Sustainable by design: An organizational design tool for sustainable business model innovation

Abstract

When firms want to meet ambitious sustainability targets, they often fail to deliver on more radical innovation at the level of the business model. They often struggle to design and successfully implement new, sustainable business models in practice. While sustainability tools might help bridge the design-implementation gap in business, they often lack a grounding in both theory and practice. In this study, we build on empirical research that recognises the importance of dynamic capabilities to develop sustainable business models, and the barriers and drivers that might exist at the organizational level. We investigate the following research question: How can firms address organizational design issues in order to develop the dynamic capabilities necessary for sustainable business model innovation? The research method consists of four stages derived from the iterative, user-involved method of design science research: 1) identifying the problem and defining objectives for a solution; 2) design and development; 3) demonstration; and 4) evaluation. The work results in the “Sustainable By Design” tool which was used in a workshop setting with two large multinational companies seen as sustainability leaders in their sectors: DSM and IKEA Retail (Ingka Group). The work makes two contributions. First, we contribute the Sustainable By Design tool which practitioners can use to evaluate their current organizational design, identify barriers and drivers for sustainable business model innovation, and develop strategic interventions to engage in organizational transformation. Second, we elucidate the theoretical connections between organizational design, dynamic capabilities, and sustainable business model innovation, and suggest directions for future research.