Innovative Business Models for Resource Efficiency SMEs in Developing and Transition Economies RECP-Net Conference October 2011, Nairobi

Transcription

1 Innovative Business Models for Resource Efficiency SMEs in Developing and Transition Economies RECP-Net Conference October 2011, Nairobi Dick van Beers, Michael Kuhndt, Francesca Grossi, Fisseha Tessema

2 Presentation Today UNEP project on RE and business models Traditional business models Innovative RE driven business models Overview Practical examples Conclusions and next steps

3 UNEP Project Development of the Business Case for Resource Efficiency - An Integrated Approach to Resource Efficiency, Cleaner and Safer Production using LCM as a Tool in SMEs Project objectives Focus of presentation today Identify innovative business models and case studies that have effectively promoted RE Build a business case for increased investment in resource efficiency Develop targeted RECP and LCM guideline for SMEs Focus on SMEs in developing & transition economies Project rationale Significant accumulative impacts of SMEs Green Economy cannot be inspired by policies and regulations only Need to demonstrate the business benefits of RE Innovative business models are emerging field of interest

4 Introduction to Business Models A business model describes the rationale of how an organisation creates, delivers, and captures value Economic, social, environmental, or other forms of value. Cost Structure Customer Segments Value Proposition Business Model Building Blocks Key Partnerships Distribution Channels Key resources Adapted from Business Model Generation 2010

5 Problems of Traditional Business Models Employed by SMEs Short-term management focus Rather than strategic decision making Focus on maximising product outputs Rather than value creation through delivery of (supporting) services Build on open-loop systems Not facilitating reuse and/or recycling of end-of-life products Do not capitalise on the opportunities offered by RE Internal opportunities through cleaner production External opportunities in supply and value chain

6 Innovative RE Driven Business Models Value creation through RE increases when: Production and/or delivery costs are reduced Consumers are willing to pay more for products and services Value creation and delivery through innovation Re-inventing or replacing existing models Developing new customer markets Dimensions of RE-driven business models Economic, environmental, social

7 Examples RE Driven Business Models Draft and Not All-Inclusive Consumption Consumption Oriented Societal Business Model Value Proposition Production Oriented Disruptive Technology Business Model Multi- Functional Product & Service Business Model Product Service System Business Model Real Value Business Model Production Production Process Products and Services Systems Resource Efficiency Focus

8 Real Value Business Model Introduction Description Integration of true environmental costs into company decision making and/or the price charged to consumers Contribution to RE and SMEs Identification, comparison, and communication of RE hot spots Development of RE business opportunities Assist in stakeholder communications and decisions (e.g. supply chain) Environmental Values Social Values Economic & Political Values

9 Real Value Business Model Case Study PRONACA: INCLUSIVE BUSINESS IN AGRIBUSINESS SECTOR (ECUADOR) Local maize production could only supply 40% of company s demand Company recognised the real value of locally produced maize (e.g. lower costs, employment, supply security) Key features of case study Company assisting local farmers to increase maize production Training, access to finance, farming technologies Elements of societal business model Reference:

10 Disruptive Technology Business Model Introduction Description Disruption of an existing consumer market by displacing existing (inefficient) technology Contribution to RE and SMEs De-materialisation through technological advancements Innovative and low-cost technologies Enable SMEs to access new market segments

11 Disruptive Technology Business Model Case Study COSMOS IGNITE INNOVATIONS (INDIA) Solar powered LED technology to provide lighting to low income communities without access to electricity Product eliminates needs for expensive kerosene Key features of cases study Disruptive technology = combination of LED and solar Low cost and durable product opening new customer markets Reference: CII-ITC Centre of Excellence for Sustainable Development and World Wildlife Fund (2006). Indian Companies with Solutions that the World Needs Sustainability as a Driver for Innovation and Profit.

12 Multi-Functional Product & Service Business Model Introduction Description Model facilitates the multi-functional use of products and services in order to better meet consumer demands and create additional business value Contribution to RE and SMEs Products and services with multiple functions and RE features Assist SMEs to achieve larger market segments Collaborative opportunities in the value chain

13 Multi-Functional Product & Service Business Model Case Study ANDHIKHOLA HYDEL RURAL ELECTRIFICATION SCHEME (NEPAL) Provision of innovative energy distribution and tariff structure to enable local farmers to have access to electricity Scheme also provides gravity irrigation to local farmers (280 ha) Key features of case study Large scale application of multi-functional product and service model Elements of societal business model Reference:

14 Product Service System Business Model Introduction Description Integration of technical products and services along their value life cycle Contribution to RE and SMEs Promotion of services and function of a product provides Establish long-term relationships with customers Collaborative opportunities in supply and value chain

15 Product Service System Business Model Case Study CHEMICAL LEASING (EGYPT, MEXICO, RUSSIA,..) In chemical leasing the producer remains responsible for supplied chemical during its life cycle, including use and disposal Aligned incentives for both supplier and buyer to minimise chemical use and impacts UNIDO has launched pilot projects to promote chemical leasing in developing and transition countries (e.g. CPC of Serbia) Key features of case study Long term client-buyer relationships Reference:

16 Societal Business Model Introduction Description Employment of social criteria to determine stakeholder relationships and influence consumer habits, and generate revenue Contribution to RE and SMEs Collaboration with suppliers, clients, community and consumers to make improvements along the value chain Equal emphasis on achieving economic, social, environmental benefits Larger enterprises delivering business opportunities and benefits to SMEs

17 Societal Business Model Case Study MAI VIETNAMESE HANDICRAFTS (VIETNAM) Company employs young and innovative artisans as producers of handicrafts (annual turnover ~ 2 million $) Profit is re-invested in artisans and social community projects Member of Fair Trade organisation Key features of case study Partnering with over 1,000 artisans Promote self-reliance of artisans and their communities Reference:

18 RE Driven Business Models Conclusions RE opportunities exist for SMEs through innovative business models RE to be an integrated element of business models RE defines features and impacts on all business model components No one-size-fits-all approach to develop RE-driven business models Many variables, including customer demands, resources, partnerships Need to understand capacity and flexibility of existing business models Can current model accommodate RE business opportunities or need for entirely new business model? RE and business models = emerging field of application and knowledge Welcome your comments and input

19 RE Driven Business Models Potential Next Steps Up-scaling sustainable business models towards a Green Economy Role of large industries to support SMEs in development of RE driven business models Mentor role in supply chain Develop sharing, learning and supporting opportunities Success stories, success factors, barriers Business case and development Next steps addressed in business model workshop session

20 Acknowledgements UNEP project funding UNEP/DTIE Sustainable Consumption & Production Branch Desta Mebratu, Cristina Battaglino, Garette Clark, Guido Sonneman, Sonia Valdivia, Tomas Ferreira Marques and Ruth Coutto Participants in project surveys and interviews National Cleaner Production Centres Technical support institutions Individual experts

21 Questions and Comments... Thank you for your attention! Dick van Beers UNEP / Wuppertal Institute Collaborating Centre on Sustainable Consumption and Production dick.vanbeers@cscp.centre.org