social business models
Long Range Planning 43 (2010) 291e307
http://www.elsevier.com/locate/lrp
Business Models: Creating New
Markets and Societal Wealth
James D. Thompson and Ian C. MacMillan
This thought piece proposes a framework for addressing the challenges of poverty and human suffering so widespread around the world. Based on the WSWP action research program, we suggest that visionary businesses can play a role in creating new business models that open up new markets, and simultaneously attend to societal wealth improvements. This framework should be of great interest to global firms intent on creating new markets for their own futures. One of the critical problems managers face in opening up new markets is to maintain fiduciary responsibility in the face of little, if any, market information. We consider such environments to be characterized by significantly high e or near-Knightian e uncertainty, and propose a framework for designing business models that simultaneously attend to the planning and project evaluation concerns of such firms, as well as the societal needs of the activity’s proposed beneficiaries.
Ó 2009 Elsevier Ltd. All rights reserved.
If you don’t know for sure what will happen, but you know the odds, that’s risk . if you don’t even know the odds, that’s uncertainty
(Frank Knight1)
Introduction
This article proposes an alternative approach to the charitable aid model in the challenge of improving the lot of large numbers of the hundreds of millions of human beings mired in abysmal poverty. We argue that many of their problems can be massively ameliorated by developing business models that create new markets, even in the face of high uncertainty, and which simultaneously attack such problems and generate profits. Further, we suggest this approach should be of considerable interest to visionary global firms interested in forging new markets for their own future offerings.
There has been rapidly escalating concern over recent years
http://www.elsevier.com/locate/lrp
Business Models: Creating New
Markets and Societal Wealth
James D. Thompson and Ian C. MacMillan
This thought piece proposes a framework for addressing the challenges of poverty and human suffering so widespread around the world. Based on the WSWP action research program, we suggest that visionary businesses can play a role in creating new business models that open up new markets, and simultaneously attend to societal wealth improvements. This framework should be of great interest to global firms intent on creating new markets for their own futures. One of the critical problems managers face in opening up new markets is to maintain fiduciary responsibility in the face of little, if any, market information. We consider such environments to be characterized by significantly high e or near-Knightian e uncertainty, and propose a framework for designing business models that simultaneously attend to the planning and project evaluation concerns of such firms, as well as the societal needs of the activity’s proposed beneficiaries.
Ó 2009 Elsevier Ltd. All rights reserved.
If you don’t know for sure what will happen, but you know the odds, that’s risk . if you don’t even know the odds, that’s uncertainty
(Frank Knight1)
Introduction
This article proposes an alternative approach to the charitable aid model in the challenge of improving the lot of large numbers of the hundreds of millions of human beings mired in abysmal poverty. We argue that many of their problems can be massively ameliorated by developing business models that create new markets, even in the face of high uncertainty, and which simultaneously attack such problems and generate profits. Further, we suggest this approach should be of considerable interest to visionary global firms interested in forging new markets for their own future offerings.
There has been rapidly escalating concern over recent years
References: 1. F. H. Knight, Risk, Uncertainty and Profit, Hart, Schaffinger & Marx, Boston MA (1921). 2. W. Easterly, The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done so Much Ill and so Little Good, The Penguin Press, New York (2006); D There is Another Way for Africa, Farrar, Straus and Giroux, New York (2009). 3. M. Yunus, B. Moingeon and L. Lehmann-Ortega, Building social business models: lessons from the Grameen experience, Long Range Planning 43(2e3), 308e325 (2010). 6. C. K. Prahalad, The Fortune at the Bottom of the Pyramid, Wharton School Publishing (2003). 7. F. M. Santos and K. M. Eisenhardt, Constructing market and shaping boundaries: entrepreneurial power in nascent fields, Academy of Management Journal 52(4), 643e671 (2009). 8. J. Adams, Risk, Routledge, London, (2002) As Adams notes further:. in common, non-technical, usage this distinction between risk and uncertainty is frequently blurred and the words are used interchangeably 9. M. H. Boisot and I. C. MacMillan, Crossing epistemological boundaries: managerial and entrepreneurial approaches to knowledge management, Long Range Planning 37(6), 505e524 (2004). 10. S. D. Sarasvathy, Causation and effectuation: toward a theoretical shift from economic inevitability to entrepreneurial contingency, Academy of Management Review 26(2), 243e263 (2001). 11. See: Real Options reasoning as espoused by R. G. McGrath and I. C. MacMillan, Discovery Driven Growth, Harvard Business School Press (2009); or A for Growth, Wharton School Publishing (2008). 12. M. H. Boisot and I. C. MacMillan (2004) op. cit. at Ref. 9. 14. H. E. Aldrich and C. M. Fiol, Fools rush in? The institutional context of industry creation, Academy of Management Review 19(4), 645e670 (1994); M 15. R. G. McGrath, Business models: a discovery driven approach, Long Range Planning 43(2e3), 247e261 (2010). 16. C. Zott and R. Amit, Business model design: an actvity system perspective, Long Range Planning 43(2e3), 216e226 (2010). 17. C. W. F. Baden-Fuller, Exit from declining industries and the case of steel castings, The Economic Journal 99, 949e961 (1989). 18. R. H. Coase, The nature of the firm, Economica 4(16), 386e405 (1937). 19. R. H. Coase, The problem of social cost, Journal of Law and Economics 3, 1e44 (1960). 20. W. Easterly (2006) op. cit. at Ref. 2; D. Moyo, Why foreign aid is hurting Africa The Wall Street Journal http://online.wsj.com/article/SB123758895999200083.html [accessed 21.03.09]. 21. See S. D. Sarasvathy (2001), op. cit. at Ref. 10. F. M. Santsos and F. M. Eisenhardt (2009), op. cit. at Ref. 7.