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Summary Sustainable Entrepreneurship
- Instelling
- Tilburg University (UVT)
Summary of exam material (papers/ slides/ webclips) but the class exercises are not included.
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Sustainable Entrepreneurship SummaryWeek 1
Greening Goliaths versus Emerging Davids
The paper analyses the interplay between ‘greening goliaths’ and ‘emerging davids’ and theorizes about how it is their
compounded impact that promotes the sustainable transformation of industries.
In the article, firms are divided into 2 categories:
Greening Goliaths represent larger incumbent firms using incremental innovation to bring about sustainable
development
Emerging Davids are start-up and young companies introducing disruptive innovations
Both can play a role in contributing towards sustainable transformation, but they do so in different ways. For future success the
interaction of the two types is needed.
Characteristics of Davids and Goliaths
Criteria Davids Goliaths
Age Rather new Old, incumbent
Size Small Large
Objective function Social and/or environmental objectives at Economic objectives dominating, social/
least as important as economic objectives environmental objectives complementary
Incremental and disruptive innovation
Innovations can be disruptive or incremental. According to Hockerts & Wüstenhagen only Davids introducing disruptive
innovations can be classified as demonstrating sustainable entrepreneurship.
Davids Goliaths
Disruptive innovation Sustainable entrepreneurship Sustainable corporate entrepreneurship
Incremental innovation Bioneers, social bricoleurs Sustainability management systems, CSR, eco-
efficiency
Co-evolution – sustainable transformation of an industry when both start-ups and incumbents influence each other in the
market.
The authors argue that:
Incremental solutions will not be enough to maintain critical levels of natural and social capital
Sustainable entrepreneurship has a role to play
There is a need for transformational change
Definition of sustainable entrepreneurship – the discovery and exploitation of economic opportunities through the generation
of market disequilibria that initiate the transformation of a sector towards an environmentally and socially more sustainable
state.
Emerging Davids – business behavior
They are not limited by previous (technological) mindsets and are more innovative
They are part of the solution and not seen as part of the problem
Sustainability start-ups have a value-based approach and externalize costs by asking customers to pay a premium for
socially and environmentally superior products (and services)
They tend to have a single-issue focus and can be less good at addressing a broader range of sustainability issues
Idealistic approach can lead to little or no attention to growth strategies
They prefer to keep their niche market small and exclusive, in order to avoid incumbents moving into their markets
,Greening Goliaths – business behavior
Incumbents may be slow to react but are often able to catch up quickly once they have decided to follow
They may then benefit from being able to charge premium prices, following the price level established by the start up
They can launch venture capital funds to monitor innovating Davids (e.g. Philips, Sabic, Unilever)
They may be able to influence the setting (or reduction) of environmental standards in their favour (e.g. car industry
lobby)
They may try to keep standards fixed rather than encourage continuous improvement
Co-evolution – a maturity model
Goliaths and Davids follow different approaches but they can converge
Love Beauty & Planet example see slides
Sustainable business model archetypes
Sustainable business context the world is currently using the equivalent of 1.5 planets to support human activities. “Business
as usual” is NOT an option for a sustainable future.
Sustainable business systems
A future sustainable economy requires new goals and priorities and a future business system that:
Encourages minimizing consumption
Prioritizes societal and environmental benefits over economic growth
Emphasizes the delivery of functionality rather than product ownership
Operates on a closed loop where nothing is allowed to be wasted
Sustainable business models – requires:
1. A fundamental shift in the purpose of business and how it is conducted
2. Re-conceptualizing of the concept and perception of value (creation logic)
3. Development of innovative sustainable business models
o A triple bottom line approach (People, Planet, Profit)
o A wider range of stakeholder interests (economic AND environment and society)
,A better understanding is needed on how sustainable business models can deliver better social and environmental performance.
So how can we change and/or innovate business models to deliver sustainable solutions? A commercial business model
describes a way of capturing economic value innovation usually means changes that increase the economic value.
Business models and innovation (example mobile telephone business model) access to a mobile telephone and internet
service for a monthly fee.
Business model innovation:
Sell a smartphone with a monthly fee and a 2 year contract
New value proposition is to provide access and the means of access creating more economic value for the mobile
telephone business
Sustainable business models
A sustainable business model requires innovation that changes the way you do business. A way of capturing economic value
AND environmental and social value (benefits).
Innovation towards a sustainable business model
Sustainability driven BM innovation:
Rent the smartphone, at the end of the 2 year contract customer returns the smartphone
Reuse the “old” smartphone in a different market for 3 years then recycle materials
Sustainable business model – what are the benefits?
Smartphone is used for longer (benefitting the environment and some social groups)
Smartphone does not become chemical waste (benefits the environment)
Sustainable business model archetypes
Goal of the research: how to help to stimulate innovation that places environmental and societal benefits above purely
economic benefits
Categorize sustainable business models into archetypes
The archetypes create insights into the range of possibilities and even how they might be combined
Business model archetypes are useful for:
Existing businesses (redesign)
Entrepreneurs (creating new business)
Research (understanding trends and direction that are creating impact)
, Sustainable business model: mobile operator (example)
Sustainable business models, and business model innovation can involve more than one archetype, in this example;
Create value from waste reuse, recycle, re-manufacture
Deliver functionality rather than ownership use oriented, PSS-, rental, lease, shared
Recap
Innovative sustainable business models are needed to bring about change – they need to incorporate
A triple bottom line approach
o People – social performance
o Planet – environmental performance
o Profit – economic performance
A wider range of stakeholder interests (economic, environment and society)
Business models – 3 key components
Value proposition Value creation & delivery Value capture
Product/ service, customer segments Key activities, resources, channels, Cost structure & revenue streams
and relationships partners, technology
Business models – what are they?
Business models are concerned with how the firm defines its competitive strategy through:
How it differentiates itself from other firms by its value proposition,
The design of the product or service it offers to its market,
How it charges for it (revenue model),
What it costs to produce,
And how the firm integrates its own value chain with those of other firms in a value network (of partnerships)
Business models describe how the company will convert resources and capabilities into economic value.
Regular business model types: advertising (google, youtube), subscription (internet, mobile phone provider), bait and hook (loss
leader – printers and ink), bricks and clicks – retail and internet sales (mediamarkt), low cost (high volume – Ryanair), premium –
revenue driven (luxury brands), franchise (Mcdonalds), freemium (Spotify), internet sales (amazon), product as a service – PSS,
lease, rental (cars, photocopiers) but these are really revenue models
Business model canvas – 9 elements
Business models – 3 key components
Business model key components in the paper:
Value proposition
o Product/ service offering to generate economic, social, ecological return
o Customer segments
Value creation and delivery
o Creating of value by seizing new business opportunities, new markets, new revenue streams
o Delivery: key activities, resources, channels, partners, technology
Value capture
o Cost structure
o Revenue streams
Business model example – Spotify (see full notes)
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