Academic journal article Research-Technology Management

Creating and Capturing Value through Sustainability: The Sustainable Value Analysis Tool

Academic journal article Research-Technology Management

Creating and Capturing Value through Sustainability: The Sustainable Value Analysis Tool

Article excerpt

A new tool helps companies discover opportunities to create and capture value through sustainability.

In recent years, as companies have been challenged by environmental legislation and societal pressures (Elkington 1997), sustainability has become a key factor in long-term business success. As a result, innovation for sustainability has received much attention from researchers and practitioners (Nidumolu, Prahalad, and Rangaswami 2009; Boons et al. 2013). However, although technological approaches to promote sustainability have been thoroughly investigated (Camarinha-Matos 2011), comparatively little work has been done to understand how innovation in business models can support sustainability across the product life cycle, including manufacturing, operation, and disposal.

Business model innovation looks at how companies create and capture value at every stage of a product's journey to market. While business model innovation has been the subject of much discussion and research, very few tools have been developed to help companies integrate sustainability into the business model innovation process (Evans et al., in press). Existing tools for business model innovation either do not consider sustainability (for instance, Osterwalder and Pigneur's [2010] Business Model Canvas) or do not address all of the elements of the business model (for example, lifecycle assessment tools [Tukker 2000]). Thus, sustainability considerations and business model innovation are often not well integrated, with sustainability being treated as an add-on rather than as a core source of value.

Considering sustainability in the process of business model innovation can provide entirely new ways to create and capture value, beyond those offered by merely developing greener technology or cleaner production systems, by making sustainability a central element not only of the product but of the business itself. New tools that help companies integrate sustainability concerns and opportunities into the design of new business models can uncover new approaches that yield new sources of value, making sustainability an opportunity for growth rather than a challenge to be overcome. To address this need, we developed a tool, the Sustainable Value Analysis Tool, that provides a broader way of looking at value, one that integrates sustainability from the beginning of the process, and a strategic process and conceptual framework for creating and capturing value by identifying where in the product life cycle value--environmental and social value as well as economic value--has not been captured. The result is a business model innovation process that has sustainability at its heart.

Business Model Innovation for Sustainability

In the literature, the concept of the business model is closely linked to the concept of value (Amit and Zott 2012); the business model explains how a company creates, delivers, and captures value (Richardson 2008). Thus, business model innovation is the process of identifying new ways to create, deliver, and capture value (Casadesus-Masanell and Zhu 2013). Several tools have been developed to help companies improve value creation. Value Network Analysis maps the tangible and intangible value exchanges within internal networks (between individuals and groups within a firm) and external networks (between organizations); the method has achieved practical results (Allee 2011). Osterwalder and Pigneur's (2010) Business Model Canvas, specifically intended to help companies design business models, has become the dominant tool in industry. This tool breaks the business model down into nine elements--value proposition, customer segments, channels, customer relationships, revenue streams, key resources, activities, partnerships, and cost structure--and provides a framework for understanding the relationships among these elements. A more recent entrant, the Value Mapping Tool (Bocken et al. 2013; Evans, Rana, and Short 2014), also focuses on relationships, analyzing value exchanges from the perspective of multiple stakeholders to identify value creation opportunities. …

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