THOUGHT LEADER : SUSTAINABLE MODELS
INFOGRAPHIC BY CAITLIN CHOI and consumers call on employers and brands to take environmental and social challenges seriously . All of this makes clear that we have entered a new era for business , one in which sustaining competitive advantage requires companies to transform their business models for sustainability .
Company leaders need a broader , more systemic understanding of these dynamic sustainability challenges and the ways that their companies can play a part in addressing them . Fortunately , as some farsighted businesses are discovering , the most powerful opportunities for profitable innovation are embedded in these same challenges . Let ’ s consider three examples .
The first is Telenor , the leading Norwegian mobile operator . In 2008 , having entered Pakistan three years earlier , it joined forces with the microfinance bank Tameer . With support from the Bill and Melinda Gates Foundation , the International Finance Corporation ( IFC ), and the Consultative Group to Assist the Poor ( CGAP ), they launched
ou may have noticed that every day there ’ s another announcement about companies making new climate commitments , asset managers outlining their plans for ESG integration , or regulators proposing new disclosures or extending producers ’ responsibilities . Corporate coalitions like the World Economic Forum International Business Council and the US Business Roundtable endorse a more stakeholder-inclusive corporate capitalism while industry coalitions work to solve their members ’ shared sustainability challenges . And employees
a new service called Easypaisa , providing mobile-based financial services to the unbanked and underbanked . By the end of 2019 , Telenor Microfinance Bank ( the result of Telenor ’ s acquisition of Tameer ) boasted the largest branchless banking service in Pakistan , growing its Easypaisa mobile wallet user base to 6.4 million , its depositor base to 17 million , and the transactions volume through its agent network to about PKR 1 trillion ( approximately $ 6 billion ). This service has significantly advanced financial inclusion in Pakistan and established Telenor as a major telecom enterprise there .
Or consider Ajinomoto , a global food and biotech company based in Japan . It produces seasonings , sweeteners , and pharmaceuticals . As part of its 2030 vision and growth strategy to “ help one billion people worldwide lead a healthier life ,” Ajinomoto is exploring a new “ personalized nutrition for health ” business . Combining its core nutrition expertise and new technology , the company aims to provide customers with digitally enabled diagnostics , analytics , and product recommendations . These would guide people toward the kind of well-balanced amino acid intake that boosts cognitive and physiological functions and helps prevent agingrelated diseases like dementia — a prominent societal issue in Japan .
Another example is Indigo Ag , a US-based agricultural technology startup that was valued at $ 1.4 billion in 2017 . In 2019 , the company launched a service called Indigo Carbon to help incentivize farmers to remove carbon from the atmosphere and sequester it in their soil . The service provides technologies and recommendations for regenerative agriculture practices . The ultimate goal is to pay farmers for each ton of carbon captured and then sell certifications to companies looking to offset their carbon footprints . By supporting a transparent carbon credit marketplace , Indigo Carbon creates benefits for all participants : the farmers , the companies buying the offsets , the planet , and its own business .
What do these three companies have in common ? Regardless of industry , geography , or size , they ( and dozens of others like them ) are innovating business models — building on and expanding beyond their core assets and capabilities — to address significant environmental and societal challenges in their local contexts . In this way , they create new sources of value and competitive advantage for their business .
THE FOUR-STEP INNOVATION CYCLE
In our research , we have studied more than 100 cases of companies that are practicing what we call “ Sustainable Business Model Innovation ” ( SBM-I ). We have found that the most advanced of these companies , the “ front-runners ,” combine environmental , societal , and financial priorities to reimagine their core business models and even shift the boundaries of competition . J
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