On sustainable business models

8 July 2019
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‘Sustainable’ has probably been the most fashionable word of the last three years. With climate disaster looming on the horizon, that’s no coincidence. People, governments and businesses alike are starting to realise that the way in which we are operating our world has some serious flaws. The capitalist engine is starting to sputter.  

Have you noticed that many companies seem to have forgotten that the profits they make are built on contributions made by many others, from both inside and outside their organisation? In the philosophy of the well-known American economist, Milton Friedman, these organisations focus on maximising profits without really looking at the consequences; as long as it is legal, it’s fine. 

You may feel a visceral anger about this. Maybe we should blame these people, or maybe not. The chances are that many of them didn’t really give it that much conscious thought. They are children of their time, which was a time which had its own set of values and that’s the context in which they made their decisions. 

However, Milton and company have been proved wrong: increasing inequality and insecurity leads to  burnout, the deterioration of our social fabric and environmental horrors. All of these are the result of a system where value is not properly allocated. Poverty, although diminished, is still abundantly present and inequality is unfortunately on the rise again in many countries. 

In an era where value becomes more important than mere money and happy is the new rich, it is worthwhile to rethink the business models to make them become ‘sustainable’. That is, they refocus on non-monetary value instead of profit and rebalance private interests with the ‘common good’. 

At Happonomy, we aim to develop and apply sustainable business models. We have also gathered some other examples of sustainable business models that made us think, “Wow!”

Sustainable business model: Software

Maybe you have already encountered the following…

You subscribe to a promising online software tool; you try it, use it for a while, but are not sure if you like it, so you leave it and forget to cancel your subscription. You see the subscription amount month after month in your credit card statement, but you forget to cancel it or you just have too much on your plate. 

At the end of the year, you have spent quite a large sum of money on a tool that didn’t provide any value. Technology only offers value if it is used, something which many software companies seem to forget. 

Value-driven software companies can apply a different perspective, by proactively monitoring whether or not accounts are still live and then contacting these clients to ascertain whether the tool still gives them the value they are looking for; that is, you reset the balance.

At Happonomy, clients of Tribeforce, our organisational development software tool, can count on the fact that we reach out proactively and pause their subscription after three months if they haven’t logged in. 

Sustainable business model:  Services

The entire service industry is stuck in a race to the bottom as marketplaces for ‘gigs’ are becoming increasingly globalised and automated. 

With artificial intelligence (AI) and machine learning increasingly ready to do the heavy lifting in many domains, expect a surge in competent, highly-educated service providers who will ‘flood the market’ and compete for the same projects. The capitalist logic here is simple: increased supply means lower prices with increasingly more independent service providers struggling to have a high-quality life. 

There is a different perspective though. What if we chose a high-quality life over the lowest cost? What if we paid service providers the rates they need to live a good life? 

At Happonomy, we are building a Federation of value driven business experts who charge these rates exactly; each one of them has reflected on what they find important in their lives and has calculated in detail what this means financially. This rate serves as their indicative base rate for their services. There’s no need to ’negotiate’, as your organisation guarantees that people are paid enough to have the life they want. 

Sustainable business models: Giving

In business, giving is a word which is not used very often. Business, through the creation of its products or services, focuses on driving value. However, this value comes at a cost, literally.

Giving, meant as an altruistic token of value for which gratitude is its currency, can be implemented in organisational policies though. 

Epic Fondation, a global philanthropic innovator, developed several giving solutions which put the value of the gift centre stage to alleviate poverty. 

The foundation developed different solutions, all aimed at giving to those in need. Each solution offers a unique tool in the sustainability toolkit of a company. For example, employees might give away a part of their wage (“employee giving”), entrepreneurs might give away a part of the money after selling their company via an entrepreneurial pledge, and clients might pay a surplus (“transactional giving”).

Sustainable business models: Structure and Governance

Let’s face it, sustainable business models seldom touch on the foundations of a company and its statutes. Too often, statutes are generic, ‘shareholder-first’ types of documents. How can we build a sustainable business if its foundations aren’t designed for sustainability?

There is hope though. The trailblazers of business are exploring alternative, more sustainable avenues. With regards to corporate structure and governance, the benefit corporation, the B-Corp, is gaining traction. It focuses on purposeful activities, ethical behaviour of its directors and transparency towards all stakeholders involved. 

We admit that it is a rather sad state of affairs when you have to design a new company model to emphasise sustainability, transparency and ethical behaviour. Shouldn’t all companies be held to that standard? 

That being said, B-Corp is a great initiative aiming to rebalance what is going wrong. Unfortunately, it only goes so far. It does not model how shares are divided fairly, nor does it cover how profits for the good of all stakeholders can be handled

That is why, at Happonomy, we are developing The Slingshot, an open source legal model to create a business with fairness and balance built in its DNA. With Slingshot, founders of new companies and owners of mature companies can ensure that ownership is allocated fairly and profits are distributed to benefit all stakeholders involved. 

It is time to realign value and money

Our capitalist system is deeply flawed and is a product of an era where financial security and consumption were considered to be quite valuable. That was then. 

Today, in mature Western societies, values and priorities have shifted. In the rich, economically developed countries, people are craving different things, such as time and ease; valuable relationships; sustainability; meaning. 

Although the root-issue, i.e., a flawed monetary system, is not tackled with any of the above examples, the good news is that we don’t need to wait for the perfect system to move things forward. 

Entrepreneurs and leaders can lead their organisations by installing novel policies and sustainable business models which include the needs of all stakeholders and realign money with those things that truly matter. 

The clock is ticking…


Want more?

Are you an entrepreneur or a business leader who wants to be a force for good? Reach out to explore whether our solutions can help you to move the needle. 

 


Bruno Delepierre

Socially inspired entrepreneur, organizer of TEDx in Leuven, friend of M.I.T. Happonomy alchemist.

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