Good morning, everybody. I think it's okay to start with a good morning at 11 a.m. and
Germany at least. So welcome to our sessions on sustainable business models or as Anthony
would say, strongly sustainable business models. And today we are talking about the flourishing
business and the flourishing business canvas. So thank you for attending our program and
thank you also for coming. Despite the short time, we had to invite people and motivate
people to come. But nevertheless, we are around 30 people in the morning and in the afternoon,
which is pretty good for such a special niche topic, which combines sustainability to a
certain degree, innovation, and at least business models, of course. My name is Flora Nudeke
Freund. I'm a research associate here at the University of Hamburg. I'm working for Professor
Alexander Bassen, who is leading the chair for capital markets and management. And this chair,
even if it doesn't sound like, has a strong focus on sustainability issues like sustainable capital
markets, ESG topics. And I myself am doing research in the field of corporate sustainability
management with a particular focus on business models. And this is why I'm in connection with
Antony, which was facilitated by Sebastian, who brought us into contact one and a half or two
years ago. So we know each other a bit. And this is why I invited Antony to join us today, because
he made big progress in his research on sustainable business models. And I thought it was time to
show it to our German audience, to our German researchers, but also business people like
consultants. We have students here. We have professors here. So it's a very mixed audience.
And I think this will make today's session very lively and bring different perspectives to this
topic, to the room. Antony, it's all about you today. So Antony is providing us two sessions.
The first is an academic colloquium, which provides the background of his research and
also the background to better understanding what you see on the walls behind you, the flourishing
business canvas, which is a radical extension of the famous business model canvas. I think
most of you know the business model canvas developed by Osterwald and then brought to
the market by Osterwald and Pinot. This is a radical extension because Antony combined
the science of sustainability with a focus on strong sustainability. He took a design
science approach as his epistemology to do this research. And then he finally atomized the original
business model canvas and recreated or developed a new approach to describing and talking about
business models by combining what he found in the sustainability sciences and what he found in
business model and the business model concept. And the result is the flourishing business canvas,
which is what we will talk about today a lot. In the afternoon, we will learn to use it. You will
get an introduction to use it all facilitated by Antony. So thank you for coming, for following
this invitation. It was made possible with the financial support of our faculty who were really
willing to support this program today, which is a great opportunity to strengthen our international
connections between researchers, and especially in this niche topic, which as some of you might
know, it's only emerging. It's a very young topic, so there are no standards, no conventions, and we're
trying different things to bring sustainability to the business model level. And so it's very
important to have this international connection. Antony himself has 25 years of practical or
professional experience in the field of business architecture and as a management consultant.
In the last around five years, he focused on his business model research and one of the many
results of his research is his master thesis, which is unbelievable because it has 1000 pages,
which is too many, which is yeah, but he went into the details of the history of sustainability and
sustainability science. He took a complex design science approach, you looked at what is out there
in terms of business models. So I think 1000 pages is a lot, but there is a reason that it's 1000
pages. Now the task for today and for the next year is to boil down two core messages. One core
message is for example, the flourishing business canvas, which is what we're focusing on today.
So thank you very much for being here and I would say let's welcome Antony and have a nice day.
So good morning, good Morgan, everybody, thank you very much for coming.
I'm hoping that this is the start of the process of taking this from being a niche
topic as Florian was referring to it and turning it into not a niche topic, something that many
more people understand and can use and take advantage of. One practical matter, we are
recording this and we have some people on the live stream, although we can't tell how many at this
point. And we are taking a few photographs and you may ask questions. So in order that we can use
your images, we need your permission. So we need you to fill in one of these forms. If you didn't
have a form on your seat, there's a stack on one of the chairs towards the back. Please help yourself
and please make sure you hand this in before you leave. You will not be allowed to leave without
handing one of those in. Otherwise, I get into all kinds of trouble. So where to begin today?
On Monday, I'm going to be giving a keynote lecture at Plymouth University's Business School
where they have a centre focused on the future of business. And I thought I might start this
morning by trying a little exercise that I'm going to try with them on Monday.
But maybe first I should spend a moment just introducing myself a little more. So I now call
myself a sustainability business architect. So this is somebody who solves business problems
looking at environmental, social, economic issues, but also looking at it from the organisational
perspective in a business, the people and then technology to support the business processes.
I have a consulting company, which is called Edward James Consulting. This is named after my
grandfathers, which is some nod to intergenerational aspects of sustainability. And we refer to
ourselves as flourishing enterprise designers. And we'll come back to this flourishing word
in a moment. I'm an industry partner with the Ontario College of Art and Design University's
Strategic Innovation Lab, which is the home and the host for almost all the work that you're going
to hear about. So this is the academic home now for this work. I'm co-founder of the Strongly
Sustainable Business Model Group. This is a group hosted by the S Lab, the Strategic Innovation Lab.
The Strongly Sustainable Business Model Group now has about 300 and I think it was 23 people as of
last night in it. And we meet monthly and you'll get the URLs for this later. And then last but not
least, I'm the convening entrepreneur and the programme director of a global initiative,
which includes Sebastian and Florian and nine other people from around the world working on
developing a toolkit around the Strongly Sustainable, the Flourishing Business Model
Canvas. And we'll talk a little bit more about that later on. So you notice that on the start
of the presentation that I'm going to give on Monday, it said flourishing is the goal.
And so perhaps you're wondering why is flourishing the goal? Why are we starting to use this word
flourishing and not this word sustainable? So I would like to have an opportunity to see if
I can demonstrate to you practically why flourishing is a better word than sustainable.
So I'm going to ask you to do a very quick exercise in pairs. There are two parts to the
exercise and each part will take about three minutes. So we're going to divide this up into
two, three minute sections. And then in each three minute section in with a partner that you'll
just pick right now, you'll have 90 seconds to do a task each. Okay, so two exercises,
90 seconds each in each three minute section. Okay, so the first thing I would like you to do
is take 90 seconds each to tell a story to your partner about when you personally felt you were
sustainable. Okay. All right. Okay. This is your task. You can use whatever language you would like,
of course. Please find a partner. I know you're in rows of threes and fours. So choose a partner.
I'll give you just a moment to shake hands with your partner. And then we will begin the 90 seconds.
Are you ready? Okay, go.
Okay.
Okay. If you haven't already changed over to the other person, please go ahead and change over.
Okay.
Okay. So this is the first exercise. I'm going to go straight into the second exercise and then
we'll have a little conversation about the experience. So here is the second exercise.
Now turn to your partner and talk about a situation in which you flourished. So another
word for this in English would be to thrive. Perhaps that's a word you're more comfortable
with. So this is the second exercise. Again, 90 seconds each, a situation you recall where
you personally thrived. We're in the moment of flow. Okay, go.
It's a little bit, a little bit.
Okay.
Okay. So just for the folks on the live stream and if you're very shy in the audience,
this may apply for you as well. We are monitoring the Twitter hashtag SSBMG and the strongly
sustainable Twitter account. So if you are on the live stream and would like to ask a question,
then you can tweet us at that hashtag and hopefully we will see it. I believe
this Twitter screen here should be updating automatically. And if you're in the room and
you're very shy, you can do that too. But as we go through, if you would like to ask a question,
please stop me and ask the question as we go through. I'm going to do this informally
this morning. So let me just go back to the slides here. So the first thing I wanted to ask
is did the words that I use on the screen here for each of the two stories, firstly sustainable,
let me just ask this question first. Did these resonate with you? Did these seem to convey your
understanding of what the word sustainable means or did I miss something that you think is important
from a perspective of understanding sustainable? Thumbs up, thumbs down.
It's good, generally. Yeah. Anything big that I missed? Okay. And what about the words that I
used for flourishing or thriving with these good words as well? So the question that I want to now
ask is what just happened for you between those two conversations? Would anybody like to say a few
words about what their experience of those two conversations was? Sebastian, I'm going to call
on you. So I think the first conversation starting about sustainability was really about
kind of static flow of things. And the flourishing one was really, you know,
you just realized that it's much more energy and you feel, okay, there's something popping up and
it's growing. I think this is the biggest difference between those two words.
And I didn't pay him to say that. Does anybody else have anything they would like to share?
Not yet, no. Anybody else? Okay, you're all going to be shy. So this is my general observation,
exactly what Sebastian just said, that sustainability tends to make people go,
and flourishing makes people come alive, as the word itself suggests. And so I'm going to actually
use these slides for a second. So we then turn to something very big and very important that's
current in the world, the sustainable development goals that have been developed by the United
Nations. And this is being suggested as some sort of goal for humanity. This is the United Nations
who speaks on behalf of all the people in the world. And they're proposing sustainable goals.
And we've just personally experienced that sustainability is,
why would we want goals that make us feel sad, that make us feel not alive? This to me strikes me
as a very odd way of setting a goal. And if we wanted to get more specific about problems with
the word sustainability, one problem is that they're very unclear as to what we mean when we use the
word. We have people on Wall Street talking about sustainable financial results. Is this the sort of
sustainability we want? We have other people talking about sustainable this and sustainable
that. It doesn't automatically mean what we want to happen. The next thing about sustainability is
it's really rather uninspiring. If you're sustainable, you're doing the same thing.
This is not something that is about life. This is not about growing. This is not about
being as good as you can be. It's about doing the same thing every day. It's also demotivating.
Would you want to describe a relationship you had with a significant other person as sustainable?
This is not a good way of describing it. And actually it gets worse. This word sustainable
has other problems. The first thing is based on the science, it's not actually realistic.
Our experience in the world is that the world is always changing. And it's changing because we have
a ball of gases burning in the sky called the sun sending energy to our planet every day. And
that energy that arrives on our planet every day causes everything to change from the weather to
plants to grow to us to be able to eat etc. All of this ultimately is powered by solar energy.
And so moment to moment the world is changing. It's not going to be the same. So us trying to
make it the same is actually not the way the world actually works day to day. To use the river
analogy, the river is not the same moment to moment. And of course over longer time frames
the river can get huge when there's a big flood. It can get very small when there's a drought.
And then over even longer time frames the channel, the space the river moves through
will change as the amount of water causes erosion in the landscape around the river.
And then of course there's us, the observers of the river. Our experiences, our feelings,
our emotions, our knowledge changes moment to moment. This is one of the insights that we get
from Eastern philosophy about meditation being in the moment. So the idea that we could sustain
either the physical thing of the river or ourselves observing the river is just not
correct scientifically. And then we come to business.
Business is about change. It's about recognizing that the world is always going to change,
that people change, that society changes, the market changes, the competitors change.
So when people stand at the front of a room and say to business you must be more sustainable,
that they may morally or ethically understand that they need to do something differently
because of the world, the state of the world is getting into because of our human activity.
But ultimately they're thinking to themselves at some very deep level, this is not relevant to me.
Business is about change and you're asking me to be the same. How is this useful to me
as a business person? These two ideas are not aligned. So the question then becomes
what should we sustain that is realistic, so it must be scientifically legitimate,
it must be correct as far as our knowledge, it must be achievable, it must be something
that we can really do, it must be something abstract and impossible, it must be attractive,
we must want people to adopt this new thing, to try and sustain this new thing and it needs to
be relevant to business and therefore to humanity as a whole, business obviously being a creature of
what we as humans create. So this means that we have to make a choice about what we want to
sustain, so we have to be specific about it, this word sustainability, one of the problems with it
is of course that it's very general, people can use it in all kinds of different ways, so we have
to be specific about what we want to sustain, we have to be very careful to be thinking about who's
going to benefit when we sustain this thing, you know if we have a sustainable financial result,
who gets that benefit? We have to know how long we want to sustain it for, the world is going to
change, so if we want to keep something the same we have to decide how long and how much do we want
to spend, both in effort and potentially in money to sustain that and then how will we know when we
have it? We also need something that makes people excited about it, you know this is not something
that we need something appealing to business, something that they're going to want to do, not
something that's going to be a drag on them that they're forced to do and to remind us about where
we are at the moment, we need radical change in the world, we are not going to be surviving for
much longer if we do not do something very different to what we've done in the past and
certainly that's where myself and the other members of the strongly sustainable business model group
are really very interested in this, so let me try a little thought experiment which I'm going to then
continue for the rest of the day, what if we try to sustain the possibility for flourishing?
Obviously whether you flourish or not moment to moment as an individual depends on a choice that
you make, so nothing I can do can make you flourish, you have to choose to attempt to flourish and then
to actually have that experience but I can create the possibility that everything that is makes it
easy for you to flourish is around you, I can make sure at the very basic level that you have
enough to eat, that you have shelter in our society, that you have enough money to be able to afford
those things and then there's all the personal things that you're treated fairly, that you're
treated with trust, that you have an opportunity to grow as a person to learn, all of these things
contribute to creating the possibility that we individually can flourish, so we think that this
idea of the thing we want to sustain is flourishing, is a really important one and it's one in fact
that was first thought about over 10 years ago, actually over 15 years ago now, by one of the
founders of the industrial ecology field in business, this is Dr. John Ehrenfeld, he was
a now professor emeritus at MIT and he wrote originally about back in 2000 that he thinks
that the word sustainable, the thing we should try and sustain is this possibility that human
and other life will flourish on this planet forever, so if we go back it's very clear about
what we want to sustain, the possibility for flourishing, it's very clear about who we want
to sustain it for, who will benefit, it's us humans and all other life, it's very clear about
for how long, this is forever, this is a goal that we want to try and have forever, so I think this
is incredibly audacious, this is a big stretch goal that we can choose for ourselves, we can choose
for our businesses and we can choose as a species, this is a goal that I think would be much better
for the UN to adopt as a goal for humanity, we the United Nations as the community of countries on
the planet decide that we want to try and sustain the possibility that we as humans and all other
life on this planet flourishes forever, that is our goal, it's attractive, we all want to flourish,
it's very, we all had that good experience when we talked about flourishing of that, it's universal,
it applies to everybody, it doesn't matter your culture, it doesn't matter where you are, this
is something that resonates with everybody, it means different things to different people but
the basic idea resonates with everyone, it's very practical, we've all had an experience of flourishing,
we know it's possible, this is not some remote distant possibility and it's continuous,
this is not something that happens once and then disappears, this is something that can happen
again and again and again and obviously in some eastern traditions this is something that you
could perhaps aim to have in every moment of your waking life. So I'm going to stop there,
we'll go into some more of this this afternoon in the introduction to the workshop but I just
wanted to set that scene, so I'm now going to switch gears and go into the more academic
side of things and then we'll go back to being practical this afternoon.
So I wanted to spend the rest of this morning talking and chatting with you a little bit about
the work that underlies this idea of flourishing business and this is the strongly sustainable
business model ontology and then the flourishing business canvas is the practical practitioner
tool that is built from there and what I have as a sort of menu of things we could talk about
is I have some context, some of which I've just talked about a little bit more, a little bit but
this is more context about business models specifically, some more about the problem
that we have because of the context that we have in business models, the objective of the research,
a little bit about the methodological aspects of how we did it, so the design science, the
systemic design science approach that I took which is very unusual in business schools
and in many other disciplines, then I have a summary of the literature that I looked at,
a very short summary, it was almost 400 pages, was looking at the literature and then a description
of the ontology, a deep dive walkthrough of the boxes and lines on the ontology diagram
and then a very brief introduction to the practitioner tool, this we will get into this
afternoon a lot and then some examples and we'll also get into that a lot this afternoon,
the whole of this prezi will be available afterwards so you can go through it but do
we have any sense in the room and Florian maybe I'll ask you to perhaps make a suggestion and
then I'll take others from the floor and then I will jump around, prezi is very good to allow me to
to jump around easily, Florian do you have any particular thoughts on what might be interesting
for this audience?
Yes, again as an introduction to you, you say was a blurring, I would now like have
important details of how you do a business model, so the second pillar would be I personally would
now like maybe be ordered. Okay, would that be okay if we did business models next? Okay,
all right and then maybe after business, maybe we'll start with context and I'll work from there
what I may do is to jump to this at some point just because from a timing perspective
so my starting point nearly five years ago now, just over five years ago now was that I was
looking around and people were using this word business models in connection with sustainability
and there's lots of words that have been used to describe business models that people are claiming
are more sustainable, serviceization so turning things from products into services, dematerialization
reducing the material quantities of quantities of materials involved in a business model, industrial
ecology the idea that the waste from one business becomes the input to another, collaborative
consumption so sharing assets cradle to cradle, localist trying to do everything very locally,
social entrepreneurship and there are many many more words and labels out there and one of the
members of the strongly sustainable business model groups Nancy Bochen at Cambridge University has
done some really interesting work about categorizing these patterns of business models
and we have some examples out there that are fairly well known interface floor perhaps being
one of the most well known Patagonia who recently reincorporated as a benefit corporation perhaps
timberland in one of their earlier incarnations perhaps Unilever with the leadership of Paul
Pullman but I started to look five years ago for what are successful patterns in fact how would
I know a successful sustainable business model pattern if I saw one and what things do I need
to think about to be able to describe a successful more sustainable business model and what I
discovered was that there was no taxonomy there was no common language for sustainable business
models and no way to reliably know that any particular description of a sustainable business
model was necessary and sufficient so what what is a sustainable business model what elements
does it include so just to rewind now so let's go back to before Alex Osterwalder did his PhD
and the previous best practice for starting a business was to do what we don't do with any
other field of design in any other field of design so we're in Germany so let's talk about cars
uh we're designing a car people understand that if you simply take some metal and bolt it together
and then drive the car out onto the street the likelihood is that the car is not going to perform
very well the wheels will fall off the engine will stop it will break down it won't be reliable
and but yet this is exactly what we do in business people write a business plan which is purely on
paper and then they go and get some money and they start their business and they hope it's going to
be successful but the result is crash crash real crashes right we crash our businesses all the time
and this leads to some costly failure so this is the basic idea at the moment you are prior to
Osterwalder's work you have an idea you write a business plan you get the money you work hard you
have hope and you have luck and as Osterwalder observed when he started his started bringing
his work to market this is not efficient effective or reliable and if you want documentation of this
you can look at the OECD this is a report from 2001 that said in the major OECD countries 60%
of firms that have started using that method fail in the first seven years
60% can you imagine if we designed cars that way it would be awful and this does real damage if you
think about how much harm is done to the founders to the people investing to the communities the
employees the suppliers when firms fail it's terrible so now we move on so in 2009 Alex
crowdfunded business model generation and established a new best practice for how we
could start to bring ideas of design into the world of business using the business model as
the artifact as the thing we're going to design and he suggested we can now apply the design
approach of sketching so this is coming up with multiple options really really quickly this is
what designers always do they're always got a piece of paper they're always doing things visually
and they're always trying to sketch new ideas to compare contrast understand look at alternatives
and then you can prototype and this is using the business model canvas at a slightly deeper level
and then of course you can start to simulate so the business model tool on the ipad app and in
the strategizer app now has the ability to actually put numbers to all of those sticky labels and to
start to simulate on the right here we have a pro forma profit and loss statement driven from
this set of stickies you can see the numbers here and you can turn that into a pro forma pnl very
quickly this is clearly a big step forward now if you don't like the pnl you can go back to the
business model you can change your business model and you can see immediately the effect on your
profit and loss statement and of course coming to the academic side this was based on his phd
at a first attempt at an ontology of business models and i'll come back and define ontology
in a moment and so he asked how can a business model be described and represented in order to
build the foundations for subsequent concepts tools and possibly computer-based possibly
computer-based tools so let's just be clear about what he did here this is something for describing
business models all of the ideas about using it for design all you're doing with the ontology is
you are using the ontology to capture all the necessary and sufficient elements of the design
he took a design science approach and i won't spend much time on this now i'll come back to
it in my context but he he also took a design science approach and this is how he did it he
set some goals for the various parts of an ontology and then did those he went through
the literature so to define the elements of the language to define the elements of the ontology
he looked at a range of literature he identified you'll notice some of these terms at the top here
are very familiar to you even in the business model canvas and he saw these were the terms
that were used by at least two people in the literature and if he could find two independent
uses of it in the business model literature at that time so this would have been around 2002 2003
then that's what got that box into the ontology and this is what his ontology looked like this
graphic has got slightly messed up for some reason all these lines should be slightly to the left
but it basically groups these using the business balance scorecard into the customer interface
into the product sorry let's start at the top so the business balance scorecard starts with the
financial aspects then it goes to the customer then it goes to the product and lastly to the
process process no sorry this is the other way around this is process and then that's the
improvement side of the balance scorecard so it's a different order to the so finance in order to
have good financial results you have to do good results with your customers in order to have good
results with your customers you have to have good processes in order to have good processes you have
to have a strong product or service value proposition so fairly simple you'll notice
these nine boxes are what ended up on the uh business model canvas but you'll notice in
the ontology he had some other ideas at a more detailed level so there are and there's actually
a couple that are in the phd that are not in this summary slide that he used at his defense
and he made a significant contribution to practice i mean let us not underestimate how much
alex osterwalder did for us by doing this piece of groundbreaking work he was groundbreaking
breaking methodologically he was groundbreaking from asking the question what are the necessary
and sufficient elements of a business model it was really a tremendous step forward and i won't spend
time talking about the details of it but it really was a an amazing piece of work for the time that
it was done so it's so amazing so what's the problem the problem is that underlying this
piece of work and underlying nearly all the work that is being done about business models there is
an underlying normative assumption an ideal goal that is implicit not explicitly stated but
implicitly stated is that all the people who want to design or describe a business they all agree
with milton freeman so if you don't know what milton freeman said this is what he said
so as we've talked about earlier we want to start to think about sustainability in business models
so what would this mean i summarized this set of words on the slides that i showed you a moment ago
so i won't dwell here but sustainability is really rather more complicated subjects and i just want
to start delving into the science here a little bit further so the first is from a just a purely
linguistic perspective it's a property of a process so an adverb or it's a it's a property of
a thing so it's an adjective so we misuse the word sustainable and sustainability all the time
and so it's useful to go back and i will tell you it's so commonly misused i misuse it in the
title of my own thesis okay so but if we want to go to what it really means it's a property of
a process or property of a thing which means it's a choice which means it's based on what you believe
i'll just let that sink in for a second it's a choice which means it's based on what you believe
it is inherently normative so for all of you descriptive scientists in the room if you are
doing work in sustainability your values are included in what you do whether you like it or
not because it's a choice about what you want to sustain
it has implications because it's a choice
and it's important to explicitly understand those implications it's an emergent property
you can't manage for sustainability you can just simply try to create the possibility that
that outcome will emerge because you can only know whether you had it in hindsight
this is another problem with this word you can only know that you had it in hindsight
and this is my personally favorite definition of sustainability
as a thing as opposed to a goal flourishing is the goal but as a thing it's the interplay
between a continuously evolving state of nature driven by solar energy and a continuously
changing state of mind if you just think about values if you think about how much our values in
western society have changed in the last 10 15 20 years 30 years 50 years on a whole range of
topics if you took somebody in fact we have lots of tv shows that bring the past back to us now and
we look at the characters and we can't relate to them or we think they're crazy for having
attitudes towards certain topics the status of women sexuality a whole bunch of different
topics that today we think completely differently based on different values than we had even a
short time ago this is from the best thing that i read during my thesis work it's a book called
supply side sustainability by allen tainter and hokstra the reference is on the side here for you
for those of you want to go get it there's a short uh 12 slide summary of this book on my
slide chair site um but i really recommend it is the the the thing that opens my eyes to so many
aspects of of this work so sustainability is really quite complicated and from the scientific
perspective there's a new emerging world view on what do we mean by it scientifically and it's
coming from a small field in economics called ecological economics these are the economists
who are no longer in denial about the reality of the economy so neoclassical economists which is
99 percent or more believe that the economy consists of firms and households that is it
that is all context free it's the relationship between firms and households
no context ecological economists say hmm hang on a second firms and households don't exist in a
vacuum they exist in a society which is on a finite planet and we have biology sorry physics
chemistry biology ecology sociology as disciplines which inform our understanding of this context
and maybe as economists we should not be so big-headed uh and actually consider firms and
households in that context and what does that do to economic theory uh when we put our economic
theory into those contexts and unsurprisingly it changes an awful lot about how you understand the
economy when you put it into its context and so they've come up with this definition of strongly
sustainable to contrast it with what most people in economics and this includes natural resource
economics and environmental economics think about when they think about sustainability
and strongly sustainable is the impossibility of substituting natural capital with any other sort
so for example ecological economists would say it's extremely unlikely that we will be able to
replace soil with something that we made
of course without soil we can't grow plants which means we have no food so the idea that if we do
something to destroy the soil that natural capital it would mean we could no longer live
so ecological economists think that soil is rather important
neoclassical economists not so much they think we'll be able to invent soil and this is
particularly true in time frames which might mitigate the worst effects of our own behavior
as we fully enter the uh anthropocene so this has an implication it means we have to change
that's interesting okay um so this comes back to what do we want to sustain flourishing which I
already talked about uh and the fact that is a completely applicable idea at all different
levels of scale so this is will go from individual all the way to business and beyond and
it starts to get at this problem that we have which is we have some frameworks out there
on the practical side of things about how do we make business models more sustainable
but if you're a practitioner and you want to apply these ideas there's been no advice about
what to do from a business model perspective so some of you will know the natural step framework
for strategic sustainable development and its four system conditions and now this future fit
business benchmark which I encourage you to look at there's a version that has just been released
by some other colleagues in the strongly sustainable business model group and this
is trying to get at the question how do I know a sustainable strongly sustainable organization if
I see one interestingly we haven't been able to answer that question until this piece of work
just came out there's the business alliance for local living economies and I apologize I would
love to get some more European things up here I'll mention one in in passing in a second the
business alliance for local living economies or barley as it's known has 35 000 members in the
United States and they are all trying to preach follow a set of localist principles for creating
more sustainable businesses and then there's the B lab work which I know is now in Germany and
elsewhere in Europe and their idea of this impact assessment you know how would you score 200 points
in their survey what do you put in your business model to score 200 points nobody's been able to
answer this question until the work that I've done um so the ultimate goal of this work
is as we enter the answer we're seeing we need to increase the quality quality of strongly sustainable
aka flourishing business models this is an urgent normative goal that we have collectively
if we don't do this we will not avoid the worst effects of our own choices that we've made in the
past and that means we have to be concerned about efficiency so if we're going to start a business
how do I not make it too difficult to start a flourishing business so we're talking about
designers here so this could be entrepreneurs managers strategists business architects venture
capitalists consultants you anybody starting a business is a business model designer and by
quality we mean the business model needs to be reliable how do we ensure that we can reliably
create flourishing businesses that create that possibility for everybody how can we do it
consistently how can we be effective at doing it so the research goal from this came to be defining
a common language or a taxonomic structure to describe business models that include the
necessary and sufficient elements required for strongly sustainable a flourishing outcomes
in other words let's put this into canvas language we want to know what are the questions
that you as a business model designer have to answer in order to have the possibility
of having a flourishing business and creating the possibility of flourishing for all of your
stakeholders and you have to obviously answer the questions well that's a whole different problem
so we're just asking at the moment what are the questions you have to answer
how to answer them well this is the next step in the research
but we have a problem from a scientific perspective from a research epistemology
perspective how can we do this when there's no businesses out there that meet the definition
of a flourishing business descriptive science the normal way we do science is we take a phenomena
we usually bring it into a lab to get rid of all the context so we can stop any variability in our
experiment and then we examine the thing through all kinds of techniques whether they're
sociological techniques whether they're physical techniques or biological etc but in this case we
do do not have any strongly sustainable any flourishing businesses so we can't try and study
it does this mean science has no nothing to do if this normative goal is so important are we saying
saying that sustainability is um are we saying that science can not help humanity here
surely there must be some way of doing it
so this is where design science comes in and let me just spend a minute talking about what
is design science so let's just start with the top of this diagram just to begin with
so what descriptive science does is it takes a phenomena in context you observe something in
the world a star shining in the night sky a person behaving on a street corner doesn't matter it's a
phenomena and this phenomena you observe it and this informs the creation or the discovery of
theories which then you try and prove are correct by a process of justification and of course this
is the process of normal and paradigm changing science that Kuhn so eloquently described in
and uh his work in the 1960s but you'll notice there's a one-way arrow here this can only be
done if there's something to study and we have a problem in this situation that the thing we want
to create doesn't exist so we can't theorize about it based on deductive and inductive techniques
but we have a lot of really useful work that's been done in this area that has created certain
truths people have been doing work on business models and sustainability for quite a long time
now so it's not that there's no knowledge out there it's not that there's nothing so there's
quite a lot of truths that descriptive science has provided us so what design science then says is
we can build something new and we can then evaluate whether or not we have built something
that is useful so our justification in design science is not is it true it's whether it's useful
so i will use an analogy medicine is a design science this was first put forward by herbert
simon in the sciences of the artificial in 1969 along with management architecture
what other engineering these are all design disciplines in simon's opinion
and they're design disciplines because if you think about the way that medicine has developed
as a science usually doctors had an idea about a treatment for a given condition without having
any idea of why that treatment worked and of course in the history of medicine we have a lot
of experiences where of course doctors were wrong leeches for example to cure blood ailments although
it's turned out that certain things about leeches are good in fact but this is the process of
design i have an idea about something that is useful i try it out and see if it is useful or
not if it is useful guess what we can create new phenomena more easily and that means that there's
more for descriptive science to study so what i'm doing but osterwalder did and what i've
i've done is built something the ontology and the canvas that's powered by the ontology and i
evaluated it is it useful and by bringing it into the world of course osterwalder has now got
amazing amounts of face value validity that what he created is useful and since what we're doing
is an extension of what osterwalder has done that also brings quite a lot of basic level of validity
usefulness to what we've done we've obviously doing more and more specific stuff so this is
really the idea that we're doing design science we're building and evaluating rather than
discovering and justifying oh one other thing about this when you're doing something useful
in the world you don't care about disciplines because disciplines are of course the antithesis
of practical reality practical reality is messy everything is all together you can't separate out
things into nice buckets truths that come out of descriptive science tend to be discipline
based of course this is normal and i'm not saying that disciplines are a bad thing at all they're
very very helpful but when you're coming to do something disciplinary you have to look
across the discipline when you're doing something in design science you have to look across the
disciplines and so of course for a problem like sustainability which is inherently interdisciplinary
this is a very useful thing that we can do much more easily so this is one of the reasons why this
is such hard work because you do have to try and look across the disciplines and you end up with
the normal problem of interdisciplinarity which is you can go broad but you can't go deep so one of
the critiques that would be really helpful is we have if we had some really deep scholars in some
of the disciplines that i looked at looking at what we've done here and saying well no actually
you're wrong or the way you've synthesized across the disciplines isn't appropriate for whatever
reason so this would be some further research so again this is a nice table from and those
citations at the bottom here purpose of descriptive science is truth describing and explaining the
theory whereas in design science is is it effective is it useful so the output of descriptive
science is theory and the evidence to say that it's true and the output of design science is
artifacts and evidence that it's useful um so design science also has another interesting
facet which is not only can it create something useful in the face of incomplete knowledge
in doing so it explicitly not implicitly explicitly includes the designer's values
so if you're thinking about designing a chair or a table when the designer sketches it what they're
putting on paper is not only the knowledge about ergonomics how the body works how the body sits
which is a science that's that's been much descriptive science evidence to support how
what good ergonomics is it's also the designer's idea of how will the chair be used what is
beautiful about a particular chair or color or fabric or material so it includes the designer's
values so this is fantastically helpful in sustainability where we know that what we choose
to sustain is got to be values based because it's a choice so design science helps us in two ways
first we can create when there's nothing secondly we can create based on our values and be explicit
about it and that's okay whereas in descriptive science of course we're trying to keep values out
of it so this is what makes it useful which i've just said but we have some challenges with
sustainability and design design isn't inherently systemic in how you do it you know a lot of
designers will claim to be artists which is the opposite of being systematic and so there are four
things that we need to worry about as we're looking at business sustainability as the topic
of the thing we want to design the first is how do we define the boundary of the problem and the
solution because of this interdisciplarity transdisciplinary orientation and because
sustainability is a systemic idea it's an emergent property of a complex system how do we understand
sorry what is the boundary and then how do we understand what's in the boundary
for the same reasons what do we design so what are we going to design are we designing
a sustainable chair we're designing a sustainable business model but what does that mean we actually
have to get specific about what it is that we're designing and how do we do it how do we do design
we know how to design a chair or a car how do we design a business something to do with the
business models so we have a few slides here to talk about this the first is what was the
literature that i looked at so the literature you call this the key theoretical frames in design
work what were these key theoretical change key theoretical frames that i chose so it was a choice
maybe i missed something maybe you think there's something in this list that is not relevant
but we started from the macro level so if we're looking at strongly sustainable we have to look
at the physics of the world and the universe in which the world exists physics is obviously atoms
then we've got the molecules then we've got the molecules that become life and then the
systems in which life exists and that's all the very big picture the macro level then once we get
into human activity we have two disciplines ecological economics specifically which takes
this systems orientated view of economics neoclassical economics is not interesting if you're
trying to be talking about sustainable and ecological sociology so the sociologists have
the same problem that the economists have which is their discipline is also not system based
in fact the original definition of the discipline by dirkheim in 1920s was sociology is the study
of sociological facts entirely closed definition of the discipline no context there at all
in about the same time that the ecological economists were getting going in the late 60s
early 70s some sociologists went you know maybe there's some interaction going on between society
and people in society in the world and maybe we should pay attention to that and so they created
an even smaller sub-discipline of sociology which is in fact called environmental sociology
but i don't like that term because environmental economics is still very neoclassical so i like
this term ecological so hence it's in quotes then we have the meso level so within society so we
got the planet within society now we have organizations and of course this is the place
where business schools and schools of public administration have all of their disciplinary
knowledge and all the truths that have come out of all of the fantastic research that have been
done in business schools so these can be broken out into these three area these four areas that
are relevant to business models and then last but not least organizations and societies composed of
individuals and because we're talking about sustainability we must and flourishing as the
goal that comes down to people this is about positive psychology this is about physiology
how can we flourish physically as people as animals uh not just so we've got these three
levels micro macro and sorry micro meso and macro and we also in addition have some formal science
that we have to bring into this we need some way to describe a flourishing business model we need
some formalism to help us with this and of course we're dealing with information information science
is a formal scientific discipline and so this is where the idea of ontologies and information
science comes into this second thing is the research conceptual framework so i won't go
into this in too much detail but yes we've grounded this philosophically as you would
expect in proper research so we made we have three areas where you have to make decisions
what is your ontological approach not an ontology an ontology but ontology as the uh what exists
question the how do i know epistemology and uh what's important what's valuable the axiology
so what we chose here was um overall i'm taking a critically pragmatic approach
pragmatism as a philosophical school was first defined by charles sanders pierce an american in
the latter part of um uh the 1800s and was written up very nicely by um where's he gone
oh did i delete the actual name of the author of that i did uh i'm gonna forget it as well i'll
have to fix that citation um so uh and critical pragmatism so pragmatism is says as a school if
it's important it's valuable right that's it it's just purely pragmatic so it doesn't say whether
it's you know it could be uh essentialist objective it could be anti-foundationalist
subjective it doesn't matter if it's if it's useful it's important and so you get to choose
what your ontology is depending on what's valuable and of course from a design perspective design
is very practical we're trying to create something useful so that fits nicely um you also have a
choice with pragmatics of whether you're idealist empiricist or a realist um i personally took a i was
biased towards realism but that doesn't mean other things don't come into it and this becomes
particularly important when you're talking about flourishing personally because that's all to do
with a subjective experience so you can't just ignore the other world views here and then from
a valuable perspective well obviously you're doing design so it's sort of applied piece of work this
is not a theoretical piece of work um at all this is uh an applied piece of work so the research
purpose was explore a problem uh to make a difference so this is almost action research
you can think of design research as action research uh so we want to design an ontology
we can usefully employed to describe a firm's current or future business model so this is an
important point here ostavalda's ontology isn't just for designing new ones in fact he didn't
even think about the idea of using his ontology to design a new business his original work to
simply describe the way it is today but you can describe something in its current state or you can
describe an imaginary future imagined future state so you can do both but uh this is the future uh
and then to design and use a systemic epistemology to do this to build an evaluation
so what do we design so this is where we get into business models and ontology
so what is a business model lots of arguments in the literature about this most people use it
without defining the term um it's an agreement that it is a model so it's a representation of
reality which is of course something way more complicated in reality it is just a model um
you know all models are wrong some models are useful um the working definition um is it something
to do with the logic of the business um something to do about figuring out what the right things to
do how you do them right and how you know you're doing the right things right and uh when used to
express a desired future reality a business model is inherently normative because the person
describing the future it had to be their values that drove it and it's all about how you choose
to answer what's right how do you do it right how do you know you've done it right
so i'll spend a moment talking about this in scientific research using the management
research using the business model as a unit of analysis is really pretty unusual uh still we've
talked about firms as a unit of analysis we've talked about uh industries as a unit of analysis
or industrial sectors uh firm or individuals from a leadership perspective or teams within businesses
but business model is something new the first phd that did a uh used the business model was a
german patrick starler and who did his work in the uh just before ostervolders so this is actually
another thing that inspired uh ostervolders to do his work and i won't go into this detail but for
those of you who want to get into the sort of academic background to why is a business model
such a helpful concept uh rosen's anticipatory systems are is a good piece of work to do and
one of our colleagues in our group peter jones professor peter jones is a real deep expert in
in this area lots of people are talking about it it all really came out of the e-business stuff
there was almost no mentions of business model the earliest one i found was 1954 uh then there
was another one or two in the late 50s and early 60s but basically zero until the internet came
along and then all of a sudden everybody was talking about business models because everybody
thought that they the computer science people thought that uh the internet was going to change
everything um i won't talk about how it's going to fit in for the moment um so we believe that
given this normative goal that we have of flourishing the business model is the most
salient point to influence an entire enterprise the people its operations and to endorse
organizational values of flourishing um and the process is required to create the possibility of
flourishing so that's the business model aspect of the artifact we're going to do something about
business models what's an ontology it's an explicit specification of a conception uh this is from
artificial intelligence work this is where the the term was really defined originally ontology
engineering is a sub-discipline within artificial intelligence um and to make it more human it's
simply a framework to enable communication between people by providing as a language a vocabulary
that we share it's nothing really very special in fact it's a big word or a little word to mean a
very simple idea so the other thing about it is it's human language has the possibility to express
conflicting ideas we can use german or english and we can have a conversation and i can have a
different opinion to yours and we can still have a conversation we still have a shared language to
have that conversation i can understand that you disagree with me ontologies are exactly the same
this is fantastically useful when we know that all current businesses are really or nearly
all current businesses are really focused on profit maximization and we know that focusing
purely on profit maximization is in conflict with creating the possibility for flourishing
this is not a problem for ontologies we can put a language together that can describe both
possibilities in one ontology this is really helpful when we want to describe both the current
state of things and an imagined future state where the difference between them is driven
by a difference in world view so it gives us the framework to describe a business model whose
goals whose the objectives the values of the people doing the describing you know anywhere
on a spectrum of we agree with milton freeman milton freeman was 100 correct to
we have a goal to create the possibility of de flourishing so we can do that in one ontology
lastly methodological approach we've already talked about this a little bit so design science
plus systems thinking systems thinking for those of you not familiar with it's the study of parts
which is what we know of is called analysis plus the study of holes this is synthesis this is what
herbert simon in the science of the artificial first talked about in 1969
um so i won't go through this in any detail um so this is what gets us to my graduate work
so the objective is build a really useful tool to help us effectively describe existing and novel
business models anywhere on the continuum from profit first is strongly sustainable the title
was an ontology in canvas for strongly sustainable business models a systemic design times exploration
it's downloadable here uh and um you can enjoy the thousand pages um i won't talk about this
at the moment so basic approach build based on the knowledge the truths from natural and
formal science and then evaluate um
i did a traditional lit review that led me to two things a set of uh overall ontology design
principles for strongly sustainable business model ontology and a taxonomy of the relevant
literature the taxonomy that i developed then led me to do the systemic literature review the
taxonomy was that chart with the dictionary in the middle and the arrows pointing to it that was
basically my structure the the macro meso micro structure and the summary of this led to six
detailed ontological design principles for a strongly sustainable business model uh and then
i use the design principles uh when responding to a question that i set for myself in the build
processes which is how do i take osterwald as ontology and make the smallest number of changes
in order to create a business model a strongly sustainable business model ontology so i started
with osterwald as work as the base and then through criticism and through extension uh added
and changed what was necessary so evaluation um the first thing i did was tested it against the
b lab impact assessment tool i worked with the folks at b lab to do this and the basically what
i did is i took the two the questions that determine how many points you score out of 200
and i said for both the business model ontology and the strongly sustainable business model ontology
can i answer this question by responding to the questions on the business model ontology yes or no
or and the strongly sustainable business model ontology scored it out of five five was it was
super easy to answer to represent an answer to this b lab question using the ontology zero meant
it was impossible osterwald scored one and a half as the median score mine was four and a half
the uh but you can be skeptical about this because it was work i did um and um the um
different why i didn't score five was because there's a bunch of questions in the b lab
assessment that are due with operational issues which it's the wrong level of detail for a business
model so that represented the gap next thing is i did a bunch of interviews with seven business
model experts uh and the last thing i did is case studies so for the experts i actually gave them a
version of this presentation i showed them the ontology i gave them an example and then asked
them some questions to get their feedback on whether they thought it was useful uh with the
case studies um i asked a cfo and a ceo in fact the example we'll do this afternoon uh is i asked
them to tell me about their business i described the business using the ontology and the canvas
and then i had them react to the description of their business using the ontology to see if they
found it useful for them i didn't give them any technical explanation whatsoever and they found
it useful it was pretty powerful so that was the overall approach uh i won't go through that
okay literature um so the two ontological design principles that we came up with is if you're going
to be strongly sustainable you have to be able to apply the latest natural and social science
knowledge what we don't want managers doing is inventing the knowledge that they think is
important when they're designing a strongly sustainable business so we have to include the
science in the ontology if we don't we're not helping managers design strongly sustainable
business models but we're assuming that we're not going to have a revolution and that the basics of
uh capitalist economy are still going to be around we may modify them significantly and
of course as a society we can choose to do that but this idea that profit is still going to be in
there is not going to go away and um but it's the same idea that's normative in existing tools that
makes them so hard to use if you want to try and create a strongly sustainable business
so um this means that sustainable firms must remain sufficiently monetarily profitable
it's one thing that they must do it's not the only thing of course now but it's one thing
so osterwelder's ontology is a great place to start it's a good place to start um and uh but
it must be able to strongly sustainable ontology must be able to describe uh something else so
that's the first principle the second is this multiple worldviews point of view ontologies are
not prescriptive when you walk up to the canvas it's not you it's not me that's telling you what
to think it's you that decides what to think based on your own values so i'm not prescribing
anything there's nothing here that guarantees you are going to create a strongly sustainable
business guess what there's nothing that guarantees you're going to have a profitable business when
you use osterwelder's work that's up to you as the user of the canvas to decide to make the right
choices to answer the questions well based on your goals so this is a fantastic learning tool
people will ask on even on alex osterwelder's canvas well why do you talk about partners
or why do you talk about relationships well that why question is an opportunity for the user to
learn about what's necessary this is the same thing we can include knowledge that people are
not familiar with so they have an opportunity to learn about things that they didn't know were
important so it's not prescriptive it allows values to be uh included i won't go into the
detailed design principles but these are the six actually let me just i will just zoom over to this
go how do i do that yes here we go this is the taxonomy that i talked about so you can see here
are the different disciplines listed down here these are the world views and then the design
principles came out of the different world views so the one world view is the profit first the
other is strongly sustainable and we have the design principles that came out of that so if
you want to go into more detail it's there so the overall process as i said was what's missing what
needs to be changed in osterwelder's bmo and we're doing that by using the the knowledge from the
science to do that and again that on this slide down here there's a these are maybe the key
citations for the from the literature that i used so the first thing that came out of all of that
was we need some new definitions so alex's definition of a profit first business model
is a business model describes the rationale of how an organization creates delivers and captures
value and the little asterisk here is to point out that when he uses the word value he means
measured in monetary units he's not talking about any other sort of value because his focus is on
making money so it's on ultimately on that this is clearly not good if you're trying to describe
flourishing flourishing is not about how much money you have maybe that's one aspect of it but
it's not the only thing so we need to think about value differently so this is based on
some work by a chilean economist named manfred max nyff and his work on universal human value
human needs this is a much more up-to-date model than maslow's work on hierarchy of needs
and so we've redefined value here as the perception by a human or non-human actor
of a need being met measured in aesthetic physiological
sorry psychological physiological utilitarian or monetary terms and or monetary terms
nosis non-human in is in here partly because of the definition of flourishing and sustainability
we're using partly this is also based on act and network theory by the french
philosopher of science bruno latour and so if you want to get more insight into this word actor
um that's a good place to go uh interestingly in the business model ontology osterwalder had an
actor question it's not in the canvas it got dropped it was very underdeveloped and this is
an area which has been really developed in the strongly sustainable business model ontology
because we have to be able to think about the non-human how do we help the non-human flourish
value is so this is what is value how do you do it what's the process value is created when needs
are met via satisfiers that align with the recipient's world view so to decode this needs
are um uh in manfred max nieff's terms universal and very few in number it doesn't matter culture
time in history anything there's a there's about there's 10 of them in total
satisfiers are the things that change based on your values changes over time based on technology
based on values uh changes by place in culture um so for example if you're of a certain have a
certain religious background and i offer you pork to eat for example and you're hungry i didn't
satisfy your need to eat pork is a perfectly good satisfier if you uh have a value set of
values that allows you to eat pork but if you don't then offering you pork to eat is no help
whatsoever if you're hungry so this is how you can have multiple satisfiers that may or may not
meet different needs based on your world view again critical idea when it comes to designing
flourishing value propositions and you can destroy value destroy value when a previously
met need goes unmet due to the withdrawal of a satisfier or the application of inappropriate
satisfies like pork if you don't eat pork um the application or the application satisfies that do
not align with the recipient's world view actually that's more the pork example we'll get into lots
more value destruction examples this afternoon we need to redefine what an organization is
so an organization that's strongly sustainable is one in which all of its behaviors and all the
behaviors of all the other other social economic and biophysical actors lead to the possibility
that human and other life will flourish on this planet forever this definition means that an
organization defined by a legal entity cannot self-declare that it is strongly sustainable
because it's part of the larger system strongly sustainable flourishing is a
emergent property of the system not of the organization the fact that an individual
organization can't self-declare this is not a mistake this is based on the science and anybody
who says that you can self-declare sustainability is scientifically incorrect in my opinion
so what does that mean what's a strongly sustainable business model a strongly
sustainable business model is the logic for an organization's existence
who does it do it for to and with what does it do now and in the future how where and with what
does it do it notice where for all of those people who believe that everything is going to become
virtual you still have to put the data center somewhere you still have to physically be somewhere
to access the data over the cloud where is always going to be we still have to live somewhere
we certainly have to grow our food somewhere so where is not going to go away despite what some
people might like to think and what matters so the material you use does matter and then how does
it define a measure of success so this is where the values come in and lastly there's this idea
of tri-profitability now so obviously this idea of monetary profitability is interesting but now
we need to focus on well beyond monetary profitability so we have this thing called tri-profitability
and it's the conceptual sum of the net harm sorry all benefits arising as a result of a firm's
activities in each of the domains so a tri-profitable firm is financially rewarding
socially beneficial environmentally regenerative so it's all the positives and it's tri-profitable
if it's tri-profitable it's creating tri-impact for its stakeholders
okay so let's talk about the ontology so there's two ways of doing this i'm going to ask for your
opinion which way you'd like me to go here because we don't have time to do both i can describe it
from the bottom up so without any reference to the business model ontology or i can do it in
comparison to the business model ontology which would you like florine do you have an opinion
for this audience
yes we we do but in comparison to the business model ontology rather than
the logic the internal logic of it
the comparison okay can i not head nodding yeah okay all right so
let me just go down here just for a second i just i realized that what would be helpful here
is if we did this first of all so let's just remind ourselves
this is the full diagram of the business model ontology interestingly this does not appear in
osterwald's phd you have to assemble this from what is in his phd to get this diagram
and just to give you a sense this is what it looks like when you that's not what it looks like
this is where my presid skills are not quite up to snuff
so there we go when you add all the detail from his phd onto a single diagram again this is not
included in his phd you end up with an entity relationship model this is a formalism an
information systems formalism for describing database structures so any database that you
want to create in oracle or sql server you have to have an entity relationship model to describe
all the entities and their interrelationships and this is the diagrammatic formalism you use for it
so you can imagine each of the boxes is a table in your database if you're not used to databases
think about spreadsheets so you think of each of box as a spreadsheet with rows and columns
the title of the spreadsheet is the name on the box this is a noun so this is for example
value proposition so there's imagine you've got a sheet in the spreadsheet in a table a spreadsheet
that has value proposition as the title you have rows which are each of your individual value
propositions and then the columns are different things about the value proposition its name a
description and other attributes so each of these is a box is a spreadsheet or a table and then the
lines between them are verbs their relationships so for example
let's pick one here that i can do quickly value propositions have offerings
value propositions are delivered via channels okay so this is how the boxes relate and you can see
if you know the business model canvas very quickly why the canvas is physically structured
the way it is the relationships between the large areas on the canvas represent the verbs on these
lines he's never explained this to anybody it's not in the book but it's almost implicit in the
in the visual structure it's a beautiful thing so just to give you a sense of where we're heading
here so that's uh those diagrams let me just so that's this one so this is the strongly sustainable
business model ontology you can see boxes and lines you can see many of the same words value
proposition channel um uh what else we got done here uh partnership so these are very similar but
there's some new things here and i'm going to describe what the new things are and how things
have changed but there's also these other boxes in the background which are completely not there in
the uh profit first ontology uh you see that the four colored boxes are the same it's the same
basic idea from the balanced scorecard um they've been changed a little bit again
ostavalda changed them a little bit i've changed them a little bit um and then to give you a sense
so this is the detail of the business model ontology and then this is the detail of the
strongly sustainable ontology so again each one of these boxes is a table or a spreadsheet and these
are the attributes in the bubbles list the columns in each of the spreadsheets um all of these four
diagrams you can download with my thesis they're in the supplementary material uh so this one prints
out it's about uh this big by this big when you print it and make it readable and actually in the
prezzie you can actually zoom actually i should demonstrate that because that may be useful if
people want to go into this without having to print out this is actually readable so you can zoom in
without having to and the if you want a pdf of it that's in my uh in my thesis
oops now you can go back to
yeah sorry prezzie skills
uh
ah no
why is that not working
yes okay so um what's missing and what needs to be changed to get from business
model ontology to strongly sustainable um it wasn't actually tons um there was um
the the first thing that needed to be added was the context so uh osterwalders were based on
neoclassical economics context free uh no boundary of the firm no boundary of society no
boundary of the economy no boundary of the environment so we had to add the contexts
there was none in osterwalders ontology zero and i added three uh there was no boundary of the firm
so where's the edge of the firm on the business model canvas it's not there so how can we think
about a system that's going to be strongly sustainable if we don't know where the edge of
the firm is so we have to add the boundary and then we added six extra boxes six extra constructs
there were 20 in osterwalders ontology so i added six uh we then have um
some changes we needed to make um the four perspectives those are the four elements of
the balanced scorecard i changed those slightly um and then there are of the 20 constructs that
osterwalder defined i've changed four of them in a big way and the others then have to be subtly
changed in order to fit with the verbs that then connect them between them nothing was deleted so
back to this goal of being able to describe a business model anywhere on the continuum of
profit first to strongly sustainable anything you can describe with osterwalders ontology and his
canvas can be described using the strongly sustainable ontology and flourishing canvas
okay so let's now talk about the ads so the ads are first the context we've discussed it comes
direct from the science there's even management literature now that's out there that acknowledges
that these really are the contexts and there's some good papers which Florian can point you to
on this front this is no surprise to anybody i'm not going to dwell on it um we do have to nest
them though because this is again the reality the old model of sustainability is three interlocking
circles the venn diagram this is not got anything to do with physics chemistry and biology and
therefore is not useful for this work uh so this is nested this means so this the blue is the
economy pink is the society green is the environment when you put something a box on here it doesn't
mean it's in the economy and not in society and not in the environment it means and so a box here
means this concept so value proposition for example is in this area value propositions can
have an economic aspect you could measure value financially but you could also measure value
socially or you could measure value environmentally so where the box goes matters there are some
things that are don't have an economic dimension sorry neoclassical economists not everything is
measured in terms of money and that's normal if you're going to create flourishing you have to
think about things that have no monetary aspects you also have to think about things that have no
social aspect the non-human so there are some boxes that will appear only in the green area
and will not appear in the others and those means when it's placed in pink it means there is no
monetary when it's placed in green it means there is no social or monetary
so that's the context the boundary so we have to define the boundary of the firm so there's a
line that defines the boundary of the firm this is just an entity like any of the others it encloses
all of the others this is what allows the business the strongly sustainable business
model ontology to represent the network of businesses because we this is a spreadsheet
so i can have lots of rows in this spreadsheet so i can represent not only the focal firm the one
that is doing this work to define their business model but i can represent all of the other
organizations so all the people upstream and all the people downstream
um six constructs have been added um ostermelder had actor i mentioned he did not have anything
about fundamental human needs because he doesn't care about fundamental human needs he's quite
happy to deal with once because if i can sell it and make people buy it from me for money
that's all that matters here we have to be concerned about fundamental human needs
like sustenance like flourishing like uh love etc so we have to be cognizant of that hence the
importance of max nief's work and maslow's work um ostermelder had nothing in terms of measuring
process so the only measures that are on the business model canvas are revenue and cost
well there are other things in a business model that are important and so this is from the profit
first business model literature now this is not from sustainability this is actually a critique
critique of ostermelder's business model ontology from a neoclassical perspective
there are other things that people like peter drucker for example would say are really important
like quality timeliness these are not things you can turn into monetary measures and businesses
don't you know how long do you wait on the phone when you make a phone call to a company
so these are measures of process uh so the profit first literature says that this is something that
the business model ontology missed the other thing that uh there's some debate about this
is that's missing from the business model ontology is there's nothing about assets
it's a profit and loss view of a company there is no balance sheet so it's about flows not stocks
and there are many scholars who believe that that's not appropriate so we've added asset
to the business model to the business model ontology um i don't know alex's response to
this omission i do know this one this one he says we just looked at it from a profit and loss
perspective and if you want to think about assets it's a resource end of story that's his response
to that oops sorry and then we have three new ones the first is if we're talking about values
that means that my values in the company may be different to your values as a customer
or as a supplier or as a community around me
do i get to impose my values on you i'm going to build this factory in your town whether you like
it or not that's comes down to power does the community have the power to stop me
in canada right now we've got these big debates over pipelines for oil
does the community to the first nations have the right to stop the pipeline
this comes down to questions of decision making and governance and so the literature is very clear
that we have to start thinking about power within the context of the business model who has the power
what power what rights what decision rights what governance rights to people have the other two is
ostervalders business model ontology has resources and activities but the only valid resources and
activities are ones you can buy all i have to be concerned with is can i afford those resources can
i afford to perform those activities such that my revenues are greater than my financial costs
if you're talking about sociological aspects and environmental aspects
now you have to also think about where did those things come from
and where do they go to after you've done with them this is biophysical stocks this is the stock
of everything on the planet every atom on the planet including all the atoms in you and i
are all biophysical stocks all the water all the air all the things in the lithosphere in the
ground that we dig out of the ground this is all biophysical stocks
and if you think about the world from this perspective when we take something into human
society and into a human organization we are borrowing it we are just getting access to it
it doesn't take it out of the world somehow magically it's still in the world so biophysical
stocks are a continuous idea so when we take oxygen from the atmosphere to burn in our internal
combustion engines as we drive our vehicles we turn the oxygen plus the fossil fuel into carbon
dioxide and some other chemicals and put them back into the atmosphere for example ecosystem
services uh just just do a quick poll here how many people know this term
okay not too many this is this is again one of these elements which we're adding to the language
of business models through the ontology so an ecosystem service is a service powered by the sun
ultimately that is beneficial to humans so it's an anthropomorphic concept so climate regulation
water cycling photosynthesis secondary production which is animals growing based on them eating
plants that have grown through photosynthesis but also cultural services like beauty a landscape
can provide the the ecosystem service of appreciation and of awareness and aliveness
and thriving those are all benefits that we can get from the environment there are about
uh 30 of them in total depending on how you count them there's the best report on this is by the
world business council for sustainable development they've done two reports on ecosystem services
from a business perspective and this is the the critical work in this area okay so those were the
uh 20 sorry the um six ads now let's talk about the uh four perspectives
so osterwalder is not really clear about why he took the four business model the four
balanced scorecard as perspectives and change them he doesn't really talk about it in a lot
of detail so i decided i'd go back to the original work so uh osterwalder called it the customer
interface uh the original balanced core card called it the customer perspective obviously
uh we're not just interested in customer stakeholders now we're talking about the
flourishing of all stakeholders so customer needs to become stakeholder both internal and external
uh osterwalder called it product the business the profit sorry balanced scorecard called it
learning and growth this is the fourth perspective in the balanced scorecard uh what we call it in the
strongly sustainable business model ontology is product learning and development
so notice it's not just product and service now it's also a process that's going on here
osterwalder called it infrastructure uh the balance scorecard it scorecard called it processes
we call it process too i don't know why it should be called infrastructure it doesn't make any sense
the balance scorecard at the top was sorry osterwalder called it um financial aspects
the balance scorecard called it financial we call it measurement
so this is just how you keep score and this could be in any units that you find useful
doesn't have to be in dollars could be in uh units of happiness for example or units of illness if
you're making people sick it could be in environmental terms it could be kilograms
of carbon dioxide now you can choose to only measure things in money if you like to do that
and we know certain companies are constructing balance sheets and p and l's
monetize for the off the tip things that are not typically money uh nike is i think it's not is
it nike or puma i always forget which one's doing the puma there you go it's doing that work so
those are the uh four perspectives we changed four constructs so i already mentioned this one
target customer in the business model ontology becomes target stakeholder uh osterwalder used
the word function around relationships i think this is one of those times when the uh the the
language osterwalder's english is amazing uh but his use of the word function wasn't quite right
so it uh sorry he called it a mechanism and it's really a function so we changed that um
he had valuation method this is what where he deals with pricing in the strong in the
business model ontology he he called it revenue stream and pricing sorry i should say here we
call it in the strongly sustainable business model ontology value valuation method so it's how do we
value things monetarily socially or environmentally and then osterwalder does include profit in the
business model ontology this gets changed to try profit now in the strongly sustainable ontology
so in summary what that gets us is as we said we go from here to here so now you can see that
here's the stakeholder perspective we have actors and their needs actors you'll notice are partly
only environmental so you can have an actor who is a rock or a bird or an animal of any kind could be
an actor um you can have actors who are purely social so a community for example could be a very
powerful actor in a business model they have may have may have in your context no financial interest
whatsoever or you could have actors who have a combination of all three you'll notice that
to connect an actor to become a stakeholder has to be a human we can't have non-human stakeholders
of a business directly in my opinion and based on some of the literature so what we have to have
here is humans to represent the non-human this is what non-governmental organizations lobby groups
um people like Greenpeace these would be lobbyists on behalf of the non-human but it
doesn't mean you can't think about the non-human directly in your business model these are the
needs of the actors again these needs may be economic and hence social and uh hence social
and environmental they could be just a social need like love and caring or they could be
just an environmental need like sustenance target stakeholders are here this is all pretty much the
same now as the business model ontology except we have it now in all three dimensions implicitly
because it's all three contexts are here uh relationships functions channels and links that's
all business model ontology stuff value propositions and offerings all business model ontology stuff
what changes here however is that um value propositions become either positive or negative
so um and many value propositions that companies have are both um the example that we typically
use is the fizzy drink so the fizzy drink uh if you're thirsty a fizzy drink if you have the need
of satisfying your thirst drinking a can of fizzy drink isn't a bad thing to do
so that's a positive value proposition that a fizzy drink manufacturer could offer a tasty
fizzy drink that satisfies your thirst the problem is if you drink too many of them
you're going to get pretty sick you're going to get overweight you're going to get diabetes
this is clearly a negative value proposition that most fizzy drink manufacturers do not currently
recognize that they are having their in denial about it in fact and so much so that their business
models are under attack by of all people doctors if i was a fizzy drink manufacturer do i really
want doctors attacking me do i really want public health officials as they have now done in new york
legislating against the size of fizzy drink that i can offer this is a terrible thing for my business
and yet the business model canvas doesn't or in business model ontology offers no room to think
about this negative value destroying aspects we'll talk more about this how we represent this in the
canvas this afternoon over here most of this is very similar to is all the same as the business
model ontology value configurations decisions is the new box here so who can decide what i do
what value propositions i offer and the who can decide comes from target stakeholders so which
target stakeholders can decide what i do how i do it where i do it how i measure success
over here we've got the biophysical stocks and the ecosystem services so all resources must come
from and go back to a biophysical stock all activities are going to be dependent at some level
on an ecosystem service and then down here we've got process measures of added revenue cost and
asset you'll see that they're on all three perspectives all three contexts sorry so they
can be measured in any term you like and this is this is again account this was from the business
model ontology this is a just an accounting idea of having an account valuation method so you can
value things economically socially or environmentally things and try to try profit so that's the basic
difference between the two and then as i said if you want to go into the detail then all the
detail is here so i actually should point out if you use the ipad app or if you use the strategizer
app this is the database that's sitting underneath and you can actually see many of the attributes
that are in these boxes from his phd actually appear in the apps it's it's that connected to
the original work in fact and our plan certainly is that we're going to try and do something similar
to instantiate this database in a tool at some point
and that is probably where i should stop i think what time is it
and take from take some questions yeah so i've now
let me just say a couple of words about this for those of you who are not here this afternoon
so what we've done here is a common language for describing and designing flourishing organizations
we build an understanding of the interconnections of the organization with the world
it enables broader deeper and richer conversations about all aspects of value co-creation and
destruction and it provides this context to enable collaboration because we now have a common
language before austin alder came along everybody had a different idea about what a business model
is now everybody has the same idea we're going to do the same thing which is why it's not going to
be a niche there is a symbiotic relationship between this work and the future fit business
benchmark that i wanted to mention so the business model canvas allows you to describe your business
model but it leads to a question when you implement that business model in reality because it's just
a model you actually have to instantiate it how do you know whether we've created the possibility
for flourishing how and how can we learn whether or not we've actually met that goal
so this learning can be done using the future fit business benchmark this is the measures that will
tell you whether or not a real organization in existence is actually creating the possibility
for flourishing if you start with measuring your current organization when you measure and you find
that you're not future fit when you're not creating the possibility for flourishing how can we
collaborate to redesign our business model so that we can be better and of course this is how we
improve by using the canvas so this is the relationship so this work is available at
futurefitbusiness.org and it's the public consultation is now in process around this so
please take a look a destination for the project the canvas ultimately is going to be made under
a creative commons license exactly the same way that osterwalder has done the current version
needs to be licensed before use it's free to license it we are doing this i'll explain why
in a moment there's going to be a book to introduce the canvas to respond to this question how do i
answer these questions well we think that the methods for designing flourishing businesses
are going to be significantly different from designing profitable ones and patterns and case
studies we've got the team of 12 assembled three of whom are here today next steps we've got a
developed version ready for you so what's on the wall what you're going to use this afternoon is
definitely ready for use we've done enough validation with enough people to say that are
there elements of the toolkit like the design principles the methods that's much earlier stage
and frankly we're looking for money to help us here developing and growing we're also developing
and growing a series of paid workshops like the ones i'm doing today and we're looking for
relationships with people to help us learn so we're looking for people to use the canvas now
you can get a free license to use the canvas and your feedback on using it is what we want so we
need relationships with people and the invitation is to experience it which you've taken me up on
that invitation thank you use the canvas contribute to its further development and undertake
research if you're in the research community using it and send an email to inquiry at flourishing
business.org if you're interested in getting involved and research agenda there's lots of
stuff going on in the strongly sustainable business model group around this if you want to
get more involved and we're also offering commercial services so those of you who are
consultants in the room happy to talk to you about what we're doing in this space as well
and i'll leave that as the last slide