Lots of speaker notes, inc. references Strongly Sustainable Business Model Canvas A New Visual Tool for Designing Values-driven & Local Business Builds on many slides download and view in slide show mode for improved comprehension A Brief Intro for ENVS5150 Perspectives of Green Business Week 4: October 2, 2013 Good evening, my name is Antony Upward, and I’m a sustainability business architect with Edward James Consulting and co-founder of the Strongly Sustainable Business Model Group at the Ontario College of Art and Design University’s Strategic Innovation Lab. I want to spend the bulk of our time together responding to your questions based on the pre-reading. Required: Introducing the Strongly Sustainable Business Model Canvas Visual Design Tool  (Highly recommend students download the presentation which is embedded in this blog post - URL for just the presentation is here). Optional: Willard, B. (2012). Introduction From the new sustainability advantage: seven business case benefits of a triple bottom line (Completely rev. 10th anniversary ed.) (pp.1-25). Gabriola Island, British Columbia, Canada: New Society Publishers Optional: Blattberg, C. (2000). Welfare: Towards the Patriotic Corporation. From pluralist to patriotic politics: putting practices first (pp. 172-184). New York City, New York, United States of America: Oxford University Press.  (attached pdf) But if you’re OK with this, I’d like to start by quickly introducing the strongly sustainable business model canvas, the 3 year research project that created it, and our plans to bring this visual design tool to the world. I’m trying something a little new – since I only want to take a few minutes – I’m going to tell you a story! Afterwards I’ll take your questions for as long as you want to keep ‘em coming: I am really interested in your reactions to the practical application of these ideas and our plans. Antony Upward is a Sustainability Business Architect with Edward James Consulting.  Antony is the creator of the Strongly Sustainable Business Model Canvas, the result of a 3 year research project at York University's Schulich School of Business and Faculty of Environmental Studies.  Antony is a co-founder of the Strongly Sustainable Business Model Group at the Ontario College of Art and Design University's Strategic Innovation Lab.  Together, in fall 2013, they will be launching a crowd-funded collaboration project to bring a Strongly Sustainable Sustainable Business Model Innovation Toolkit to market (to receive notifications about the project - join our mailing list - http://signup.SSBMG.com)   Twitter: @aupward #SSBMG Facebook: https://www.facebook.com/StronglySustainableBusinessModels  Linkedin:  http://www.linkedin.com/groups/Strongly-Sustainable-Business-Models-5005769/about Web: www.SSBMG.com / www.EdwardJames.biz Email: info@SSBMG.com  

= Today… Increasing risks Unintended consequences for 1: Once upon a time most business people, went to work every day with the goal of maximizing profit. And this profit was used to do all kinds of good for many people: food, education, roads, health care and so on. 2: But these business people started to see that despite all the benefits of the wealth their organizations generated over the years, the unintended social and environmental impacts of their operations were growing larger and larger. Businesses were creating some bad outcomes for a lot of people and our environment. Increasingly these business people are understanding that these bad outcomes were preventing humanity and other life from flourishing; Their children and grandchildren were hurting and they could see it was getting worse! 3: Not only that, but everyday they could ALSO see increasing risks to their company’s supply of raw materials, their social license to operate, as well near-term profit and long term viability. 4: And worse, they were missing out on opportunities to innovate in response to all these challenges. 5: Result: The thing they said they cared about most, profits, were in trouble! Missed innovation opportunities Today…

Less Risk, More Innovation = Do Good & Do Well Less Risk, More Innovation 1. So, one day these business people decided they needed to imagine and embrace a new definition of success They realized that by integrating the achievement of environmental, social and economic goals a whole new world of innovation was possible; innovations that simultaneously increased profit while reducing risk! http://www.istockphoto.com/stock-photo-12372891-success-team.php?st=e968fda But imagine…

Sustainability is “the possibility that human and other life will flourish on this planet forever.” (Ehrenfeld, 2008 p.6) In other words, people are imagining that business success should create the possibility for human and other life to flourish on this planet forever! Ehrenfeld, J. R. (2008). Sustainability by design: a subversive strategy for transforming our consumer culture. New Haven, Connecticut, U.S.A.: Yale University Press. Ehrenfeld, J. R., & Hoffman, A. J. (2013). Flourishing: a frank conversation about sustainability

Passing Benefit Corporation Legislation Already all these people are innovating to embrace the possibilities of sustainability as flourishing And of course all these people, after they had embraced this new definition of success, realized they were not alone! There were lots of people who had already changed their definition of success for their business – and despite the economic, social and environmental challenges – these businesses were thriving by doing good and doing well. These are the so called mission or impact oriented businesses, also known as green businesses or social enterprises. _____________ Notes: This is not a small group of people! For example… we need to add: … All sustainability consultants … All sustainability professionals in the increasing number of companies seeking to improve their sustainability … All Credit Unions … All Co-ops … All members of all local ethical sustainable business groups … All the members of all these organizations And these are just the most obvious groups – there are many many other groups pursing projects and initiatives to bring about this new operating logic for business. So my work sets out to make a key contribution to an already large community of leaders in business sustainability… because so far no one has proposed a toolkit that can help all these groups to efficiently and effectively design businesses that apply apply this new definition of success. Now imagine how much larger the market for our toolkit gets when you realise, as Bob Willard has been highlighting for years, that more sustainable businesses are simply *BETTER* businesses – even if your goal remains predominately to make money. Businesses that embrace this new definition of success as simply fitter for the future! We want any business person to want to engage with our toolkit… simply because by doing the right thing you can do better: generate more wealth, be happier and have a flourishing community and environment. So the group I am working with believes our market for our Strongly Sustainable Business Model Design toolkit includes: … All entrepreneurs and innovators … All business owners … All venture capitalists and investors … All consultants … All business educators … All business Incubators (OCADU, MaRSDD, RyersonDMZ, etc.)

Real Context of Business All Business So, what’s allowed all these people to embrace this new definition of business success? Let’s break it down: 1. First, they have come to understand the real context for business wasn’t just the economy…. 2. These people realized the economy, the financial system, is something created by society; So they understand society has concerns far broader than simply money. Societies care about the people within them; helping everyone achieve their potential; in other words societies want to help everyone have the possibility of flourishing! 3. But it doesn’t stop there. These people also understand that society is entirely dependent upon the environment. Without clear air, water, and healthy soil society would go bankrupt and we would ALL about out of business. 4. Finally, all these people understand that a sustainable business model is one whose definition of success recognizes and must relate to all these contexts: the economy, society AND the environment. By considering how each part of a business model relates to its real contexts, a business can be more resilient: finding more opportunities to innnovate AND reduce the risk of being surprised. This means not only that businesses will create less unintended social and environmental consequences, they can actually focus on creating outcomes that proactively enable the possibility of flourishing. In other words, what all these people have understood is that businesses that recognize their connections to all their contexts are simply better businesses. Context: Financial Economy (Social/Technology) Context: Society (Monetary) Context: Environment (Physical / Chemical / Biological) © Antony Upward / Edward James Consulting Ltd., 2013 Some rights reserved. Permissions available at www.EdwardJames.biz/Permissions

What Would a Canvas for Sustainable Business Look Like? 1. When I started to learn about the real context of business a few years ago I was inspired. So, I set my self a goal of bringing sustainability to the wonderful, all be it profit-first, Business Model Canvas. I wanted to create a new visual design canvas – one that could help all the people who are redefining business success as doing good AND doing well So this goal led me to return to university to do a masters degree in Environmental Studies, focusing on Business Model Design and Sustainability; 2. I have now successfully defended my thesis (http://hdl.handle.net/10315/20777) and graduated. _____________ In my research, following Alex Osterwalder’s lead, I created an Ontology for Strongly Sustainable Business that I then used to conceptually power a visual design tool: The Strongly Sustainable Business Model Canvas. The Strongly Sustainable Business Model Canvas – the result of my 3 year research project © Antony Upward / Edward James Consulting Ltd., 2013 Some rights reserved. Permissions available at www.EdwardJames.biz/Permissions

The Profit-First Business Model Canvas: 9 Questions to be Profitable So to understand the Strongly Sustainable Business Model Canvas, let’s go back to the profit first canvas and look at it in light of the “real context for business”. In short the profit-first canvas makes clear the 9 questions you must answer to increase the quality of your business design; in other words it helps you increase the liklihood of creating a profitable business (These questions are based on the best scholarly knowledge we have about the necessary and sufficient conditions required to have a higher quality profitable business design). Prior to the profit-first canvas, tools to help design businesses were few and far between. So clearly the profit-first canvas is a big improvement. If profitability is your primary goal, using the Profit-First Business Model Canvas can improve your efficiency and reduce your risk. Because of this the Profit-First Canvas has been highly successful. Alex Osterwalder’s crowd-funded collaboratively created book “Business Model Generation” has now sold over 700,000 copies in 26 languages since its launch in 2009 http://www.businessmodelgeneration.com/ There is a 2 x 1.5m version available via a creative commons licenses for free commercial use at www.businessmodelgeneration.com Osterwalder, A., & Smith, A. (2012). Strategyzer: Your Business Model Toolbox on Strategyzer . Switzerland: Business Model Foundry GmbH. Smith, A., Osterwalder, A., Business Model Foundry GmbH, & Hortis - Le Studio. (2011). Business Model ToolBox. Apple AppStore / Switzerland: Business Model Foundry GmbH. Osterwalder, A. (2010, 2011). Business Model Canvas. Switzerland: Business Model Foundry GmbH. Osterwalder, A. (2004). The Business Model Ontology: A Proposition in a Design Science Approach. (Ph.D., l’Ecole des Hautes Etudes Commerciales de l’Université de Lausanne). , 1-172. The Profit-First Business Model Canvas: 9 Questions to be Profitable

Aside (Hidden Slide) How did the profit-first business model canvas come about? 1. The business model canvas, and its 9 questions are conceptually ‘powered by’ the business model ontology, that Alex Osterwalder developed in his PhD back in 2004. 2. In 2008-9 Alex and his PhD supervisor ran a crowd-funded book project with 450 collaborators/funders. (http://www.slideshare.net/Alex.Osterwalder/bmgen-the-story-of-a-bestselling-management-book, http://jeffreykrames.com/2010/02/20/a-new-business-model-and-a-new-bestseller/) Published in mid-2009, as of Late Summer 2013, the book has become very popular: selling over 700,000 copies in 26 languages and is now used in most MBA strategy and innovation course around the globe (its also been in the top 10 amazon business books since launch.) 3. In 2011-12 an iPad and a web app that enhances the canvas were introduced. These apps enable a three step iterative design process to be used – First you quickly sketch lots of possible business models (i.e. hypothesis for a profitable business) (Sketch = Green light / brain storm / get out of the box) Second, you prototype your business models in more detail – using the best elements of many sketches And Third you simulate the financial performance of your business models resulting in a pro-forma profit and loss statement

But…does this help to design a sustainable business? 1. Customer Segments 2. Value Propositions 6. Key Activities 3. Channels 7. Key Resources Alex Osterwalder’s 9 questions give us a common language to discuss, describe, and improve our profit-first business model designs… 1. But do these questions help us if our goal is to create businesses that set out to enable human and other life to flourish? Or at least to create businesses with less unintended consequences? 2. In my research I realized that while financial viability is important, I needed to ask what’s missing from these 9 questions and why? 4. Customer Relationships 8. Key Partners What’s Missing? Why? 5. Revenue Streams 9. Cost Structure

Lots about money, and the people you financially transact with… Looking at the 9 questions you quickly see that there is a lot of focus on money and the people businesses financially transact with – customers and suppliers… And almost nothing about everyone and everything else. ___________ (Not surprising… given the generally accepted current design brief for business – a singular focus on profit and the generation wealth!) …(almost) nothing about everyone and everything else

The Context… Flattened So what’s missing? First… as I mentioned earlier, we need to think about the real context for any business. The three dimensional view of the real context for business that I showed early is great… but its rather hard to work with as a visual design tool… so in the Strongly Sustainable Business Model Canvas I flattened it into two dimensions! ____________ (But remember, these context boxes are nested within one another, mimicking the reality that the environment really does contain society, society really does create the economy and firms have complex relationships directly with all three!!) Note that None of this context is considered by Osterwalder’s Business Model Canvas The boarder of the firms involved a business model in relation to the enviroment, society and the economy aren’t even conceptualized © Antony Upward / Edward James Consulting Ltd., 2013 Some rights reserved. Permissions available at www.EdwardJames.biz/Permissions

“Just” Being Profitable is Not Simple Another key observation I made during my research is that businesses are very complex entities; even being profitable is not simple! And things only get even more complex when one puts businesses into their real contexts. http://2.bp.blogspot.com/-xToytUgrp2M/TzILZebtZ2I/AAAAAAAABgE/sqAM5qV-8Io/s1600/starting+a+small+biz.jpg “And that, in simple terms, is how you start a profitable small business”

Useful Perspectives What does a firm do now and in the future? How, where and with what does the firm do it? Who does a firm do it to, for and with? So the second thing that is missing from the Profit-First Business Model Canvas is a way of helping the business designer deal with this complexity by breaking up a business into a number of parts or perspectives. One of the most well known set of perspectives, used in the field of business strategy, is the Balanced Scorecard. (Aside: In fact Alex Osterwalder also used the Balanced Scorecard approach in his PhD Business Model Ontology, but it was largely dropped from the Canvas). The profit-first balanced scorecard has four perspectives –I adjusted these in light of the real context of business 1-4 Kaplan, R. S. (1996). In Norton D. P., NetLibrary I. (Eds.), The balanced scorecard: translating strategy into action. Boston, Massachusetts, U.S.A.: Harvard Business School Press. (Note the sustainability extensions proposed for the balanced scorecard fundamentally do not recognize the true context for the business, but ‘tack-on’ the environment as an afterthought and largely ignore the larger society. Figge, F., Hahn, T., Schaltegger, S., & Wagner, M. (2002). The Sustainability Balanced Scorecard - linking sustainability management to business strategy. Business Strategy and the Environment, 11(5), 269. ) How does a firm define and measure success (in Environmental, Social & Monetary units)? © Antony Upward / Edward James Consulting Ltd., 2013 Some rights reserved. Permissions available at www.EdwardJames.biz/Permissions

Strongly Sustainable Business Model Canvas – 14 Questions So putting all this together: we’ve added the real context for business, and we’ve added the fours perspectives to help manage the additional complexity. 1: Now we can add the questions that must be answered by a business designer to create a strongly sustainable business. From the natural, social and managerial science I developed the 14 necessary and sufficient questions that must be answered well to create a strongly sustainable business model. To come up with good answers, the business model designer needs to consider their answer to each question in relation to each of the 3 contexts and the 4 perspectives. BTW, another way to think about these questions is that they are a way to help you construct a story about how your strongly sustainable business is going to be successful. Your answer to each question becomes part of your narrative, part of your sustainable business model story. Then you can tell your story to all the other people whose help you need in order to succeed – customers, investors, suppliers, employees; Using the Strongly Sustainable Business Model Canvas can give you the confidence that you’ve not forgotten anything important to your success! One important thing to note is that I found is Alex’s Osterwalder’s 9 questions on the Profit-First Business Model Canvas, are all still necessary. So they remain – although adjusted in light of the real context for business. ___________________ However, the profit-first business model canvas’s 9 questions, even adjusted in light of the context are not sufficient. The natural, social and management science literature I reviewed suggested that just 5 more questions must be answered to have the possibility of describing a strongly sustainable business model – to get the total of 14 questions in the Strongly Sustainable Business Model Canvas. The additional 5 areas are as follows: Actors and their Needs Decisions / Governance (Power) Bio-Physical Stocks Eco-system Services © Antony Upward / Edward James Consulting Ltd., 2013 Some rights reserved. Permissions available at www.EdwardJames.biz/Permissions

Strongly Sustainable Business Model Canvas So finally, here it is: The Strongly Sustainable Business Model Canvas. This turns the 3 contexts, the 4 perspective and the 14 questions into a visual design tool, with space for your sticky notes for your answers – just like the Profit First Canvas. (If displayed: you can see the wall sized canvas on the wall, showing an example of the business model design of the Timberland Company as it was described in 2011 in all the public information available on their website) © Antony Upward / Edward James Consulting Ltd., 2013 Some rights reserved. Permissions available at www.EdwardJames.biz/Permissions

What’s Next? Can I Use It Now? How Can I Help? So perhaps you’re wondering what’s next? Can I use the strongly sustainable business model canvas now? What are your plans? How can I help? Image purchased from http://www.imagedirekt.com/en/royaltyfree-images-photos/1633288.html

What Can I Do? Join us! Help bring Sustainable Innovation to the World! Join the crowd-funded collaborative book project Working Title: Strongly Sustainable Business Model Innovation 12 International co-authors identified Self Publish, 2014 Crowd-funding starting soon Individuals and Organizations To Be Informed When Funding Starts: http://signup.SSBMG.com Become next “First Explorer” 12 organizations around the globe already using SSBMCanvas! Connect to like minded colleagues Linkedin group Strongly Sustainable Business Model Group (SSBMG) Hosted by Strategic Innovation Lab at Ontario College of Art & Design University ~80 Members from around the globe Join Us! http://signup.SSBMG.com Share your ideas: http://survey.SSBMG.com Learn more: http://www.SSBMG.com info@SSBMG.com http://www.facebook.com/ StronglySustainableBusinessModels @aupward #SSBMG

Learn more: http://www.naturalstep.ca/gold-standard A Key Related Project If the Strongly Sustainable Business Model Canvas asks the right questions that, when answered well, can enable flourishing, how do we know the businesses people design are actually enabling flourishing? For this we need a benchmark against which to measure actual business results – not by comparing against past performance, or self-defined future goals, or against “leaders” – but against the boundary conditions that increasingly science tells us create the possibility for flourishing. Creating this benchmark is the goal of a new international, collaborative project of The Natural Step Canada. For more details of the Gold Standard Work see: http://www.naturalstep.ca/gold-standard http://www.naturalstep.ca/amazing-possibilities-for-a-gold-standard-benchmark-for-sustainable-business http://ecoopportunity.net/2013/02/the-sustainability-gold-standard-the-pathway-to-capitalism-2-0-event-summary-feb-7-2013/ (Video) Learn more: http://www.naturalstep.ca/gold-standard

Questions / Discussion

stay tuned for updates www.SSBMG.com blog.SSBMG.com signup.SSBMG.com About the Strongly Sustainable Business Model Canvas ~3 minute Audio Visual Overview Share your ideas via our Survey survey.SSBMG.com Mailing List sign-up signup.SSBMG.com Learning / Knowledge wiki.SSBMG.com/home/learning-map Blogs blog.SSBMG.com slab.ocad.ca/blogs/antony-upward http://www.facebook.com/ StronglySustainableBusinessModels @aupward #SSBMG info@SSBMG.com stay tuned for updates blog.SSBMG.com Mailing List sign-up signup.SSBMG.com

Possible Table of Contents for “Book” As a working title we’re calling the “book” “Strongly Sustainable Business Model Innovation” This slide gives an outline of the table of contents with section 2 describing the strongly sustainable business model canvas, section 3 describing how to answer the 14 questions the canvas asks well, so you will score highly, for example, on the B Lab Benefit Impact Assessment Survey, align with the BALLE localist principles or the Framework For Strategic Sustainable Development Sustainability Principles (3 environmental and *NEW* 5 social), plus Transition Towns, Institute for Local Self-Reliance, etc. and the emerging “Gold Standard” section 4 describes how to use the canvas to create a strongly sustainable business model section 5 provides more case studies… Image: http://bookmarks.mikis.it/wp-content/uploads/2010/11/escher-two-drawing-hands.jpg

Copyright All images used under applicable creative commons licences – see notes on each page © Antony Upward / Edward James Consulting Ltd., 2013. Some rights reserved. Permissions available at www.EdwardJames.biz/Permissions This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.