5 Social Business & Innovative Business Models

Question 1

Why do we need a change in our curent business models?

Answer 1

• Business models form the engine of our economy
• many existing business models rely on the assumption that natural and social capital are in virtually limitless supply
• not convinceable to change a business model based on threats/ opportunities
• incremental innovation would be needed
• fundamental different approaches to value creation and consumption are needed

Question 2

What does consumerism refer to? What does the “degrowth” movement intend to do?

Answer 2

• Consumerism as a social and economic order and ideology encourages the acquisition of goods and services in ever-increasing amounts
  
  • e.g. more than 300.000 items in the average US home
  • average house size has tripled in past 50 years
• Degrowth-Movement: Reserach and actions to consume less and share more:
  
  • “It is high time to develop economic and social models that are independent of growth and can provice for a good life for everybody”

Question 3

When can we speak of “artificial demand”?

Answer 3

• demand for something that, in the absence of exposure to the vehicle of creating demand, would not exist
• increases customer utility very inefficiently
• e.g. mass media advertising

Question 4

Please describe examples of startup companies that try to address the problem of the proliferation of plastic in consumer products.

Answer 4

• The “Tiffin Project” offers plastic-free food-containers:
  
  • can be borrowed from partnering restauramts
  • can be taken home or to work
  • returned later to be cleaned and reused

Question 5

How does Alexander Osterwalder define the term business model? Please discuss whether you think that according to this definition the startup you described in (4) can be seen as a business model innovation. You may also use the elements of the business model canvas to argue for your position.

Answer 5

• business model: “fundamental structures for how companies create, deliver, and capture value”
• yes, the “Tiffin Project” can be seen as a business model, and also as innovative

Question 6

What are “sustainable business models”? Please name examples of characteristics that these business models should have.

Answer 6

• Sustainable business models incorporate a triple bottom-line approach and consider a wide range of stakeholder interests, including environment and society
• characteristics
  
  • minimizing of consumption
  • maximize societal and environmental benefit
  • closed-loop systems
  • delivery of functionality and experience
  • fulfilling, rewarding work experiences
  • collaboration and sharing

Question 7

How do companies usually set prices? When would we refer to price setting as “unfair”? How do innovative pricing mechanisms like pay what you want work?

Answer 7

• Usually prices are set by using of these methods:
  
  • demand-based pricing
  • cost-based pricing
  • competition-based pricing
• We refer to a price setting as unfair when there is no relation between the costs and the price. e.g. if there is a monopoly
• These innovative mechanism do work and customers are voluntarily paying non-zero prices!

Question 8

Why do you think are many companies reluctant to communicate their price structure transparently?

Answer 8

• to veil / to cover up are potential artfically inflated prices
• because they might be commercially sensible informations

Question 9

Name three archetypes of business models as developed by Bocken, Short, Rana, and Evans (2014). What could be exemplary companies implementing these business models?

Answer 9

• Technological:
  
  • Maximize material and energy efficiency
  • create value from waste
  • substitute with renewables and natural processes
• Social:
  
  • deliver functionality rather than ownership
  • adopt a stewardship role
  • encourage sufficiency
• Organisational:
  
  • repurpose for society/ environment
  • develope scale up solutions

Question 10

What do we mean when we speak of a social business?

Answer 10

As defined by Yunus, a social business:

• is created and designed to address a social problem
• is financially self-sustainable
• prime aim is not to maximize profits
• is not dependent on donations or grants

Question 11

Discuss: what are advantages and disadvantages of provision of public goods through social businesses instead of governments?

Answer 11

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