Prepare for a deep dive into emerging business model innovations that are disrupting industries while having significant positive social and/or environmental impacts. This workshop will break down 20 such innovative models in order to help attendees better understand their origins, mechanics and implications. From producing on demand, to rematerialization, to inclusive sourcing, to building entire new marketplaces, to differential pricing – this workshop has it all. Explore SustainAbility's brilliant work and uncover the latest insights on business model innovation for sustainability.

2. Lindsay Clinton SustainAbility @lindsclint
Chris Guenther SustainAbility @reallychrisg
Business Model Innovation:
Redesigning Value Delivery
and Unlocking New Benefits
in the Process
#SB14sd

3. sustainability.com London | New York | Oakland
Sustainable Brands 2014
Business Model Innovation for
Sustainability
Confidential and Proprietary
This presentation has been produced for E-Square only.

4. Model Behavior explores the role and practice of business
model innovation in the context of sustainability.
- Over 100 companies reviewed
- More than 80 examples of business model innovation
- 5 areas of innovation
- 20 distinct business models
The report offers a closer look at what’s occurring in each
of these models to produce more sustainable outcomes.
www.sustainability.com/model-behavior
#modelbehavior
Introduction
4
Model Behavior
SUMMARY SLIDES MODEL BEHAVIOR INTRODUCTION
20 Business Model Innovations
for Sustainability

5. 5
Structures to create, deliver and capture value
Source: Alex Osterwalder’s Business Model Canvas.
SUMMARY SLIDES MODEL BEHAVIOR INTRODUCTION

6. 6
Framework: Innovating for sustainability
SUMMARY SLIDES MODEL BEHAVIOR INTRODUCTION

7. 7
The 20 Models
SUMMARY SLIDES MODEL BEHAVIOR THE 20 MODELS
Environmental
Impact
 Closed Loop Production
 Physical to Virtual
 Produce on Demand
 Rematerialization
Social Innovation
 Buy One, Give One
 Cooperative Ownership
 Inclusive Sourcing
Base of Pyramid
 Building a Marketplace
 Differential Pricing
 Microfinance
 Micro-Franchise
Diverse Impact
 Alternative Marketplace
 Behavior Change
 Product as a Service
 Shared Resource
Financing
Innovation
 Crowdfunding
 Freemium
 Innovative Product
Financing
 Pay for Success
 Subscription Model

8. Key Takeaways from
the Research

9. Every exchange in a value chain
provides opportunities for innovation
and impact.
9
Takeaway 01
SUMMARY SLIDES MODEL BEHAVIOR KEY TAKEAWAYS FROM THE RESEARCH
By identifying and analyzing the points of
exchange, an established business can
find areas of promise for business model
innovation.

10. Companies that have demonstrated a
business model innovation have often
done so by shifting incentives in the
value chain.
10
Takeaway 02
SUMMARY SLIDES MODEL BEHAVIOR KEY TAKEAWAYS FROM THE RESEARCH
When a business understands what each stakeholder wants or
needs and responds creatively, or perhaps even radically,
business model innovation begins to take shape.

11. The largest companies tend not to be the
source of new models, but they can help
evolve and scale them.
11
Takeaway 03
SUMMARY SLIDES MODEL BEHAVIOR KEY TAKEAWAYS FROM THE RESEARCH
Larger companies can help to bring new models to maturity
through acquisition or mutually-beneficial partnerships, or the
adoption of new ideas into a given industry.

12. Business model innovation doesn’t
happen in a vacuum.
12
Takeaway 04
SUMMARY SLIDES MODEL BEHAVIOR KEY TAKEAWAYS FROM THE RESEARCH
We must recognize how any model - sustainable
or not - is dependent on surrounding conditions, and that
new models are often enabled by, or arise organically from,
changes in those conditions.

13. Models with the
Most Promise

14. SUMMARY SLIDES MODEL BEHAVIOR MODELS WITH THE MOST PROMISE
14
Closed-Loop Production
Closed Loop
Production:
The material used to create a product is
continually recycled through the production
system.
Spotlight:
Novelis
Novelis aims to develop an almost entirely
closed-loop business model by sourcing
more recycled aluminum, coordinating
post-production scrap take back, arranging
end-of-life product takeback, and building
more of its own recycling operations and
processing facilities.

15. SUMMARY SLIDES MODEL BEHAVIOR MODELS WITH THE MOST PROMISE
15
Product as a Service
Product as
a Service:
Consumers pay for the service a product
provides without the responsibility of
repairing, replacing or disposing of it.
Spotlight:
Rolls Royce
plc
Rolls Royce handles service and
maintenance of the products it
manufactures; rather than charging per
transaction, the company uses a model
focused on achieving outcomes for each
customer.

16. 16
Financial Innovation
MODEL BEHAVIOR SLIDE TEMPLATES MODELS
Innovative
Product
Financing:
Consumers lease or rent an item that they
can’t afford or don’t want to buy outright.
Often, the lease agreement can lead to
ownership, called “progressive purchase.”
Spotlight:
SunEdison:
SunEdison offers a power purchase
agreement (PPA) to business and retail
customers; there is no upfront cost to have
a solar system installed; users pay for the
electricity produced and used; SunEdison
installs and maintains the equipment.

17. 17
Base of the Pyramid
MODEL BEHAVIOR SLIDE TEMPLATES MODELS
Building a
Marketplace:
Companies build new markets by
delivering social programs, adapting to
local markets, and bundling with other
services like microfinance and technical
assistance.
Spotlight:
Novartis’
Arogya
Parivar
This pharma company, known medicines
like Theraflu, Excedrin and Maalox, has
combined education and sales efforts to
create a for-profit initiative to improve
health outcomes for poor, rural
communities in India.

18. SUMMARY SLIDES MODEL BEHAVIOR MODELS WITH THE MOST PROMISE
18
Alternative Marketplace
Alternative
Marketplace:
When a company circumvents a traditional
method of transaction or invents a new
type of transaction to unleash untapped
value.
Spotlight:
ITC
e-Choupal:
This rural agribusiness arm of the Indian
conglomerate ITC provides Internet access
and market pricing information that can
boost farmers’ earnings and eliminate
middlemen.

19. Model Dissection

20. SUMMARY SLIDES MODEL BEHAVIOR MODELS WITH THE MOST PROMISE
20
Walmart’s traditional produce value chain
Source: Link

21. SUMMARY SLIDES MODEL BEHAVIOR MODELS WITH THE MOST PROMISE
21
Walmart’s new produce value chain
Source: Link

22. SUMMARY SLIDES MODEL BEHAVIOR MODELS WITH THE MOST PROMISE
22
Enabling external conditions
Health trends in the US, including
messages direct from the White
House, have made consumers more
aware of the need to eat healthier
and eat local.
In China, income gaps between the
middle class and the rural poor as
well as food safety concerns, have
led the government to advocate
retailers to source direct from farms.
India’s Foreign Direct Investment
rules mandate that foreign retailers
source 30% of goods directly from
local, small industries.

23. SUMMARY SLIDES MODEL BEHAVIOR MODELS WITH THE MOST PROMISE
23
Results/Effects
— Farmers
— Direct relationships with farmers, resulting in 10-15% higher
farmer income
— Farmer education and training in key growing regions
— Customers
— More affordable, fresher products on shelves
— Walmart claims to have saved customers $1 billion on fruits
and vegetables
— US customers get money-back guarantee
— Environment
— Less food waste in the system due to quicker time to
market
— Fewer emissions due to more direct farmer to store system
— Walmart
— Competitive advantage in terms of price over other retailers
— Decreased cost due to cutting out middlemen
— Potentially more stable supply chain due to farmer skill-
building efforts

24. Lindsay Clinton
SustainAbility
clinton@sustainability.com
Twitter: @lindsclint
#modelbehavior

25. REIMAGINE
REDESIGN
REGENERATE
#SB14sd