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Business models for doing well and doing good

Business models for doing well and doing good. EMC Feb 11 2011 Prof. Morten Hansen. Agenda. What’s wrong with CSR today Key issues, by industry Business models for doing well and doing good Taxonomy. What’s wrong with CSR. Generic list of 100 items Not linked to core business

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Business models for doing well and doing good

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  1. Business models for doing well and doing good EMC Feb 11 2011 Prof. Morten Hansen

  2. Agenda • What’s wrong with CSR today • Key issues, by industry • Business models for doing well and doing good • Taxonomy

  3. What’s wrong with CSR • Generic list of 100 items • Not linked to core business • Not very important in company • VP of CSR/Sustainability • Resolving key business issue often requires huge changes in core business • CSR needs to be re-thought

  4. Rethinking CSR • From 100-list to core business strategy • From VP to CEO • From CSR to Porter’s “CSV”--Creating Shared value • From business models for making profits to business models for doing well and doing good; It’s all in the “and” • Requires 1) identifying core business issues, and 2) creating new business models

  5. 1. Identifying core business issue Question: What’s the single most important social/environmental issue that the company should be concerned with?

  6. 2. Creating a new business model (the hard part) • Product strategy • Process strategy • People strategy

  7. Product Strategy • Portfolio: product-market composition • Danone: shifting portfolio • Products themselves • Improvements (e.g., food with less sodium) • Segmentation

  8. Product market segmentation • Premium segment - Costs extra, willing to pay more - Benefit: direct personal (eg healthy food, status) or indirect (save the planet) - Greenerprinter: “Dark Green” - Danone, healthy yogurts - 10-15% of a market

  9. Product market segmentation • Light segment - Not willing to pay more, but will buy if social/environmental - Greenerprinter: “Light Green” - Customers will not offset extra costs

  10. Product market segmentation 3) Good value, happens to be green/social Favorable economics for customer a) Pay more now, save more later - HydroPoint, Prius b) Good value right away - Zipcar, bike rental in Paris c) Lower price, because green/social reduced costs - requires change in process

  11. Process Strategy • Reduce resource use in company - Herman Miller chair 2) Product lifecycle approach - Reckitt Benckiser (detergent) 3) Supplier/Customer shared value - Improve total productivity (eg, from fair trade to better yield)

  12. People Strategy • Sustainability => talent attraction - People want to work for leading companies - Is this really the case? 2) Better social model => talent attraction - Work/life balance, daycare center, good environment, etc. - SAS Institute (Best place to work)

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