Solutions to global

sustainability problems

through responsibility

innovations Minna Halme

15.4.2013

16.4.2013

• Sustainability challenges as a starting point for innovation

• How is sustainability entrepreneurship different from

conventional entrepreneurship?

• What resources are needed for starting a sustainability

enterprise?

• Examples now and future

16.4.2013

Outline

Sustainability Challenges A Systems Overview

Energy

extraction

Non-

renewable

resources

Water

Biodiversity

Soil

Deforestation Pollution

Atmosphere

Population

Inequality Poverty

Climate

change

Food

16.4.2013 Minna Halme JOC

Sustainable Development

16.4.2013 Minna Halme JOC

Business: Corporations SMEs cooperatives other

Governments: Global Regional (e.g. EU) National Local

Civil society: NGOs CSOs Citizens & consumers

Responsibility types in business

Responsibility type

Philanthropy Integration Innovation

Dim

en

sio

n o

f acti

on

Relationship to core

business Outside of firm’s core

business Close to existing core

business Enlarging core

business or

developing new

business

Target of responsibility Extra activities Environmental and

social performance

of existing business

operations

New product, service

or business model

Expected benefit Image improvement and

other reputation impacts Improvements of

environmental and

social aspects of

core business

Business opportunity

for now & future

Example Microsoft's software

donations for charity

groups.

Merck employees build

timber houses for

poverty-stricken people

Certifying facilities with

e.g. ISO14001 or

SA8000

Zero carbon energy

technologies;

Inclusive business and

eco-efficient

service business

models

Halme, M and Laurila, J (2009) Journal of Business Ethics, 84: 325-339

16.4.2013 Minna Halme JOC

Taking a sustainability challenge as a starting point of innovation

Energy

extraction

Non-

renewable

resources

Water

Biodiversity

Soil

Deforestation Pollution

Atmosphere

Population

Inequality Poverty

Climate

change

Food

16.4.2013 Minna Halme JOC

Conventional and sustainability

entrepreneurship Conventional

entrepreneurship

Sustainability entrepreneurship

Main goal Create economic value (i.e.

earn money)

Contribute to solving

environmental and social

problems and create economic

value (earn money)

Role of

economic

goals

Ends Means and ends

Role of non-

economic

goals

None beyond legal

requirements

Environmental and social goals as

ends

Organizational

development

challenge

Economic growth From focus on sustainability

issues to integrating economic

issues

16.4.2013 Minna Halme JOC

Adapted from: Belz & Binder (2013) Sustainability entpreneurship: A Pcocess Model. Paper presented at Aalto University CESR seminar on March 15 & Schaltegger and Wagner (2011) Business Strategy & the Environmentl, 20(4): 222-237

Generic model of entrepreneurial

process

16.4.2013 Minna Halme JOC Source: Shane, 2003

Model of sustainability

entrepreneurial process

16.4.2013 Minna Halme JOC Source: Belz & Binder (2013) Sustainability entpreneurship: A

Pcocess Model. Paper presented at Aalto University CESR seminar on March 15.

Findings from sustainability

innovations’ study

16.4.2013 Minna Halme JOC

Profit as a goal

Fin

Profit as a means

Social impact as a means

Social impact as a goal

The Missionary Business

Profit from Principles

Social Purpose Business

• PROBLEM: Subsistence entrepreneurs have

too little money or can’t get bank loans.

• SOLUTION: MyC4 is a microfinance bank

operating through the internet since 2007. • MyC4 grants loans to small enterprises in African

countries

• Investors are individuals and organizations in developed

countries.

• Each investor can choose the loan recipient, follow

how the enterprise succeeds and can also give advice.

• Local ”providers” in Africa screen prominent

entrepreneurs.

• REVENUE MODEL: MyC4 charges a 6%

interest fee on the loans when they are repaid.

• OUTCOME: Over 19,000 investors from 115

countries have invested over €15 million

through the MyC4 website. Over 8,000

businesses in seven African countries have

been funded.

Microfinance over the internet

Presentation name and

author - 4/26/2013

12

Clewer – clean water

• Sustainability innovation: Leapfrog

technology that can purify toxics from

waste water with help of precision

bacteria. Can purify nitrogen from

waste water in all temperatures above

+3 C, and could be of major

importance in combating the

eutrophication of the Baltic Sea. 90%

less energy consumption to next best

competitor. Figure. Researchers visit Muurala waste water treatment

plant. In the forefront small part of the traditional water

purification system, at the back Clewer purification

process, which takes only about 5-10% of the size of the

traditional system.

What resources do starting

sustainability entreprises typically

need?

16.4.2013 Minna Halme JOC

Source: Halme & Korpela (2013) Scarcity or abundance? An examination of resources behind responsible innovation in Nordic SMEs. Forthcoming in Best Paper Proceedings of the Academy of Management 2013 and Business Strategy and the Environment.

Financial

capital

Capabilities Social capital Reputational

assets

Equity

Liabilities

Industry knowledge

Intellectual Property

Rights (IPR)

Networks

R&D cooperation

Reputation

• Yes

– In the sample of 13 Nordic small sustainability enterprises, the

most scarcely resourced ones started with only equity and R&D

cooperation

– Proposition: For a scarcely resourced enterprise, equity and R&D

cooperation appear necessary resources for commercializing a

sustainability innovation

– Why these? Sustainability innovators can compensate lack of

resources by cooperation with external parties (customers or

other stakeholders).

– MyC4 and Zealand Care

• And no – see the next slide

16.4.2013 Minna Halme JOC

Can you set up a sustainability

enterprise with scarce resources?

Source: Halme & Korpela (2013) Scarcity or abundance? An examination of resources behind responsible innovation in Nordic SMEs. Forthcoming in Best Paper Proceedings of the Academy of Management 2013 and Business Strategy and the Environment.

• We compared technology, business model and design

based sustainability innovations

• Sustainable business model innovations require less

resources than technology innovations

• For technology-based sustainability innovations industry

knowledge appers an igniting resource. Entrepreneurs

need it to access other resources, which are in turn needed

to make the tech-innovation into a commercial offering.

• Advice to resource-poor wanna-be sustainability

entrepreneurs: head for a business model innovation

16.4.2013 Minna Halme JOC

Source: Halme & Korpela (2013) Scarcity or abundance? An examination of resources behind responsible innovation in Nordic SMEs. Forthcoming in Best Paper Proceedings of the Academy of Management 2013 and Business Strategy and the Environment.

Resource needs vary between

sustainability innovation types

16.4.2013 Minna Halme JOC

How to change the world –students’

business models

• Professor Minna Halme, minna.halme@aalto.fi

• http://management.aalto.fi/en/research/groups/responsibility/

• http://management.aalto.fi/en/research/groups/bop/

• http://www.aaltoglobalimpact.org/

• https://people.aalto.fi/index.html?language=english#minna_halme

16.4.2013 Minna Halme JOC

Thank you!