6 Ethical operating models that can help businesses live to their 100

The whole concept of “business model” always suggested “what’s your way to swallow economical growth?”. Surely, you can argue that growth stems from value delivered to customers, who hasn’t heard it? And it’s true. But “value to customers” is still measured in dollars (or any fiat currency for that matter) thereby describing a successful business model as “an effective way to always get bigger flows of value that can be measured in dollars”. Its exacerbation being what we call GDP or Gross Domestic Product.

It’s mainly because we are counting only incoming new wealth as the value created — and therefore ignoring the pile of value already in existence — that we seem to be endlessly running after the sacrosanct growth. Of course, we could think of changing what we value and avoid giving too much value and rewards to companies or countries relentlessly looking for growth, but that’s 1. Not going to happen overnight, and 2. It would be wrong as we need to value innovation and fresh entries of vital resources. As always, I think we (as human beings) are smart enough to lean towards balance. We shouldn’t deconstruct to reconstruct something different but potentially as harmful. We should tweak, change and modify the existing to improve ourselves.

Enough shortcuts on macroeconomics, my focus lies at the enterprise level, where we don’t have a numerical recognition of the value yielded in participating in a collective effort (such as preserving and nurturing our planet).

That said, attributing value to new mechanics is tricky and can quickly become a slippery rope. Choosing an issue hitting literally everyone is the first step. Happiness — as described by the World Happiness Index — is a good case in point. It concerns everyone but is still hard to convert into numbers supporting growth, which makes it more of a trophy than a performance indicator. That’s probably why we have not given up on GDP. It’s global and measurable, and therefore enables useful comparisons to gain trust.

Today, I want to shed some light on another solution for businesses. Far from me to pretend to be smart enough to come up with a neat and sharp indicator that can be adopted by everyone. I’m not. However, I truly believe we need to initiate change and in the absence of a magic indicator, we all can use our common sense to affect value where there is no hard data (and believe me I’d usually rather follow hard data than my heart #TeamEngineer).

Where do we start?

As mentioned, we need something which:

· Pertains to all of us;

· Provides an unchallenged value;

· Cannot be measured.

You have seen me coming miles away, that’s the exact attributes of fighting climate change to preserve environmental sustainability. Broadly, sustainability is concerned with ensuring that the well-being of future generations is at least as high as that of the current generation.

97% of the terrestrial ecosystem of the planet has been modified, structured, or ruined by the human presence. You’ve read it right: only 3% of the terrestrial lands can be considered ecologically unscathed. According to those same studies (published in Frontiers in Forests and Global Change), between 20% to 40% could be considered as not fundamentally disturbed. Well, let’s not argue on the definitions of intact or destroyed, we got the trend.

Pertain to all of us? Definitely so.

Criteria number 2 is also checked. Natural resources and biodiversity may not build schools and hospitals but try to build a smartphone without lithium.

As per criteria number 3, I will quote Kenneth Ross Henry, Secretary of the Department of the Treasury, in his speech “The value of the environment” to the Australian Government: “There are also important natural assets, like water and wild fish, whose commercial value is not captured in the national balance sheet. Establishing the commercial value of water is difficult given that prices are only available for some forms of water supply.”

Not measurable? Checked.

Environmental sustainability (and any of its forms such as fighting climate change) is an adequate long-term source of value we haven’t found any form of measurement for. Our ideal candidate to be included in businesses. But wait there is more to it.

An Earth operating model can make your business model last forever

Clickbait title? Hardly. Even if you can’t measure precisely the value delivered by incorporating environmental sustainability, you’ll see it in a form or another at some point. Nurturing long-term objectives brings stability to a business and is the closest indicator we have to detect if your firm has the potential to last 100 or 200 years. Don’t take my word for it but look at Japan. It’s the only country in the world with over 33,000 centennial firms (40% of the world’s total), among which 3,100 are operating for over 200 years, 140 for over 250 years, and — bear with me — 19 have been operating continuously since the first millennium!

Unlike what you may think, their secret sauce is not (only) unremitting work. It’s rather a stable business model deeply linked to long-term and strong values, not one focused solely on profits and growth.

Ichiwa is a small shop in service since at least the year 1,000. Its persistence comes from the value embedded in its mission: servicing pilgrims coming to the nearby temple. In this example, the religious value is enabling long-term stability but is also very hard to translate into other metrics. It also gave them the strength to turn down takeover or expansion offers.

This is exactly the positive thing that could stem from applying an Earth operating Model to your current business model. What’s an Earth operating Model?

Start thinking about Business Model AND Earth Operating Model

The Earth operating model is a complement to the traditional notion of business model. If you know the canvas business model, it could be seen as a second sheet of different components that needs to match your business model sheet.

The main element is to understand in which phase you can establish your Earth operating Model (EoM). Indeed, not all business models will be suitable to directly support any of the 6 phases. However, any business model of any industry can slightly tweak its structure to support at least one phase and incorporate an EoM. Each phase can constitute a different EoM, but it’s also likely that many businesses will find a link with their business model in several phases.

As exemplified by this terrible number of 3% of intact lands, we may well be heading into a wall. To avoid a sharp decline, we need some economical agents to bridge the gap and buy us some time before developing lasting solutions.

We have defined the following steps to start and entertain a positive circle for the Earth:

Fig 1: the sustainability loop

What’s needed most urgently is to stop the bleeding with firms making the most out of the current solutions. We call them “Band-aid firms”. They will enable to buy some time and to start the “Use” phase. This is where other businesses start using solutions brought by Band-aid firms and later on newer solutions. Next, come the “Megaphone” firms to expand the use of better solutions and practices. They speed up the usage of what works. Raising interest means more value identifiable (not necessarily measurable), which in turn means more interest from financiers. Remember, it’s not about changing the entire system but rather improving what works. They are the necessary step towards deeper problem-solving by the “R&D” firms. They, in the end, are the true savers. And we start again, new and better solutions from the “Solve“ phase are tested in the “Use” phase and so on and so forth.

By linking well-known business models with an EoM, we will be capable of developing sustainable businesses within a sustainable ecosystem and, any time we are drifting away, we will be in a position to quickly adjust.

This is more or less what we are doing and have been doing for centuries. But lately, it seemed to us that we needed to write down this process in order to:

1. Raise awareness and structure sustainable action plans;

2. Give back confidence in our ability to solve urgent environmental issues.

Once you’ve retrieved confidence and chosen where your business will be able to help, you can tackle the rest of the EoM (but you’ve made the bigger step!):

Fig 2: Earth operating Model framework

Set clear objectives about what you’ll achieve by implementing your EoM. This is closely related to the scale it can have. Some businesses can effectively touch millions of people but it might be only to raise awareness. Others may have local contributions but a lasting impact. Whichever, we need you to support change. Your scale is linked to information directly available on your business model. In the case of the canvas business model, it should lie between your customer segments and your channels. The key savings, modeling activities, and qualitative impacts describe what you are undertaking and what the benefits will be. The key suppliers represent the phase before, put differently whom you need to rely on to perform your activities. Key partners are the ones in the next phase, those who need your inputs to keep the circle running. Both should be described in the key partners section of the canvas business model.

EoM in practice: more fun, more impact

Clearly, a charity or a tech startup does not belong to the same phases. We’d probably assigned a mix of “Bridge” and “Use” for the charity and “Solve” for the tech startup. Let’s take our example, what is the EoM of PlayTiX?

Fig 3: PlayTiX’s EoM

Our goal is to operate as a “Band-aid” company at first by fueling willingness to act, time, and money towards some cleaner uses. The solutions are not used by us per se and, as such, we don’t have a strong impact in the “Use” phase. However, we have a large workforce at our disposal: 3 billion players, most of whom would be happy to spend this entertaining time productively. Therefore, we think we have a strong influence in the “Expand” phase by democratizing usages to our B2C market but also because we want to pioneer this type of thinking (or at least its implementation). We think of ourselves as the use case for the gaming industry, an industry that seems far from having a central role in the sustainable loop. With the framework and some creativity, there is no reason your firm cannot find its place and play its role in fixing climate issues.

Watch out for greenwashing

Just a quick warning about greenwashing. If you’re not already familiar with the term greenwashing, it’s the practice of marketing products in a way designed to convince consumers that the product is more environmentally friendly than it actually is. Of course, we can find manipulative companies assigning fake attributes to their product. However, with the amount of information at hand, we can spot them pretty easily. The most deceitful are the ones practicing hidden trade-offs. It often relies on a single environmental claim like “recycled content,” while ignoring other — often more important — aspects of sustainability. While no company could be 100% sustainable on all aspects (at least for now), it’s important to investigate them to avoid robbing Peter to pay Paul. This why elaborating a framework annexed to the business model will force to think of a real and long-term solution and bring to light real proof points. When investors look at your business model, they may start to trust you with a slide, but they will soon need proof of the implementation. By the same token, when consumers will trust your activity for the deep entanglement with ethical notions, they will ask for some proof. The EoM is thought to raise awareness and bring a little bit more transparency at the same time.

Conclusion

The sustainable loop has been our natural way to create the society we live in. For once, we may be in a phase where we are too slow to get to the end of the cycle (solve phase) and this is why, at PlayTiX, we developed this framework: to come up with good questions and raise awareness. Any business can include one or several of the EoM frameworks to start giving momentum to sustainable change. I bet visualizing a video game company within this framework was not straightforward, but if we can, most of the industries will be able to as well.

What are your thoughts and how do plan on being sustainable?

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Writter : Jérôme Wurster, PlayTiX Co-founder &CEO