A forecast of the likely direction of travel for business model innovation has revealed that strategies focused on sustainability and circularity will be vital to business success in the coming years.
The report, commissioned by the Business and Sustainable Development Commission and published by global consultancy, Volans, provides practical examples and a guide to the characteristics of breakthrough business models that are set to become mainstream in the coming years.
With the sustainable development agenda becoming increasingly central to the way businesses are working, the report argues that businesses “must let go of the old ways of doing things” by revolutionising their business models – or risk being left behind.
“All businesses now need a much clearer sense of the direction of market travel… the old approach of simply signing sustainable business charters or producing annual sustainability reports is [now] a baseline activity”, the report reads.
Over 80 different existing business models are identified in the report.
The key characteristics of business models that will be successful in the future include:
- Social: delivering both financial and ‘extra-financial’ value by generating positive social impacts
- Lean: using physical, human and intellectual resources more effectively, creating no waste and maximizing value creation across the value chain
- Integrated: measuring and managing data flows and systems to develop new market intelligence
- Circular: designing operations that sustain products, components and material inputs and outputs at their highest value.
Making the cut
John Elkington, chairman of Volans, said: “Leaders know that the rules of the game are about to change faster than at any time in their working lives. Simply parroting the latest sustainability jargon won’t make the cut.”
Successful business models are likely to capitalise on the opportunity of the ‘fourth industrial revolution’, or Industry 4.0, which includes smarter manufacturing and using vast amounts of data to unlock new efficiencies.
In addition, the concept of a circular economy is expected to become mainstream for businesses within the next few years. The University of Manchester is offering workshops to companies interested in adopting a circular business model as part of its Sustainable Industrial Systems research.