Product, Service & Design Innovation
Elkington:
Breakthrough Business Models Needed to Drive Both Exponential Growth and Sustainability

Business must adopt a new mindset to move the world away from its collision course with the “Sixth Extinction" and onto a path of sustainability, acclaimed speaker and author John Elkington argues in a paper that shows how “Breakthrough Business Models” can deliver the technological advancements needed to achieve an inclusive, net-zero emissions economy. The paper, written for the Business and Sustainable Development Commission (BSDC), highlights critical pathways for developing a radical mindset that aligns sustainability with profit and transforms business and markets. Elkington launched the paper this morning at SB’16 Copenhagen.

The paper, Breakthrough Business Models: Exponentially More Social, Lean, Integrated and Circular, uses the term “breakthrough” to showcase a new business agenda that shows:

• While incremental change has its place, it is no longer remotely enough to address global challenges that threaten both growth and sustainability.
• Market disruption is happening and is likely to accelerate, offering new opportunities for those who can move fast — and in the right direction.
• Business mindsets are shifting from doing less bad towards doing more good.

The paper’s release coincides with the launch of Project Breakthrough, co-developed by Volans and the UN Global Compact, the world’s largest sustainable business platform. The purpose of the initiative is to shine a spotlight on the best examples of sustainable innovation and stimulate transformative insight and action amongst global C-suite leaders.

Since 2000, the world has seen extreme poverty more than halved, but the trajectory toward devastating climate change impacts, economic turbulence and widening social inequality poses a significant threat to business growth. Business — which provides 60 percent of GDP, 80 percent of inward capital flows and 90 percent of jobs in developing countries — is central to setting the world on an entirely different path, one that realizes inclusive growth.

To achieve the Sustainable Development Goals (SDGs) — 17 objectives for ending hunger, poverty and tackling urgent global challenges such as climate change by 2030 — the paper argues that business requires an “exponential mindset” — one that shuns incremental thinking and accelerates systemic change — and a “moonshot” level of ambition. To achieve these ambitious goals means the adoption of new integrated business models that are the blueprint of the future, crafted by some of the most inspirational business minds of the 21st century.

“Too many business leaders around the world have used dilute versions of the sustainability agenda as a comfort blanket when faced with systemic challenges. Our Breakthrough Business Models paper is a practical guide for those who recognize that the challenge is no longer how to build the business case for action, but how to evolve and deploy the business models needed to create new forms of financial and extra-financial value,” said Elkington, co-author of the paper and executive chairman of Volans Ventures. “A new mindset is needed, one that focuses not only on the shrinking of a business's negative impacts but also on the expansion of its positive impacts — and, crucially, that moves from incremental to exponential rates of change.”

The paper’s authors argue that companies need to determine whether their business models are fit for the changing market and geopolitical realities ahead. Business is at a critical juncture, and the SDGs are a more radical agenda than most business leaders realize. To meet the objectives outlined by the SDGs, companies must embrace four critical hallmarks of these breakthrough business models: social, lean, integrated and circular. The authors urge businesses to seek the extra-financial value that comes from healthier, safer, and better-educated populations. Breakthrough business models will optimize the use of all forms of capital, from physical and financial, through human and intellectual, to social and natural. In the paper, the authors define these characteristics as:

• Social: Delivering both financial and extra-financial value through positive impacts for people in the present and the future
• Lean: Optimizing the use of all forms of capital, from physical and financial through human and intellectual to social and natural
• Integrated: Managing financial and extra-financial value creation across economic, social and environmental systems
• Circular: Sustaining inputs and outputs at their highest value in both technical and biological cycles

Crucially, the paper urges companies to apply an exponential mindset to each of these four characteristics — to aim for a tenfold rather than a 10 percent improvement. It highlights emerging examples of companies that incorporate some or all of these characteristics and identifies ways for others to assess the “Breakthrough Potential” of their business models.

“It’s not that complicated: Business leaders who commit to the Sustainable Development Goals are pursuing the greatest opportunities of our time. This commitment means creating business models that more explicitly link profit to social and environmental performance,” said Jeremy Oppenheim, program director at the BSDC. “It is necessary, because otherwise we will fail to deliver. It is desirable, because we must put an end to poverty and environmental degradation. And I am convinced it is the pathway to success for business.”