategy Top down generation of input for 1-5, taking the Analysis (0) into account

• Definition of target customer group to achieve econ. Goals • High env. & social relevance, i.e. health aspects., demand for green products, pressure from NGOs & via regulation

• Definition of necessary competencies, information, motivation & organ. struct. • High env. & social relevance, i.e. purpose/vision as ‘green company, working conditions

• Definition of processes req. to achieve perspectives 1-2 • Innovation, Operation, Serv. • High env. & social relevance, i.e. production processes & material usage, supply chain.

Obj. Meas. Targ. Initiat.

3 Internal Business Proc. Obj. Meas. Targ. Initiat.

4 Learning & Growth


• Optionally, a 5th perspective can be introduced if necess. • Examples: legality and legitimacy, i.e. proactive compliance with future regulation), child labour


5 Non Market Perspective

In order to implement a sustainable business strategy and to measure + monitor sustainability performance, the S-BSC method can be used along the 4 to 5 main business perspectives


0 Analysis & Strategy Fit

The S-BSC is derived from the work of Schaltegger & Lüdeke-Freund, 2011

95

Lastly: Best practices for successful sustainable innovation

1

Look ahead - Don‘t start from the present, but envisage the future

6

(e.g. anticipate future regulation, consider enabling trends)

2

3

Be open to change - Understand that sustainability is a business opportunity, not just marketing Question the status quo - Ask yourself how you can make your value proposition more sustainable

4

7

related activities and goals into the entire supply chain

9

Keep efficiency in mind and prioritise Change what you can change now most efficiently

Team up - Form alliances with stakeholders (e.g. suppliers, NGOs) including regulatory bodies

8 Look at the roots - implement sustainability-

Be lean and green - Start small, learn, pivot & scale

5

Anchor sustainability in strategy and processes, allocate resources and ensure accountability

10

You cannot control what you cannot measure - Quantify sustainable activities using the S-BSC Stay Flexible - Pursue sustainability consistently but stay flexible to be able to react to new trends


96

Contents


97

Lets take a closer look at the sustainable business model canvas

98

The Sustainable Business Model Canvas - Overview Positive Impact (Maximise) 2nd

3rd


What are positive and order effects of your product on planet, society, the economy or your organisation (e.g. brand)? How can these effects be maximised along the complete product life cycle?

Sustainable Partners Who are possible partners in becoming more sustainable? How can we make the whole supply chain sustainable, transparent and circular? Can we cooperate with partners form other industries to form an industrial symbiosis?


Sustainable Value Creation Which are our key activities? How can we adjust them (e.g. manufacturing) to ensure sustainability? Which enabling sustainable technologies can be used?


What are negative 1st, 2nd and 3rd order effects, and how can these be minimised? Is harmful waste generated that requires expensive disposal? Are there rebound & induction effects or new technological risks?

Sustainable Value Proposition Which problem do we solve, which value do we create? What are function & form of our product or service? Can we solve our customers‘ problems more sustainably? Can we transform sustain-ability into customer value? Is ownership necessary or is the product as a service model applicable? Can we extend the product life cycle?


Sustainable Customer Relation Which customer relationships satisfy customer expectations and are sustainable? How can we make current relationships more sustainable?

Responsible customers Who are our customers? How can we enable them to act sustainably? Which target customers may help to promote our sustainable solution?

Sust. Channels

End of Life






Cost Structure & Additional Costs What are the required costs and investments for my endeavour? Which resources / activities are the least sustainable? Do sustainable alternatives exist? Is switching economically reasonable?

Subsidisation Do tax bonuses & subsidies or 3rd party funding exist for my endeavour?

Revenue & Sustainability Premium Which are existing and possible revenue sources? Are customers willing to pay a premium for sustainability? Can we create a unique advantage due to sustainable proposition elements? Do price structures exist that incentivize sustainable customer behaviour?

The Sustainable Business Model Canvas by Threebility is licensed under a Creative Commons Attribution 4.0 ShareAlike International License.

99

Advantages of using the Sustainable Business Model Canvas

• It forces users to think about the most relevant areas of their business within a triple-bottom-line (3BL) context • It allows users to maximise the sustainability impact of their venture whilst minimising negative externalities

• It is fast and easy to complete • If retains the standard BMC advantages of forcing users to focus on the value proposition and other important aspects

• It represents a common language • It helps social entrepreneurs to structure their discussions with (impact) investors

100

The Sustainable Business Model Canvas Game

One of several ways to use the S-BMC in practice is to organize a team innovation session and jointly complete the S-BMC with business model cue-cards

101

Step 1: Provide your team with the S-BMC Template Positive Impact (Maximise) 2nd

3rd


What are positive and order effects of your product on planet, society, the economy or your organisation (e.g. brand)? How can these impacts be maximised along the complete product life cycle?

Sustainable Partners Who are possible partners in becoming more sustainable? How can we make the whole supply chain sustainable, transparent and circular?

1

Can we cooperate with partners form other industries to form an industrial symbiosis?


Sustainable Value Creation

What are negative 1st, 2nd and 3rd order effectss, and how can these be minimised? Is harmful waste generated that requires expensive disposal? Are there rebound & induction effects or new technological risks?

Sustainable Value Proposition

Sustainable Customer Relation

Responsible customers

2 5 7 4 6 8 3

Which are our key activities? How can we adjust them (e.g. manufacturing) to ensure sustainability? Which enabling sustainable technologies can be used?


Which problem do we solve, which value do we create? What are function & form of our product or service?

Can we solve our customers‘ problems more sustainably? Can we transform sustain-ability into customer value?

Is ownership necessary or is the product as a service model applicable? Can we extend the product life cycle?


Which customer relationships satisfy customer expectations and are sustainable?

How can we make current relationships more sustainable?

Who are our customers? How can we enable them to act sustainably? Which target customers may help to promote our sustainable solution?

Sust. Channels

End of Life






Cost Structure & Additional Costs What are the required costs and investments for my endeavour?

Which resources / activities are the least sustainable? Do sustainable alternatives exist? Is switching economically reasonable?

Subsidisation

Do tax bonuses & subsidies or 3rd party funding exist for my endeavour?

Revenue & Sustainability Premium

Which are existing and possible revenue sources? Are customers willing to pay a premium for sustainability? Can we create a unique advantage due to sustainable proposition elements? Do price structures exist that incentivize sustainable customer behaviour?

102

Step 2: Provide your team with business model cue-cards*

The benefits and risks section helps your team to complete the positive & negative impacts section in the S-BMC

The description and example section helps your team to quickly understand the concept of the business model

These numbers help your team locate the relevant fields in the S-BMC

* See collection of cue-cards in following slides

103

Step 3: Ask your team to complete the S-BMC with the cue-cards

Is this relevant for 2 or 5?

Run through all business model cue-cards and see if any are relevant for your product

104

Step 4: Complete the Impact Canvas and transfer the results

Sustainability Impact Canvas

Input content from Impact Canvas into S-BMC

Sustainable Business Model Canvas

105

Step 5: Challenge the final result with the S-SWOT Discuss and challenge the S-BMC with your team, using the Sustainability SWOT Analysis. Do not just complete the S-BMC in order to ‘tick all the boxes’. Critically question your assumptions.

106

To help you get started:

38 Sustainable Business Model Cue-Cards

107

1

Product as a Service 108

Customers pay for the functionality of a product, without the responsibility of repairing, replacing or disposing it. Category:

Circular Economy

In the spotlight:

Business Model Category

Positive Impact

Risks

Longer product life cycles, end to 'in built obsolescence‘, reduced waste, improved differentiation Induction of additional consumption, rebound effects

4

Threebility

threebility.com

Across its lighting business, Philips utilizes a Product as a Service model - where customers Lock-In and pay for light, while Philips installs, maintains, and both recovers and recycles lighting units at the end of life, generating additional revenues and lowering resource costs.

5 8 108

2

Product Refurbishing 109

Refurbishing old or used products with the intent of reselling them Category:

Circular Economy

In the spotlight:


Positive Impact

Additional revenue from returned products, reduced resource consumption No significant risks

Risks

2 3 Threebility

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4

Dell refurbishes its old products and makes money on it. Dell Certified Refurbished PCs are laptops and desktops that have been returned to Dell, put again through the production process, and then again retested to ensure they meet all original factory specifications.

8 109

3

Rematerialisation 110

Sourcing materials from recovered waste to create entirely new products Category:

Circular Economy

In the spotlight:

ResQ Club


Positive Impact

Additional revenue, reduced waste, less resources used No significant risks

Risks

ResQ Club – This Finland-based startup has developed an app to reduce food waste by providing restaurants with a way to turn leftovers into revenue. Similar to the ‘Too Good to Go’ app launched in the UK earlier this year, ResQ Club’s app allows customers to purchase leftover food in their neighborhood for a lower price.

3 Threebility

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110

4

Industrial Symbiosis 111

Sharing of services, utility, and by-product resources among industries to improve resource efficiency. Circular Economy, Sharing Business Model CategoryEconomy

Category:

Positive Impact

In the spotlight:

Reduced costs, consumed resources and waste Increased network vulnerability

Risks

1 Threebility

The City of Kalundborg has created a genuine ‘industrial ecosystem’ where each company uses the waste of another. The Kalundborg Symbiosis is an industrial ecosystem, where the residual product of one enterprise is used as a resource by another enterprise, in a closed cycle.

8 threebility.com

111

5

Behavior Change 112

Stimulating customers to embrace new behaviors, such as reducing consumption or modifying daily habits. Category:

IoT, Nudging, Quantified Self

In the spotlight:


Positive Impact

Risks

Reducing resource consumption of consumers, improving safety & other relevant metrics Unintended consequences, rebound effects

4

Threebility

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5

6

Using Dash's smartphone app, car drivers are able to connect their car to their phone, and analyze their driving behaviors. The information gathered is used to help the driver improve their driving, making the roads safer and greener whilst at the same time making driving more affordable and more social.

112

6

Collection Service 113

Providing a service to collect old or used products from customers in a convenient manner. Category:

Circular Economy

In the spotlight:


Positive Impact

Optimisation of logistics, additional revenue

Risks

Possible rebound effects of additional consumption

4

Threebility

threebility.com

The food company Cirkle has optimised its logistics fleet of vans and drivers - who personally deliver Circles main product, seasonal produce - with a return logistics service including the collection of recyclables, dry cleaning and charity collections.

5 8 113

7

De-Materialisation 114

Reduction in the amount of materials used in the production of products. Category:

Miniaturisation

In the spotlight:


Positive Impact

Reduced costs, consumed resources, environmental footprint Possible rebound effects

Risks

In 1995, the carpet manufacturer Interface began experimenting with decreasing the amount of plastic used in their carpet backing. Reducing the plastic in the backing by a single ounce (per square yard) saved the company $1 million in materials that year.

2 3 Threebility

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114

8

Digitisation 115

Turning existing products or services into digital versions of themselves, offering advantages such as more rapid distribution. Category:

Physical to Virtual

In the spotlight:


Positive Impact

Risks

Reduced operating cost, market differentialisation, improved customer relationship Induction of additional energy consumption, rebound effects

2

Threebility

threebility.com

Number 26, a fin tech startup in Berlin, has completely digitized its customer acquisition process. Customers now validate their personal details via a video interface with a Number 26 employee, avoiding resource intensive paper based processes.

5

115

9

Local Loop 116

Co-locating of production processes in countries or regions where the businesses’ main markets are. Category:

Circular Economy

In the spotlight:


Positive Impact

Reduced costs and environmental footprint, optimised logistics, support of the local economy Local rebound effects

The Belgian company Umicore has decided to source its raw materials from local urban mines rather than exploit African mines for the recovery of gold and other precious metals.

Risks

1 Threebility

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6 116

10

Modularity 117

Designing a product based on smaller component parts that can be independently created, purchased, used and replaced. Category:

Circular Economy, Customisation

In the spotlight:


Positive Impact

Reduced waste, increased product life cycles, improved customer relationship, differentiation

No significant risks Risks

4

Threebility

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5

Fairphone offers a mobile phone using modular design and spare parts make it easy to repair, whilst at the same time offering improved protection to extend product life. Fairphone offers optimised and regular software updates limit asymmetries in HW and SW product life cycles.

7 8 117

11

Trash to Cash 118

Used products are collected and either sold or transformed into new products. Resource costs for the company are practically eliminated. Category:

Circular Economy

In the spotlight:


Positive Impact

Additional recycling, reduced waste and consumed resources, positive impact on brand Increased network vulnerability

Risks

Adidas has developed a premium shoe largely made from ocean plastic waste scoped from the Indian Ocean near the Maldives. Each pair of shoes contains 11 plastic bottles, and most of the rest of the sneaker (including the heel, lining, and laces) is also made from recycled material.

3 Threebility

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118

12

Consumer Product Sharing 119

Consumers share typically single owner a product with many other consumers. Category:

IoT, Sharing Economy

In the spotlight:


Positive Impact

Risks

Reduced need for product ownership, use of access capacity Potentially strong rebound effects of additional consumption

4

Threebility

threebility.com

Mercedes offers the car sharing service Car2Go, where predominantly urban customers can access shared cars on demand.

5

119

13

Upcycling 120

Using waste material as it is to create a more valuable material or ressource from it Category:

Circular Economy

In the spotlight:


Positive Impact

Additional revenue, reduced waste, less resources used, improved customer relationship Increased network vulnerability

Risks

3 Threebility

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4

Meldgaard takes back the cutting sand it has sold to customers for their water jet cutting machines. 50% of the used cutting sand is reusable and even offers a higher quality than new cutting sand. By doing so, Meldgaard reduces its dependency on suppliers, builds stronger customer ties and avoids depleting resources.

8 120

14

Remanufacturing 121

Reintroducing products into the manufacturing process for a major overhaul Category:

Circular Economy

In the spotlight:


Positive Impact

Additional revenue from returned products, reduced resource consumption No significant risks

Risks

2 3 Threebility

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4

Autocraft Drivetrain Solutions provide remanufacturing services on a wide range of engines and components for the automotive industry. Autocraft recovers up to 85 percent of the core engine through innovative methods, and works in partnership with OEMs when they design new engines, to design with remanufacturing in mind.

8 121

15

Product Deconstruction 122

Removing resources from a product offering that have to be added by the end consumer after he purchased the product Category:

Do it Yourself

In the spotlight:


Positive Impact

Risks

Reduced production costs, improved value proposition, logistics and storage processes Induction of resource consumption, rebound effects

2 3 Threebility

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4

The cleaning product company Splosh sells customers a one-off ‘starter box’, containing a range of simply designed bottles. A sachet of concentrated liquid is added to the bottle with warm tap water to create cleaning products. Bottles can be used repeatedly, with refill sachets delivered in boxes through the post.

6 122

16

Closed-Loop Production 123

Directly recycling the material used to create a product back into the production system. Category:

Circular Economy

In the spotlight:


Positive Impact

Reduced production costs, waste and energy usage, improved processes No significant risks

Risks

2 3 Threebility

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In 2011, General Motors decided to greatly reduce its waste footprint, committing to cut total waste (including manufacturing) by 40 % by 2020, from 2010. Four years ahead of schedule, GM has 100 of its manufacturing sites, along with 50 non-manufacturing sites, landfill-free. Over 150 of GM’s global facilities send zero waste to landfill.

8 123

17

Crowdsourcing 124

Solutions to tasks or problems are generated via an anonymous crowd, with contributors receiving some incentives Category:

Wisdom of Crowds

In the spotlight:


Positive Impact

Improved innovativeness, improved brand perception and customer engagement No significant risks

Risks

Threebility

threebility.com

Unilevers Foundry IDEAS platform acts as a hub for consumers and entrepreneurs to work together to tackle sustainability challenges. The platform provides a place for individuals to create and collaborate on solutions to “grand challenges” relating to sustainability. Unilever regularly upload challenges to the platform for users to submit ideas.

124

18

Differential Pricing 125

Charging more to those able to afford, and subsidizing those who cannot Category:

Bottom of the Pyramid

In the spotlight:


Positive Impact

Social inclusion, growth of market share, improved brand perception

Risks

Depending on product: rebound effects of additional consumption

The pharmaceutical company Novo Nordisk introduced a Differential Pricing Policy for Least Developed Countries in 2001. Under this policy the company has offered human insulin in LDCs at a price that does not exceed 20% of the average realised price for Europe, the US, Canada and Japan.

5

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19

Virtualisation 126

Hardware virtualization or platform virtualization refers to the creation of a virtual machine that acts like a real computer with an operating system Category:

Physical to virtual

In the spotlight:


Positive Impact

Optimised energy consumption, improved availability, lean corporate footprint Rebound effects

Amazon's Elastic Compute Cloud (EC2) solution enables Amazons clients to reduce their own HW requirements by outsourcing HW heavy services to Amazons cloud, where they can be run more efficiently.

Risks

3 Threebility

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4

5

126

20

Fractional Ownership 127

Sharing of a certain asset class among a group of owners

Category:

Sharing Economy

In the spotlight:


Positive Impact

Risks

Increased market share, reduction of carbon footprint for individual consumer Strong possible rebound effects due to additional consumption

NetJets offers its clients to buy "NetJets Shares", enabling the customer to own a "fraction" of an aircraft from the NetJets fleet. A NetJets Share costs a fraction of the price of owning a whole aircraft and provides greater flexibility than owning a single aircraft.

5

Threebility

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127

21

Lean Production 128

The elimination of waste within a manufacturing system, or the creation of more value for customers with fewer resources Category:

Lean

In the spotlight:


Positive Impact

Reduced costs, consumed resources and environmental footprint Rebound effects

Risks

Threebility

threebility.com

Lean manufacturing is a philosophy of management originating in part from the Toyota Production System (TPS). TPS aims to design out stress (overburden) and inconsistency and to eliminate waste, e.g. by introducing flexibility. Waste also refers to consumer time waiting for a product or assistance and waste of movement.

128

22

Open Source 129

The source code or patent of a product is made freely accessible for anyone Category:

Open Innovation

In the spotlight:


Positive Impact

1st order benefit of spreading a technology, 2nd order benefits via industry symbiosis & collaboration Risks related to competitors using own IP

Risks

1 Threebility

IBM is one of the founding members of the Eco-Patent Commons Initiative EPC, which brings together a collection of patents covering new technologies, processes and ideas to address a range of environmental problems. By opening these patents to the public, the companies hope to spur innovation, as well as create new business opportunities.

3 threebility.com

129

23

Pay Per Use 130

Actual usage of a service or product is metered, and customers pay for what is effectively consumed. Category:

IoT, Nudging

In the spotlight:


Positive Impact

Risks

Competitive advantage in certain scenarios, incentivisation reduced consumption Possibility of induction and rebound effects

4

Threebility

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5

The Dutch laundry company Bundles offers clean clothes on a pay-per-wash basis. Applying Internet of Things technology enables product monitoring, while maintenance and refurbishment of higher quality machines preserves the product integrity for multiple cycles.

7

130

24

Rent Instead of Buy 131

Customers rent the product, reducing the capital typically needed to access it Category:

Circular Economy

In the spotlight:


Positive Impact

Risks

Extended product life cycle, creation of regular customer touch point Possibility of induction and rebound effects

5

Threebility

Rent the runway rents out high-end designer dresses to its customers. The company uses big data enabled customer analytics to predict customer behavior and manage the logistics of moving around thousands of dresses and jewellery amongst the United States.

threebility.com

7

131

25

Predictive Maintenance 132

Enable equipment to notify operators when in use of maintenance to extend product life cycles. Category:

IoT

In the spotlight:


Positive Impact

Risks

Extended product life cycle, creation of regular customer touch point Risk of rebound effects if costs for maintenance carried by customer

4

Threebility

threebility.com

The ball bearing manufacturer SKF offers SKF Insight, an intelligent IoT wireless technologies that is integrated into SKF bearings. SKF developments in various smart technologies now enable bearings to communicate their operating conditions continuously.

5 8 132

26

Remote Maintenance & Services 133

Experts are enabled to perform machine maintenance remotely via life instructions of local unskilled labour Category:

IoT

In the spotlight:


Positive Impact

Risks

Reduced travel costs, extended product life cycle, creation of regular customer touch point Risk of rebound effects if costs for maintenance carried by customer

4

Threebility

threebility.com

Th augmented reality company Ubimax offers industrial clients solutions that enable even unskilled workers to repair technical equipment in the field. They can be guided via real time remote assistance with video & audio transmission, document exchange & remote augmented reality.

5 6

8 133

27

Circular Supplies 134

Using renewable, bio-based or fully recyclable materials to replace single-lifecycle inputs Category:

Circular Economy

In the spotlight:


Positive Impact

Risks

Reduced eco foot print of production due to use of renewable raw materials Possibility of significant induced consumption of raw bio materials

AkzoNobel collaborates with the biochemical company Photanol to replace its current fossil based raw chemical base compounds with bio-based chemical building blocks.

2 3 Threebility

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134

28

Grow and Sell 135

Farming food products directly at the point of sales

Category:

Local Production

In the spotlight:


Positive Impact

Reduced food waste, improved product quality, optimised logistics processes Induction of energy consumption

Risks

The Berlin based company Infarm is offering on-demand farming services for supermarkets. Using the Infarm solution, supermarkets can grow and sell herbs and vegetables directly in the supermarket, which enables them to reduce food waste and the resulting environmental impact.

2 3 Threebility

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6 135

29

Unlimited warranty 136

Offering free product repair services and unlimited full warranty for a product Category:

Circular Economy

In the spotlight:


Positive Impact

Improved value proposition, reduced waste

The fashion company Nudie Jeans offers free denim repair at twenty of their shops, encouraging customers to renew their jeans instead of. throwing them away Nudie Jeans also provides mail-order repair kits and online videos, so that customers can learn how to fix a pair of jeans at home, improving product longevity and value proposition.

No significant risks Risks

4

Threebility

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8 136

30

Waste to storage 137

Storing waste or toxics permanently or temporarily whilst creating value and revenue Category:

IoT, Carbon Capture

In the spotlight:


Positive Impact

Reduced pollution, decarbonisation Induction of energy consumption

Risks

Part advertising panel, part living, aircleaning installation, the City Tree of the company Green City Solutions can absorb 100kg of carbon dioxide annually – the equivalent of about 275 regular trees. The tree is autonomously powered by photovoltaics, rainwater, and IoT technology.

2 8 Threebility

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137

31

Consumer Resource Sharing 138

Sharing resources between private households to limit household waste Category:

Sharing Economy

In the spotlight:


Positive Impact

Reduced consumption, reduced waste

Risks

Possible induction and rebound effects

4

Threebility

threebility.com

The company Restado has created a digital platform that supports the consumer DIY trend by allowing even small amounts of materials to find buyers. Users can buy and sell residual, unneeded materials, rather than throwing them away or storing them.

7

138

32

Consumer Extended Value Chain 139

Relying on the consumer to optimise a value creation process Category:

Sharing Economy

In the spotlight:


Positive Impact

More efficient logistics, improved customer access Possible rebound effects

Risks

4

Threebility

threebility.com

5

DHL decided to include citizens into the last mile delivery of parcels by enabling them via App to accept parcels for neighbours and gain points for that. Instead of putting more delivery vehicles on the road, the app matches supply with demand and improves logistics efficiency.

7

6 139

33

Inclusive Sourcing 140

Shifting the focus of sourcing from volume and price, to supporting the farmer or producer Category:

Stewardship Model

In the spotlight:


Positive Impact

Social inclusion, improved brand perception No significant risks

The fashion brand ANN Inc. Made progress towards a more inclusive supply chain by committing to provide 100,000 women in its global supply chain with health and financial literacy training.

Risks

3 Threebility

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6 140

34

Innovative Product Financing 141

Leasing or renting products to customers

Category:

Circular Economy

In the spotlight:


Positive Impact

Reduced waste & consumption, extended product life cycles, end to 'in built obsolescence' Induction and rebound effects

Risks

4

Threebility

threebility.com

The tire manufacturer Michelin offers its customers to lease rather than buy tires. These customized tire lease programs save fuel and reduce costs. Michelin offers effective tire fleet solutions for a full range of applications, including transit, motor coach, refuse and all types of trucking fleets.

5 8 141

35

Repurposing of Excess Capacity 142

Excess capacity is mobilized in new ways, or with new customers Category:

Sharing Economy

In the spotlight:


Positive Impact

Optimisation of capacity usage and system performance

Risks

Rebound effects, network vulnerability

1 Threebility

By seamlessly connecting shippers and carriers through web and mobile apps, Cargomatic is helping truckers to unlock under-utilized capacity and shippers to track their freight in real time.

2 3 threebility.com

142

36

Produce on Demand 143

Producing a product only when a customer order has been received Category:

On Demand Economy

In the spotlight:


Positive Impact

Reduced costs due to no need to forecast demand, no shipping, returns or inventory costs Induction and rebound effects

Risks

3 Threebility

threebility.com

4

Amazon offers the Amazon Print on Demand Service, which enables authors to offer physical books on the Amazon website without having to print a first edition. Customers ordering books from Amazon receive these printed upon their orders with next day delivery.

6 143

37

No Frills 144

Focusing on the necessary minimum to deliver the core value proposition, where cost savings are shared with the customer Category:

Frugal Innovation

In the spotlight:


Positive Impact

Social inclusion, reduced resource consumption per product and during individual product use

High risk of induction of resource consumption and rebound effects

Risks

4

1 Threebility

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Tata Motors developed the Nano, an extremely simple, fuel efficient and basic car that is affordable for many Indians who currently ride motorcycles. The price of this no frills auto was brought down by dispensing with most nonessential features, reducing the amount of steel used in its construction, and relying on low cost local labour.

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Make More of It / Corporate Asset Sharing 145

Know-how and other assets in a company are offered to other companies, creating additional revenue using slack resources Category:

Open Innovation

In the spotlight:


Positive Impact

Optimisation of resource and labour usage, freeing of resources for higher value activities

Rebound effects, network vulnerability

Risks

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FLOOW2 is a platform that facilitates the sharing of overcapacity of business equipment and the skills & knowledge of personnel that are under-utilised for half of the time, by making it transparent and tradable on their platform. The platform is currently operational worldwide with a rapid global expansion plan envisaged.

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Contents


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Now we got the right tools. So let’s get going!

147 Connected Business as a Driver for Sustainable Innovation

A few more points: what else you need as a practitioner • High tolerance to frustration • Persistence • Being able to speak different languages; of engineers, management, marketers etc. • Deep knowledge of company processes • Ability to communicate complex issues simply & in non patronising way

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Additional resources and worthwhile reads – Part 1/3:

Circular Economy • Towards the Circular Economy, Ellen MacArthur Foundation (Link)

• Growth within: a circular economy vision for a competitive Europe, Ellen MacArthur Foundation (Link)

Internet of Things and ICT • ICT Solutions for 21st Century Challenges, GeSI (Link)

Sharing Economy • Assessing the size and presence of the collaborative economy in Europe, PWC (Link)

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Product and Business Model Innovation • How to Build a Startup, Y Combinator (Link)

• Sustainability Driven Innovation – Sustainability's ability to spark innovation, Deloitte (Link) • Nudging - A tool for sustainable behaviour? SEPA (Link) • Gamification and Sustainable Consumption, Huber & Hilty (Link) • A sustainability SWOT analysis, World Resources Institute (Link) • Design Thinking and Lean Startup according to mm1

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Other • How businesses value natural capital, Global Nature Fund (Link)

• The Sustainably Balanced Scorecard, University of Lüneburg (Link) • Towards a Unifying Narrative for Climate Change, Imperial College London (Link) • Introduction to Life Cycle Assessment (LCA), Gutowski (Link)

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Sustainable Produc & Business Model Innovation By Dr. Robert Gerlach Questions? Ideas? Get in touch: www.threebility.com [email protected]

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