THOUGHT LEADER : SUSTAINABLE MODELS
ASSESSING THE BUSINESS MODEL
The following questions , based on our research into the characteristics of robust , resilient business models , can help you navigate this part of the process :
Can the business model
1 / scale effectively ? Can it be replicated across all your business units or the markets you serve , without diminishing returns ?
2 /
Will the business model differentiate your brand or product and make it more competitive in the marketplace ?
3 /
Will it reduce the risk of commoditization by being hard for others to imitate ? Will its distinctiveness help you retain some control over pricing ?
4 /
Can it leverage network effects ? For example , can it attract the kinds of customers and suppliers that make other customers feel compelled to join ?
5 /
Does the business model harness business ecosystems — including the larger industry , the value chain , and everyone who interacts with your products , services , and practices — for advantage and sustainability ?
6 /
Does the business model naturally create meaningful environmental and societal benefits ?
7 /
Will the environmental and societal benefits remain durable against changing trends over time , even as the business model scales up ?
8 /
Does the business model increase returns to shareholders as well ? Are the financial benefits linked to the environmental and societal benefits in some significant way ?
9 /
Finally , does the model animate your company ’ s purpose ? Does it boost engagement and loyalty between the company and its employees , customers , investors , and other stakeholders ? blockage of digestive passages , and endocrine-related reproductive problems for people as well as animals . Concerns about this problem reached a tipping point in the mid-2010s , as studies confirmed the damage .
As industrial leaders in this field know all too well , the complexities of gathering , cleaning , sorting , recycling , and reusing plastics have made it costly and difficult to address this issue . Companies that step forward with effective and financially viable solutions will not only gain enormous goodwill but are also likely to build high-growth businesses .
But where do you start ? And where do you focus innovation efforts and investments to tackle such a complex , multifaceted environmental issue ? Reflecting the SBM-I cycle approach , the diagram on page 28 shows what a stakeholder-centric systems map for the plastics issue could look like from the point of view of a CPG company . This map uses basic systems dynamics principles to capture the most significant interrelationships among the CPG company , the environmental issue at stake , and key stakeholders ( consumers , policymakers , civil society , waste collectors and recyclers , and plastics manufacturers ). The arrows show patterns of cause and effect . For example , when urbanization increases , so does the cost of landfilling .
STEP
2
Innovate for a Resilient Business Model
The first step in the cycle will have led you to identify the opportunity spaces that hold potential for both financial returns and societal value . You must then transform your business model , or imagine an entirely new one , so that you can seize these opportunities . In this second step , you innovate and develop new aspects of that new business model . You are seeking to bypass current constraints , break trade-offs , deploy technological advances , and perhaps integrate activities that were previously kept separate . You should ideate a new business model to integrate and reinforce both business advantage and environmental and societal benefits .
In related research , we introduced and defined seven archetypal business models that optimize for both societal and business value . Here we illustrate how they might apply to the plastics waste challenge .
/ OWN THE ORIGINS . Change production inputs to generate societal and environmental benefits . For instance , HP is working with waste collectors in a partnership with the First Mile Coalition in Haiti . HP has invested $ 2 million in a local facility to produce clean , high-quality recycled plastics that can then be used as input in an array of HP personal computer products and ink cartridges , reducing the environmental footprint of those products . Four years after its launch in 2016 , the program had already diverted approximately 1.7 million pounds ( 771 metric tons ) of plastic materials ( equivalent to more than 60 million plastic bottles ) from waterways and oceans and created income opportunities for 1,100 Haitians ( with 1,000 more expected in coming years ). Thanks to this and other efforts , HP boasted the world ’ s most sustainable PC portfolio in May 2020 . This included , for example , the HP Elite Dragonfly , the first PC manufactured with ocean-bound plastic .
/ OWN THE WHOLE CYCLE . Create environmental and societal impact by influencing the product usage cycle from cradle to grave . Since the 1990s , Grupo AlEn , a leader in home cleaning products based in Monterrey , has invested and scaled up its in-house plastic recycling operations to become one of the largest plastic recyclers in Mexico . AlEn now operates 30 routes and 6,200 collection points in the Monterrey area , recycling more than 50,000 tons of PET and HDPE per year . This business expansion has given AlEn an exclusive supply of recycled plastics , enabling it to create distinctive , greener packaging at a relatively stable cost .
/ EXPAND SOCIETAL VALUE . Expand the environmental and societal value of products and services , and capture value in pricing , market share , and loyalty . In 2018 , PepsiCo acquired SodaStream , the world ’ s leading at-home sparkling water maker . Building on this technology , PepsiCo has begun to bring packaging-free , customizable beverages to workplaces , college campuses , and airports . This new business positions PepsiCo to win in the increasingly personalized beverage market and to save an estimated 67 billion single-use plastic bottles by 2025 .
HP / INNOVATION / FALL 2021 30