In the last months, I was looking for the non-existent. I realized that there are no regenerative business models. Let me tell you why.
Understanding Business Models
Inspired by the Business Model Canvas, a business model describes:
- What an organisation offers to its customers (value proposition),
- How it delivers that value (operations, organisation & capabilities) and
- How this is profitable (revenue & costs).
I understand a business model as a theoretical framework, a pattern, a relation of the three points above. There are dozens of business models out there, the BMI Lab lists 55 different patterns. These business models are like templates: They can be used by many actors; they can be adopted with or without modifications. Let me give two examples of business models.
The retail business model is making things accessible, providing it at a point of sale, and selling it at a price higher than the sourcing costs. The taxi driver business model is bringing people from here to there, using a car and telephone to do so, and charging a fee that is higher than the fuel and compensating the price of the car. And so on. Business models are templates that can be used by individuals and organisations.
A business model is applied in practice. Some business models – the one of a taxi driver, a lawyer, a retailer – are applied by millions of businesses. Some business models – like marketplaces, Product-as-a-Service, banks – are applied by thousands of businesses. Some business models are only applied by a few business, either because it’s highly regulated – e.g. railway infrastructure, nuclear energy plants – or has strong network effects – like social networks. Anyway, a business model is applied in practice and many organisations apply it with an individual flavour. This turns it into a specific application of the theoretical template.
Understanding Regeneration
Regeneration business is based on a different understanding of value creation, cooperation and connectednesses. This goes back to a regenerative mindset, that Josie Warden by the British Royal Society for the Encouragement of Arts, Manufactures and Commerce described as “a mindset that sees the world as built around reciprocal and co-evolutionary relationships, where humans, other living beings and ecosystems rely on one another for health, and shape (and are shaped by) their connections with one another.” This mindset comes with a direction of improving quality of life. While sustainability is understood to do “less harm”, regeneration is seen as doing “more good”.
But how does this translate into business models? Valuable research by Jan Konietzko, Ankita Das and Nancy Bocken , suggests the following definition:
“Organizations with regenerative business models focus on planetary health and societal wellbeing. They create and deliver value at multiple stakeholder levels—including nature, societies, customers, suppliers and partners, shareholders and investors, and employees—through activities promoting regenerative leadership, co-creative partnerships with nature, and justice and fairness. Capturing value through multi-capital accounting, they aim for a net positive impact across all stakeholder levels.”
Regeneration in Business
Interestingly, this definition ties the “regenerative business model” to a specific organisation that acts in a certain way. The definition does not constitute new business models per se. Looking at examples illustrates that character.
Regenerative businesses are relatively popular within the agricultural and forestry industry. In essence, regenerative business make sure that with its value capture, the involved ecosystems benefit in certain capacities. This can be the number of different species, the volume of a certain species, the total biomass or something related.
The regenerative business practices are not a necessary consequence of the business model of „farming“ or „forestry“. We all know that farming can be harming. It is degenerative practice when forests are burned down to create land for mono-cultural farming that reduces soil capacity and leaves a devastated area. It still qualifies as the business model of farming. Contrary, farming can also be regenerative. It can increase biodiversity, it can capture carbon, it can provide jobs, food, purpose. The regenerative character is not on the level of the business model, but on the level of the application of the business model.
Business models are like a blank sheet of paper. You can write a death sentence or a love letter on it. There is no deadly or lovely paper per se. It is what you make out of it.
Business models are like knifes. You can use it to kill a person or to prepare a healthy meal. There is no lethal or healthy knife per se. It is what you make out of it.
Every business model can be degenerative. And every business model can be regenerative. It depends how the specific business is run – the business practices. For some business models it might be harder, for some it might be easier to apply regenerative practices.
Instead of talking about regenerative business models, I suggest to talk about regenerative business practices.
How does your business practice look like: Lovely, healthy and regenerative?
PS: It might be just a matter of time until regenerative business models are born. It just takes (a) an organisation successfully connecting regenerative practices in a distinct way and (b) researches giving this pattern a name and a description that includes regeneration per definition. And voila, a the first regenerative business model will be born. If that happens/ed, please let me know.
Photo by engin akyurt at Unsplash