How Do We Innovate New Business Models that Trigger New Industry Ecosystems and New Integral Economies?
By Bill Baue & Ralph Thurm
In the Reporting 3.0 Blueprints, we lay out the need for simultaneous bottom-up and top-down transformation to trigger the kinds of societal shifts needed to achieve a regenerative and distributive economy. In the New Business Models Blueprint in particular, we call for entrepreneurs launching startups with innovative net positive impact business models from the grassroots up, and intrapreneurs transforming existing business models from the inside out toward what we call Integral Business Models that create system value.
What’s the issue?
How can we tell if business models actually create sustainability? After a comprehensive review of business models literature and practice, we found the most advanced integration of theory and practice by Antony Upward of the Flourishing Business Canvas (a maturation of the Osterwalder Business Model Canvas). Upward points out that business models are simply extrapolated templates of actual businesses; his work extends another layer, to business model ontologies, which are extrapolated templates of business models that allow for generalization and meta-designing of broad characteristics that can be integrated into business models — and enacted in actual businesses.
The New Business Models Blueprint literature / practice review revealed an opportunity to articulate a set of general characteristics aligned with the next-generation practices identified in the suite of Reporting 3.0 Blueprints. Taken together, these General Characteristics describe what we call Integral Business Models, aligning with and extending the most advanced thinking and practice in the field, such as the Flourishing Business Canvas / Flourishing Enterprise Toolkit. Below is a representation of the 8 General Characteristics of Integral Business Models that are described in full in the New Business Models Blueprint (final release June12, 2018).
These characteristics set the foundation of a business model ontology that cascades down to transformation at the actual business level; such change also aggregates in a scaling progression from new business model innovation on the micro level to the emergence of new industry ecosystems on the meso level, adding up to the transformation to new integral economies on the macro level. This progression corresponds to Work Levels 5 / 6 / 7 in the Organizational Capital Partners typology discussed in the previous article in this series (Part 11). This progression also aligns with recent academic research by Bidmon & Knab brought to our attention by Niels Faber of Radboud University, Nijmegen.
Why it’s important?
I have not been able to identify any existing companies with truly flourishing / integral business models that we can point to as examples of comprehensive best practice. Some companies have some characteristics; none have them all. So, our work has to spur flourishing / integral businesses into existence,
says Upward, who is a Reporting 3.0 Advocation Partner. The reason for this gap, Upward explains, is that
flourishing / integral business models aren’t as viable in today’s market, with today’s laws and regulations, industry sector orientations, business and investment assumptions, and custom and stakeholder values and preferences. Hence, we need to co-evolve the interdependent nano, micro, meso, and macro levels to usher into existence the possibility for individual lives, organizations, sectors, economies, societies and the environment that sustain the possibility for flourishing.
How can you tackle it?
As a starting point, the New Business Models Blueprint includes a Process Flowchart for assessing business models with the goal of moving toward Integral Business Models.
This Process Flowchart walks business model designers and implementers through the Blueprint, and therefore serves as a basis for preliminary orientation. Digging deeper, we developed a Template that walks both entrepreneurs and intrapreneurs through the steps of applying the thinking of the Blueprint. The virtual dialogue on Exposure Draft 2.0 of the Blueprint (which will be released as a final report at the 5th International Reporting 3.0 Conference at KPMG in Amsterdam on June 12/13) featured in-depth vetting of the Template. And the final report includes case examples from three companies: Coop Power, ReBlend, and VDMBee.
For existing business models, the Blueprint advocates for companies to apply <2°C scenario analyses as recommended by the Taskforce for Climate-Related Financial Disclosure (TCFD– which recently launched a Knowledge Hub compiling helpful tools). And the Blueprint goes a step further, calling for companies to produce transition plans to <2°C business models, as advocated by Preventable Surprises– which published a Guidance Note on transition plans for utilities and their investors.
The Flourishing Enterprise Innovation Toolkit– which includes the Flourishing Business Canvas — represents a strong set of tools to build flourishing business models, and assess existing business models for opportunities to mature them toward flourishing.
What will you have achieved?
As we have discussed in previous parts of this series, one of the goals of Reporting 3.0 is to spur the shift from creating shareholder value only and beyond creating shared value to creating system value. Toward that end, the new term “system entrepreneur” has emerged over the last several years as “a person or organization that facilitates a change to an entire ecosystem by addressing and incorporating all the components and actors required to move the needle on a particular social issue.” While this definition is clearly broader than the traditional scope of entrepreneurship in business, it does apply to Integral Business Model entrepreneurs.
Interestingly, the term “system intrapreneur” has yet to produce a Google footprint. Perhaps this article — and the New Business Models Blueprint– is a first step toward changing that, and inspiring a new generation of business model intrapreneurs to focus on creating system value by building Integral Business Models.
The work on the New Business Model Blueprint was supported by the Dutch Stichting Doen, focusing their ‘New Economy’ program on sustainable business model entrepreneurship.
What questions will be discussed next time?
How can Organizations Report on Their Purpose, Success and Scalability? Please find part 13 here.
[Context of this series: This is part 12 of the Reporting 3.0 series that forms the basis of an Implementation Guide that summarizes the total value of Reporting 3.0 in implementing a future-ready sustainability strategy and disclosure approach, in line with the idea of a Green, Inclusive and Open Economy. By posting these articles here Reporting 3.0 seeks feedback in the writing process of the final document, to be released as Blueprint 5 at the 5th International Reporting 3.0 Conference in Amsterdam, The Netherlands, on June 12/13, hosted by KPMG, see www.2018.reporting.org]