Steinbeis Entrepreneurs Kerstin Schenk and Professor Dr. Esin Bozyazi talk about the challenges of sustainable business models
There is a tendency at the moment to associate the concept of sustainability with nothing more than simply acting in an environmentally friendly manner. But actually, the concept of sustainable action goes a lot further. Its focus lies in the responsible use of finite resources, whatever their nature or origin. As Kerstin Schenk and Professor Dr. Esin Bozyazi tell their clients at Business Models of the Future, their Steinbeis Consulting Center, sustainability must also become part and parcel of business models and corporate strategies. The duo talked to TRANSFER Magazine about the requirements that have to be met with sustainable concepts.
Hello Ms. Schenk. Hello Professor Bozyazi. The focus of your work lies in sustainability as a model for the future. Why did you decide to take this approach?
If you consider our backgrounds, it was a fairly obvious next step. In addition to founding our Steinbeis Consulting Center, in 2015 I co-founded the Institute for Social Sustainability. From an ecological point of view, there’s no questioning the rationale of sustainability. Now we’ve added social sustainability. I’ve returned to an area where I can add value for society and nature. Ultimately, that’s what business models are all about.
It’s the same with me – part of my personal history that has evolved into a passion in life. I’ve always been involved in projects to do with sustainability, or developed sustainable work cultures.
This topic has been with me for more than 15 years now. I think Esin and I are both the kind of people who think about things from the perspective of the future. When you do that, you can’t help but embrace sustainability as a topic. We’re not trying to pick low-hanging fruits or get quick-wins, we’re striving for things that give us long-term solutions and change society – whether that’s at the workplace or in our personal lives.
Of course not all companies think about things from the perspective of the future. Some simply ask themselves what they can do now in actual terms. But the UN’s Sustainable Development Goals have been pointing out the way ahead for a long time now, and a lot has already changed in society. To a certain extent, we’ve reached social consensus. For example, we’re now finally tackling the climate problems we brought upon ourselves.
Why do you say companies should focus strictly on sustainable business models?
Viewed through marketing glasses, naturally there’s always a danger that sustainability will just get used for branding purposes. But I still believe society and customers are now well-informed enough for people not to fall for it. It’s also not the approach we’re taking. If you look at the changes in values in our society, the kinds of issues that are becoming increasingly important are topics like health and environmental protection. This is an area – and thus a USP – that’s bound to become more relevant in the future.
It’s a phenomenon of our age, one that’s become much easier to do your homework on. Things that used to be practically veiled in mystery – like production processes or how companies actually do business – are becoming more and more transparent and accessible to or understood by the general public. I strongly believe that future customers will increasingly want to know if companies are operating sustainably before they buy products.
Companies invest a lot of time and effort in the sustainability side of their business models, not only when it comes to human-centered thinking but also with regard to what their customers want. New technology, speed, but also the short cycles of business offer us new ways to design business models.
Customer wishes change, and technological development changes. So you have to keep an eye on how you keep your business model moving forward – for example, the payment options you offer: What impact will bitcoin, blockchain, or paying with an iPhone have on people? Developing business models takes all kinds of factors into account, from production to payments, and it makes adjustments in order to respond to innovations.
Should we come at it from another angle for a moment and ask ourselves what a business model is in the first place?
A business model is a cognitive model that attempts to capture as comprehensively as possible the activities and fields a company has to deal with these days, and which issues have to be managed. It’s essential to think sustainably in all areas, because we live in a highly agile world and short-term quick-wins are changing – faster and faster. If you also want to be future-ready and secure competitiveness in this area, it’s important to adopt an approach based on sustainability.
What are the most important milestones when developing sustainable business models, but also the biggest obstacles?
When I hear milestones, I always think about roadmaps, and there’s already a roadmap for sustainability in the form of the UN’s SDGs, which we should use as orientation. You don’t have to reinvent the wheel. You can break these overarching goals down into each individual area of your business model.
Absolutely. The obstacles we encounter are managing the supply chain and buying in the right resources from the right suppliers – intentionally or unintentionally. We see our role in this as building awareness. If you sell electric cars as something sustainable, but the batteries are produced in South America under the worst possible conditions and resources are ruthlessly depleted on a grand scale, that’s not exactly socially sustainable. As a producer, this presents you with a problem: Where can you obtain the resources you need and do this truly sustainably – and can you find suitable ways to process them?
Sometimes the technology you require to do this is available; at other times it may be available, but it’s too expensive to meet customer requirements. This is another aspect where we want to create a so-called circular economy – without compromise: If something is brought into the cycle of business, it must be as socially, sustainably, and ecologically acceptable as possible. Presently, developing 100 percent sustainable business models and processes is still a major challenge.
This may sound contentious, but I think companies don’t think things through properly when it comes to the circular economy. The thinking stops when they get to the end of the business process. But if you’re a business leader, you have to think beyond the value chain, not just in terms of your core competences. This is a way of thinking and a mindset you don’t find everywhere. It’s something we need to get into companies, into people’s heads, especially in the corridors of management.
And this is exactly where we come in and try to instill this culture within companies. To do this, we come along with a number of new ideas and consulting methods, which allow us to plan things in collaboration with the company.
What do you think of the current situation? Are we making good progress in making companies more sustainable?
There are some good examples of this, and more and more are emerging in the startup scene. We use the search engine called Ecosia; it creates green electricity. But you have to look below the surface to work out how sustainable it really is. I think we’ve made progress in some sectors of industry, but there’s still a lot to do in others. We’re still getting out of the starting blocks, but at least the overall process is underway.
Too many things still feel like marketing. And of course sustainable thinking shouldn’t just be lived out and believed in at companies, it should also be part of our private lives. Some of the methods and conditions are in place and they look promising. All that’s missing now is the right mindset and coherent action! But we’re happy to offer help with this – to medium-sized and large companies.
Our central concern is not just thinking about this topic in the right way, but actually doing something. We call ourselves co-creators and we tackle things in the same spirit!
The UN Sustainable Development Goals (SDGs)
In 2015, the United Nations defined 17 fundamental goals for sustainable social, economic, and ecological development as part of the 2030 Agenda:
- No poverty
- Zero hunger
- Good health and well-being
- Quality education
- Gender equality
- Clean water and sanitation
- Affordable and clean energy
- Decent work and economic growth
- Industry, innovation, and infrastructure
- Reduced inequalities
- Sustainable cities and communities
- Responsible consumption and production
- Climate action
- Life below water
- Life on land
- Peace, justice and strong institutions
- Partnerships for the goals
Prof. Dr. Esin Bozyazi (author)
Steinbeis Consulting Center Business models of the future (Stuttgart)
Kerstin Schenk (author)
Steinbeis Consulting Center Business models of the future (Stuttgart)