As business people we have a powerful tool in our hands: the knowledge of how to build, run, and manage businesses. Let us be ambitious and put that knowledge to work for things that really matter.
But please don’t get me wrong. I’m not talking about so-called “social corporate responsibility”. Nor am I talking about “pro bono work” for social projects, or about “giving back”, a phrase that so many successful business people like to use. No, what I am talking about is the ambition to build sustainable business models that have a social, environmental and/or development impact written in to their DNA. In other words, business models that make a difference by their “mere” success.
Business Models that Matter
Take Grameen Bank, to use a very popular and widely discussed business model with an impact. The Bangladeshi institution makes micro-loans, mainly to women in Bangladesh. This allows the women to build micro-businesses and earn sustainable incomes for them and their families. The success of Grameen Bank’s business model has a substantial impact on poverty alleviation and the social status of these women entrepreneurs.
A completely different example is Max Havelaar, an originally Dutch and now pan-European fair trade label. The organization behind the concept has been self-financing its business model since 2001 through licensing fees. Products bearing its label (e.g. coffee, bananas, flowers) are sold through supermarkets at a competitive price. The label provides consumers with the assurance that a fair price was paid to the producing farmers in the South. To make that possible a minimum of intermediaries are used to bring those products to markets in the North.
Another inspiring example is Acumen Fund, founded by Jacqueline Novogratz, the author of The Blue Sweater. The fund invests in business models that generate financial and social returns. It particularly looks at business models that can be effective in reaching the “base of the pyramid” (BoP)—or the billions of poor without access to clean water, reliable health services, or formal housing options.
Real Ambition
Business models of this type is what we should really aspire to build as business people. Trying to tackle business issues of this level of difficulty and relevance, is what I call real ambition. “Difficulty”, because it’s not “just” about weaving profits into the business model’s DNA, but also impact. “Relevance”, because I sincerely believe that innovative business models can make a substantial contribution to helping solve some of the pressing global issues of our times (poverty, sustainability, inequality, healthcare…).
Building business models that merely pursue profits almost pale as a hedonistic or pecuniary quest aside the grand challenge of building business models that matter. Let us at least allocate some of our time and intellectual capacity to this quest of designing and implementing relevant business models. I am convinced that powerful innovative business models are one of the major tools (besides regulation, etc.) that can bring systems level change and transformation. Let us take up the challenge
Peepoople – a case study to challenge your creativity
To seduce business people to think about business models that matter, I get them to work on a different type of business model in my workshops. I get them to brainstorm on innovative business models for Peepoople, a Swedish organization that has developed a self-sanitizing toilet bag that is biodegradable and turns into fertilizer after usage. With the right business model this organization could potentially bring toilets to over 2 billion people who lack proper sanitation infrastructure.
Check out the video interview with Peepoople’s CEO Karin Ruiz and propose some innovative business models that could help her organization to scale and succeed. I use the video to introduce the case study challenge.
(never mind the video quality – we did this interview over Christmas with Skype when Karin was on vacation in Uruguay / also, please note that I didn’t really know how to make a natural-sounding voice-over…)
Last but not least: check out our new project on business models that matter: BusinessModelsBeyondProfit
Great post Alex! I like a quote by Mads Kjaer: “Business must be for profit but profit must also be for purpose”
Looking forward to the Business Models Beyond Profit Project.
[...] Blogpost Ambition: Building Business Models that MatterClose [...]
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[...] og han bruker eksempler fra en rekke bransjer og aktiviteter. Nylig skrev han for eksempel om sosialt entreprenørskap, og muligheten for å komme ut med viktig hjelp til mennesker som trenger d…. Hans budskap er at rett forretningsmodell kan bidra til [...]
This seems very relevant to work I’m doing with COMPETE Africa in the African apparel manufacturing sector. We’re at the very beginning of designing a new apparel sourcing model for Africa and involving the manufacturer’s customers in the process to make proposals. I want to thank you for the work you’ve done and the Business Model Canvas as I think I may incorporate it in one of our meetings.
Chad, that sounds like an exciting project. Good luck!
Cool points Alex. We’ve just formed a company called shiftalliance which is wholly focused on developing what we call ‘meaningful business models’. What we found was that we could aggregate all the ways that different businesses ( green, socially responsible, web 2.0 etc.) and certain academic areas ( positive psychology for internal cultures, presence based leadership for individuals etc.) create meaningful value for all their stakeholders across the business model into one methodology. We’re seeing some amazing ‘patterns’ which allow businesses to drive commercial success through meaningful value in very unique ways. We’re happy to share our approach if anyone is interested.
[...] a similar theme, business model guru Osterwalder presents an open case study challenge. The challenge is based on a real (Swedish) organization that could improve the sanitary situation [...]
I used your wonderful approach to work with a team of a South African Women’s Fund to model their grant-making venture. The grassroots women in the townships that benefit from the Fund are one key customer group and a variety of donors are the another group. The model helped to find out where you need consistency (in value propositions, drivers of customer relationships and revenue flows) and where you need diversity (channels, partners and activities). Often core processes and fundraising in not-for-profit are totally disconnected: the businessmodel map helps you to connect the two. See also my blog: http://herweijer.wordpress.com/2010/02/19/business-models-in-not-for-profit/
Happy to hear that our approach was useful in your context!
Best wishes,
Alex
[...] new measures of business model success. Based on ideals or “betterness”, these business models will matter, and that’s why they’ll [...]
Sell to wealthy hunters and use the profit to buy them for the poor.
Or fold your product into a not for profit – yours or someone elses, and settle for a resonable salary.
This should be easy. Forget selling to poor. Sell the benefit to thoes that have money, a lot of money!
good luck,
Vsioneer
I stumbled across this initiative; an interesting business model that matters – including a nice presentation: http://www.getitdone.org/ .
I really think that the busines model canvas is a really cool tool to develop something gret for a project, also creating a blue ocean stregy could be a great idea for develop a high value business model. We will always have to be ambisious to create a value with our model.
What do you think?