The Quest for Sustainable Business Model Innovation

We have argued that corporations should Optimize for Both Social and Business Value, using their core businesses to deliver the financial returns expected by their owners and, in tandem, to help society meet its most significant challenges. To do so, we suggest that leaders reimagine corporate strategy by creating new modes of differentiation, embedding societal value into products and services, reimagining business models for sustainability, managing to new measures of performance, and reshaping business ecosystems to support these initiatives. While this is a tall order for any management team, the future of the company, our environment, and society depends on doing so.

Few companies have tried to systematically understand the sustainability limits, vulnerabilities, and potential of their current business models and ecosystems. As a result, they risk diminishing their future competitiveness, license to operate, and shareholder returns.

We have a long way to go before the two main uses of the S-word in business— sustainability and sustainable competitive advantage—fuse coherently in a way that can guide management thinking and corporate action in the decade ahead. This disconnect is both a wasted opportunity and an urgent social priority.

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