Examples of New Business Models

Conceptualizing a "Sustainability Business Model"

Stubbs, W., & Cocklin, C. (2008). Conceptualizing a "Sustainability Business Model." Organization & Environment, 103-127.

There are many new pressures in the modern global business environment that require firms to think about sustainability in new ways. The authors of this article believe to quell these pressures organizations will have to literally transform the paradigms that they are operating under. Furthermore, the authors believe that the dominant neoclassical model cannot be supplemented with new addendums or additions that will be adequate in regards to building sustainable business. That is, a new system, new metrics, and new ways to collaborate with deeply rooted culturally capabilities must be introduced on the firm level to truly achieve sustainability. The article uses two case studies to support the hypothesizes and this review will discuss the authors' claims as well as these case studies.

Article Review

The business world operated under the premise that the primary objective of all business activities was to maximize the profits and corresponding returns to the firm's investors. Typically, the consideration of any social or environmental objectives would be secondary at best unless they were required by regulations or laws, but even then they were often overlooked. For examples, if a fine for violating an environmental regulation was less than the profits the generated from the activity some companies would strategically simply pay the fine rather than alter its operations. However, as the science, understanding, and political pressures surrounding ecological issues, the business environment relative to the natural environment is quickly evolving.

The two case studies that are used to illustrate the authors positions are Interface Inc. and Bendigo Bank. Interface is the world's largest manufacture of carpet commanding over one third of the total make share in the industry; it has seventy-five sales locations and manufacturing operations in over twenty different countries (Stubbs & Cocklin, 2008). Bendigo Bank operates in the Australian market in the financial services industry with over five hundred outlets with roughly seven percent market share in the segments that it operates in. Each of these organizations were selected to use as examples of how violating the traditional neoclassical model can lead to true sustainability. The former has produced a truly innovative approach to environmental sustainability in a natural resource intensive industry while the latter has shown how to innovate to become a leader in social sustainability.

The CEO of Interface realized that his company was making a negative impact on the environment on a broad scale. The company later set out on a comprehensive initiative to reduce waste throughout both internal operations as well as in the external environment. It designed it processes to be more efficient in terms of energy and the use of oil-based products. It also constantly scanned for opportunities in which it could use recycled materials and material with less toxic effects on humans or natural systems. It also built an outreach program to build support among stakeholders for sustainable practices. One of the most interesting aspects to their effort, is that it was not focused on profitability; although the company remained profitable through their transition.