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Design thinking and sustainable business model innovation

This submodule introduces phased approach to design sustainable business models. It has a
direct linkage to Module 17 – Sustainable business model canvas.

Business model is an abstract sketch of the value flow and interactions between value elements
inside a company. Company’s essential value elements are focused with proposition, creation,
delivery, and capturing value. The ability to communicate the connection and contents of these
elements in a simplified manner is critical to the success of any business. The process of
sustainable business model design forms an innovative part of a business strategy. Different
industries and businesses have utilized sustainable business models’ concept to satisfy their

economic, environmental, and social goals simultaneously.
Sustainable business models incorporate sustainability concepts and goals into the value
proposition, value creation, and value capture activities of a company. To achieve sustainability
goals, sustainable business models incorporate proactive multi-stakeholder management,
innovation, and a long-term vision. As a result, sustainable business models have effectively

contributed to decreasing the negative effects of business operations on the environment and
society by providing solutions to assist companies fulfilling their economic and sustainability goals
at the same time.

A sustainable business model provides a company with a competitive edge by enabling traditional
businesses to satisfy sustainable development goals while retaining productivity and profitability.
Sustainable business model design aims to develop approaches that organizations may use to
evolve their business models toward sustainability.
Circular economy is one concept that is closely related to sustainable business. Circular business

concepts are comparable to sustainable business models in this regard. They do, however, have
additional properties that are primarily concerned with delaying, intensifying, and narrowing
resource cycles.

A four phase approach to create a sustainable business model:
The first phase in creating a sustainable business model is to create sustainable value, which
includes economic, social, and environmental advantages as forms of value.

The second phase in developing a sustainable business model is to establish a system of
sustainable value flows among many stakeholders, with the natural environment and society
serving as key stakeholders.

The third phase toward a sustainable business model is to create a value network with a new
purpose, design, and governance.
The fourth phase in developing a sustainable business model is to examine stakeholder interests
and obligations for reciprocal value generation on a systemic level.

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