Designing a sustainable business model: A development project in the construction industry

Abstract

As humanity’s impact on natural ecosystems is escalating, businesses are under increasing pressure to disconnect growth from environmental degradation. Construction is one of the industries where new circular solutions are most needed. It accounts for nearly half of all extracted material, 40% of all emissions, 40% of the energy consumption and 40% of all waste produced. Much of the waste is surplus mineral materials, such as gravel and sand, collectively called masses, which could have been reused or recycled, but rarely is. A great deal of these non-renewable natural resources therefore ends up in landfills. Instead, virgin mineral materials are mined to supply the infrastructure development that society needs, like new roads. Business models in construction are largely linear and volume-driven.

Feiring is one of Norway’s biggest stone mining companies and was the case of this thesis. The objective of this development project was firstly to understand what characterizes Feiring’s value network and the needs of contractors in relation (un)sustainability and mass management, and secondly to develop a new sustainable business model for Feiring. Simply put, the task was to help Feiring make more money from selling less virgin stone.

The thesis followed research-oriented development as the overarching methodology. Design thinking (DT) and the double diamond was the overall process framework, along with tools from circular economy and business model innovation (BMI). It included qualitative methods such as explorative and evaluative interviews, co-creative workshops and thematic analysis. A key output of the project was a system map, which shows the main needs of contractors, drivers of waste and unsustainability in the value network, as well as key processes and material flows. Also developed were prototypes of a new sustainable business model for circular mass management and strategies for the sustainable transformation of Feiring.

The sustainable business model was evaluated against criteria from four theories, which indicated that it has high potential, and that Feiring should further refine, test and implement it. The evaluation of the development approach suggested it was a driver for sustainability in this industrial context. But the approach also it had its clear limits. This includes a too singular focus on user needs and the value proposition, lacking systemic perspectives and the full business model. Also, BMI and circular economy’s sustainability impact is arguably limited by goods-dominant logic. It was also found that DT encouraged co- creation in the innovation process, but it did not similarly encourage the development of co-creative and ecosystem-oriented business models. This provides some important empirical nuances, and supports, and is supported by, key findings in the literature.