How A Life Cycle Driven Business Model Can Accelerate Sustainable Value Creation
Peter Bakker from the WBCSD declared that corporate social responsibility is dead and urged us to create new definitions of success. The change to a more holistic approach is already happening. However, shouldn’t we place the shared value that we create at the heart of what we do?
LCA and life cycle thinking are quite unique in the way they look at the impacts of organisations and products - unlike other methods, LCA looks at the entire life cycle. Taking this holistic view and integrating life cycle thinking into the business is definitely necessary to create sustainable, shared value.
Do We Want To Go Back Or Forward?
Organisational LCA, the model that comes to mind when you think of LCA as a business model, can be seen as a step back, in a certain respect, as it puts the organisation at the heart and takes the traditional, linear business model as a starting point. This traditional approach is primarily about mapping out all costs and benefits (potentially including environmental and social impacts) for the company and then determining at the bottom line whether the business is viable. The result of this approach is a closed model: value that is created for others is not taken into account. But organisational LCA is not the only way to build a business model around life cycle thinking.
Figure 1, Business Model Canvas. Image Credits: Osterwalder, A. & Pigneur, Y. (2010). “Business Model Generation: A Handbook for Visionaries, Game Changers, and Challenger”, John Wiley and Sons, Inc.
Time For An Open, Life Cycle Driven Model
Wouldn’t it be better to turn things around and put the life cycle of a value proposition, whether a product or a service, at the core of how we organise our businesses? Isn’t it time for an open, life cycle driven business model? In this model, everyone in the ecosystem of a company should be able to derive value from their participation in the life cycle ecosystem, in one way or another. In LCA, we call this ‘defining the system boundaries’. This also leads to a situation where businesses are organised along their life cycle, as they need to take all actors into account – everyone affected by their positive or negative impacts. In this model, the life cycle of a value proposition is at the centre of attention instead of one organisation.
Figure 2, New Business Model. Image Credits: Jonker. J. (eds)(2014). “New Business Models: Collaborating to Create Value”, only available in Dutch. Den Haag : Academic Service
The life cycle perspective opens up new opportunities and inspiration for innovation. Traditionally, organisations were organised ‘gate to gate’, but now we organise ourselves more and more ‘cradle to gate’ or even ‘cradle to grave’. The way we collaborate is much more bi-directional and the value is shared and multi-dimensional.
Figure 3, Organisation of New Business Models. Image Credits: Jonker. J. (eds)(2014). “New Business Models: Collaborating to Create Value”, only available in Dutch. Den Haag : Academic Service
More Questions Than Answers
From a sustainability point of view, life cycle driven organisations are the way forward. You cannot create shared value alone. However, using the life cycle as the concept of how we organise ourselves raises a lot of questions that need to be addressed by each organisation:
- Can we define the system boundaries of this organisation? Do we shift from ‘gate to gate’ to ‘cradle to gate’ or even ‘cradle to grave’ organisations?
- Which actors do we take into account?
- What is the value proposition or representative product that is the backbone of the life cycle?
- How do we collaborate with other actors in the life cycle?
- Which new opportunities for innovation are opened up by this life cycle perspective?
There’s a long road ahead, but if we want to redefine what successful sustainable value creation means, we need to start now.