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Business strategy and management disciplines are increasingly incorporating sustainable development into their long-established assumptions and frameworks. They are rethinking the theoretical foundations in the practice of business strategy.
Theoretical and practical approaches to sustainability of being proposed with some common properties improving Sustainability often implies change, innovation, or adjustment of an entity in relation to its surroundings or supporting environment.

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The ability to innovate in the domain of sustainability represents a necessary business capability. Whether related to small incremental steps or radical disruptive innovations. Business model innovation is emerging as a potential mechanism to integrate sustainability into business.

The lack of case studies makes it challenging for firms to understand how to innovate their business models, identify and design alternatives, then assess and select the most adequate ones. When considering business model innovations sustainability, this leads to higher complexity related to how preliminary assesses the impact of sustainability innovations and how to understand their effects on the whole Business Network.

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Understanding business model innovation for sustainability

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Understanding business model innovation for sustainability

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Commonly accepted explanations consider that business models refer to the logic of how a firm does business and explain how the firm creates, delivers, and captures value.

However, there is no general agreement on the concept of business models with one author highlighting the difference between American and European scholars approaches to business model research. The former, focusing on classification and the relation with open innovation while the latter concentrates on casual modelling and design approaches.

Another author suggests that the business model concept goes far beyond the simple storytelling of a firm and how it does business, and has the potential to provide a holistic perspective of the firm's activities. This is supported. The report suggests that the design of business models enables reconfiguration of business capabilities to adapt the firm to the changing business environment.

Business models are seen as a vehicle for innovation. A necessary means for commercial rising, technological innovations as well as a subject of innovation.

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Sustainability innovations refer to the novelty of not only in technology but also in process operating procedures and practises, business models and systems thinking.

Researchers from different disciplines, economics, sociology, innovation, history, technology studies have attempted to explain business model innovation for sustainability from a various perspectives.

Sustainability innovations require more integrated thinking and the reconfiguration of several business aspects such as capabilities, stakeholder relationships, knowledge management, leadership and culture.

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Sustainability innovations are those envisioned to make real and substantial improvements by developing superior production process products and services by exercising strong market influence and social or political influence.

The concept of a business model is widely underpinned by the concept of value within the literature. It has been specifically related to the realisation of economic value to the delivery of customer value to the interlocking elements that create and deliver value.

This is demonstrated in the image below:

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Triple bottom line. The Co-creation of profits. Social and environmental benefits and the balance among them are challenging for moving towards SBMs.

Mindset. The business rules guidelines, behavioural norms, and performance metrics prevail in the mindset of firms and inhibit the introduction of new business models.

Resources. Reluctance to allocate resources to the business model innovation and reconfigure resources and processes for new business models.

Technology innovation. Integrating technology innovation eg clean technology with a business model in innovation is multidimensional and complex.

Business modelling methods and tools. Existing business models. Methods and tools. Are few and rarely sustainability-driven

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Environmental or eco entrepreneurship seeks to solve environmental problems whilst creating economic value. Sustainable value then represents not only environmental sustainability but also social and economic value. Sustainability drivers such as footprint reduction, poverty, fair distribution, waste reduction and diversity, and their associated business strategies understood as clean technology sustainability, pollution prevention, and product stewardship can take forward the creation of sustainable value for the business.

The scope of value should include not only economic transitions but also relationships, exchanges and interactions that take place among stakeholders, and that can be represented by value flows. Identifying all the value flows among stakeholders, including the natural environment and societies, primary stakeholders can reveal opportunities for the business model innovation.

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Integrating sustainability into business models requires a systemic view that considers a global perspective in different elements of the system and their interrelations.

The term network refers generally to a group of three or more organisations, either self-initiated or contracted, connected in ways that facilitate the achievement of not only their own goals but also a common goal.

The overall focus of the network has been a source of differentiation between disciplines. Given the general concept, several names depending on the motivation of the network. For example, innovation, network supply networks and Manufacturing networks.

Network governance is needed for goal-orientated networks if they are to be effective. Stable networks reinforce relational ties among members and ensure equitable distribution of value.  A new governance model is needed to realise a system in which sustainability issues are integrated in a way that ensures value creation for the firm and beneficial results for all stakeholders in the long term.

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Balancing the ecological, social, and economic sustainability aspects of a system requires an approach that builds on the assumption that each of the three subsystems must be viable and healthy if the planet system is to flourish.

Faber (2010) conceptualised sustainability and affirms equilibrium between a business and its supporting environment. Where they interact with each other without mutual detrimental effects, sustainability explicitly refers to this equilibrium.

In order to realise an integrated and balanced system, deliberate interaction partnering network unlearning from multiple and diverse stakeholders is crucial. It is no longer a choice for firms whether to engage with stakeholders or not, the challenge is rather how to engage successfully.

Greater stakeholder engagement, alongside greater trust and innovation is important to the long term success of SBM's.

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Business model innovation can be largely undertaken. For a firm and its stakeholders, the effects cascading throughout the value network given the uncertainty regarding processes and outcomes of business model innovation, it is widely understood that firms are hesitant to pilot business model innovations in the real world.

These models, however, require significant resources. For example, financial capital and carry substantial risk.

A business model will ultimately be the mediator between various actors in the real-world value network. The simulation environment for business model innovation must reflect human behaviour and decision making.

Increasingly, researchers and practitioners are adopting and validating the use of behavioural models such as system dynamics. And Agent-based models to simulate business model innovation and other business-related activities.

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In response to pressures in the areas of corporate social responsibility and social and environmental accounting, more and more firms are publishing triple bottom line and sustainable development reports.

At the time this paper was written, almost 80,000 sustainability reports were listed on corporateregister.com at the same time Triple bottom line perspective is exponentially increasing along with the scope of measurement options with emerging competing frameworks that are complex with no indication of reaching an agreement on a common reporting standard.

These multiple financial, social and environmental measures are often presented under the umbrella of environmental, social, and governance ESG metrics. The Study of sustainable business models is evolving rapidly, but little effort has been spent exploring their successful adoption.

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The five perspectives for innovation towards SBM's

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The five perspectives for innovation towards SBM's

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1.       Sustainable value incorporates economic, social, and environmental benefits conceptualised as value forms.

2.       SBM's require a system of sustainable value flows among multiple stakeholders, including the natural environment and society as primary stakeholders.

3.       SBM's require a value network with a new purpose, design and governance.

4.       SBM's require systemic consideration of stakeholder interests and responsibilities for mutual value creation.

5.       Internalising externalities through PSS enables innovation towards SBM's

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Throughout this paper it has been highlighted that there is increasing importance on stakeholders. Through stakeholder engagement and co-creation.

Value networks can offer the platform in which stakeholders can create effective solutions, manage risk and discuss options when developing or creations SBM models.