Progressive Business Models

This introductory chapter signposts the rationale, framework, and case study contents of the book. First, we offer an overview of the need for new more progressive business models than the mainstream which exists at present, identifying the current challenges facing business in Europe and beyond in its international ramifications. To remedy these challenges, we present our alternative vision of progressive business functioning, whose basic criteria comprise ecological sustainability, respect for future generations, and pro-socialness. Then, synopses of our case examples follow. Business models are basically stories about how enterprises work, so case studies lend themselves to telling a story. The case study is a structured narrative that depicts the past, present and potential future of the enterprise, how it came to develop and implement its business model and how it works. Since no business is perfect in all its dimensions, issues and challenges with respect to progressive business principles fulfillment and enterprise sustainability faced by the organization and its business model will be presented in the case studies. The case chapters conclude with generalizable insights offered by the case. These insights provide a basis for pedagogical analyses which can be applied to the material and used by instructors with students as appropriate.

The chapter analyses Triodos Bank, a Dutch ethical and sustainable bank with branches in four European countries. It was founded in 1980 and its mission is “to make money work for positive social, environmental and cultural change.” Triodos finances and invests in companies, institutions, and projects within an ecological, social, and cultural scope. Triodos’ principles are reflected via a thorough qualitative decision process. In general, it excludes loan applicants involving “any product, service, or business process that it believes would hinder the development of a sustainable civil society. Specifically, Triodos does not lend to organizations, businesses, and projects whose activities products, services, or processes are more than 5% non‐sustainable.” Triodos is highly transparent when it comes to its portfolio of investments. The company’s portfolio is disclosed on its website, enabling customers to track directly where their money is put to work through an interactive map. Triodos also invests money directly through several green funds which are under its management. These funds provide an additional instrument to raise capital for responsible investments. The ethical funds invest in different themes such as microfinance, sustainable trade, organic agriculture, climate and energy, sustainable real estate, arts and culture. Triodos’ mission is translated into a set of business principles that all employees are expected to follow. The executive board and senior management are charged with managing these principles. The principles promote sustainable development, obedience to the law, respect for human rights and the environment, accountability and continuous improvement. The principles are paired with practical instructions regarding, for example, internal and external auditing of, and reporting on the bank’s environmental performance. Bonuses are not part of employees’ compensation packages. The bank does not set any up-front targets that influence worker pay. The bank believes that its employees act on their intrinsic, value-based motivation. The bank has also implemented a whistleblower policy in order to promote compliance with its principles.

The chapter analyses Béres Pharmaceuticals, a leading Hungarian company engaged in natural and preventive medicine, comprising a unique trace element supplement product strengthening the immune system of the human body and additional natural medicine developed from it. Béres’ mission is to promote human health by supplying people with natural medicines for their physical and mental well-being. The company definition of success consists not only of financial profitability but also running an ethical operation and safeguarding the well-being of stakeholders. Béres defines its stakeholders in a broad sense: employees, customers, partners and suppliers, competitors, government and regulatory bodies, needy members of society, and the natural environment. The company applies a strict and continuously revised code of ethics, fair and open communication, and ethical training. Béres has been able to prosper because its ethical stance and innovativeness result in loyal employees, suppliers, and customers.

This chapter analyzes illycaffè, the family-owned Italian company located in Trieste which produces and sells a unique single blend of premium-quality coffee in more than 140 countries on all five continents. The top-quality coffee blend, the basis of the growth and competitive success of the company is deeply rooted in strong, progressive, and collaborative relationships with farmers. illycaffè buys green coffee directly from the farmers that produce the highest-quality coffee beans in South and Central America, India, China, and Africa. The production of this kind of coffee requires great personal, economic, and managerial efforts by the local farmers. illycaffè remunerates these efforts by paying 30–35% more than the market price for Arabica coffee beans. Therefore, illycaffè and the local suppliers develop long-term, mutually beneficial relationships and build robust partnerships, establishing a virtuous cycle of sustainability based on four principles: (i) sustainable development and quality are an inseparable pair; (ii) 100% of illy coffee is bought directly from local producers; (iii) quality is a tool for improving the living conditions of farmers over time; and (iv) a fair price is always applied.

The chapter deals with DKV Integralia, the Spanish affiliate of Munich Health, the leading European health insurance company, a division of Munich Re. It has a wide network of offices and consultancies throughout Spain, with 760 employees servicing 1.6 million clients as of 2014. DKV’s business model revolves around the central idea of “really interested in you,” which is a value proposition based on how DKV Spain relates with its key stakeholders based on “open collaboration, participative, long-term and sharing the DKV Dream.” DKV Integralia Foundation is a non-profit foundation established in 1999 by DKV Spain, with the objective of “fostering the integration of handicapped people into society and the workplace.” The Foundation is the contact center for DKV Spain, servicing over 2.5 million contacts with almost 300 employees in different call centers. The Foundation offers call center services with a high level of quality and virtually no employee turnover. DKV has the highest percentage of handicapped employees (29%) of any company in Spain. The goals of The Foundation are not only to hire handicapped people, but also to train and help them get jobs in other companies, as well as to spread the culture of integrating handicapped people in business. DKV Spain enacts its collaborative business model through four objectives: (1) being the best company co-responsible for the health of its clients; (2) give a service that surpasses their expectations; (3) being an exemplar organization; and (4) being an innovative, open, and responsible company.

Sonnentor is a medium-sized Austrian company that produces and sells organic spices and teas. This case study shows that a business model, which works toward the common good and is based on cooperation, can work and even thrive. Economically, the firm invests all profits in creating employment and sustainable growth in the regions where it operates. Furthermore, it limits automatic production and emphasizes manual work in order to give stakeholders (employees and farmers) a greater part in its value chain. Ecological aims are achieved by reducing energy consumption in the production process, environmentally friendly products, and the reduction of chemicals in packaging. Among the social goals are fair working conditions throughout the supply chain, using social enterprises as suppliers as well as donations to NGOs.

This chapter analyzes Armor Group, a French middle-sized company, specialized in printing ink consumables. The Group is committed to an ambitious industrial project, to provide technical solutions to meet current and future challenges in society. Its business development depends on it meeting three major challenges: protect property and individuals through product traceability, reduce the environmental footprint of printing, and convert light into energy for all. Armor no longer seeks to sell a product but rather a service. This has had the effect of redesigning and enhancing the company’s role. Through its core business, it participates in social changes and the protection of resources, aiming to demonstrate that this new vision can create added value in terms of social development, international competitiveness, and economic profitability.

This chapter analyzes Lumituuli Inc., the first nation-wide customer-owned wind power producer in Finland. Its main business operations consist of commissioning and operating wind generators and funding these activities via share offerings targeted mainly at ordinary people. Electricity produced by the turbines is sold to the firm’s shareholders. Thus, Lumituuli is a customer-owned firm having more than 1200 shareholders; mostly private citizens but also other firms, associations, and municipalities. Lumituuli is a socially oriented company whose ultimate goal is to raise awareness about the possibilities and potential of wind power and extend its use. Its activities help to scale down the use of fossil fuels, reduce carbon emissions, and facilitate a transformation to renewable resources in the economy. Investment in Lumituuli ensures that new wind power capacity will be installed. Moreover, to broaden its scope, the company has released public loans which enable people to make direct investments in building new wind turbines without using the power generated from them. This move has enabled the disconnection of investments and personal electricity use. Lumituuli has offered opportunities to get involved with a €1000 minimal investment. Lumituuli has strong communal and civil society foundations, as the firm has played a distinctive role as a model for and as an active supporter of local community projects and of citizens in economically sustainable ways.

The chapter analyses John Lewis Partnership, an employee owned UK company which operates 42 John Lewis department stores across the UK, 328 Waitrose supermarkets, an online and catalogue business, a production unit, and a farm. The company is owned by a trust on behalf of all its 90,000 permanent staff, known as “Partners,” who have a say in the running of the business and receive a share of annual profits, which is usually a significant addition to their salary. Its Constitution states that “the happiness of its members” is the Partnership’s ultimate purpose, recognizing that such happiness depends on having a satisfying job in a successful business. It establishes a system of rights and responsibilities, which places on all Partners the obligation to work for the improvement of the business in the knowledge that they share the rewards of success. The Constitution defines mechanisms to provide for the management of the Partnership, with checks and balances to ensure accountability, transparency, and integrity. It established the representation of the co-owners on the Partnership Board through the election of Partners as Elected Directors.

This chapter analyzes Danish pharmaceutical and healthcare corporation Novo Nordisk which is known for a model of management that integrates business ethics, stakeholder management, and the balanced scorecard in their strategy. The main product of Novo Nordisk is insulin to treat diabetes, but the corporation also engages in research to manufacture related medicines and to find a cure for the disease. Novo Nordisk is a company that considers good corporate citizenship and CSR as fundamental for a management strategy. The company also works with stakeholder communication as important for corporate self-perception in order to improve the balanced scorecard. In many ways, Novo Nordisk promotes itself as a virtuous corporation that is able to deal with business dilemmas in a constructive way. Balance is considered as a vital aspect of organizational culture to create the right atmosphere and a tool to build corporate identity, image, and self-perception. Moreover, values of balance are also connected with external stakeholders in the sense that they contribute to the formation and identification of ethical integrity as a central component of organizational identity. Novo Nordisk is a large multinational corporation with approximately 20,000 employees, operating in more than 75 countries, and selling its products in nearly all countries in the world.

The chapter analyses Carlson Rezidor, a global hotel group, quoted on the Stockholm Stock Exchange with the Radisson SAS, later Radisson Blue brand as a key asset. The company is an exemplary case in the travel and service industry. Its program of Responsible Business is aligned with the company’s 4D strategy (Develop Talent, Delight Guests, Drive the Business, and Deliver Results). The core of the program includes three dimensions: Think Planet—minimizing the company’s environmental footprint; Think People—taking care of the health and safety of guests and employees; and Think Together—respecting social and ethical issues in the company and the communities in which Carlson Rezidor operates. The global travel industry has a considerable impact on social, economic, and environmental conditions around the world, so there is an urgent need for a new mindset. If the tourism industry continues to operate in the way it does today, energy use and emissions will double by 2050, and water use will increase 2.5 times. Buildings are responsible for 30% of global energy consumption and use of energy savings technologies is needed. These are some of the challenges that need to be approached by the Rezidor Hotel Group’s management. The conservationist resource use and its employment in local communities of Carlson Rezidor can play a major role in initiating and leading the new mindset.

The chapter analyses Unilever, a British-Dutch global consumer goods company whose Sustainable Living Plan includes three main goals: improving health and well-being, reducing environmental impact, and enhancing livelihoods. Unilever creates value for customers by supplying them with responsibly sourced products. It earns enough profit to be sustainable and supply the products that their consumers demand. It works every day to attain the goals that it has set for itself, in a sustainable living plan to grow as a company, while protecting the environment. CEO Paul Polman joined Unilever in 2009. He eliminated earnings guidance and quarterly reporting and does not want hedge funds as investors, thus changing the way business is done by Unilever. Polman redefined the role of CEO as statesman—someone who runs his or her business responsibly and successfully, with integrity. Because no company has ever made such sustainable commitments before, Unilever does not know for certain that they will meet their goals and succeed. The biggest challenge to committing to such a broad initiative is surviving the transition. Unilever is working to arrive at solutions to various problem areas, including safe drinking water, fighting viruses, better packaging, sustainable washing, storing renewable energy, and changing consumer behavior.

This concluding chapter stresses that the future of business highly depends on its ability to renew its business models. The key problem is the nature, form, and scale of business operations. The business models of today’s mainstream business do not fit in the reality of the biosphere. Business models vary but almost none of them are consistent with the flourishing life on Earth (including human, nonhuman, and future life). To achieve meaningful change in the humanity-nature nexus business organizations should reinvent the ways they function. How can business become ecologically conscious agent which operates within limits, that is, uses only its “fair earth share” and contributes to the richness of life on Earth? Our progressive business cases and other examples of innovative business models are just the first steps in the difficult trajectory of transforming business to fit in the reality of the Anthropocene. The much disturbed Earth-Human system requires organizations whose primary objectives and criteria of success include the “Commonwealth of Life.”If mainstream business will not change its underlying “market fundamentalism,” there will be little chance for humanity to survive in the Anthropocene. The hope is that progressive business models can make the old-fashioned ways of doing business obsolete.