This upper-level Open Access textbook aims to educate students and professionals on how to develop business models that have a positive impact on people, society, and the social and ecological environment. It explores a different view of how to organize value creation, from a focus on an almost exclusively monetary value creation to one that creates positive impact through multiple values.
The book offers students and entrepreneurs a structured approach based through the Business Model Template (BMT). It consists of three stages and ten building blocks to facilitate the development of a business model. Users, be they students or practitioners, need to choose from one of the three offered business model archetypes, namely the platform, community, or circular business models. Each archetype offers a dedicated logic for vale creation. The book can be used to develop a business model from scratch (turning an idea into a working prototype) or to transform an existing business model into one of the three archetypes. Throughout the book extra sources, links to relevant online video clips, assignments and literature are offered to facilitate the development process.
This book will be of interest to students studying the development of business models, sustainable management, innovation, and value creation. It will also be of interest executives, and professionals such as consultants or social entrepreneurs seeking further education.
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CHAPTER 1 SPEAKING OF TRANSITION
KEYWORDS: transition, major challenges, changing value-creation, redefine the value proposition
SYNOPSIS: The deliberate designing and organising of transactions and the value they create form the basis for the development of every business model. A central point of departure in this book is working on new forms of value creation. A business model shows how value creation is achieved and the resulting transactions. Transactions are those actions in which two or more parties make an exchange, which is experienced as the creation of value. The BMT distinguishes itself by providing a system to enable users to develop a sustainable business model based on multiple value creation. But ultimately what happens in the template is up to the users themselves. After all, a template by itself is an ‘empty’ thing. It prescribes the form, consisting of stages and building blocks. The user(s) themselves must develop the content in a clear, logical, and coherent fashion, and connect it to a value proposition accordingly. The challenge is to create an infrastructure that enables users to come up with a concept that organises multiple value creation in a step-by-step manner: this is the gap that the BMT seeks to address.
1.1 The triple transition – climate, energy, and circularity
1.2 A new model for organising multiple value creation
1.3 Measuring performance
1.4 The Business Model Template
CHAPTER 2 BUSINESS MODELLING
KEYWORDS: logic of value creation, the modelling process, sustainable business model archetypes
SYNOPSIS: In essence, a business model is a description of how value creation between parties or partners – based on certain principles – is organised, at a particular moment, in a specific context, and given available resources. There are an unlimited number of combinations of factors that influence the design and function of a business model within a particular natural and institutional context, so it is inevitable that entrepreneurs and intrapreneurs make choices. Collectively, these choices reflect a certain logic. We move from organisation-centred to network-centred or loop-centred value creation, retention, and capture, which leads to a fundamental revision of the logic of value creation, and therefore the composition of business models.
2.1 A short history of business modelling
2.2 The modelling process
2.3 Key business model archetypes
2.4 Horizontal and vertical organisation
2.5 Summary: Engaging with the Business Model Template
PART I: DEFINITION STAGE
A business model does not usually come out of the blue, but originates from an inspiration, an irritation, a great concern, an urgent need or a passion. To direct these inspirations, irritations, concerns, and passions, in the Definition Stage of the BMT you will work out WHAT you are going to do. What keeps you awake at night? What contribution will your business model make to sustainable challenges now and in the future? What do you think the ‘gap in the market’ is, or, even better, ‘the gap in society’? The first three building blocks of the BMT help you to structure and focus this thought process.
CHAPTER 3 MOTIVE AND CONTEXT
KEYWORDS: personal and societal motives, defining (institutional, social, material etc) context
SYNOPSIS: When you start working on a new business model, the main question that arises is why you are doing it. What problem, challenge, or opportunity have you identified within a specific (existing) context? You could think of the necessity of working in a CO2-neutral way, or the increasing demand for modular elements in construction or electronics in the context of the transition to the circular economy. Or your business model could focus on improving biodiversity, abolishing single-use plastics, or making bikes from recycled materials. If the immediate reason and motive driving you to develop your business model is not clear, then this needs to be the first thing to consider. Building Block #1 – Motive and Context deals with this aspect, and is about capturing the nature and context of the problem, the challenge, or the opportunity posed as clearly as possible.
3.1 Exploring the challenge and opportunity
3.2 Tools for visualising the motive and the context
3.3 Cases: Motive and Context
3.4 In conclusion
CHAPTER 4 THE DREAM
KEYWORDS: Big, Hairy, Audacious Goal (BHAG), wicked problems, impact
SYNOPSIS: In addition to Motive and Context (Building Block #1), the ‘Dream’ (Building Block #2) provides a second tool in this stage to help you build your business model. The Dream can also be seen as a Big, Hairy, Audacious Goal (BHAG) on which you are going to work. In essence, it is simple. What is the goal of your Dream? How and why will your business model idea/value proposition really make a difference? The Dream building block demands thinking big. You have previously indicated which major social and/or ecological issues you want to solve. Now you will determine what the result of that solution could be: what the ideal final image would look like. What is the bright spot or opportunity you see on the horizon? In this process, it is vital to refrain from all kinds of ‘yes, buts’. Note and park all of the challenges you see and actively think outside your mental box. Beyond the problems, roadblocks, challenges, and opportunities you see, you are already dreaming about the future. The Dream can – and should – be broadly defined as and based on seeking to address so-called ‘wicked problems’. Your solution should seek to go beyond tackling just one issue: it is the very building block in the transition towards sustainable development in society. It offers a solution for either the climate challenge, the energy transition, or the realisation of a circular economy. Or perhaps it seeks to address this triple transition simultaneously. This is your Dream.
4.1 The bright spot on the horizon
4.2 Using framing to bring your dream to life
4.3 Cases: Dream
4.4 Curating dreams
CHAPTER 5 THE PROPOSITION
KEYWORDS: value proposition, values (that matter), impact
SYNOPSIS: A business model is underpinned by a value or business proposition – Building Block #3. Such a proposition solves a problem, meets a current need, or appeals to new, often still undiscovered, needs. It consists of a smart and ‘immediately’ recognisable combination of products and/or services that implicitly and explicitly meets the requirements of a customer or user. It communicates what you are going to do to solve the problem, seize the opportunity, or take up the challenge, and for whom you are going to do it. The trick is to state in your proposition, as precisely as possible, which values will be created and who will benefit from them. This proposition may identify a potential target group or indicate who the customers or stakeholders could be. The more precisely you indicate the nature of that value, the better you will be able to design an appropriate (organisational) logic at a later stage. It is important to also take impact and value creation into account when developing your proposition, factoring in social, ecological, and economic values (the so-called ‘Triple Bottom Line’, or People, Planet, Profit (PPP) by John Elkington, 1997).
5.1 Developing the perfect proposal
5.2 Speaking of value creation
5.3 Value creation and change
5.4 Some reflections on the scope of value creation
5.5 Cases: Proposition
5.6 It’s not that simple
PART II: DESIGN STAGE
In the Definition Stage, you decide WHAT you are going to do. The next logical step is to decide HOW you are going to design the organisation of your business model. The five steps in the Design Stage help you to concretise the form and working method of your business model as much as possible. The first four steps are: choosing the business model archetype, understanding which parties are involved, the choice of strategy, and defining the core activities.
We have opted for this order, but it does not have to be absolute. As indicated in Chapter 1, filling in the building blocks is an iterative process. When you have completed the first four steps in this stage in conjunction with each other, it is time for the external test (the fifth step) which relates to both the Design and the Definition Stages.
CHAPTER 6 BUSINESS MODEL ARCHETYPES
KEYWORDS: value creation, archetypes, platform business models, community-based (or collective) business models, circular business models
SYNOPSIS: The BMT provides the building blocks for developing a novel logic for a business model. In such a model the nature of multiple value creation, the way it is organised, and how transactions take shape are operationalised in such a way that they meet the proposition. Practice shows that at present, business models aimed at capturing multiple value creation can be divided into three main categories: (1) platform business models, (2) community-based (or collective) business models and (3) circular business models. The three archetypes (or basic forms) of a business model differ mainly in the way in which they create value. The mechanism through which value creation takes place is also different, while each basic form has its specific objective. Finally, each business model type differs in its infrastructural and technological requirements. In this chapter, which covers Building Block #4 – Business Model Archetypes, each archetype is explored, further explaining the aforementioned factors. We also present practical examples of each of these archetypes.
6.1 The logic of value creation
6.2 Platform business models
6.3 Community or collective business models
6.4 Circular business models
6.5 Selecting a business model archetype
6.6 Cases: Business Model Archetypes
6.7 Laying a logical foundation
CHAPTER 7 PARTIES INVOLVED
KEYWORDS: parties involved, framing the social context, stakeholder and/or network analysis
SYNOPSIS: In Building Block #5 – Parties, the central question is identifying what actors and stakeholders you want to engage with, work with, or create value for through your business model. As indicated in the previous chapter, identifying the parties that you work with is an essential step in setting up a circular, platform, or community-based business model. Working together on (multiple) value creation is always a collective task in which value chains and networks take a central position.
The ‘Parties’ building block addresses the identification and selection of stakeholders that are relevant to the realisation and implementation of your business model. It is useful to make an overview of them when designing a business model. To begin with, it is about determining who they are and what interests they have or may have in relation to your business model, which in turn will help to determine what relationship these stakeholders have with your business model. Are they parties you have to deal with immediately as they are essential for your business model to work? Or are they more distant, but will ultimately influence the social acceptance of your idea?
7.1 Who is participating?
7.2 Identifying people
7.3 Case: Parties
7.4 The art of uniting parties
CHAPTER 8 STRATEGY
KEYWORDS: strategy (as a process or as a plan), typology, R-ladder
SYNOPSIS: Strategy – Building Block #6 – is very briefly touched upon in earlier chapters. In Chapter 5, five traditional value creation strategies are explained (product leadership, organisational excellence, customer intimacy, experience, and community building) as well as five value creation positions over time (for example transformation, recycling, circularity, regenerating and restoring). These are both strategic considerations to reflect on the nature of value creation in a business model and on how to address them strategically. But there is more. Therefore, in this chapter, we will delve more specifically into the nature of strategy itself and present a typology of strategies. It comes in handy to remind ourselves of the three earlier-introduced business model archetypes (Chapter 6) since they create the basis for what we see throughout this book as sustainable business models.
8.1 Mapping out the route
8.3 Cases: Strategy
8.4 Everything is context
CHAPTER 9 CORE ACTIVITIES
KEYWORDS: core-activities, organising a value proposition
SYNOPSIS: Now it is time to specify what you are going to do, with Building Block #7 – Core Activities. The idea of a core activity is that a particular part of the business activities can be seen as the speciality of the company: what it is really good at. Which core activities will you undertake alone or with others to achieve your goal through the chosen strategy or mix of strategies? These can be both technical and organisational activities. Given the wide variety of companies, business models, and the context in which they operate, it is impossible to present a comprehensive list of activities. However, bear in mind that the core activities should align with the chosen strategy (or strategies), enable the realisation of the overall goal, and ultimately be coherent within the proposition. The activities that are needed to initiate a change or to start a new business model (such as training people or purchasing resources) are referred to as the starting or initial activities. The activities that you undertake after the business model sets off are referred to as the operational core activities. These are always available and are a central part of the daily management of your business model.
9.1 The more specific the better
9.2 Core Activities framework
9.3 Cases: Core Activities
9.4 A running score
CHAPTER 10 EXTERNAL TEST
KEYWORDS: testing, confrontation, value proposition, business model ‘survival’
SYNOPSIS: Building Block #8 – External Test is the final building block of the BMT’s Design Stage. Here you will test the viability of the new company, business activity, or intervention. Some of you might find it useful to take the external test immediately after formulating your proposition given that the steps in this building block enable you to interrogate your business model further. For some entrepreneurs and intrapreneurs it can be extremely beneficial to ask others for feedback on their idea at the very start or even before the Design Stage.
10.1 Seek confrontation
10.2 Testing is applied research
10.3 Minimum of five checks in an external test
10.4 Cases: External Test
10.5 Has your business model survived the test?
Part III: RESULT STAGE
In the previous stages, you have thought about and worked on WHAT your business model entails (Definition Stage) and HOW you organise your business model in such a way that it creates value (Design Stage). You then tested your business model idea with third parties (external testing). The next step is to work out the impact of your business model and which values will be created as a result – this is the Result Stage.
The central focus of the BMT’s last two building blocks is the question of how you can measure the results of your business model idea. The Result Stage helps you to expand upon two crucial parts of your business model: (1) the impact that the business model has on the (broader) social, ecological, economic, and material environment, and (2) the revenue model (or hybrid revenue model) in which it is made clear which values are created for whom – going beyond looking exclusively at financial returns. In our view, impact and multiple value creation go hand in hand: they are integrated, hence it is even possible to frame this as integral value creation.
CHAPTER 11 IMPACT
KEYWORDS: impact (negative and positive), indicators, link to value creation
SYNOPSIS: This chapter unpacks Building Block #9 – Impact, which seeks to determine the impact that your business model idea will have on the broader social, ecological, economic and material environment. We have found, especially during the development and trialling of the BMT, that this building block is often challenging for BMT users. Nevertheless, this building block is crucial in a sustainable business model. After all, the Result Stage is about translating impact (Building Block #9) into value(s) creation (Building Block #10). And here we mean multiple value(s) creation rather than only financial value, which is the focus of most linear business models. Impact is about the short- and long-term effects of your sustainable business model. What are the positive and negative consequences of your business model, now and in the future? You can measure the effect of your business model in three successive stages: the concrete output of your production or services (the direct result), the outcome (medium-term environmental effects), and the impact (lasting long-term effects).
11.1 Speaking of Impact
11.2 Quantifying Impact
11.3 Cases: Impact
11.4 Assessment and impact reporting
11.5 Keep it simple
CHAPTER 12 VALUE(S) CREATION
KEYWORDS: value creation, typology of transactions, hybridity in transactional means
SYNOPSIS: With this chapter, we have arrived at what we consider to be the most challenging building block of the BMT, Building Block #10 – Value Creation. We construct our existence with transactions. We do this constantly, consciously and unconsciously, sometimes with lots of meaning but at times inconspicuously, and also over varying time spans (long- and short-term). Transactions are translated into daily activities, such as buying a loaf of bread, paying for a haircut, a car, a house or the electricity and water you use at home. Those transaction processes continue throughout our day – often just between two parties, sometimes with multiple parties. All this leads to a dynamic mix of transactions between people (C2C), between people and governments (C2G and G2C), between people and companies (C2B and B2C), between companies themselves (B2B), between companies and governments (B2G and G2B), and between governments (G2G). We call this economy. So, there are transactions in all shapes and sizes, with large and small impacts. Because it is not always clear what the transactions are and how these can be used in the context of sustainable business models, it makes sense to rank them in order. Therefore, in this chapter we present a typology of transactions and related Product–Service System (PSS) strategies, which in turn we link to the concept of multiple (hybrid) values, for example sales, take-back, deposit, rent and use. What we want to explain as clearly and as unambiguously as possible is how multiple value(s) creation can be achieved within and through a broad variety of transactions.
12.1 Everything is a transaction and has value
12.2 Speaking of transactions
12.3 Typology of transactions and revenue models
12.4 Bartering, time banks, and hybrid transactions
12.5 What is the business case of your business model?
12.6 Cases: Value(s) Creation
CHAPTER 13 ALTERNATIVE ROUTES
KEYWORDS: different approaches to using the BMT
SYNOPSIS: This book is designed to support you to work through the ten building blocks, which are grouped into the Definition, Design and Result Stages, from left to right and top to bottom. The underlying idea is to develop a business model from scratch by following each step in the BMT system. Crucial to the process is looking at your BMT from different angles, getting people to give you constructive feedback on your idea, and, last but not least, getting distance from it and coming back to it with fresh eyes. Taking your BMT through several iterations will help to improve your business model idea step by step. There are also many other possible ‘routes’ through the BMT, and we next outline five possible alternatives: (1) Idea-driven, (2) Proposition-driven, (3) Network-driven, (4) Impact-driven, and (5) Competence-driven. To provide you with some inspiration, we will briefly elaborate on each of these five routes with examples.
13.1 Alternative routes through the BMT
13.7 What route do you take?
CHAPTER 14 THE ART OF DOING
SYNOPSIS: And there you are: in one hand, you have your well-developed brilliant idea for a new company, and in the other, this book. The purpose of the BMT is to help you turn your idea into a viable project or organisation – in whatever form. But where do you start? It doesn't really matter where you start, as long as you start somewhere. To illustrate this, we will look at two cases of an active/real project’s business model using the BMT. Firstly, the KipCaravan project (which is a mobile home – a caravan – for chickens) in the Brainport Eindhoven Metropolitan Area of the Netherlands. Secondly, the Sun at School NSV2 project in the city of Nijmegen, also in the Netherlands. These examples are, of course, shown in simplified versions. In reality, the steps for the development of, for example, KipCaravan were not completed one by one in a logical and predetermined order. In this respect, a BMT is like a waterbed: pushing on one side will cause something to happen on the other. The trick is to design all the building blocks in such a way that they come together as a logical puzzle.
14.1 From the BMT to a Working Business Model
14.2 KipCaravan Project
14.3 Sun at School NSV2 (Zon op School NSV2) Project
14.4 The secret to success
CHAPTER 15 EPILOGUE
KEYWORDS: transition, creating change through business models
SYNOPSIS: We live in a time of social transition. Institutional arrangements that have been carefully built up in recent decades are under heavy pressure. People no longer colour within the lines. Students take to the streets in protest. Common answers and arrangements are no longer sufficient. Everywhere in society, cracks are appearing. Elected representatives of the people both devise and advocate a reality armed with polarising facts. The COVID-19 pandemic has highlighted how our ‘normal’ ways of doing things can be upended in a matter of weeks or months.
The only answer to these developments is to organise differently – on our own and with others. That means saying goodbye to linear economies – which are a safe and familiar way of working that we know and have mastered, but which have dark sides we can no longer ignore. Because continuing to abuse the earth, combined with a rising population, will ultimately lead to confrontations: about climate refugees, exhaustion, pollution, weather changes, declining biodiversity, floods, droughts, severe forest fires and so on. Almost every day we see the effects of this in the news: we can read the background in newspapers and learn more from an ongoing stream of scientific reports, policy briefs and memoranda … the stream of information is endless and is growing exponentially.
Observing this development from a distance, it appears that something much more fundamental is at stake. We organise collectively and collaboratively to achieve a broad range of created values which we could not realise individually. This is a timeless argument because all through the history of mankind we have shown that together, we can achieve more. But what is of value changes over time. So now, once again, we are consciously and unconsciously trying to discover what these new forms of value creation could look like. This is what transition is all about. We use this word because it fundamentally questions the way we organise ourselves in today’s world. There is no manual or standard way forward for this process of (re)discovery – only trial and error. Neither a national government nor ‘Brussels’ have ready-made answers.
We have argued in this book that the search for new forms of value creation and the ‘triple transition’ necessitate different business models: new business models that create multiple forms of value. This has been described using principles that draw attention to both the social and the ecological side of value creation in business models. As long as the nature of transitions and transactions is not revised, we will remain trapped in existing routines and behaviour without being aware of them.
APPENDIX I: QUICK SCAN
APPENDIX II: GLOSSARY
APPENDIX III: EDUCATIONAL ASSIGNMENTS
APPENDIX IV: SUSTAINABLE DEVELOPMENT GOALS
APPENDIX V: TOOLS TO ORGANISE WORKING IN GROUPS
APPENDIX VI: SUSTAINABILITY TOOLS
APPENDIX VII: LIST OF FIGURES AND TABLES
APPENDIX VIII: ACRONYMS AND INITIALISMS
APPENDIX IX: LIST OF WORKS CONSULTED
APPENDIX X: ABOUT THE AUTHORS
APPENDIX XI: TEMPLATES
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