Sustainable Product-&
Business Model Innovation
Robert Gerlach
Lecture Notes
Steinbeis University Berlin, 2017
Module: Integrative General Management
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Contents
2
1. Learning Objectives
2. Introduction to Sustainable Innovation
3. Tools & Methods for Sustainable Innovation
4. Deep Dive, 38 Business Models & Examples
5. Conclusion & Further Reading
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Contents
3
1. Learning Objectives
2. Introduction to Sustainable Innovation
3. Tools & Methods for Sustainable Innovation
4. Deep Dive, 38 Business Models & Examples
5. Conclusion & Further Reading
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 20174
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
By the end of this course you will:
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 20175
4. You should be keen to make a positive impact in
organisations, startups or with your own business
Most importantly:
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Contents
6
1. Learning Objectives
2. Introduction to Sustainable Innovation
3. Tools & Methods for Sustainable Innovation
4. Deep Dive, 38 Business Models & Examples
5. Conclusion & Further Reading
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 20177
Why Sustainable Innovation?
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Sustainability is an urgent need
8
It now takes the Earth one
1.6 years to regenerate the
resources we use in 1 year.
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
But sustainability is also a business opportunity
9
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Overview of sustainability opportunity: push & pull
10
Pressure from government & society
Tightening governmental regulation
Positive government incentives
Pressure through social activism
Emerging business Opportunities
Customer demand
Technological advance
Process optimisation
Risk reduction
Transformation of business mission
Drive towards circular economy models
Digital transformation
‘Green’ supply chain partnerships
Market pressure
Rising & extremely volatile commodity prices (energy, raw materials)
Pull from investors
Threat of disruption
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Positive business impact of sustainable business practice
12
Higher Margin Higher Revenue
Improved business case drivers and increased return for shareholders
Costs Employees Brand ProductSpeed &
RisksInvestment
• Optimised use
of energy and
resources
• Optimised
processes &
supply chain
• Lower taxes
• Improved ability
to attract, retain
& motivate
employees
• Improved
employee
productivity
• Stronger brand
and greater
pricing power
• Improved
customer loyalty
• Lower churn rate
• Opportunities to
seize the
innovative high
ground via
disruptive
sustainable
innovation
• Pre-empting
regulations via
proactive
innovation, Risk
Management
• Greater access
to investment
capital
• Lower cost of
capital
Higher ValuationIncreased Profits
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201714
Sustainability recognised as strong driver for innovation
Additional
boundary
conditions
stimulate thinking
about new
approaches to
solving known
problems
New Boundary
conditions
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
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201715
Current state of sustainability
in the corporate world
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
69 of global CEOs
believe that investor
interest in sustainability
will become an
increasingly important
factor for securing
business finance
Sustainability recognised as important by many CEOs….
16
76 of global CEOs believe
embedding sustainability into core
business will drive revenue growth
and opportunities.
63 of CEOs expect
sustainability to
transform their
industry within five
years
84 of global CEOs report that they
are actively investing in and employing
connected and digital technologies to
advance sustainability.
93 of global CEOs view
sustainability as important for
the future of their companies
54 of companies’ sustainability
heads anticipate that they will see
“significant” or “transformational”
change in their firms’ sustainability
management practices by 2015
69%
93%
54%76%
84%
63%
*Source: The UN Global Compact-Accenture CEO Study on Sustainability
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201717
…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.
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
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
18
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
We need a fundamental shift in our thinking…
19
Let’s compensate
for the unsustainable
things we do
Let’s fundamentally
change the way we
do businesstowards
Let’s make financial
sacrifices to be
more sustainable
Let’s capture new
business opportunities
to become more
innovative
towards
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201720
Reduce CO2 footprint of your own company
Design innovative products and services to reduce CO2 footprint and promote sustainability during product use
And broaden our horizons
Horizon 1 Horizon 2
Reasonable
progress &
strong existing
incentives
Work to do
& focus for
this course
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201722
The Goals of Sustainable
Product & Business Model
Innovation
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201723
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
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!
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201724
Key to 21st century sustainability: resource decoupling
Time
Business activity
Resource Use /
Environmental
Impact
Resource decoupling
Inte
nsi
ty
1970 2017
Business activity growth
needs to be decoupled from
resource usage and – by
extension – environmental
impact.
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201725
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.
In order to make a positive long-term impact, we need to …
All of this whilst remaining profitable and competitive!!!
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
It can be done - profitably!
26
Pre-empted government banon 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.
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.Charges 15 to 30 % more
for sustainable products because its customers are able to generate increased product margins through green products.
Green Products line, stablished 2004, by 2010 already accounted for 37.5% of overall sales, with the target for 2015 to reach 50%.
Sustainable product line yields significantly higher growth rates and margins than standard product lines.
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
Sustainable Product-& Business Model Innovation
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4 Trends Driving Sustainable
Product & Business Model
Innovation
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
The Circular Economy – The problem with waste
Source: Waste to Wealth – The Circular Economy Advantage, 201529
• 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
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
The Circular Economy - more than just recycling
Source: Ellen MacArthur Foundation circular / Braungart & McDonough and Cradle to Cradle (C2C) 30
1 Hunting and fishing
2 Can take both postharvest and postconsumer waste as an input
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Sources of value creation in the Circular Economy
Source: Ellen MacArthur Foundation circular economy team31
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Potential economic impact of circular economy Europe only
32Source: Ellen MacArthur Foundation circular economy team
3% of additional annual
productivity growth
€ 0,6 trillion per year benefit by 2030 to
Europe's economies
€ 1,2 trillion additional non-resource and
externality benefits
7 % GDP increase
relative to current development
scenario
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Example: Internet of Things as a catalyst for sustainability
Autonomous Driving
Smart City
Smart Home
Industry 4.0
Agriculture 4.0
IT-for-Green
Wireless Networks
Real Time Traffic
Cloud Computing
Smart
Grid
Ecosystem
Society
Economy
Car Sharing
From optimised processes to improved decision making – connected technologies are a
driver for sustainability. They also offer high potential scalability of sustainability effects.
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Internet of Things and ICT offer high return on invest
*Source: GeSI, SMARTer 2030, 2015
35
0
10
20
30
40
50
60
70
2030 with Business as
usual
2030 with ICT enabled
abatement
GtC
O2
em
issi
on
s
ICT Footprint All other GHG emissions
-20 %
The savings potential of ICT
amounts to 12 GtCO2 – more than
the total emissions of China today
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%! *
ICT Savings
Potential
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*
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Substitution Optimisation Incentivation Other (i.e. Decision
Making, Life Cycle, Waste)
Transportation Car Sharing, Virtual
Mobility
P2P Parking, Inter-
modal transp.
EcoDriving, Pay-
How-You-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 Quantified Self,
Health Applications
Big Data driven Smart
Health
Goods & Services Virtual goods, E
business
Green material selection
via CAD* plus LCA**
Public Sector E-Governance, E-
Bureaucracy
Agent Based Policy &
Service Models, Big Data
Raw Materials, Agric. Agriculture 4.0 Supply Chain Mgmt. &
Life Cycle Mgmt.
36
Sustainability LeverIndustry
High business potential across all major industries
*Computer Aided Design, ** Life Cycle Analysis
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
The Collaborative & Sharing Economy is on the rise
38
Peer 2 Peer
Transportation
Peer 2 Peer
Accommodation
Industrial
Symbioses
On demand
household
services
On demand
business services
Collaborative
finance
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
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Established industries are increasingly threatened by
innovative startups – example recycling industry
40Source: “Digital Business Innovation in the Recycling Industry”, mm1, 2017
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Logistics optimization
Logistics support and optimization of processes within the recycle value network
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
Waste usage
Transformation of waste into valuable
resources or consumer products
Waste sorting
Smart sorting of waste &
assortment of resources
Waste acquisition
Collection of a defined set of waste
and extraction of valuable resources
Startups are threatening complete recycling value chain
and accelerate the unbundling process of the industry
Source: “Digital Business Innovation in the Recycling Industry”, mm1, 201741
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Manufacturing companies
buy valuable materials from
haulers
Materials are reused and
recycled
Example: Rubicon Global – a cloud-based platform
connecting businesses and independent haulers
0
Recycling Companies
Rubicon supports businesses of all sizes to get out of existing waste disposal contracts
Businesses can arrange for trash pick up within one hour via Rubicon‘s app
Disposal job auctioned on the Rubicon platform
Producers of waste
On demand pick-ups
Cost reduction (~30%)
Customized reports
CSR management
+
+
+
+
Haulers acquire their
business by bidding on the
disposal job
The app helps haulers to
optimize their routes and get
real-time information on
their truck fleet
Independent haulers
Low-cost acquisition of
new customers
Increase route efficiency
Customized reports
+
+
+
Cost-efficient acquisition
of valuable resources
Diversion of waste from
landfills
+
+
Leonardo Di Caprio
- Hollywood actor –
Marc Benioff
- Founder & CEO of –
Investors
Current valuation
500+ Mio. $
Source: “Digital Business Innovation in the Recycling Industry”, mm1, 2017
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Contents
43
1. Learning Objectives
2. Introduction to Sustainable Innovation
3. Tools & Methods for Sustainable Innovation
4. Deep Dive, 38 Business Models & Examples
5. Conclusion & Further Reading
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201744
Introduction
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Challenges to Corporate Sustainable Innovation
Lack of tools and methods for systematic sustainable product innovation
Lack of or wrong KPIs and lack of data and sufficient information 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)
46
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201747
What do we need to do?
Sustainable Product-& Business Model Innovation
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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
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201749
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
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201750
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
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201751
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
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201752
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
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Key challenges addressed in this lecture
Lack of tools and methods for systematic sustainable product innovation
Lack of or wrong KPIs and lack of data and sufficient information 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)
53
Directly addressed in this course
Indirectly addressed
Sustainable Product-& Business Model Innovation
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How to start
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201756
• None by definition
None
low
high
Positive
• Low investment costs
Positive
• Increasing Market share by being
early adopter
Positive
• Increasing innovation capability
• Improving perception of product
quality
• Reducing risk (environmental, LtO)
• Increasing attractiveness for new
talent
Acti
on
sIm
pli
cati
on
s
Negative
• Missed opportunity to innovate &
grow
• Abandoning sustainability-sensitive
customer segments
• Jeopardizing License to Operate (LtO)
• Increased challenge to attract top
talent
Negative
• Medium investment volume required
Negative
• Extensive amount of resources
needed
• High investment costs
• Increasing Risk
medium
medium
low
high
high
high
1) Business as Usual 2) Pragmatic Approach 3) Radical Turnaround
Be realistic not idealistic – take sustainability step by step
Investment
Opportunity
Risk
• Anticipating regulations
• Successive improvement of
sustainable efficiency & portfolio
• Opportunistic PDP & BMDP–
Sustainable and cost-sensitive
• Organisational transformation
• Complete transformation towards
sustainable business & portfolio
• Preempting and shaping regulations
• Fully sustainable PDP & BMDP
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201757
Sustainable Innovation as a kick starter
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
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
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201758
Tools, Methods & Best
Practices for Sustainable
Product Innovation
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201760
Incorporate Sustainability from the very beginning
$
Psychology
Technology
Commercial
Sustainability Holistic product design
It is much easier to design a product sustainably from the start than to change it later on
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201761
How to incorporate Sustainability into the design process
Conception Concept Validation Test & LearnBuilding
Product & Business Model Innovation Themes (all iterative & non-linear)
Selection of useful tools & methods (no dogma, but suggestions)
• Empathise with
user
• Identify problem
• Create idea for
solution &
business model
• Define hypotheses
• Validate
Hypotheses
• Define (rapid)
prototypes, paper
prototypes and
MVPs
• Build, test & learn
Design Thinking
Sustainable Business Model Canvas
Lean Startup Method
Value Proposition Canvas
Sustainability-SWOT Analysis
Sustainability Balanced Score Card (S-BSC)
Sustainability Levers Framework
Sustainability Best Practices
Sustainable Product Development Script
• Definition of
metrics & KPIs
• Test functionality,
process, usability,
customer
acceptance
(Post) Launch
• Launch if
deficiency free
• Marketing &
growth
• Continuous
improvement
Iterate
Tailored Tools & Methods for
Sustainable Product Development
Standard Tools
and Methods
Life Cycle Assessment
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Design Thinking
Sustainable Business Model Canvas
Value Proposition Canvas
Sustainability-SWOT Analysis
Sustainability Levers Framework
Sustainable Product Development Script
62
How to incorporate Sustainability into the design process
Conception Concept Validation Test & LearnBuilding
Product & Business Model Innovation Themes (all iterative & non-linear)
Selection of useful tools & methods (no dogma/rule – but suggestions)
• Empathise with
user
• Identify problem
• Create idea for
solution &
business model
• Define hypotheses
• Validate
Hypotheses
• Define (rapid)
prototypes, paper
prototypes and
MVPs
• Build, test & learn
Lean Startup Method
Sustainability Balanced Score Card (S-BSC)
Sustainability Best Practices
• Definition of
metrics & KPIs
• Test functionality,
process, usability,
customer
acceptance
(Post) Launch
• Launch if
deficiency free
• Marketing &
growth
• Continuous
improvement
Iterate
Tailored Tools and
Methods
Standard Tools
and Methods
Life Cycle Assessment
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Robert Gerlach, Steinbeis University Berlin, 201764
Anchor: Consider all aspects of product life cycle from start
Product
Value & LT
ExtensionEnergy
Efficiency
Substance
& Material
Emissions
BatteriesPackaging
& Packing
End of Life
treatment
Design for
Manufact-
uring
Smart
Usage
• 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
Sustainable Product Development
Script
S-PDP
$$$
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
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Lean Startup Method
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Value Proposition Canvas
GAINS
PAINS
CUSTOMER
JOBS
PAIN
RELIEVERS
GAIN
CREATORS
PRODUCTS
&
SERVICES
Value Proposition Customer Segments
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The mm1 Sustainable Business Model Canvas
Sustainable
PartnersSustainable
Value Creation
Sustainable Value
Proposition
Sustainable
Customer Relation
Responsible
customers
Sust. ChannelsSustainable Tech
& Resources
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?
Can we shape anticipated
environmental regulations by
partnering and cooperating
with relevant regulatory
bodies?
Which are our key activities?
How can we adjust them (e.g.
manufacturing) to ensure
sustainability?
Which enabling sustainable
technologies can be used?
Which 1) natural, 2) energy
and 3) technical resources do
we need?
Can we substitute any for
more sustainable resources?
How can we make our
distribution channel more
sustainable and circular?
How do we best communicate
the sustainable aspect of our
product / service?
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?
End of Life
What happens at the end of
the product life cycle?
Can the product be
profitably recycled,
upcycled, reused, refurbished?
Cost Structure & Additional Costs
Subsidisation
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?
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?
Negative Impacts (Minimise)
What are negative 1st, 2nd and 3rd order impacts, and how can these be
minimised? Is harmful waste generated that requires expensive disposal? Are
there rebound & induction effects or new technological risks?
Positive Impacts (Maximise)
What are positive 2nd and 3rd order impacts 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?
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Technology
Application
Behaviour and
structural
change
• None by definition
• Substitution (e.g. of paper
through digitalisation)
• Optimisation (e.g. of
energy usage & processes)
• Rebound effects (e.g. via
additional consumption)
• New risks (e.g. via rising
network vulnerability)
• Life cycle Impact
(Production, Use, Disposal)
• Induction (of resource
consumption, e.g. energy)
• Obsolescence (e.g. via
shorter product life cycles)
• Incentivisation (e.g. of fuel
saving drive styles)
• Decision making (e.g. via
agent based models)
1st
ord
er
eff
ect
s
2n
do
rder
eff
ect
s
3rd
ord
er
eff
ect
s
Maximise Minimise
The ICT sustainability impact framework
Positive Effects Negative Effects
Source: Hilty, L.M.: Information
Technology and Sustainability, 2008
3 2
5 4
1
Input for
S-BMC
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201769
Minimise Life Cycle Impact of technology
Focus: enabling technology only, e.g. HW, Software etc.
Main Principles
• Design for longevity and resilience, i.e. via
modularity
• Design for timeless product appeal
• Identify and utilise product as a service strategies
• Use low eco-impact raw materials
• Optimise production processes
• Decarbonise distribution processes
Benefits for provider and consumer
• Preempting of tightening regulations
• Higher customer appeal for eco-aware customers
• Energy and material savings
• Lower manufacturing costs
• Independence of volatile commodity prices
Risks
• LCA time and cost extensive,
long-term performance of
materials may be unknown
• Set up costs of recycling system
• Increased durability as threat to
future sales
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)
1
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201770
Minimise in built obsolescence and induction
Focus: application only, e.g. household equipped with smart home
Main Principles
• Induction
• Identify and minimize previously non
existent forms of resource consumption
• Obsolescence
• Match real software life cycles to HW life
cycles
Benefits for provider and consumer
• Lower energy and resource usage
• Lower obsolescence induced replacement costs
Risks
• Challenge to internalize
external costs
• Difficulty to adapt life cycles of
products of different providers
Examples:
• 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
2
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201771
Maximise Optimisation and Substitution Potential
Focus: application only, e.g. household equipped with smart home
Main Principles
• Optimisation
• Improve technology to optimise energy, fuel
or capacity usage
• Substitution
• Identify potential disruptive qualities of
application
• Digitalise, virtualize, dematerialise
Benefits for provider and consumer
• Higher customer value
• Higher market potential
Risks
• Rebound effects
• Difficulty to assess impact of
substitutive processes
Examples:
• Reduced passenger car fuel
consumption (Smart Drive)
• Reduced home energy
consumption (Qivicon)
• Paperless billing, Virtual meetings
• Managed service (sharing
economy)
3
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201772
Minimise rebound effects and new risks
Main Principles
• 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
Benefits for provider and consumer
• Reliable products and services
Risks
• Challenge to internalize costs
of rebound effects
• Difficulty to assess complexity
related risks
Examples:
• Smart Vending machine with
reduced energy consumption
increases aggregated vending
machine spread and energy use
• Over optimised processes for
vehicle management prone to
complete blackout
4
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Jevons paradox: improvements in product efficiency
may lead to higher overall energy use due to higher sales
73
Dramatically reducing power
consumption of individual vending
machine
VS
Dramatically increasing total power
consumption of combined number of
vending machines
4
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201774
Maximise incentivisation and improved decision making
Focus: 3rd order effects only, e.g. societal and structural change
Main Principles
• 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
Benefits for provider and consumer
• Soft mentoring (‘nudging’) of user towards
beneficial behavior
• More efficient decision processes
Risks
• Importance to not patronize
users with excessively high
‘nudge’ frequency
• Complexity of decision
processes
Examples:
• Driving behaviour tips and
incentives to save fuel (Smart
Drive) or insurance (PHYD)
• Improved policy decision making
via Agent Based Models
5
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201775
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
5
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example of Nudging in Gamification Context
76
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
Goal if Gamification:
Behaviour change of user
via intelligent incentivization
(‘Nudging’).
5
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201777
Marketing of Sustainability Related Product FeaturesKeeping up with the Joneses:
social comparison as an
effective nudge
5
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Release 2 Further ReleasesRelease 1
Example of Smart Home App Gamification Concept.
78
Points
Streak
Comparison w. neighbors
Accumulated savings
Accumulated consumption
Reminder
Goals
Compare demographics
Custom Savings Plan
Compare by location
Friends
Community Challenge
Individual challenge
Bets
Virtual Currency
Personification (Charme, Self irony, Humor), Big Picture and Quantified Self Character
Source: mm1
5
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201779
Environmental
Challenges & TrendsSte
ps Opportunities &
Threats
• Natural resource scarcity
• Water availability
• Waste & hazards
• Global warming
• Climate variability and
extremes
Challenges
What do you and others see
changing? What are the
sustainability relevant big
trends?Key q
uest
ion
• Innovation & technology
advances
• Demographic & social shifts
• Global economic dynamics
• Political & regulatory
requirements
Trends
Where are environmental
challenges threatening future
business value, and how can
you address these threats?
The Sustainability SWOT Analysis (S-SWOT)
How can our strengths
address environmental
challenges? Who has similar
weaknesses or faces similar
risks?
Which insights will influence
senior company
stakeholders most? What
can be a short/mid/long
term strategy?
Strengths & weaknesses
Action
Deta
ils
• Consider both direct threats
as well as threats to partners
in the value chain
• Look upstream and
downstream and identify
opportunities for joint action
T Threats
• Look at threats that currently
are not addressed
• Consider the business value
that can be created with new
products, services and
business practices
O Opportunities
• Start with traditional list of
your companies’ strengths,
extend the list to the
partners in your value chain
• Consider core & transferable
strengths (i.e. R&D, Eng.)
S Strengths
• Start with risks resulting from
environmental challenges
impacting markets (e.g.
operations, regulation,
commodity prices)
• Include partners in list,
W Weaknesses
• Prioritise according to
company vision and strategy
• Identify strong messengers
• Emphasise findings that
would resonate with CEO
and senior management
Prioritise
• Categorise generated
insights according to where
and when you can act
• If needed, consider
gathering more insights
before planning action
Act
*Source: mm1 & Metzger et al., 2012
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Robert Gerlach, Steinbeis University Berlin, 201780
How to incorporate Sustainability into the design process
Conception Concept Validation Test & LearnBuilding
Product & Business Model Innovation Themes (all iterative & non-linear)
Selection of useful tools & methods (no dogma/rule – but suggestions)
• Empathise with
user
• Identify problem
• Create idea for
solution &
business model
• Define hypotheses
• Validate
Hypotheses
• Define (rapid)
prototypes, paper
prototypes and
MVPs
• Build, test & learn
Design Thinking
Sustainable Business Model Canvas
Lean Startup Method
Value Proposition Canvas
Sustainability-SWOT Analysis
Sustainability Balanced Score Card (S-BSC)
Sustainability Levers Framework
Sustainability Best Practices
Sustainable Product Development Script
• Definition of
metrics & KPIs
• Test functionality,
process, usability,
customer
acceptance
(Post) Launch
• Launch if
deficiency free
• Marketing &
growth
• Continuous
improvement
Tailored Tools and
Methods
Standard Tools
and Methods
Life Cycle Assessment
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201781
Validation
Validation
is King(Especially for sustainable
business models which are
under double scrutiny)
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
The #1 reason product initiatives fail: confirmation bias
82
“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,
invalidates concept?”
Design
Experiments to
test hypotheses:
What is the fastest & cheapest technology/method to test my hypothesis?
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Methods for hypotheses validation
83
• Do similar initiatives
exist?
• Are they successful?
• What are the
numbers?
• Do their customers
like product? Why?
• Who are their
customers?
• If they failed, why?
How:
• Talking to users
• Structured user
interviews
• Over the shoulder
testing
• Focus groups
• Web analytics
• A/B Tests
• Customer development
What:
• Individual
hypotheses
• Product idea
• Concept
• Paper prototype
• Landing page
• Concierge MVPs
• MVPs
• (Product)
User Testing:Competitor Research:
#1 rule: be courageous and try to falsify, rather than confirm
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Deep dive: Customer development
84
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
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Design Thinking
Sustainable Business Model Canvas
Value Proposition Canvas
Sustainability-SWOT Analysis
Sustainability Levers Framework
Sustainable Product Development Script
85
How to incorporate Sustainability into the design process
Conception Concept Validation Test & LearnBuilding
Product & Business Model Innovation Themes (all iterative & non-linear)
Selection of useful tools & methods (no dogma/rule – but suggestions)
• Empathise with
user
• Identify problem
• Create idea for
solution &
business model
• Define hypotheses
• Validate
Hypotheses
• Define (rapid)
prototypes, paper
prototypes and
MVPs
• Build, test & learn
Lean Startup Method
Sustainability Balanced Score Card (S-BSC)
Sustainability Best Practices
• Definition of
metrics & KPIs
• Test functionality,
process, usability,
customer
acceptance
(Post) Launch
• Launch if
deficiency free
• Marketing &
growth
• Continuous
improvement
Tailored Tools and
Methods
Standard Tools
and Methods
Life Cycle Assessment
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201786
Design Thinking
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Design Thinking
Sustainable Business Model Canvas
Value Proposition Canvas
Sustainability-SWOT Analysis
Sustainability Levers Framework
Sustainable Product Development Script
87
How to incorporate Sustainability into the design process
Conception Concept Validation Test & LearnBuilding
Product & Business Model Innovation Themes (all iterative & non-linear)
Selection of useful tools & methods (no dogma/rule – but suggestions)
• Empathise with
user
• Identify problem
• Create idea for
solution &
business model
• Define hypotheses
• Validate
Hypotheses
• Define (rapid)
prototypes, paper
prototypes and
MVPs
• Build, test & learn
Lean Startup Method
Sustainability Balanced Score Card (S-BSC)
Sustainability Best Practices
• Definition of
metrics & KPIs
• Test functionality,
process, usability,
customer
acceptance
Launch & after
• Launch if
deficiency free
• Marketing &
growth
• Continuous
improvement
Tailored Tools and
Methods
Standard Tools
and Methods
Life Cycle Assessment
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201788
Your Narrative Matters
Lets save the
environment
Let’s have some fun
and be cheeky smartChange of story
“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
“Sustainability is dead. Or at least the entire
language we use to talk about it should be
buried.” ~ JUCCCE Chairwoman Peggy Liu,
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201789
For an effective narrative, start with Why
Why
How
What
Anchor your
narrative here
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Design Thinking
Sustainable Business Model Canvas
Value Proposition Canvas
Sustainability-SWOT Analysis
Sustainability Levers Framework
Sustainable Product Development Script
90
How to incorporate Sustainability into the design process
Conception Concept Validation Test & LearnBuilding
Product & Business Model Innovation Themes (all iterative & non-linear)
Selection of useful tools & methods (no dogma/rule – but suggestions)
• Empathise with
user
• Identify problem
• Create idea for
solution &
business model
• Define hypotheses
• Validate
Hypotheses
• Define (rapid)
prototypes, paper
prototypes and
MVPs
• Build, test & learn
Lean Startup Method
Sustainability Balanced Score Card (S-BSC)
Sustainability Best Practices
• Definition of
metrics & KPIs
• Test functionality,
process, usability,
customer
acceptance
Launch & after
• Launch if
deficiency free
• Marketing &
growth
• Continuous
improvement
Tailored Tools and
Methods
Standard Tools
and Methods
Life Cycle Assessment
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201791
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
1 Goal & Scope Definition
2 Inventory Analysis
3 Impact Assessment
Interpretation
Mining Primary Mfg Distribution Use Disposition
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201792
The Sustainability Balanced Score Card (S-BSC)
• Definition of financial targets
• Direct or indirect reference
for perspectives 2-5
• Low relevance for
environmental and social
perspectives
1 Financial Perspective
Ob
j.M
eas.
Targ
.In
itia
t.
• 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
2 Customer Perspective
Ob
j.M
eas.
Targ
.In
itia
t.
• Definition of processes req.
to achieve perspectives 1-2
• Innovation, Operation, Serv.
• High env. & social relevance,
i.e. production processes &
material usage, supply chain.
3 Internal Business Proc.
Ob
j.M
eas.
Targ
.In
itia
t.
• 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
Ob
j.M
eas.
Targ
.In
itia
t.
• Definition of necessary
competencies, information,
motivation & organ. struct.
• High env. & social relevance,
i.e. purpose/vision as ‘green
company, working conditions
4 Learning & Growth
Ob
j.M
eas.
Targ
.In
itia
t.
0 Analysis & Strategy Fit 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
Vision
& Strategy
Top down generation of
input for 1-5, taking
the Analysis (0)
into account
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
The mm1 S-BSC is derived from the work of
Schaltegger & Lüdeke-Freund, 2011
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201793
Lastly: Best practices for successful sustainable innovation
Look ahead - Don‘t start from the
present, but envisage the future (e.g. anticipate future regulation, consider enabling trends)
1
Be open to change - Understand
that sustainability is a business
opportunity, not just marketing
2
Question the status quo - Ask
yourself how you can make your value
proposition more sustainable
3
Be lean and green - Start small,
learn, pivot & scale
4
Keep efficiency in mind and
prioritise - Change what you can
change now most efficiently
5
Anchor sustainability in strategy
and processes, allocate resources and
ensure accountability
6
Team up - Form alliances with
stakeholders (e.g. suppliers, NGOs)
including regulatory bodies
7
Look at the roots - implement
sustainability-related activities and goals
into the entire supply chain
8
You cannot control what you
cannot measure - Quantify sustainable
activities using the S-BSC
9
Stay Flexible - Pursue
sustainability consistently but stay
flexible to be able to react to new trends
10
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Contents
94
1. Learning Objectives
2. Introduction to Sustainable Innovation
3. Tools & Methods for Sustainable Innovation
4. Deep Dive, 38 Business Models & Examples
5. Conclusion & Further Reading
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Lets take a closer look
at the (familiar) star of
the business model
innovation tools
95
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201796
The Sustainable Business Model Canvas (S-BMC) in practice
Sustainable
PartnersSustainable
Value Creation
Sustainable Value
Proposition
Sustainable
Customer Relation
Responsible
customers
Sust. ChannelsSustainable Tech
& Resources
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?
Can we shape anticipated
environmental regulations by
partnering and cooperating
with relevant regulatory
bodies?
Which are our key activities?
How can we adjust them (e.g.
manufacturing) to ensure
sustainability?
Which enabling sustainable
technologies can be used?
Which 1) natural, 2) energy
and 3) technical resources do
we need?
Can we substitute any for
more sustainable resources?
How can we make our
distribution channel more
sustainable and circular?
How do we best communicate
the sustainable aspect of our
product / service?
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?
End of Life
What happens at the end of
the product life cycle?
Can the product be
profitably recycled,
upcycled, reused, refurbished?
Cost Structure & Additional Costs
Subsidisation
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?
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?
Negative Impacts (Minimise)
What are negative 1st, 2nd and 3rd order impacts, and how can these be
minimised? Is harmful waste generated that requires expensive disposal? Are
there rebound & induction effects or new technological risks?
Positive Impacts (Maximise)
What are positive 2nd and 3rd order impacts 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 Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201797
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 templates
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
3
2
6
5
8
741
98
Step 1: Number the principle fields in the S-BMC
Sustainable
PartnersSustainable
Value Creation
Sustainable Value
Proposition
Sustainable
Customer Relation
Responsible
customers
Sust. ChannelsSustainable Tech
& Resources
End of Life
Cost Structure & Additional Costs
Subsidisation
Revenue & Sustainability Premium
Negative Impacts (Minimise)Positive Impacts (Maximise)
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 201799
Step 2: Provide your team with business model templates
These numbers help your team
locate the relevant fields in the
S-BMC
The benefits and risks section
helps your team to complete
the positive & negative
impacts section in the S-BMC
The description and example
section help your team to
quickly understand the
concept of the business model
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017100
Step 3: Distribute the templates and complete the S-BMC
Is this
relevant
for 2 or 5?
Run through all business
model templates and see if any
are relevant for your product
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017101
Step 4: Challenge the final result with S-SWOT & SLF
Sustainability SWOT
Sustainability Levers Framework
Discuss and challenge the completed
canvas with your whole team.
Optionally, use additional methods to
enhance your S-BMC and improve
your decision making process.
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017102
To help you get started:
Here are 38 Sustainable Business
Model Templates for you
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Product as a Service
103
Customers pay for the functionality of a product, without the responsibility of
repairing, replacing or disposing it.
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.
Circular Economy
4
5
8
Longer product life cycles, end to
'in built obsolescence‘, reduced
waste, improved differentiation
Induction of additional
consumption, rebound effects
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Product Refurbishing
104
Refurbishing old or used products with the intent of reselling them
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.
Circular Economy
2
3
4
8
Additional revenue from returned
products, reduced resource
consumption
No significant risks
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Rematerialisation
105
ResQ Club
Sourcing materials from recovered waste to create entirely new products
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.
Circular Economy
3
Additional revenue, reduced
waste, less resources used
No significant risks
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Industrial Symbiosis
106
Sharing of services, utility, and by-product resources among industries to improve
resource efficiency.
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.
Circular Economy, Sharing Economy
1
8
Reduced costs, consumed
resources and waste
Increased network vulnerability
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Behavior Change
107
Stimulating customers to embrace new behaviors, such as reducing consumption or
modifying daily habits.
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.
IoT, Nudging, Quantified Self
4
5 6
Reducing resource consumption
of consumers, improving safety &
other relevant metrics
Unintended consequences,
rebound effects
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Collection Service
108
Providing a service to collect old or used products from customers in a convenient
manner.
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.
Circular Economy
4
5
8
Optimisation of logistics,
additional revenue
Possible rebound effects of
additional consumption
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
De-Materialisation
109
Reduction in the amount of materials used in the production of products.
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.
Miniaturisation
2
3
Reduced costs, consumed
resources, environmental
footprint
Possible rebound effects
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Digitisation
110
Turning existing products or services into digital versions of themselves, offering
advantages such as more rapid distribution.
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.
Physical to Virtual
2 5
Reduced operating cost, market
differentialisation, improved
customer relationship
Induction of additional energy
consumption, rebound effects
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Local Loop
111
Co-locating of production processes in countries or regions where the businesses’
main markets are.
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.
Circular Economy
1
2
3 6
Reduced costs and environmental
footprint, optimised logistics,
support of the local economy
Local rebound effects
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Modularity
112
Designing a product based on smaller component parts that can be independently
created, purchased, used and replaced.
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.
Circular Economy, Customisation
4
5 7
8
Reduced waste, increased product
life cycles, improved customer
relationship, differentiation
No significant risks
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Trash to Cash
113
Used products are collected and either sold or transformed into new products.
Resource costs for the company are practically eliminated.
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.
Circular Economy
3
Additional recycling, reduced
waste and consumed resources,
positive impact on brand
Increased network vulnerability
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Consumer Product Sharing
114
Consumers share typically single owner a product with many other consumers.
Mercedes offers the car sharing
service Car2Go, where
predominantly urban customers can
access shared cars on demand.
IoT, Sharing Economy
4
5
Reduced need for product
ownership, use of access capacity
Potentially strong rebound effects
of additional consumption
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Upcycling
115
Using waste material as it is to create a more valuable material or ressource from it
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.
Circular Economy
3
4
8
Additional revenue, reduced
waste, less resources used,
improved customer relationship
Increased network vulnerability
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Remanufacturing
116
Reintroducing products into the manufacturing process for a major overhaul
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.
Circular Economy
2
3
4
8
Additional revenue from returned
products, reduced resource
consumption
No significant risks
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Product Deconstruction
117
Removing resources from a product offering that have to be added by the end
consumer after he purchased the product
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.
Do it Yourself
2
3
4
6
Reduced production costs,
improved value proposition,
logistics and storage processes
Induction of resource
consumption, rebound effects
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Closed-Loop Production
118
Directly recycling the material used to create a product back into the production
system.
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.
Circular Economy
2
3 8
Reduced production costs, waste
and energy usage, improved
processes
No significant risks
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Crowdsourcing
119
Solutions to tasks or problems are generated via an anonymous crowd, with
contributors receiving some incentives
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.
Wisdom of Crowds
Improved innovativeness,
improved brand perception and
customer engagement
No significant risks
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Differential Pricing
120
Charging more to those able to afford, and subsidizing those who cannot
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.
Bottom of the Pyramid
5
Social inclusion, growth of market
share, improved brand perception
Depending on product: rebound
effects of additional consumption
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Virtualisation
121
Hardware virtualization or platform virtualization refers to the creation of a virtual
machine that acts like a real computer with an operating system
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.
Physical to virtual
3
4
5
Optimised energy consumption,
improved availability, lean
corporate footprint
Rebound effects
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Fractional Ownership
122
Sharing of a certain asset class among a group of owners
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.
Sharing Economy
5
Increased market share, reduction
of carbon footprint for individual
consumer
Strong possible rebound effects
due to additional consumption
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Lean Production
123
The elimination of waste within a manufacturing system, or the creation of more
value for customers with fewer resources
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.
Lean
Reduced costs, consumed
resources and environmental
footprint
Rebound effects
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Open Source
124
The source code or patent of a product is made freely accessible for anyone
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.
Open Innovation
1
3
1st order benefit of spreading a
technology, 2nd order benefits via
industry symbiosis & collaboration
Risks related to competitors using
own IP
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Pay Per Use
125
Actual usage of a service or product is metered, and customers pay for what is
effectively consumed.
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.
IoT, Nudging
4
5 7
Competitive advantage in certain
scenarios, incentivisation reduced
consumption
Possibility of induction and
rebound effects
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Rent Instead of Buy
126
Customers rent the product, reducing the capital typically needed to access it
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.
Circular Economy
5 7
Extended product life cycle,
creation of regular customer
touch point
Possibility of induction and
rebound effects
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Predictive Maintenance
127
Enable equipment to notify operators when in use of maintenance to extend
product life cycles.
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.
IoT
4
5
8
Extended product life cycle,
creation of regular customer
touch point
Risk of rebound effects if costs for
maintenance carried by customer
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Remote Maintenance & Services
128
Experts are enabled to perform machine maintenance remotely via life instructions
of local unskilled labour
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.
IoT
4
5
6 8
Reduced travel costs, extended
product life cycle, creation of
regular customer touch point
Risk of rebound effects if costs for
maintenance carried by customer
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Circular Supplies
129
Using renewable, bio-based or fully recyclable materials to replace single-lifecycle
inputs
AkzoNobel collaborates with the
biochemical company Photanol to
replace its current fossil based raw
chemical base compounds with bio-
based chemical building blocks.
Circular Economy
2
3
Reduced eco foot print of
production due to use of
renewable raw materials
Possibility of significant induced
consumption of raw bio materials
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Grow and Sell
130
Farming food products directly at the point of sales
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.
Local Production
2
3 6
Reduced food waste, improved
product quality, optimised
logistics processes
Induction of energy consumption
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Unlimited warranty
131
Offering free product repair services and unlimited full warranty for a product
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.
Circular Economy
4
8
Improved value proposition,
reduced waste
No significant risks
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Waste to storage
132
Storing waste or toxics permanently or temporarily whilst creating value and
revenue
Part advertising panel, part living,
air-cleaning 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.
IoT, Carbon Capture
2
8
Reduced pollution,
decarbonisation
Induction of energy consumption
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Consumer Resource Sharing
133
Sharing resources between private households to limit household waste
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.
Sharing Economy
4
7
Reduced consumption, reduced
waste
Possible induction and rebound
effects
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Consumer Extended Value Chain
134
Relying on the consumer to optimise a value creation process
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.
Sharing Economy
4
5
6
7
More efficient logistics, improved
customer access
Possible rebound effects
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Inclusive Sourcing
135
Shifting the focus of sourcing from volume and price, to supporting the farmer or
producer
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.
Stewardship Model
3 6
Social inclusion, improved brand
perception
No significant risks
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Innovative Product Financing
136
Leasing or renting products to customers
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.
Circular Economy
4
5
8
Reduced waste & consumption,
extended product life cycles,
end to 'in built obsolescence'
Induction and rebound effects
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Repurposing of Excess Capacity
137
Excess capacity is mobilized in new ways, or with new customers
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.
Sharing Economy
1
2
3
Optimisation of capacity usage
and system performance
Rebound effects, network
vulnerability
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Produce on Demand
138
Producing a product only when a customer order has been received
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.
On Demand Economy
3
4
6
Reduced costs due to no need to
forecast demand, no shipping,
returns or inventory costs
Induction and rebound effects
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
No Frills
139
Focusing on the necessary minimum to deliver the core value proposition, where
cost savings are shared with the customer
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.
Frugal Innovation
1 4
5
Social inclusion, reduced resource
consumption per product and
during individual product use
High risk of induction of resource
consumption and rebound effects
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Example Application:
Benefits:
Risks:
Theme:
SBMC*
Ideation
Anchors:
Method
* Sustainable Business Model Canvas
Model:
! ! !
Make More of It / Corporate Asset Sharing
140
Know-how and other assets in a company are offered to other companies, creating
additional revenue using slack resources
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.
Open Innovation
1
2
3
Optimisation of resource and
labour usage, freeing of resources
for higher value activities
Rebound effects, network
vulnerability
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017141
Examples from real world
projects by the consulting
company mm1
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Solution: Smart STB replaces HTML5 STB
Life cycle extension of Set Top Boxes
142
Challenge: Large legacy STB base impacts performance & market growth
• Legacy STB cannot deploy modern UIs less customer satisfaction &
market growth
• STB life cycle (LC) much longer than UI application life cycle
• Constantly upgrading STBs to enable modern UIs is expensive
• Less environmental impact, less land fill
via longer STB life cycle (increased from
2-3 to 5-7 years)
• Higher margin via longer STB life cycles &
lower customer churn.
• Higher customer satisfaction through high
quality UX without need to upgrade
legacy STBs.
Results:
• Decision to abandon traditional layered software
architecture in STB HTML5 clients
• Mid term strategy: use of SmartSTB strategy where
client directly connects app & STB HW using a
‘virtual animation machine’
• Long term strategy: Virtual STB, moves app
execution and rendering into the cloud and streams
video data directly to the STB
A client in the TELCO
industry
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Solution: The connected washing machine
143
• SIM card based connectivity of washing machine,
digitalised washing assistant
• Digital and optimised two component based
dosage system for washing agent
• Smart phone enabled control of washing machine
• Remote and atomised reordering of washing agent
• Up to 70% savings of washing agent
• Increased water efficiency
• Differentiating product feature
• Direct customer contact, knowledge about
customer & usage behaviour over whole
product life cycle
• Increased customer retention via
automated reordering system
Results:
Challenge: Increase consumer retention and improve washing machine efficiency• Few customer touch points with washing machine customer after initial sales of
washing machine, lack of upselling opportunities
• Lack of influence on customers choice of washing agent
• Inefficient usage of water and washing agent (e.g. 30-40% over dosage of
washing agent common)
The connected washing machine A client in the home
appliance industry
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Solution: QIVICON– Smart Home Solution
144
• Integrated Smart Home Solution connectable to a
wide range of devices
• Allows monitoring and controlling energy
consumption, lighting, heating, AC, etc.
• Easy to control via smartphone, tablet & computer
• Renowned suppliers of compatible products, e.g.
EnWB, Miele, Philips
• Reduction in energy consumption
• Reduced risk of mould-related health
issues
• Improvement of fire prevention via
connection with smoke-/CO2-detectors
Results:
Challenge: Satisfying the increasing demand for an integrated SH solution
• Global demand for resources drives up energy prices (+33% until 2030)
• Increasing consumer interest in energy-saving Smart Home solutions
• High demand for increased convenience
Integrated Smart Home Solution A client in the conn.
home industry
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Solution: Product Re-Launch
145
• Replacement of legacy search engine with new
open-source technology
• Switch from high performance physical servers to
cloud infrastructure
• Modularisation of the search engine, elimination of
redundant systems
• Consolidation of several interfaces for various
consumers into one full-featured interface serving
all customers
• Hardware setup reduced by 50%
• Overall performance significantly
increased (up to 2,000%)
• Lead time for change requests has been
reduced by around 3 weeks
• Modularization helped reducing
complexity such that only 1 interface
needs to be maintained instead of >10
before
Results:
Challenge: Provide efficient and service-friendly search solution
• Need for a solution to provide a search engine allowing for a near-to-realtime
processing of TV metadata
• New solution required to be more cost-efficient, flexible and powerful than the
current proprietary system
• Support for current solution is cancelled by vendor
Optimisation of a metadata search platform A client in the TELCO
industry
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Solution: Multifunctional Application
146
• B2C2B Product that aggregates several consumer
services in a single product
• Services include EcoDrive, PHYD, parking,
Maintenance Mgmt. and more
• Intelligent push instead of pull App layout based
on recommendation engine
• Gamification and community functionality to
incentivise active use
• Less environmental impact as consumers
and fleets save up to 15% fuel
• Less accidents due to incentivised save
driving
• Less urban congestion and CO2
emissions due to parking space finder
Results:
Challenge: Achieving high connected car market penetration with B2B partners
• Players in the connected car eco system (OEMs, workshops, insurers) are
looking for products to achieve high consumer market penetration
• Stand alone products often not sufficiently attractive to consumers and not
conducive to frequent App use
Fuel efficient and safe driving solution A client in
automotive industry
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Solution: Sustainable Dev. Process
147
• Establishment of a Stage-Gate Process in
Product development
• Codification of process and quality mgmt.
in the quality management handbook
according to the ISO norm
• Establishment of check points at every
product development gate including the
check points ‘reusability material’,
‘reduction material usage’ and
‘optimisation energy efficiency
Results:
Challenge: Reducing cost and time required to manufacture Telco consumer prod.
• Quality problems during development and manufacturing of Telco products
• Need to optimise product development and quality management processes
• Need for lean and fast product development with minimized use of resources (i.e.
reduced materials usage and improved energy efficiency)
Optimised product development process
• Certification ‘Blauer Engel’ awarded
• Sustainability of router considered and increased
energy savings generated, e.g. via sleep mode in
IP-Telephones
• Development of a mass market router in 50%
shorter time span and less use of personnel and
material resources
• Product meeting higher customer demand and in
line with strategic objectives, incl. sustainability
strategy, of client
A client in the TELCO
industry
Source: “Connected Business as a Driver for Sustainable Innovation”, mm1, 2015
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Contents
148
1. Learning Objectives
2. Introduction to Sustainable Innovation
3. Tools & Methods for Sustainable Innovation
4. Deep Dive, 38 Business Models & Examples
5. Conclusion & Further Reading
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017149Connected Business as a Driver for Sustainable Innovation
Now we got the right tools.
So let’s get going!
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
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
150
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017151
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)
Additional resources and worthwhile reads – Part 1/3:
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017152
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
Additional resources and worthwhile reads – Part 2/3:
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017153
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)
Additional resources and worthwhile reads – Part 3/3:
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017154
Robert Gerlach is head of the Sustainable Innovation Practice at mm1. He has a
background in product- and business model innovation within the automotive, telco,
insurance, aerospace and manufacturing industries, focusing on connected mobility,
Smart Home, AR/VR and robotics. He previously worked in aerospace R&D and
obtained a PhD in engineering science from the University of Oxford.
The concepts presented here are based on industry best practices and new methods
developed at the consulting company mm1. mm1 supports large companies in digital
transformation and designing products and processes for an increasingly digital
world. The mm1 consulting services range from developing connected business
strategies and business models to ensuring an efficient operational implementation.
About
Sustainable Product-& Business Model Innovation
Robert Gerlach, Steinbeis University Berlin, 2017
Sustainable Product-&
Business Model InnovationBy Robert Gerlach
Questions? Ideas? Get in touch:
mm1.com