In this interview, Florian Lüdeke-Freund discusses his scientific inquiry into sustainable and innovative business models. This research project was initiated after the NBS-SA Leadership Council asked, "How are innovative business models creating shared value."
NBS: What exactly is a business model – and what makes one sustainable or innovative?
“What is a business model?” is probably one of the most popular openers in business model publications. Many answers have been given. However, I disagree with authors who suggest that we have not reached consensus on what a business model is. We simply have to deal with multiple consensuses. We have to consider that business models are not tangible objects. They are social constructs. That is, ideas, concepts or frameworks that people develop to do something particular with them. A degree of context dependency informs how a business model functions in reality – how it can be represented or how a scientific inquiry has to be structured to analyse it.
"Technology is only one ingredient. Entrepreneurs and corporate managers with their new business models are the real change makers."
For our project it will be helpful to start from the value creation function of business models, which most business authors agree on. That is, they see business models as devices that create, deliver and capture value, based on how a company configures its resources, capabilities and stakeholder relationships. What we have to understand is how we can move from a narrow focus on financial value to societal values.
People also tend to confuse particular business model representations with universal definitions. While the famous Business Model Canvas of Osterwalder and Pigneur is the most recognised and applied visual concept, we must be careful not to interpret it as the only valid business model definition. In many areas, such as sustainability research, concepts must be adapted to the research and questions they are informing.
NBS: Florian, tell us about your background and work on business models? How did you stumble upon this topic?
I came across this topic when working with Prof. Stefan Schaltegger of the Centre for Sustainability Management at Leuphana University in Germany. I felt there was a need to connect corporate sustainability research with existing business model theory. Some ideas contained in my first working paper on the subject still influence my publications and projects.
More recently, I launched the collaborative platform SustainableBusinessModel.org, where readers find an open literature list as well as information about events and research projects.
As with this NBS project, establishing sound connections between sustainability issues and business models still requires a lot of basic research. We have to look at what notions like “business model” and “shared value” really mean. We hope to identify the essentials of these concepts and structure their relationships in a useful manner for researchers and practitioners.
NBS: Who has joined your team for this project?
The expertise of the researchers in our team is fundamental for this project. Nancy Bocken, Associate Professor at TU Delft, and Lorenzo Massa, Assistant Professor at Vienna University of Economics & Business, are both exceptional business model researchers as well as consultants and executive trainers, who are doing cutting edge research in this area.
On the South African side, Alan Brent, Professor of Engineering Management and Sustainable Systems at Stellenbosch University, and Josephine Musango, Senior Lecturer in Stellenbosch, join the team to ensure that our work addresses South Africa’s most pressing societal problems, which we will translate into business model challenges for creating shared value.