Strategy, Targets & Performance Management
Business model transformation
Fundamental change to how a firm creates, delivers and captures value so that the model itself generates positive environmental and social outcomes rather than treating them as add-ons.
Expert review openNo editor-accepted expert review yetDefinition
The redesign of an organisation's business model — its value proposition, value creation and delivery architecture, and value capture logic — so that sustainability is embedded in how the business operates, not bolted onto an unchanged core. Academic frameworks (building on Richardson's business-model components and Bocken's value-mapping work) define sustainable business model innovation as change in how a firm operates to create positive impacts, or significantly reduce negative consequences, for the environment and society.
References
SBMI definition (operational change for positive impact); value proposition/creation-delivery/capture components; Bocken value mapping; Osterwalder canvas lineage.
Five-paradigm framework (sustainable value design, multi-stakeholder value flows, value networks, mutual value creation, internalising externalities via product-service systems).
Overview
What it means
The concept distinguishes transformation from optimisation: eco-efficiency improves an existing model; transformation replaces it — for example shifting from selling products to product-service systems, from linear throughput to circular loops, or from shareholder-only to multi-stakeholder value creation that treats the environment and society as stakeholders.
Evans and colleagues describe the required shifts as five paradigms, including designing for sustainable value, managing value flows across multiple stakeholders, and internalising externalities. It is a recognised capability gap: most firms pilot sustainable models but struggle to scale them against incumbent-model economics.
How it is used
Strategy teams use business-model canvas variants (triple-layered canvas, value mapping) to design transformations; transition plans operationalise them; investors probe business-model resilience to transition risk in valuation.
Why it matters
Incremental efficiency cannot deliver absolute decoupling; whether firms can transform business models — profitably and at scale — determines how much of the private sector actually transitions.
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