Business modelling in farm-based biogas production: towards network-level business models and stakeholder business cases for sustainability

Niklas Karlsson; Maya Hoveskog; Fawzi Halila; Marie Mattsson

doi:10.1007/s11625-018-0584-z

Business modelling in farm-based biogas production: towards network-level business models and stakeholder business cases for sustainability

Karlsson, Niklas; Hoveskog, Maya; Halila, Fawzi; Mattsson, Marie 2018-06-01 00:00:00 Farm-based biogas production is a promising renewable energy technology with the potential for creating sustainable economic, environmental, and social value. However, Swedish farmers engaged in this activity struggle to turn a proﬁt because of high-investment costs and severe price competition with fossil fuels. One way to address this situation is to re- organize the activity by innovating the business model (BM) towards sustainability. In this study, a team of researchers took an action research approach that proposed solutions for the ﬁnancial difﬁculties at a farm cooperative that intended to develop its farm-based biogas production. Two participatory workshops (including researchers, producers, students, and consultants) were conducted using the sustainable business-modelling tool called the Flourishing Business Canvas (FBC). Based on the 215 ideas developed in the workshops, ﬁve sustainable BM prototypes were created. These ﬁve prototypes form the basis of an approach for initiating the development of a network-level BM for sustainability that highlights its superiority over a single-ﬁrm BM. The network-level BM’s main advantage in the farm-based biogas context is its strong focus on stakeholder collaboration that supports the development of a stakeholder business case for sustainability. Overall, this study highlights the usefulness of the network concept in the practice of sustainable BM development. Collaborative business modelling for developing network-level BMs that address environmental and social problems for and with stakeholders can be an effective way to increase long-term ﬁnancial proﬁt and promote the growth of a ﬁrm, a network, or an industry. Keywords Business modelling Stakeholders Business case Sustainability Biogas production Introduction Farm-based biogas from organic farm waste can create green energy, develop the circular economy in rural areas, The European Union’s research and innovation framework, and promote local possibilities for sustainable growth Horizon 2020, highlights activities aimed at dealing with (Boulamanti et al. 2013). Previous research (Bergh 2013; various societal challenges. These activities relate to Karlsson et al. 2017) lists the success factors related to renewable energy production, sustainable agriculture, and Swedish farm-based biogas. However, some farmers climate change (European Commission 2011). The engaged in biogas production, such as certain farmers in renewable energy technology behind farm-based biogas Sweden, have experienced ﬁnancial difﬁculties that hamper production, under the right conditions, can help to meet the development of the activity (Fallde and Eklund 2015). these challenges. As Lantz (2013) found in research on biogas production in Sweden, production, distribution, and marketing barriers (e.g., high-investment costs, restricted markets, falling Handled by Karel F. Mulder, The Hague University of prices, and short-term subsidies) are the primary problems Applied Science, Netherlands. with realizing farm-based biogas production as a prof- itable business activity. Given these ﬁnancial difﬁculties, & Niklas P.E. Karlsson niklas.karlsson@hh.se Swedish farmers may need to change their business models (BM) as they create, deliver, and capture value (Amit and School of Business, Engineering and Science, Halmstad Zott 2012) in the production of biogas. University, Kristian IV:s vag 3, 301 18 Halmstad, Sweden 123 Sustainability Science There are different ideas about on what a BM actually is. with its systems perspective, is a complex, collective, and Traditionally, a BM is deﬁned as a conceptual tool that co-creational activity that emphasizes active social partic- consists of a set of elements and relationships that express a ipation and interaction (Demil and Lecocq 2015). In col- company’s logic for earning money (e.g., Osterwalder and laborative situations, business modelling can lead to new Pigneur 2010; Teece 2010). Zott and Amit (2010), who insights and can support the collaborating actors’ sustain- take an activity system perspective, view the BM as a ability policies and practices while simultaneously high- network (i.e., a system of interdependent activities that lighting strong and weak areas in their BMs. helps a ﬁrm create value by working with its partners). The In summary, addressing the current ﬁnancial difﬁculties emerging view is that BMs should take a network-centric for the Swedish farm-based biogas industry through perspective rather than a single-ﬁrm-centric perspective simultaneous creation of environmental and social value (Evans et al. 2017). Such network-level BMs may unlock requires systematic collaboration in an extended network new competences, open new markets, and advance unique of farmers and their stakeholders. The aim of this study is, value propositions (Lindgren et al. 2010; Palo and Ta¨htinen therefore, to propose an empirically based approach for the 2013). identiﬁcation and engagement of relevant stakeholders in In line with the network-centric perspective, previous ﬁrms’ development of network-level BMs aimed at pro- research (e.g., Negro et al. 2007; Negro and Hekkert 2008; moting sustainability and proﬁtability. More speciﬁcally, Vernay et al. 2013) has addressed the beneﬁts of BM this paper addresses the following research question: How collaboration in farm-based biogas production when net- can business modelling initiate the transition towards a worked ﬁrms co-create value using shared resources, network-level BM that can realize farm-based biogas pro- knowledge, and experience. Such agricultural networks can duction as a stakeholder business case for sustainability to promote individual farmers’ interests as well as the inter- overcome its ﬁnancial difﬁculties? The setting of the study ests of other stakeholders (e.g., suppliers of feedstock and is a Swedish, farm-based biogas cooperative that has transporters of digestate). In addition, these networks, encountered difﬁculties in its early development stage. The which can also promote society’s sustainability interests, cooperative needs help in overcoming these difﬁculties. may result in more government support for farmers (e.g., The primary data for the study were collected in two price support) and new ways of using the existing resour- ideation workshops. ces, reducing costs, and increasing proﬁt (Amer and Bol- The rest of the paper is structured as follows. Sec- wig 2013; Ericsson et al. 2013; Hellstro¨m et al. 2015; tion ‘‘Theoretical background’’ presents the theoretical Martin 2015). To capitalize on these beneﬁts, a change in background and the relevant concepts for the study. Sec- perspective is needed—from value creation at the single- tion ‘‘Method’’ presents the paper’s research method. ﬁrm level to value co-creation at the network level. This Section ‘‘Sigma - the biogas-producing farm cooperative’’ change requires development of a network-level BM presents the case on which the research is based. Sec- shared by ﬁrms and their stakeholders. tion ‘‘Results’’ presents the ﬁndings from the ideation Designing a new or modiﬁed activity system and workshops and the network-level BM approach. Sec- recombining the ﬁrm’s (and its stakeholders’) resources tion ‘‘Discussion’’ discusses the results and contributions through innovating a BM can be crucial in making radical of this research, including the theoretical and managerial improvements that enhance the sustainable performance of implications and suggestions for future research. Sec- BMs in which greater environmental and social value is tion ‘‘Conclusions’’ presents the conclusions. created and economic sustainability is delivered (Stubbs and Cocklin 2008). Consequently, researchers, including Hall and Wagner (2012) and Boons and Lu¨deke-Freund Theoretical background (2013), call for more research on the integration of sus- tainability in ﬁrms’ BMs. More speciﬁcally, the traditional Network-level business models for sustainability BM view of value creation for customers and shareholders should shift to a view that supports value creation for and A BM can be deﬁned as a unit of analysis that describes with a broader range of stakeholders, i.e., developing and ﬁrm’s activities (Amit and Zott 2001). Others describe the realizing a stakeholder business case for sustainability BM as a holistic concept that presents the various com- (Schaltegger et al. 2017). This need is especially relevant in ponents of a ﬁrm’s activities that propose, create, deliver, the farm-based biogas industry where it is necessary to and capture value (Bocken et al. 2014; Chesbrough and signiﬁcantly improve long-term ﬁnancial viability. Rosenbloom 2002; Demil and Lecocq 2010; Morris et al. To that end, ﬁrms may ﬁnd it advantageous to engage in 2005; Osterwalder and Pigneur 2010). Osterwalder et al. collaborative business modelling (Karlsson et al. 2018). (2005) describe how the BM concept is commonly used: Business modelling, especially in the sustainability context (1) to interact with suppliers, customers, and partners; and 123 Sustainability Science (2) to reduce business complexity to a comprehensible social sustainability for the ﬁrm and its surroundings level. Therefore, a BM has a set of components that (Stubbs and Cocklin 2008). expresses a ﬁrm’s business logic. Traditionally, a BM Thus, the collaborative view of sustainable BMs extends focuses on the organization and infrastructure of the ﬁrm’s the single-ﬁrm, traditional BM perspective to a network- supply chain and customer relationships. A traditional BM level BM perspective (Abdelkaﬁ and Tauscher 2016). The also takes a single-ﬁrm focus as it emphasizes economic network-level BM, which is open-ended and dynamic, value while neglecting environmental and social value focuses on value co-creation and cost reduction. This focus (Joyce and Paquin 2016), thus undermining the realization requires continuing development as the environment (and of economic, environmental, and social growth (i.e., sus- even the network) changes (Bankvall et al. 2017). tainability) (Schaltegger et al. 2016a). According to Palo and Ta¨htinen (2013), the network-level With the intention of identifying, forming, and/or acting BM reﬂects close cooperation among the networked ﬁrms. upon business opportunities, ﬁrms establish relationships Interactions, which are the basis of this cooperation, are, and collaborative arrangements such as networks (Bessant therefore, crucial in the creation of the network-level BM and Francis 1999). Relationships are often established in a (Araujo et al. 2003). network that produce both tangible and intangible values For biogas production, a network-level BM may consist through dynamic exchanges between two or more indi- of a group of upstream suppliers (e.g., technical equipment viduals, groups, or organizations, whether in the public or and biological feedstock suppliers), downstream suppliers the private sector (Allee 2011). Networks are thus com- (e.g., biogas and digestate distributors and retailers), and monly used to seek potential partners for collaborative BM customers (e.g., municipalities and manufacturing indus- development intended to achieve individual and joint goals tries) (Huttunen et al. 2014). Competitive advantage and (Lindgren et al. 2010;Osterle et al. 2001) such as sus- sustainable value creation in biogas production can thus be tainable value creation. achieved by developing and supporting a joint network- The literature shows that ﬁrms in networks are more level BM that connects network partners’ competencies successful in producing sustainable value than stand-alone and knowledge and supplements the ﬁrms’ individual BMs ﬁrms (e.g., Johnson and Suskewicz 2009; Rohrbeck et al. (Lindgren et al. 2010). 2013). The main reason for such success is the networked However, developing and implementing a network-level ﬁrms’ explicit focus on the holistic, stakeholder perspec- BM is a complex undertaking that requires the assistance of tive. This perspective not only beneﬁts customers and ﬁrms all network actors. They must be prepared to establish (shareholders) but also the overall system in which the BM relationships, to work with others (Hellstrom et al. 2015; is embedded (Schaltegger et al. 2016a). As a result, the Mo¨ller et al. 2005), and to share a common vision for networked BM can enhance value creation and capture business development. Network-level BM activities, aspects of the system more readily than the single-ﬁrm BM therefore, require that the network actors understand (and that supports the traditional (proﬁt-ﬁrst) deﬁnition of cor- accept) change (Freytag and Clarke 2012). In some porate success (Lu¨deke-Freund and Dembek 2017). Given instances, acceptance of a network-level BM may mean this perspective, the research on sustainable BMs increas- individual ﬁrms lose some control over their individual ingly takes a network-level approach that embraces the BMs as they work with the network partners (Zott et al. system dynamics perspective on the embeddedness of BMs 2011). Nevertheless, rethinking the ﬁrm as a network in society and their relationship to their environments partner may facilitate the core integration and delivery of (Rauter et al. 2017; Upward and Jones 2016). sustainable value in the long term (Evans et al. 2017) In contrast to the traditional BM, a sustainable BM through close collaboration with stakeholders as they provides substantial positive and/or signiﬁcantly reduced realize the business case for sustainability (Schaltegger negative environmental and social impacts through chan- et al. 2017). ges in the way the ﬁrm and its value network create, deliver, and capture value, or in the way that they change The business case for sustainability the value propositions (Bocken et al. 2014). Further, Lu¨deke-Freund (2010) points out that, compared to the In the business case for sustainability, a ﬁrm’s economic traditional BM, the sustainable BM advances competitive success is realized through, not just with, environmental advantage through producing greater customer value whilst and social activities (Kreiss et al. 2016; Schaltegger et al. contributing to the long-term development of the ﬁrm and 2012). Schaltegger and Burritt (2015) report that the rela- providing various beneﬁts to the public and private sectors. tion between business cases and sustainability is linked to A sustainable BM also includes structural and cultural the ﬁrm’s ethical foundations and sustainability manage- beneﬁts in collaboration with a broad range of stakehold- ment activities. These authors differentiate amongst four ers, all of whom support economic, environmental, and business cases for sustainability: cases that are reactionary, 123 Sustainability Science reputational, responsible, or collaborative. The reactionary claims that business modelling works particularly well in and reputational business cases deal with sustainability unpredictable situations. opportunistically in which the main goal is the maxi- Because of uncertainties and risks in terms of time and mization of (short-term) proﬁt (e.g., as a reaction to resource limitations in the innovation of BMs, it is com- increased market demand for sustainability-oriented prod- monly recognized that ﬁrms hesitate to test new or modi- ucts/services or as a way to improve ﬁrm reputation and ﬁed BMs in the real world (Evans et al. 2017). Business brand value to gain business beneﬁts). In contrast, the modelling provides an inexpensive and low-risk solution to responsible and collaborative business cases integrate this problem, because it allows researchers and practi- sustainability as a central part of ﬁrm management to tioners to acquire stakeholder input on the BM develop- create conditions for improved organizational operations ment via the development of BM prototypes. The and long-term business success. Developing joint business prototypes, which promote objective decision-making and cases through close collaboration with stakeholders offers strategy formulation, are used for experimentation and networked ﬁrms the opportunity to enhance their social and visualization of a new and sustainable BM that creates, environmental well-being as well as sustain their ﬁnancial delivers, and captures value for all stakeholders (Bocken viability. et al. 2014; Seidenstricker et al. 2014). According to Schaltegger et al. (2017) further emphasize the impor- Upward and Jones (2016), a visual representation of a tance of stakeholder involvement in business cases for sustainable BM prototype uses a common language that is sustainability. In their stakeholder theory perspective on especially effective for promoting effective collaboration business cases for sustainability, they propose that a and shared understanding of the factors a ﬁrm considers in stakeholder business case for sustainability explicitly aims setting its goals. at value creation for and by stakeholders. This goal can be Rohrbeck et al. (2013) and Bocken et al. (2013) report achieved with business activities that effectively respond to that business modelling can be facilitated by the use of a sustainability problem (e.g., climate change) in a way that collaborative business-modelling tools. The two most creates value for stakeholders involved in the problem widely used tools developed to support business modelling solution as well as for other stakeholders who are affected by practitioners and researchers are the Business Model by the problem. It is thus important to involve all stake- Canvas (Osterwalder and Pigneur 2010), and its derivative, holders early in the development of business cases for the Value Proposition Canvas (Osterwalder et al. 2014), sustainability, so that the potential consequences of the that focuses on the value proposition element (Hanshaw proposed business activities can be identiﬁed. Researchers and Osterwalder 2015). However, these tools take a single- who have studied the collaborative development of the ﬁrm perspective and are limited to traditional business stakeholder business case for sustainability have found that modelling that primarily focuses on customer value and business modelling is an important facilitator of its success proﬁt maximization. As a result, the single dimension (Geissdoerfer et al. 2016; Joyce and Paquin 2016; Karlsson (economic value) of the Business Model Canvas and Value et al. 2018; Schaltegger et al. 2016b). Proposition Canvas makes them unsuitable for generating sustainable BMs in which the full stakeholder network Business modelling (e.g., suppliers, local companies, municipalities, and soci- ety) is integrated in a holistic perspective. Realizing sustainable value co-creation for and with a wide Several visual business modelling tools have been range of partners and stakeholders is a challenging task. designed for use in the development of sustainable BMs However, the use of business modelling has been shown to and BM prototypes. These tools integrate a ﬁrm’s eco- be effective in managing the task (Geissdoerfer et al. 2016; nomic, environmental, and social concerns taking a net- Joyce and Paquin 2016; Karlsson et al. 2018). Business work perspective. The Value-Mapping Tool (Bocken et al. modelling can be deﬁned as the creative process of 2013), the Triple Layered Business Model Canvas (Joyce experimenting with BM elements in which innovative BMs and Paquin 2016), and the Flourishing Business Canvas that create, deliver, and capture value in new ways are (FBC) (Upward and Jones 2016) are three sustainable identiﬁed (Aversa et al. 2015). The primary goal of busi- business-modelling tools that primarily aim to stimulate ness modelling for sustainability is to develop a new and idea generation, discussion, and facilitation of a network sustainable BM that creates, delivers, and captures value perspective on BMs and sustainability. that makes sense to all stakeholders (Bocken et al. 2014). To summarize, our study builds on the following theo- Teece (2010) states that business modelling encourages retical knowledge. The traditional view of a BM is that it discussions and visualizations related to new value cre- can be used to manage a ﬁrm’s supply chain and customer ation/value capture systems at the conceptual level. He also relationships and to maximize its proﬁt, often to the detriment of environmental and social interests. While 123 Sustainability Science sustainability is not normally considered in this traditional business modelling for developing a network-level BM for business logic, experience has shown that business sus- sustainability and ﬁnding solutions to the practical issue of tainability and sustainable BMs can contribute to the low proﬁtability at a biogas-producing farm cooperative, combined growth of economic, environmental, and social the action research approach is also suitable for our study. values. The design and implementation of a sustainable BM and the realization of a stakeholder business case for Action research sustainability require increased cooperation and changes in the way ﬁrms and their stakeholders create, deliver, and In action research, the researcher works in a ‘‘community capture value. Business modelling and BM prototype of practice’’ to solve a social or organizational problem development can, if facilitated by a sustainable business- (Shani et al. 2012). According to Shani and Pasmore modelling tool, support the shift from value creation at the (1985), action research is a research method that focuses on single-ﬁrm level to sustainable value co-creation at the conducting the research process with those whose life and network level via a joint BM shared by ﬁrms and their actions are studied. Action research is research in action stakeholders. Such network-level BMs have a signiﬁcant rather than research about action. It emphasizes the gen- advantage over individual ﬁrms’ BMs as far as promoting eration of useful knowledge co-produced in the local sustainable value creation. context with practitioners (Susman and Evered 1978). As a method for sequencing events and solving problems, action research allows the researcher to simultaneously study a Method practical problem, propose solutions, and produce scientiﬁc knowledge (Shani and Pasmore 1985). Research approach Using action research, we worked closely with repre- sentatives from Sigma to initiate and facilitate the devel- In this study, we take an inductive approach (Goddard and opment of a network-level BM for sustainability. With a Melville 2004). Thus, we collected our empirical data joint network-level BM, the farmers and their stakeholders without hypotheses and preconceptions on how the study might beneﬁt from each other’s experiences and knowl- would evolve. This approach increased the possibilities of edge, and might co-create value aimed at establishing a discovering intriguing and new ﬁndings beyond preset proﬁtable biogas production system that contributes to knowledge and relationships (Robson and McCartan 2015). sustainable, regional development. In contrast with retro- Our research followed a trajectory from the particular (i.e., spective studies often found in BM research, our use of a Swedish farm cooperative; hereafter Sigma) to the gen- action research facilitates the study of an existing BM and eral (i.e., other cooperatives and similar organizations). the attempts to modify it or to craft a new one. According Research on joint BMs and sustainability in the Swedish to Demil and Lecocq (2015), action research is a rare and farm-based biogas industry is still at an early stage. promising approach for informing researchers and man- Therefore, we used qualitative research methods in our agers about the difﬁculties of implementing changes in the study, because the exploration of BMs in this context existing and prospective BMs as well as limiting the biases involves various actors, resources, and activities inter- of retrospective studies. twined in complex and interdependent relationships (Evans In an action research study of a network or cooperative et al. 2017). Creswell and Creswell (2017) claim that it is (such as Sigma), researchers use the plurality of experi- appropriate to conduct qualitative research in dealing with ences and the capacity in the network as a way to enrich the such complexity and with unfolding sequences and stages research process (Shani and Pasmore 1985). Therefore, the in relationships and collaborative actions in which in-depth researchers for this study (with reference to its theoretical knowledge is required. Use of qualitative research methods framework) and the Sigma representatives (with reference allows the researcher to describe how people experience to their BM development problems) jointly planned, particular events and situations as well as describe the implemented, and evaluated the research process with the variations and relationships among the actors (Robson and intention of producing useful results. The goal was to McCartan 2015). In addition, qualitative research allows develop a network-level BM for sustainability that deep interaction with the subjects of interest and promotes addressed Sigma’s organizational problems. Therefore, as ﬂexibility in the interaction with actors (Rowlands 2005). participants rather than independent observers of the In taking the inductive approach and in using qualitative research (Middel et al. 2006), we acquired knowledge of research methods in our study, we expect to increase our Sigma’s social and organizational issues otherwise knowledge of the collaborative development of the net- unavailable had we used the traditional research methods work-level BM and the stakeholder business case for sus- (Coughlan and Coghlan 2002). In addition, Bergold and tainability. Because our research theoretically addresses Thomas (2012) report that our approach enables 123 Sustainability Science researchers to put familiar routines and forms of interac- the context of real-world economic, environmental, and tions aside as they challenge and rethink established social systems (Elkington and Upward 2016). The FBC interpretations of situations and strategies. components—(1) three contextual systems, (2) four per- Action research has several research advantages. It spectives, and (3) sixteen building blocks—are both nec- focuses on a range of research activities such as planning, essary and sufﬁcient to describe a sustainable BM. The theorizing, exploring, and learning. In this research and three contextual systems are the environment (the planet, learning process, the researcher’s long-term relationship all life, and all associated processes), society (people as with studied phenomena offers a promising opportunity for individuals and groups), and the economy (revenues, costs, identifying contextually and theoretically well-grounded and proﬁt). The four perspectives are process, people, research ﬁndings (Susman and Evered 1978). Moreover, it value, and outcomes. The sixteen building blocks are topics is unnecessary in an action research study to rely on the intended to provoke stakeholder questions about a ﬁrm’s second-hand narratives (e.g., questionnaires and surveys) current or future BM. The responses to these sixteen (Coughlan and Coghlan 2002) because of the researcher’s questions are used to describe and design the BM elements proximity to the studied phenomena. for any ﬁrm—past, present, or future, irrespective of the ﬁrm’s goals. Thus, the FBC provides a consistent way for a The flourishing business canvas ﬁrm and its stakeholders to capture the results of its busi- ness-modelling efforts (Upward and Jones 2016). The use of the collaborative FBC tool (Fig. 1) in our study The FBC is the only such tool that can provide the facilitated the collection of primary data through the ﬁrst- required holistic visual expression of a shared under- hand observation and interaction. The FBC, which is a standing of the frame within which the ﬁrm and its stake- signiﬁcant extension of the widely used and purely proﬁt- holders co-create sustainable BMs (Upward and Davies focused Business Model Canvas, identiﬁes and describes 2018). The use of the FBC contributes to individual and the fundamental characteristics of BMs conceptualized in shared learning about integrated business sustainability, Fig. 1 The ﬂourishing business Canvas v2 ( Antony Upward/Edward James Consulting Ltd). All rights reserved. http://www. FlourishingBusiness.org. Used with permission 123 Sustainability Science thereby increasing the possibility that ﬁrms and stake- Board of Directors meeting holders co-create outcomes aligned with that knowledge. In so doing, use of the FBC overcomes one of the main We introduced ourselves at the Board of Directors meeting weaknesses of the Business Model Canvas and Value and described our study. We presented the BM, the busi- ness-modelling concepts, and the FBC tool. We explained Proposition Canvas tools: the neglect of the networked nature of value co-creation and the importance of all how sustainable BM prototypes could be used to develop a ¨ ¨ ¨ network-level BM. We asked questions about Sigma’s stakeholders’ interests (Ayvari and Jyrama 2017). The FBC can thus create consensus amongst a group of people who development plans. Ten board members and two external consultants with speciﬁc interests in Sigma attended the are working together by motivating them to engage in broader and deeper conversations about the topic at hand, 3 h meeting. furthering creativity and innovation. Upward and Davies (2018) report three main advantages The two ideation workshops of the FBC compared to other business-modelling tools. First, using questions, the FBC systematically helps the A workshop can be an effective way to gather a large actors to learn about every aspect of a sustainable BM— amount of diverse data on a single occasion (Graham et al. 2015). Therefore, our aim in the two workshops was to both existing and future—and the connections of the ﬁrm to its economic, social, and environmental contexts. These collect ideas on how Sigma might develop in the future. We planned and conducted the workshops jointly with a questions are useful for identifying the various risks and opportunities—whether these arise individually from eco- Sigma board member. Together, we evaluated the ideas nomic, social, or environmental contexts or from some produced in the workshops. In selecting the workshop combination of the three. Second, the FBC, which facili- participants, we followed Frankenberger et al.’s (2013) tates recording of the responses to the building block advice on the need to select participants capable of out-of- questions, offers a consistent way of documenting the the-box thinking when generating ideas. The workshops business modelling work. These responses are the narrative lasted 4 h each. elements of the BM stories that the ﬁrm and its stake- The aim of Workshop 1 (March 2016) was to generate holders think relevant to the ﬁrm at present and in the ideas for sustainable BM prototypes on how Sigma could overcome its current organizational inertia to develop its future. Third, once the collective understanding of an existing or future BM using the consistent structure of the biogas activity. The participants were the four researchers, the Sigma board representative, and 41 undergraduate canvas is established, the FBC creates trust among actors, which can facilitate the collaboration on other activities. Business Administration students from Halmstad Univer- sity, Sweden. The researchers were the workshop ‘‘facili- Data collection tators’’; the students were the ‘‘problem-owners’’ and ‘‘problem-solvers’’; the Sigma Board representative was Our primary data were collected in March and April of the ‘‘knowledge provider’’ and ‘‘utility evaluator’’. The 2016 at a Board of Directors meeting and at two collabo- premise of the workshop was that Sigma required a new rative ideation workshops. We were participants at the and comprehensive network-level BM. The participants, board meeting where development issues for Sigma were who had no biogas production knowledge, were not con- strained by preconceived ideas about biogas production discussed. We also participated in the workshops attended by Sigma participants (board members and other individ- and sale. We wanted to exploit their ‘‘outside-the-box thinking’’ so as to generate novel ideas. uals) and by external participants (university students, researchers, and consultants). All workshop participants The aim of Workshop 2 (April 2016) was to develop worked with the FBC in the formulation of new ideas and sustainable BM prototypes using the FBC and to evaluate possible solutions related to the future development of the results from Workshop 1. The 22 participants were the Sigma’s BM. four researchers, ﬁve Sigma Board members (including the We took notes on our observations at the board meeting. Sigma Board representative from Workshop 1), eleven We audio-recorded the workshops, took more notes, and other Sigma members, and two consultants with expertise in biogas development. The researchers were the ‘‘facili- collected other materials (primarily the FBCs). We also collected secondary data (reports, documents, articles, and tators’’ and ‘‘knowledge providers’’; the Sigma members and consultants were the ‘‘problem-owners’’, ‘‘problem- website information) that complemented and validated our primary data (Robson and McCartan 2015). Table 1 sum- solvers’’, and ‘‘utility evaluators’’. We summarized the results from Workshop 1 at the beginning of Workshop 2. marizes our data collection. The participants were quite familiar with biogas production in general and with Sigma in particular. 123 Sustainability Science Table 1 Overview of the data collection Data source Data type Focus Used for Board of Notes Reﬂections on the current business Building knowledge on the case and a starting point for Directors and organizational situation the business model development meeting Workshops Recorded audio material, Ideas on business model Developing business model prototypes and a notes, business model ideas development conceptual network-level business model approach Secondary data Websites, documents, articles, Acquiring additional knowledge Complementing and validating primary data reports about Sigma Data analysis cooperative, they lack a common BM. Thus, to some extent, the members have a single-ﬁrm business logic The workshops produced 362 ideas related to the sixteen instead of a network-level business logic. In the Sigma FBC building blocks. A Sigma board member and the case, we investigated how to unify these members in the researchers eliminated 147 ideas as too broad or repetitive. development of a network-level BM. Sigma was founded The 215 remaining ideas were then analyzed and visualized following a pilot study that was conducted in 2009 in an as ﬁve sustainable BM prototypes (Figs. 2, 3, 4, 5, 6). agricultural region in the south of Sweden. The pilot study These prototypes represent the main ﬁndings from the data identiﬁed farmers’ interest in farm-based biogas production set. We began our analysis by textualizing our participatory in the region where Sigma is located and their willingness observations, conversations, and experiences. We then to form a cooperative. Of the 36 founding members, 32 are analyzed our empirical data—the workshop transcripts and farmers and 4 members are consultants and other interested materials, our board meeting notes, and other documents. stakeholders. Initially, 25 farmers planned to construct We looked for repeated patterns such as actions, events, biogas plants. The raw biogas (55–65% methane) produced words, or phrases (Robson and McCartan 2015). In ana- would be upgraded to biomethane (97% methane) and sold lyzing the data, we developed and applied codes (i.e., as vehicle fuel. words or short phrases that represented an overall theme). However, for various reasons, Sigma has not been as Assigning the codes, meaningful titles facilitated the successful with the biogas activity as expected. One major identiﬁcation of patterns that underpin signiﬁcant concepts reason is the lack of funds for an upgrading facility. This (Goddard and Melville 2004) indicated by the ideas. Based facility is needed to convert raw biogas into biomethane, so on these concepts (e.g., improved marketing and commu- it can be injected into the Swedish national gas grid that nication and greater proﬁtability through sustainability), we burns natural gas. Sigma has thus failed to attract large created the ﬁve prototypes which are overall representa- customers such as energy companies and municipalities. tions of the main ﬁndings from the data set. Furthermore, biogas electricity must compete with cheaper To create a shared understanding of the data as recom- electricity from other sources. Today, three Sigma mem- mended in the action research approach (Shani et al. 2012), bers produce biogas for heat and electricity but only for at least two researchers were present throughout the entire their own use. research process. Their continued presence was useful for Given its lack of economic success, at present, ten the discussions on individual observations and analyses. Sigma members (including some board members) are Moreover, other researchers, who were knowledgeable working on a new organizational strategy for the cooper- about the study but were not involved in the data collec- ative. One plan is to build additional plants that would link tion, contributed their analyses. Their analyses comple- to the local gas grid that could then transport the raw biogas mented and validated other researchers’ analyses. to a common upgrading facility. However, this idea is still in the planning stage. Sigma recognizes that more changes are needed to realize this plan. The farmers want to develop Sigma—the biogas-producing farm their traditional farming activities (their current BMs) by cooperative improving the existing biogas production and by develop- ing new business concepts aimed at future biogas expan- Sigma, a Swedish agricultural cooperative, is a for-proﬁt sion. Sigma’s main goal for the future is, therefore, to entity, owned and operated by its 36 members. Sigma develop a joint network-level BM for sustainability that produces farm-based biogas from manure and farm waste. combines the main farming activities and the expanded Although Sigma’s members work together in the farm-based biogas production. 123 Sustainability Science complements the traditional farming activities, on Results increased resource efﬁciency, on sustainability outcomes such as job creation, a reduced environmental impact, and Ideas on business model development the promotion of renewable energy. Another identiﬁed beneﬁt was the knowledge and experience acquired from Table 2 presents the 215 ideas related to the sixteen developing a long-term vision for the integration of biogas building blocks in the FBC. Three building blocks—goals, production with other farming activities. beneﬁts, and stakeholders—received the most ideas: 23, The 21 ideas in the Stakeholders building block focus on 24, and 21, respectively. the collaboration with local authorities, municipalities, The 23 ideas in the Goals building block focus on the banks, other farmers, energy companies, and NGOs (e.g., delivery of economic value to Sigma and social and envi- environmental groups and green associations). Collabora- ronmental values to its external stakeholders. To achieve tion with these external stakeholders, combined with ﬁnancial proﬁtability, the workshop participants proposed partnerships with other ﬁrms, may result in investment that Sigma create a new company image/brand by identi- subsidies, access to new customers, and exchanges of skills fying new customers and investors, by creating a and experience. sales/marketing position, and by developing new and effective ways of communicating with the existing and Five sustainable business model prototypes prospective customers. They proposed that social and environmental values might be achieved with the use of The ﬁrst BM prototype, ‘‘marketing and communication’’ organic and sustainable farming practices and by the pro- (Fig. 2), mainly focuses on making Sigma more visible motion of biogas as vehicle fuel. through increased marketing activities. Sigma can create a The 24 ideas in the Beneﬁts building block focus on the sales/marketing position for the promotion of renewable acquisition of new skills in sustainable food and energy energy products that are locally produced and that production, on effective waste management that Fig. 2 The ‘‘marketing and communication’’ BM prototype developed in Workshop 1 123 Sustainability Science Fig. 3 The ‘‘proﬁtability through sustainability’’ BM prototype developed in Workshop 1 contribute to sustainable development in the region. By municipalities and ﬁrms as biogas consumers and biogas expanding its local presence, Sigma can use new marketing ambassadors, Sigma may increase its revenue stream as it strategies to reach more customers and other stakeholders. strengthens its sustainability proﬁle. Platforms such as social media and websites are cost-ef- The third BM prototype, ‘‘local market development’’ fective ways to attract public attention and to communicate (Fig. 4), focuses on creating the local conditions needed to with existing and prospective customers. In addition, make biogas production proﬁtable in the long term. To cooperation with municipalities, other farmers, and other create these conditions, Sigma should cooperate with local biogas producers is also in focus. Cooperation with car actors who would beneﬁt from an association with a farm- manufacturers and dealers can promote the manufacture based biogas producer. Working with Sigma, such actors and sale of biogas-powered vehicles. can create a local/regional brand that produces and delivers The second BM prototype, ‘‘proﬁtability through sus- locally and sustainably produced renewable energy. Sigma tainability’’ (Fig. 3), mainly focuses on brand creation by can also contribute to the local economy as a tourist des- emphasizing the green trend with its growing demand for tination (farm tourism) and as a seller of locally produced sustainable products and services. By creating a strong products (e.g., meat, vegetables, and organic fertilizer). brand (e.g., ‘‘Green Sigma’’), Sigma and its geographic With the developmental work on the conversion of biogas region can create an image of an organic and sustainable to liquid fuel and the plan to build another biogas plant, region that features production and use of farm-based Sigma may increase its local customer segment as well as biogas and biofertilizer. In addition, a focus on biotourism increase local tax revenues. On a more abstract level, in which Sigma offers farm study visits that educate Sigma’s cooperation with its local actors can create a stakeholders and the general public about the biogas con- regional image of responsible environmental and sustain- cept can lead to more investments and more green cus- able development. Success with such an image may lead to tomers. Eventually, under a fees arrangement, biotourism greater local ﬁnancial support from governing bodies. might become a proﬁt centre for Sigma. By involving local 123 Sustainability Science Fig. 4 The ‘‘local market development’’ BM prototype developed in Workshop 2 The fourth BM prototype, ‘‘long-distance sales and be prioritized. Moreover, Sigma can develop the serviti- distribution’’ (Fig. 5), focuses on the expansion of Sigma’s zation concept by working more with veterinarians, dairies, current markets. Sigma may investigate opening a distri- and agricultural equipment repair shops that are outside the bution channel to the national gas grid. Or Sigma may look network. As tangential service suppliers, they may estab- for new customers amongst their established suppliers such lish mutually beneﬁcial relationships with Sigma. as the large dairy company or the agricultural cooperative that sells seeds and fertilizer. Sigma may even look for The conceptual network-level business model customers willing to pay a premium for farm-based biogas approach because of its social beneﬁts (the reduction in greenhouse gases and the increase in rural development and In this section, we describe the approach for developing a employment). network-level BM for sustainability (Fig. 7) that is based The ﬁfth BM prototype, ‘‘servitization’’ (Fig. 6), focuses on the ﬁve sustainable BM prototypes. First, we present the on providing additional customer services and producing four network-level BM drivers behind Sigma’s motivation locally grown and processed food. One possibility for to develop the current BM towards a network-level BM. Sigma is to work with ﬁlling stations to promote car Drivers 2, 3, and 4 are a consequence of driver 1. The washes and automatic refueling and to sell organically resulting network-level BM is expected to be a signiﬁcant grown fruit and vegetables. In the interest of serving the improvement over the current single-ﬁrm BMs of the net- customer and society, Sigma can produce environmental worked ﬁrms. New business opportunities opened up by the performance reports that focus on the beneﬁts of farm- network-level BM can promote Sigma’s biogas production based biogas. Because environmental regulations are likely as an example of a stakeholder business case for sustain- to increase, Sigma should position itself in the forefront of ability and thereby help solve some of the ﬁrms’ ﬁnancial this movement. In promoting the service concept, distri- difﬁculties. bution channels that link producers and customers should 123 Sustainability Science Fig. 5 The ‘‘long-distance sales and distribution’’ BM prototype developed in Workshop 2 1. Increased cooperation and novel partnerships: More context and internal actors who are well informed of the cooperation with stakeholders such as local companies, context participate in this ideation activity. This heteroge- other biogas producers, public actors, and universities. neous mixture of participants promotes a broad perspective For example, cooperation with car manufacturers and and enables idea creation, unrestricted by the current dealers can lead to the promotion of the manufacture industry logic. At the same time, the mixture can provide and sale of biogas-powered vehicles. further realistic feasibility assessments of the ideas and of 2. Improved marketing/visibility: The creation of a the BM prototypes. The second step involves the identiﬁ- sales/marketing position, so that Sigma and its prod- cation of the network-level BM drivers that correspond to ucts are better advertised as locally produced. Renew- key network-level BM requirements held by various able fuel as a contributor to sustainable regional stakeholders, including private-sector ﬁrms and public- development. sector customers (e.g., municipalities). The drivers lie 3. Sustainability brand creation: Promotion of an organic behind the strategies used to create sustainable value via and sustainable brand in which farm-based biogas resource efﬁciency, waste reduction, pollution prevention/ production is an important activity. reduction measures, production increase, and the use of 4. Servitization: Additional services related to the sale clean energy and bio-based fertilizer. The third step is the and promotion of biogas. More distribution channels, conceptualization of the network-level BM. At this point, complementary services, and communications on the Sigma becomes an integral component in the network as it favourable environmental impact of farm-based biogas searches for new business opportunities and formulates production. strategies for the co-creation of sustainable value for the networked ﬁrms and their stakeholders. Finally, the net- The ﬁrst step of the network-level BM approach is to work-level BM can enable a fourth step if stakeholder envision future scenarios as sustainable BM prototypes. relationships are managed, such that a stakeholder business External actors who have no prior knowledge of the 123 Sustainability Science Fig. 6 The ‘‘servitization’’ BM prototype developed in Workshop 2 case for sustainability can be created, developed, and Previous research on farm-based biogas production realized. concludes that the single-ﬁrm logic for creating BMs does not provide sufﬁcient knowledge, expertise, resources, and inﬂuence for the management of biogas production in the Discussion development and establishment stages (Negro et al. 2007; Negro and Hekkert 2008; Wadin Lagerstedt et al. 2017). The creation of, and experimentation with, various BM Our results support this conclusion. In its dependence on prototypes at an early stage of business development is an individual BMs at the single ﬁrm level, Sigma has failed to effective way of initiating the work of designing and realize its intended biogas expansion. An alternative aimed establishing an actual BM (e.g., Demil and Lecocq 2015). at the achievement of the member ﬁrms’ business goals and In the last decade, Swedish farmers have begun looking at the realization of the beneﬁts of farm-based biogas pro- the possibility that the production of farm-based biogas duction is a joint network-level BM for sustainability. might generate a new income stream and also contribute to Success with such a network-level BM, to a large extent, environmental and social sustainability (Lybæk et al. depends on the stakeholder relationships and the formation 2013). This new perspective on farm-based biogas pro- of networks that share the risks and the rewards (Hellstrom duction as a stakeholder business case for sustainability et al. 2015; Lindgren et al. 2010). Such BM collaboration suggests farmers and their stakeholders require joint BMs. can complement Sigma’s lack of business skills (in mar- For this purpose, this paper proposes an approach for keting, sustainable brand creation, and servitization) and developing a network-level BM for sustainability derived can provide the required ﬁnancial resources for the needed from ﬁve sustainable BM prototypes (Figs. 2, 3, 4, 5, 6) biogas infrastructure (investment capital for production, based on research conducted at a farm network (Sigma) in upgrading, and distribution of the biogas). southern Sweden. Gauthier and Gilomen (2016) and Schaltegger and Burritt (2015) report that some organizations join 123 Sustainability Science Table 2 The 215 ideas related to the FBC building blocks FBC building Ideas blocks Goals Expand by selling additional products and knowledge, ﬁnd investors, reduce greenhouse gas emissions, enter into public transport partnerships, ﬁnd customers willing to pay for added value, focus on long-term proﬁtability, use ﬂexible distribution methods, promote environmental protection, create a sales/marketing position, identify new market opportunities, merge with the west coast biogas network, take a holistic view, secure more contracts, share beneﬁts, promote the service-based concept, use biogas for vehicle fuel, create a new image of the company, create a green brand, become the most sustainable area in Sweden, expand pipelines, promote a strong local spirit, and dare to take risks Total: 23 Beneﬁts Upgraded gas, new business possibilities, renewable energy, clean fuel, social beneﬁts, reduction of methane emissions, creation of different ﬁnancial strategies, fewer negative effects of climate change, improved resource efﬁciency, a long- term vision, new supplier market, new skills, job creation, increased cooperation, renewable vehicle fuel, waste management, manure management, zero emissions, more customers, promotion of main farm activities, rural development, sales of knowledge, waste management, and increased manure value Total: 24 Costs Investments, infrastructure building, communication campaigns, production and distribution, operations, transportation, environmental effects, new employees, potential loss of partnership rights, upgrading, R&D, new pipelines, salaries, additional production plants, and administration Total: 15 Ecosystem actors Public sector, energy companies, farmers, private companies, NGOs, the media, and the R&D sector Total: 7 Needs Renewable energy, waste management, social needs, esteem needs, self-actualization needs, proﬁt, greater cooperation, sustainable development, expansion of markets and resources, secure production, green trend, greater food production, increase in employment, and long-term political decisions Total: 14 Stakeholders Governing bodies, farmers, environmental groups, the transport sector, the private sector, ﬁlling stations, salespeople, recent graduates, environmental representatives, the Board of Directors, new customers, banks, energy companies, industries, companies that control the gas grid, local authorities, cities, green associations, Sigma, companies that own and manage plants, and local and regional customer segments Total: 21 Relationships With other farmers, municipalities, local companies and residents, universities, private companies, network farmers, other network actors, environmental institutions, biogas networks, vehicle companies, and representatives for the national gas grid Total: 11 Channels Truck transportation, marketing, face to face meetings, workshops, telephone, e-mail, local focus contacts, meetings, website, and social media Total: 10 Value co-creations Compliance with governmental policies, long-term solutions, acquired experience, solutions to global warming, environmental sustainability, a ‘‘green’’ reputation, presence in the market, energy enthusiasm of young people, new business opportunities, reduced costs, reduced ecological footprint, proﬁtability, new R&D, heat, green cities’ cooperation, transport of liquid gas, ethanol, and increased property values Total: 19 Value co- High investments, uncertain market, limited production, political decisions, lack of awareness, no ﬁxed demand, price destructions ﬂuctuation, liability of energy market plan, uncertain governmental support, expensive production costs, few customers, challenging competition, and low proﬁtability Total: 13 Governance Sigma, network members, employees and suppliers, Board of Directors, farmers, private companies, and governmental bodies Total: 7 Partnerships Subsidy agencies, partner associates, utility companies, farmers, agri-food companies, new customers not in the main pipeline, the local industrial biogas plant, local companies, energy companies, technological companies, the Swedish national government, municipalities, transport companies, local households, and universities Total: 15 123 Sustainability Science Table 2 (continued) FBC building Ideas blocks Resources Manure, farm waste, employee creativity and commitment, investment funds, technical and commercial knowledge, the distribution grid, organic material, subsidies, household waste, new production plants, company waste, and time commitments Total: 12 Biophysical stocks Manure, crop and food waste, farm waste, waste and bi-products from primary production, and organic materials Total: 5 Activities Upgrades, export construction of joint gas pipes, B2B, other marketing, mixing biogas with natural gas, preparation of funding applications, production of biogas, biotourism, marketing the ‘‘green values’’ of farm-based biogas production, pursuit of renewable energy procurements, collection of manure, management of digestates, conversion of biogas to liquid fuel, and creation of a market concept Total: 15 Ecosystem Reduction of global warming, more renewable energy, conversion of waste to energy, and improved nutrient management services Total: 4 collaborative projects more in the expectation that they can engage in the transition from a single-ﬁrm BM to a net- meet sustainability challenges than in the expectation that work-level BM. Sigma used the BM prototypes to explain can realize short-term economic beneﬁts. For instance, the reasons for the planned expansion of biogas production municipalities have provided support to farm-based biogas to these stakeholders in terms of increased proﬁtability and production and distribution activities with such motives sustainable production. (Benjaminsson and Benjaminsson 2013: Karlsson et al. The creation and presentation of sustainable BM pro- 2017). The exploitation of complementary sustainability totypes using the FBC tool can thus greatly help biogas- interests by such key stakeholders is crucial for improving producing farmers and their stakeholders to establish suc- competitiveness (Edgeman and Eskildsen 2014) in the cessful collaborations. Therefore, we claim that network- context of farm-based biogas production. For that reason, level BMs developed using our approach (Fig. 7) can be we argue that the existing and future farm biogas producers the basis for developing farm-based biogas production as a need to prioritize the realization of a stakeholder business stakeholder business case for sustainability that can case for sustainability that addresses the social and envi- improve competitiveness and can lead to new business ronmental needs of local municipalities (Karlsson et al. ventures through the delivery of sustainable outcomes (e.g., 2017; Schaltegger et al. 2017). In collaboration with local mitigated greenhouse gas emissions, job creation, and municipalities, Sigma might develop its biogas infrastruc- increased resource efﬁciency and waste management) ture by investing in new distribution methods (e.g., pipe- (Schaltegger et al. 2017). Furthermore, the visualization line-based transport for biogas). This system could provide and integration of sustainability in a ﬁrm’s BM with the environmental and social beneﬁts such as reductions in help of business modelling is an important strategic activity fossil fuel-based road transport, transportation costs, and that can change the collaborative mindset of managers and greenhouse gas emissions. In addition, Sigma might invest staff (e.g., Stubbs and Cocklin 2008). This change can in an upgrading facility for converting its raw biogas into facilitate the initiation and maintenance of stakeholder biomethane usable as a natural gas replacement in the collaborations and partnerships that address mutual busi- transport sector. ness interests, leading to improved long-term ﬁnancial In line with Seidenstricker et al. (2014) and Upward and viability. These ﬁndings complement the previous results Jones (2016), we found that business modelling facilitates on collaborative business modelling and experimentation the internal and external stakeholder communications in the context of sustainable value co-creation in networks required for the initiation of BM collaboration. Through the (e.g., Evans et al. 2017). visualization of different BM prototypes for future BM scenarios, the internal communications amongst the Sigma Theoretical and managerial contributions members also improved. As a result, the members were empowered to develop a joint vision and a strategy for the The main contribution of this study is its response to the biogas expansion (i.e., the need for a network-level BM for call by Schaltegger et al. (2017) for the use of the theo- sustainability). They also identiﬁed the relevant stake- retical concept of the stakeholder business case for sus- holders (municipalities and local industries) needed to tainability in empirical research. Our study describes a 123 Sustainability Science Fig. 7 The network-level BM approach illustrates how sustainable BM prototypes can be used to develop a network-level BM that can realize farm-based biogas production as a stakeholder business case for sustainability practical approach for the development and potential economic, and social sustainability through which long- realization of a network-level BM in a network of indi- term ﬁnancial viability can be improved. Our ﬁndings vidual ﬁrms. Using business modelling to create BM pro- complement the previous sustainable BM research by totypes based on the sixteen FBC building blocks, we showing how ﬁrms and stakeholders can beneﬁt both col- describe an approach for developing a network-level BM lectively and individually from collaborative business for sustainability. This approach, with its clear focus on modelling and experimentation (Bocken et al. 2013; Evans sustainable value creation and stakeholder management, et al. 2017; Joyce and Paquin 2016). Furthermore, we show can be used as a template for developing other network- that the emerging design focus in sustainable BM research level BMs that can create stakeholder business cases for (Geissdoerfer et al. 2016; Lehmann et al. 2015) can be sustainability in different contexts. facilitated by business modelling and analyzed using BM By forming a ‘‘community of practice’’ based on our prototypes (Demil and Lecocq 2015). network-level BM approach, ﬁrm owners and managers From a practical perspective, our results can be used to can work with researchers, consultants, and other stake- identify and visualize the drivers of collaborative networks holders to identify ways to advance environmental, and partnerships, the relevant stakeholders, and the new 123 Sustainability Science business opportunities associated with a network-level BM level BM implementation and evaluates its results (eco- for sustainability. We found that the development of a nomic, environmental, and social). network-level BM for sustainability and a stakeholder business case for sustainability in the biogas-producing activity is mainly driven by sustainability-oriented brand- Conclusions ing and marketing, stakeholder involvement, and changes in the competitive environment. With these results, our This study offers a new, collaborative approach to the study complements the research on antecedents and drivers development of network-level BMs for sustainability in of BM renewal and adaptation (Foss and Saebi, 2017; farm-based biogas production. In its examination of the Saebi et al. 2017) by showing that sustainability pioneers network concept in the practice of sustainable BM devel- such as biogas-producing farmers require a holistic opment, the study concludes that collaborative business approach. Such an approach includes internal and external modelling using the FBC can be used to progress from a activities at the ﬁrm level if network-level BMs for sus- narrow ﬁrm-level focus to a broad network-level focus. tainability are to support long-term ﬁnancial viability. Furthermore, this study shows that business modelling is an effective way to facilitate the work of turning ideas for Suggestions for further research change into BMs, and for understanding the potential beneﬁts of network-level BMs. A network-level BM (ver- The development of a network-level BM for sustainability sus the single-ﬁrm BM) for sustainability can result in requires that a number of dedicated ﬁrm owners and public more customers, the expansion of business activities, an actors collaborate as they try to achieve long-term goals. increase in sustainable value creation, and higher ﬁnancial There are several research opportunities in the examination returns. Thus, we conclude that sustainability can be both a of such collaborative networks. trigger for, and a result of, collaborative BM development. Future research may examine our network-level BM The perspectives and interests of the various stake- approach in other industrial contexts and with other ﬁrm holders in networked biogas production systems may be networks and stakeholders. For example, empirical studies rather different. Such diversity can pose challenges to their of the use of the approach in other business groups would collaborative efforts. However, the need for change, be fruitful. Such research might also address the roles and whatever its reason, can motivate various actors to unite as input of various stakeholders (e.g., local authorities, cus- they formulate and try to achieve common goals. For tomers, external stakeholders, and researchers) when a Sigma, the poor proﬁtability of the biogas activity moti- network-level BM is created and implemented. In the vated its need for change. The challenge, therefore, was to development of a network-level BM and a stakeholder create and develop conditions for improved ﬁnancial via- business case for sustainability in practice, researchers bility. A network-level BM developed for and with stake- might also investigate the moderating effects of, for holders could create such conditions and generate positive example, ethical motivations, organizational values, and synergistic outcomes. These (possible) outcomes included leadership characteristics that Schaltegger and Burritt sustainable value co-creation and greater competitiveness (2015) describe. in the long term. We also suggest that researchers further examine the The traditional BMs frequently centre on speciﬁc areas speciﬁc industry context of our study. They might take an (e.g., key activities or distribution channels). However, we empirical approach as they study the key actors in network- found that sustainable BMs in farm-based biogas produc- level BMs for farm-based biogas production. For example, tion are quite complex and require a holistic approach that which roles do the various actors play? Which governance recognizes the importance of environmental and social rules and power distribution schemes favour the creation beneﬁts as contributors to ﬁnancial viability. As we describe and development of sustainable network-level BMs and the in the discussion section, this approach depends on the subsequent realization of farm-based biogas as a stake- development of a network-level BM for sustainability that holder business case for sustainability? includes committed ﬁrm owners, supportive local admin- The Sigma case also offers further research opportuni- istrations, and other stakeholders who are willing to make ties. Our study covers the conceptualization of the network- long-term investments as they share the risks and rewards. level BM intended to help solve Sigma’s ﬁnancial prob- Such network-level BMs form the foundation for the lems. The next step for Sigma and its stakeholders is to development and realization of a stakeholder business case implement the network-level BM. There is much to be for sustainability in which farmers and other stakeholders learned about the theoretical and practical issues that arise jointly, through the solution of environmental and social when a network-level BM is implemented. Therefore, we problems, create and promote conditions for the long-term recommend that future research investigates the network- ﬁnancial proﬁtability of farm-based biogas production. 123 Sustainability Science in agriculture—minimization of risks in realized projects]. 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Ind Corp Change anonymous reviewers for their helpful advice and comments. 11(3):529–555 Coughlan P, Coghlan D (2002) Action research for operations Compliance with ethical standards management. Int J Oper Prod Man 22(2):220–240 Creswell JW, Creswell JD (2017) Research design: qualitative, Conflict of interest The authors declare no conflicts of interest. quantitative, and mixed methods approaches. Sage Publications, Thousand Oaks Open Access This article is distributed under the terms of the Creative Demil B, Lecocq X (2010) Business model evolution: in search of Commons Attribution 4.0 International License (http://creative dynamic consistency. Long Range Plan 43(2–3):227–246 commons.org/licenses/by/4.0/), which permits unrestricted use, dis- Demil B, Lecocq X (2015) Crafting an innovative business model in tribution, and reproduction in any medium, provided you give an established company: the role of artifacts. 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Publisher: Springer Journals
Copyright: Copyright © 2018 by The Author(s)
Subject: Environment; Environmental Management; Climate Change Management and Policy; Environmental Economics; Landscape Ecology; Sustainable Development; Public Health
ISSN: 1862-4065
eISSN: 1862-4057
DOI: 10.1007/s11625-018-0584-z
Publisher site: See Article on Publisher Site

Abstract

Farm-based biogas production is a promising renewable energy technology with the potential for creating sustainable economic, environmental, and social value. However, Swedish farmers engaged in this activity struggle to turn a proﬁt because of high-investment costs and severe price competition with fossil fuels. One way to address this situation is to re- organize the activity by innovating the business model (BM) towards sustainability. In this study, a team of researchers took an action research approach that proposed solutions for the ﬁnancial difﬁculties at a farm cooperative that intended to develop its farm-based biogas production. Two participatory workshops (including researchers, producers, students, and consultants) were conducted using the sustainable business-modelling tool called the Flourishing Business Canvas (FBC). Based on the 215 ideas developed in the workshops, ﬁve sustainable BM prototypes were created. These ﬁve prototypes form the basis of an approach for initiating the development of a network-level BM for sustainability that highlights its superiority over a single-ﬁrm BM. The network-level BM’s main advantage in the farm-based biogas context is its strong focus on stakeholder collaboration that supports the development of a stakeholder business case for sustainability. Overall, this study highlights the usefulness of the network concept in the practice of sustainable BM development. Collaborative business modelling for developing network-level BMs that address environmental and social problems for and with stakeholders can be an effective way to increase long-term ﬁnancial proﬁt and promote the growth of a ﬁrm, a network, or an industry. Keywords Business modelling Stakeholders Business case Sustainability Biogas production Introduction Farm-based biogas from organic farm waste can create green energy, develop the circular economy in rural areas, The European Union’s research and innovation framework, and promote local possibilities for sustainable growth Horizon 2020, highlights activities aimed at dealing with (Boulamanti et al. 2013). Previous research (Bergh 2013; various societal challenges. These activities relate to Karlsson et al. 2017) lists the success factors related to renewable energy production, sustainable agriculture, and Swedish farm-based biogas. However, some farmers climate change (European Commission 2011). The engaged in biogas production, such as certain farmers in renewable energy technology behind farm-based biogas Sweden, have experienced ﬁnancial difﬁculties that hamper production, under the right conditions, can help to meet the development of the activity (Fallde and Eklund 2015). these challenges. As Lantz (2013) found in research on biogas production in Sweden, production, distribution, and marketing barriers (e.g., high-investment costs, restricted markets, falling Handled by Karel F. Mulder, The Hague University of prices, and short-term subsidies) are the primary problems Applied Science, Netherlands. with realizing farm-based biogas production as a prof- itable business activity. Given these ﬁnancial difﬁculties, & Niklas P.E. Karlsson niklas.karlsson@hh.se Swedish farmers may need to change their business models (BM) as they create, deliver, and capture value (Amit and School of Business, Engineering and Science, Halmstad Zott 2012) in the production of biogas. University, Kristian IV:s vag 3, 301 18 Halmstad, Sweden 123 Sustainability Science There are different ideas about on what a BM actually is. with its systems perspective, is a complex, collective, and Traditionally, a BM is deﬁned as a conceptual tool that co-creational activity that emphasizes active social partic- consists of a set of elements and relationships that express a ipation and interaction (Demil and Lecocq 2015). In col- company’s logic for earning money (e.g., Osterwalder and laborative situations, business modelling can lead to new Pigneur 2010; Teece 2010). Zott and Amit (2010), who insights and can support the collaborating actors’ sustain- take an activity system perspective, view the BM as a ability policies and practices while simultaneously high- network (i.e., a system of interdependent activities that lighting strong and weak areas in their BMs. helps a ﬁrm create value by working with its partners). The In summary, addressing the current ﬁnancial difﬁculties emerging view is that BMs should take a network-centric for the Swedish farm-based biogas industry through perspective rather than a single-ﬁrm-centric perspective simultaneous creation of environmental and social value (Evans et al. 2017). Such network-level BMs may unlock requires systematic collaboration in an extended network new competences, open new markets, and advance unique of farmers and their stakeholders. The aim of this study is, value propositions (Lindgren et al. 2010; Palo and Ta¨htinen therefore, to propose an empirically based approach for the 2013). identiﬁcation and engagement of relevant stakeholders in In line with the network-centric perspective, previous ﬁrms’ development of network-level BMs aimed at pro- research (e.g., Negro et al. 2007; Negro and Hekkert 2008; moting sustainability and proﬁtability. More speciﬁcally, Vernay et al. 2013) has addressed the beneﬁts of BM this paper addresses the following research question: How collaboration in farm-based biogas production when net- can business modelling initiate the transition towards a worked ﬁrms co-create value using shared resources, network-level BM that can realize farm-based biogas pro- knowledge, and experience. Such agricultural networks can duction as a stakeholder business case for sustainability to promote individual farmers’ interests as well as the inter- overcome its ﬁnancial difﬁculties? The setting of the study ests of other stakeholders (e.g., suppliers of feedstock and is a Swedish, farm-based biogas cooperative that has transporters of digestate). In addition, these networks, encountered difﬁculties in its early development stage. The which can also promote society’s sustainability interests, cooperative needs help in overcoming these difﬁculties. may result in more government support for farmers (e.g., The primary data for the study were collected in two price support) and new ways of using the existing resour- ideation workshops. ces, reducing costs, and increasing proﬁt (Amer and Bol- The rest of the paper is structured as follows. Sec- wig 2013; Ericsson et al. 2013; Hellstro¨m et al. 2015; tion ‘‘Theoretical background’’ presents the theoretical Martin 2015). To capitalize on these beneﬁts, a change in background and the relevant concepts for the study. Sec- perspective is needed—from value creation at the single- tion ‘‘Method’’ presents the paper’s research method. ﬁrm level to value co-creation at the network level. This Section ‘‘Sigma - the biogas-producing farm cooperative’’ change requires development of a network-level BM presents the case on which the research is based. Sec- shared by ﬁrms and their stakeholders. tion ‘‘Results’’ presents the ﬁndings from the ideation Designing a new or modiﬁed activity system and workshops and the network-level BM approach. Sec- recombining the ﬁrm’s (and its stakeholders’) resources tion ‘‘Discussion’’ discusses the results and contributions through innovating a BM can be crucial in making radical of this research, including the theoretical and managerial improvements that enhance the sustainable performance of implications and suggestions for future research. Sec- BMs in which greater environmental and social value is tion ‘‘Conclusions’’ presents the conclusions. created and economic sustainability is delivered (Stubbs and Cocklin 2008). Consequently, researchers, including Hall and Wagner (2012) and Boons and Lu¨deke-Freund Theoretical background (2013), call for more research on the integration of sus- tainability in ﬁrms’ BMs. More speciﬁcally, the traditional Network-level business models for sustainability BM view of value creation for customers and shareholders should shift to a view that supports value creation for and A BM can be deﬁned as a unit of analysis that describes with a broader range of stakeholders, i.e., developing and ﬁrm’s activities (Amit and Zott 2001). Others describe the realizing a stakeholder business case for sustainability BM as a holistic concept that presents the various com- (Schaltegger et al. 2017). This need is especially relevant in ponents of a ﬁrm’s activities that propose, create, deliver, the farm-based biogas industry where it is necessary to and capture value (Bocken et al. 2014; Chesbrough and signiﬁcantly improve long-term ﬁnancial viability. Rosenbloom 2002; Demil and Lecocq 2010; Morris et al. To that end, ﬁrms may ﬁnd it advantageous to engage in 2005; Osterwalder and Pigneur 2010). Osterwalder et al. collaborative business modelling (Karlsson et al. 2018). (2005) describe how the BM concept is commonly used: Business modelling, especially in the sustainability context (1) to interact with suppliers, customers, and partners; and 123 Sustainability Science (2) to reduce business complexity to a comprehensible social sustainability for the ﬁrm and its surroundings level. Therefore, a BM has a set of components that (Stubbs and Cocklin 2008). expresses a ﬁrm’s business logic. Traditionally, a BM Thus, the collaborative view of sustainable BMs extends focuses on the organization and infrastructure of the ﬁrm’s the single-ﬁrm, traditional BM perspective to a network- supply chain and customer relationships. A traditional BM level BM perspective (Abdelkaﬁ and Tauscher 2016). The also takes a single-ﬁrm focus as it emphasizes economic network-level BM, which is open-ended and dynamic, value while neglecting environmental and social value focuses on value co-creation and cost reduction. This focus (Joyce and Paquin 2016), thus undermining the realization requires continuing development as the environment (and of economic, environmental, and social growth (i.e., sus- even the network) changes (Bankvall et al. 2017). tainability) (Schaltegger et al. 2016a). According to Palo and Ta¨htinen (2013), the network-level With the intention of identifying, forming, and/or acting BM reﬂects close cooperation among the networked ﬁrms. upon business opportunities, ﬁrms establish relationships Interactions, which are the basis of this cooperation, are, and collaborative arrangements such as networks (Bessant therefore, crucial in the creation of the network-level BM and Francis 1999). Relationships are often established in a (Araujo et al. 2003). network that produce both tangible and intangible values For biogas production, a network-level BM may consist through dynamic exchanges between two or more indi- of a group of upstream suppliers (e.g., technical equipment viduals, groups, or organizations, whether in the public or and biological feedstock suppliers), downstream suppliers the private sector (Allee 2011). Networks are thus com- (e.g., biogas and digestate distributors and retailers), and monly used to seek potential partners for collaborative BM customers (e.g., municipalities and manufacturing indus- development intended to achieve individual and joint goals tries) (Huttunen et al. 2014). Competitive advantage and (Lindgren et al. 2010;Osterle et al. 2001) such as sus- sustainable value creation in biogas production can thus be tainable value creation. achieved by developing and supporting a joint network- The literature shows that ﬁrms in networks are more level BM that connects network partners’ competencies successful in producing sustainable value than stand-alone and knowledge and supplements the ﬁrms’ individual BMs ﬁrms (e.g., Johnson and Suskewicz 2009; Rohrbeck et al. (Lindgren et al. 2010). 2013). The main reason for such success is the networked However, developing and implementing a network-level ﬁrms’ explicit focus on the holistic, stakeholder perspec- BM is a complex undertaking that requires the assistance of tive. This perspective not only beneﬁts customers and ﬁrms all network actors. They must be prepared to establish (shareholders) but also the overall system in which the BM relationships, to work with others (Hellstrom et al. 2015; is embedded (Schaltegger et al. 2016a). As a result, the Mo¨ller et al. 2005), and to share a common vision for networked BM can enhance value creation and capture business development. Network-level BM activities, aspects of the system more readily than the single-ﬁrm BM therefore, require that the network actors understand (and that supports the traditional (proﬁt-ﬁrst) deﬁnition of cor- accept) change (Freytag and Clarke 2012). In some porate success (Lu¨deke-Freund and Dembek 2017). Given instances, acceptance of a network-level BM may mean this perspective, the research on sustainable BMs increas- individual ﬁrms lose some control over their individual ingly takes a network-level approach that embraces the BMs as they work with the network partners (Zott et al. system dynamics perspective on the embeddedness of BMs 2011). Nevertheless, rethinking the ﬁrm as a network in society and their relationship to their environments partner may facilitate the core integration and delivery of (Rauter et al. 2017; Upward and Jones 2016). sustainable value in the long term (Evans et al. 2017) In contrast to the traditional BM, a sustainable BM through close collaboration with stakeholders as they provides substantial positive and/or signiﬁcantly reduced realize the business case for sustainability (Schaltegger negative environmental and social impacts through chan- et al. 2017). ges in the way the ﬁrm and its value network create, deliver, and capture value, or in the way that they change The business case for sustainability the value propositions (Bocken et al. 2014). Further, Lu¨deke-Freund (2010) points out that, compared to the In the business case for sustainability, a ﬁrm’s economic traditional BM, the sustainable BM advances competitive success is realized through, not just with, environmental advantage through producing greater customer value whilst and social activities (Kreiss et al. 2016; Schaltegger et al. contributing to the long-term development of the ﬁrm and 2012). Schaltegger and Burritt (2015) report that the rela- providing various beneﬁts to the public and private sectors. tion between business cases and sustainability is linked to A sustainable BM also includes structural and cultural the ﬁrm’s ethical foundations and sustainability manage- beneﬁts in collaboration with a broad range of stakehold- ment activities. These authors differentiate amongst four ers, all of whom support economic, environmental, and business cases for sustainability: cases that are reactionary, 123 Sustainability Science reputational, responsible, or collaborative. The reactionary claims that business modelling works particularly well in and reputational business cases deal with sustainability unpredictable situations. opportunistically in which the main goal is the maxi- Because of uncertainties and risks in terms of time and mization of (short-term) proﬁt (e.g., as a reaction to resource limitations in the innovation of BMs, it is com- increased market demand for sustainability-oriented prod- monly recognized that ﬁrms hesitate to test new or modi- ucts/services or as a way to improve ﬁrm reputation and ﬁed BMs in the real world (Evans et al. 2017). Business brand value to gain business beneﬁts). In contrast, the modelling provides an inexpensive and low-risk solution to responsible and collaborative business cases integrate this problem, because it allows researchers and practi- sustainability as a central part of ﬁrm management to tioners to acquire stakeholder input on the BM develop- create conditions for improved organizational operations ment via the development of BM prototypes. The and long-term business success. Developing joint business prototypes, which promote objective decision-making and cases through close collaboration with stakeholders offers strategy formulation, are used for experimentation and networked ﬁrms the opportunity to enhance their social and visualization of a new and sustainable BM that creates, environmental well-being as well as sustain their ﬁnancial delivers, and captures value for all stakeholders (Bocken viability. et al. 2014; Seidenstricker et al. 2014). According to Schaltegger et al. (2017) further emphasize the impor- Upward and Jones (2016), a visual representation of a tance of stakeholder involvement in business cases for sustainable BM prototype uses a common language that is sustainability. In their stakeholder theory perspective on especially effective for promoting effective collaboration business cases for sustainability, they propose that a and shared understanding of the factors a ﬁrm considers in stakeholder business case for sustainability explicitly aims setting its goals. at value creation for and by stakeholders. This goal can be Rohrbeck et al. (2013) and Bocken et al. (2013) report achieved with business activities that effectively respond to that business modelling can be facilitated by the use of a sustainability problem (e.g., climate change) in a way that collaborative business-modelling tools. The two most creates value for stakeholders involved in the problem widely used tools developed to support business modelling solution as well as for other stakeholders who are affected by practitioners and researchers are the Business Model by the problem. It is thus important to involve all stake- Canvas (Osterwalder and Pigneur 2010), and its derivative, holders early in the development of business cases for the Value Proposition Canvas (Osterwalder et al. 2014), sustainability, so that the potential consequences of the that focuses on the value proposition element (Hanshaw proposed business activities can be identiﬁed. Researchers and Osterwalder 2015). However, these tools take a single- who have studied the collaborative development of the ﬁrm perspective and are limited to traditional business stakeholder business case for sustainability have found that modelling that primarily focuses on customer value and business modelling is an important facilitator of its success proﬁt maximization. As a result, the single dimension (Geissdoerfer et al. 2016; Joyce and Paquin 2016; Karlsson (economic value) of the Business Model Canvas and Value et al. 2018; Schaltegger et al. 2016b). Proposition Canvas makes them unsuitable for generating sustainable BMs in which the full stakeholder network Business modelling (e.g., suppliers, local companies, municipalities, and soci- ety) is integrated in a holistic perspective. Realizing sustainable value co-creation for and with a wide Several visual business modelling tools have been range of partners and stakeholders is a challenging task. designed for use in the development of sustainable BMs However, the use of business modelling has been shown to and BM prototypes. These tools integrate a ﬁrm’s eco- be effective in managing the task (Geissdoerfer et al. 2016; nomic, environmental, and social concerns taking a net- Joyce and Paquin 2016; Karlsson et al. 2018). Business work perspective. The Value-Mapping Tool (Bocken et al. modelling can be deﬁned as the creative process of 2013), the Triple Layered Business Model Canvas (Joyce experimenting with BM elements in which innovative BMs and Paquin 2016), and the Flourishing Business Canvas that create, deliver, and capture value in new ways are (FBC) (Upward and Jones 2016) are three sustainable identiﬁed (Aversa et al. 2015). The primary goal of busi- business-modelling tools that primarily aim to stimulate ness modelling for sustainability is to develop a new and idea generation, discussion, and facilitation of a network sustainable BM that creates, delivers, and captures value perspective on BMs and sustainability. that makes sense to all stakeholders (Bocken et al. 2014). To summarize, our study builds on the following theo- Teece (2010) states that business modelling encourages retical knowledge. The traditional view of a BM is that it discussions and visualizations related to new value cre- can be used to manage a ﬁrm’s supply chain and customer ation/value capture systems at the conceptual level. He also relationships and to maximize its proﬁt, often to the detriment of environmental and social interests. While 123 Sustainability Science sustainability is not normally considered in this traditional business modelling for developing a network-level BM for business logic, experience has shown that business sus- sustainability and ﬁnding solutions to the practical issue of tainability and sustainable BMs can contribute to the low proﬁtability at a biogas-producing farm cooperative, combined growth of economic, environmental, and social the action research approach is also suitable for our study. values. The design and implementation of a sustainable BM and the realization of a stakeholder business case for Action research sustainability require increased cooperation and changes in the way ﬁrms and their stakeholders create, deliver, and In action research, the researcher works in a ‘‘community capture value. Business modelling and BM prototype of practice’’ to solve a social or organizational problem development can, if facilitated by a sustainable business- (Shani et al. 2012). According to Shani and Pasmore modelling tool, support the shift from value creation at the (1985), action research is a research method that focuses on single-ﬁrm level to sustainable value co-creation at the conducting the research process with those whose life and network level via a joint BM shared by ﬁrms and their actions are studied. Action research is research in action stakeholders. Such network-level BMs have a signiﬁcant rather than research about action. It emphasizes the gen- advantage over individual ﬁrms’ BMs as far as promoting eration of useful knowledge co-produced in the local sustainable value creation. context with practitioners (Susman and Evered 1978). As a method for sequencing events and solving problems, action research allows the researcher to simultaneously study a Method practical problem, propose solutions, and produce scientiﬁc knowledge (Shani and Pasmore 1985). Research approach Using action research, we worked closely with repre- sentatives from Sigma to initiate and facilitate the devel- In this study, we take an inductive approach (Goddard and opment of a network-level BM for sustainability. With a Melville 2004). Thus, we collected our empirical data joint network-level BM, the farmers and their stakeholders without hypotheses and preconceptions on how the study might beneﬁt from each other’s experiences and knowl- would evolve. This approach increased the possibilities of edge, and might co-create value aimed at establishing a discovering intriguing and new ﬁndings beyond preset proﬁtable biogas production system that contributes to knowledge and relationships (Robson and McCartan 2015). sustainable, regional development. In contrast with retro- Our research followed a trajectory from the particular (i.e., spective studies often found in BM research, our use of a Swedish farm cooperative; hereafter Sigma) to the gen- action research facilitates the study of an existing BM and eral (i.e., other cooperatives and similar organizations). the attempts to modify it or to craft a new one. According Research on joint BMs and sustainability in the Swedish to Demil and Lecocq (2015), action research is a rare and farm-based biogas industry is still at an early stage. promising approach for informing researchers and man- Therefore, we used qualitative research methods in our agers about the difﬁculties of implementing changes in the study, because the exploration of BMs in this context existing and prospective BMs as well as limiting the biases involves various actors, resources, and activities inter- of retrospective studies. twined in complex and interdependent relationships (Evans In an action research study of a network or cooperative et al. 2017). Creswell and Creswell (2017) claim that it is (such as Sigma), researchers use the plurality of experi- appropriate to conduct qualitative research in dealing with ences and the capacity in the network as a way to enrich the such complexity and with unfolding sequences and stages research process (Shani and Pasmore 1985). Therefore, the in relationships and collaborative actions in which in-depth researchers for this study (with reference to its theoretical knowledge is required. Use of qualitative research methods framework) and the Sigma representatives (with reference allows the researcher to describe how people experience to their BM development problems) jointly planned, particular events and situations as well as describe the implemented, and evaluated the research process with the variations and relationships among the actors (Robson and intention of producing useful results. The goal was to McCartan 2015). In addition, qualitative research allows develop a network-level BM for sustainability that deep interaction with the subjects of interest and promotes addressed Sigma’s organizational problems. Therefore, as ﬂexibility in the interaction with actors (Rowlands 2005). participants rather than independent observers of the In taking the inductive approach and in using qualitative research (Middel et al. 2006), we acquired knowledge of research methods in our study, we expect to increase our Sigma’s social and organizational issues otherwise knowledge of the collaborative development of the net- unavailable had we used the traditional research methods work-level BM and the stakeholder business case for sus- (Coughlan and Coghlan 2002). In addition, Bergold and tainability. Because our research theoretically addresses Thomas (2012) report that our approach enables 123 Sustainability Science researchers to put familiar routines and forms of interac- the context of real-world economic, environmental, and tions aside as they challenge and rethink established social systems (Elkington and Upward 2016). The FBC interpretations of situations and strategies. components—(1) three contextual systems, (2) four per- Action research has several research advantages. It spectives, and (3) sixteen building blocks—are both nec- focuses on a range of research activities such as planning, essary and sufﬁcient to describe a sustainable BM. The theorizing, exploring, and learning. In this research and three contextual systems are the environment (the planet, learning process, the researcher’s long-term relationship all life, and all associated processes), society (people as with studied phenomena offers a promising opportunity for individuals and groups), and the economy (revenues, costs, identifying contextually and theoretically well-grounded and proﬁt). The four perspectives are process, people, research ﬁndings (Susman and Evered 1978). Moreover, it value, and outcomes. The sixteen building blocks are topics is unnecessary in an action research study to rely on the intended to provoke stakeholder questions about a ﬁrm’s second-hand narratives (e.g., questionnaires and surveys) current or future BM. The responses to these sixteen (Coughlan and Coghlan 2002) because of the researcher’s questions are used to describe and design the BM elements proximity to the studied phenomena. for any ﬁrm—past, present, or future, irrespective of the ﬁrm’s goals. Thus, the FBC provides a consistent way for a The flourishing business canvas ﬁrm and its stakeholders to capture the results of its busi- ness-modelling efforts (Upward and Jones 2016). The use of the collaborative FBC tool (Fig. 1) in our study The FBC is the only such tool that can provide the facilitated the collection of primary data through the ﬁrst- required holistic visual expression of a shared under- hand observation and interaction. The FBC, which is a standing of the frame within which the ﬁrm and its stake- signiﬁcant extension of the widely used and purely proﬁt- holders co-create sustainable BMs (Upward and Davies focused Business Model Canvas, identiﬁes and describes 2018). The use of the FBC contributes to individual and the fundamental characteristics of BMs conceptualized in shared learning about integrated business sustainability, Fig. 1 The ﬂourishing business Canvas v2 ( Antony Upward/Edward James Consulting Ltd). All rights reserved. http://www. FlourishingBusiness.org. Used with permission 123 Sustainability Science thereby increasing the possibility that ﬁrms and stake- Board of Directors meeting holders co-create outcomes aligned with that knowledge. In so doing, use of the FBC overcomes one of the main We introduced ourselves at the Board of Directors meeting weaknesses of the Business Model Canvas and Value and described our study. We presented the BM, the busi- ness-modelling concepts, and the FBC tool. We explained Proposition Canvas tools: the neglect of the networked nature of value co-creation and the importance of all how sustainable BM prototypes could be used to develop a ¨ ¨ ¨ network-level BM. We asked questions about Sigma’s stakeholders’ interests (Ayvari and Jyrama 2017). The FBC can thus create consensus amongst a group of people who development plans. Ten board members and two external consultants with speciﬁc interests in Sigma attended the are working together by motivating them to engage in broader and deeper conversations about the topic at hand, 3 h meeting. furthering creativity and innovation. Upward and Davies (2018) report three main advantages The two ideation workshops of the FBC compared to other business-modelling tools. First, using questions, the FBC systematically helps the A workshop can be an effective way to gather a large actors to learn about every aspect of a sustainable BM— amount of diverse data on a single occasion (Graham et al. 2015). Therefore, our aim in the two workshops was to both existing and future—and the connections of the ﬁrm to its economic, social, and environmental contexts. These collect ideas on how Sigma might develop in the future. We planned and conducted the workshops jointly with a questions are useful for identifying the various risks and opportunities—whether these arise individually from eco- Sigma board member. Together, we evaluated the ideas nomic, social, or environmental contexts or from some produced in the workshops. In selecting the workshop combination of the three. Second, the FBC, which facili- participants, we followed Frankenberger et al.’s (2013) tates recording of the responses to the building block advice on the need to select participants capable of out-of- questions, offers a consistent way of documenting the the-box thinking when generating ideas. The workshops business modelling work. These responses are the narrative lasted 4 h each. elements of the BM stories that the ﬁrm and its stake- The aim of Workshop 1 (March 2016) was to generate holders think relevant to the ﬁrm at present and in the ideas for sustainable BM prototypes on how Sigma could overcome its current organizational inertia to develop its future. Third, once the collective understanding of an existing or future BM using the consistent structure of the biogas activity. The participants were the four researchers, the Sigma board representative, and 41 undergraduate canvas is established, the FBC creates trust among actors, which can facilitate the collaboration on other activities. Business Administration students from Halmstad Univer- sity, Sweden. The researchers were the workshop ‘‘facili- Data collection tators’’; the students were the ‘‘problem-owners’’ and ‘‘problem-solvers’’; the Sigma Board representative was Our primary data were collected in March and April of the ‘‘knowledge provider’’ and ‘‘utility evaluator’’. The 2016 at a Board of Directors meeting and at two collabo- premise of the workshop was that Sigma required a new rative ideation workshops. We were participants at the and comprehensive network-level BM. The participants, board meeting where development issues for Sigma were who had no biogas production knowledge, were not con- strained by preconceived ideas about biogas production discussed. We also participated in the workshops attended by Sigma participants (board members and other individ- and sale. We wanted to exploit their ‘‘outside-the-box thinking’’ so as to generate novel ideas. uals) and by external participants (university students, researchers, and consultants). All workshop participants The aim of Workshop 2 (April 2016) was to develop worked with the FBC in the formulation of new ideas and sustainable BM prototypes using the FBC and to evaluate possible solutions related to the future development of the results from Workshop 1. The 22 participants were the Sigma’s BM. four researchers, ﬁve Sigma Board members (including the We took notes on our observations at the board meeting. Sigma Board representative from Workshop 1), eleven We audio-recorded the workshops, took more notes, and other Sigma members, and two consultants with expertise in biogas development. The researchers were the ‘‘facili- collected other materials (primarily the FBCs). We also collected secondary data (reports, documents, articles, and tators’’ and ‘‘knowledge providers’’; the Sigma members and consultants were the ‘‘problem-owners’’, ‘‘problem- website information) that complemented and validated our primary data (Robson and McCartan 2015). Table 1 sum- solvers’’, and ‘‘utility evaluators’’. We summarized the results from Workshop 1 at the beginning of Workshop 2. marizes our data collection. The participants were quite familiar with biogas production in general and with Sigma in particular. 123 Sustainability Science Table 1 Overview of the data collection Data source Data type Focus Used for Board of Notes Reﬂections on the current business Building knowledge on the case and a starting point for Directors and organizational situation the business model development meeting Workshops Recorded audio material, Ideas on business model Developing business model prototypes and a notes, business model ideas development conceptual network-level business model approach Secondary data Websites, documents, articles, Acquiring additional knowledge Complementing and validating primary data reports about Sigma Data analysis cooperative, they lack a common BM. Thus, to some extent, the members have a single-ﬁrm business logic The workshops produced 362 ideas related to the sixteen instead of a network-level business logic. In the Sigma FBC building blocks. A Sigma board member and the case, we investigated how to unify these members in the researchers eliminated 147 ideas as too broad or repetitive. development of a network-level BM. Sigma was founded The 215 remaining ideas were then analyzed and visualized following a pilot study that was conducted in 2009 in an as ﬁve sustainable BM prototypes (Figs. 2, 3, 4, 5, 6). agricultural region in the south of Sweden. The pilot study These prototypes represent the main ﬁndings from the data identiﬁed farmers’ interest in farm-based biogas production set. We began our analysis by textualizing our participatory in the region where Sigma is located and their willingness observations, conversations, and experiences. We then to form a cooperative. Of the 36 founding members, 32 are analyzed our empirical data—the workshop transcripts and farmers and 4 members are consultants and other interested materials, our board meeting notes, and other documents. stakeholders. Initially, 25 farmers planned to construct We looked for repeated patterns such as actions, events, biogas plants. The raw biogas (55–65% methane) produced words, or phrases (Robson and McCartan 2015). In ana- would be upgraded to biomethane (97% methane) and sold lyzing the data, we developed and applied codes (i.e., as vehicle fuel. words or short phrases that represented an overall theme). However, for various reasons, Sigma has not been as Assigning the codes, meaningful titles facilitated the successful with the biogas activity as expected. One major identiﬁcation of patterns that underpin signiﬁcant concepts reason is the lack of funds for an upgrading facility. This (Goddard and Melville 2004) indicated by the ideas. Based facility is needed to convert raw biogas into biomethane, so on these concepts (e.g., improved marketing and commu- it can be injected into the Swedish national gas grid that nication and greater proﬁtability through sustainability), we burns natural gas. Sigma has thus failed to attract large created the ﬁve prototypes which are overall representa- customers such as energy companies and municipalities. tions of the main ﬁndings from the data set. Furthermore, biogas electricity must compete with cheaper To create a shared understanding of the data as recom- electricity from other sources. Today, three Sigma mem- mended in the action research approach (Shani et al. 2012), bers produce biogas for heat and electricity but only for at least two researchers were present throughout the entire their own use. research process. Their continued presence was useful for Given its lack of economic success, at present, ten the discussions on individual observations and analyses. Sigma members (including some board members) are Moreover, other researchers, who were knowledgeable working on a new organizational strategy for the cooper- about the study but were not involved in the data collec- ative. One plan is to build additional plants that would link tion, contributed their analyses. Their analyses comple- to the local gas grid that could then transport the raw biogas mented and validated other researchers’ analyses. to a common upgrading facility. However, this idea is still in the planning stage. Sigma recognizes that more changes are needed to realize this plan. The farmers want to develop Sigma—the biogas-producing farm their traditional farming activities (their current BMs) by cooperative improving the existing biogas production and by develop- ing new business concepts aimed at future biogas expan- Sigma, a Swedish agricultural cooperative, is a for-proﬁt sion. Sigma’s main goal for the future is, therefore, to entity, owned and operated by its 36 members. Sigma develop a joint network-level BM for sustainability that produces farm-based biogas from manure and farm waste. combines the main farming activities and the expanded Although Sigma’s members work together in the farm-based biogas production. 123 Sustainability Science complements the traditional farming activities, on Results increased resource efﬁciency, on sustainability outcomes such as job creation, a reduced environmental impact, and Ideas on business model development the promotion of renewable energy. Another identiﬁed beneﬁt was the knowledge and experience acquired from Table 2 presents the 215 ideas related to the sixteen developing a long-term vision for the integration of biogas building blocks in the FBC. Three building blocks—goals, production with other farming activities. beneﬁts, and stakeholders—received the most ideas: 23, The 21 ideas in the Stakeholders building block focus on 24, and 21, respectively. the collaboration with local authorities, municipalities, The 23 ideas in the Goals building block focus on the banks, other farmers, energy companies, and NGOs (e.g., delivery of economic value to Sigma and social and envi- environmental groups and green associations). Collabora- ronmental values to its external stakeholders. To achieve tion with these external stakeholders, combined with ﬁnancial proﬁtability, the workshop participants proposed partnerships with other ﬁrms, may result in investment that Sigma create a new company image/brand by identi- subsidies, access to new customers, and exchanges of skills fying new customers and investors, by creating a and experience. sales/marketing position, and by developing new and effective ways of communicating with the existing and Five sustainable business model prototypes prospective customers. They proposed that social and environmental values might be achieved with the use of The ﬁrst BM prototype, ‘‘marketing and communication’’ organic and sustainable farming practices and by the pro- (Fig. 2), mainly focuses on making Sigma more visible motion of biogas as vehicle fuel. through increased marketing activities. Sigma can create a The 24 ideas in the Beneﬁts building block focus on the sales/marketing position for the promotion of renewable acquisition of new skills in sustainable food and energy energy products that are locally produced and that production, on effective waste management that Fig. 2 The ‘‘marketing and communication’’ BM prototype developed in Workshop 1 123 Sustainability Science Fig. 3 The ‘‘proﬁtability through sustainability’’ BM prototype developed in Workshop 1 contribute to sustainable development in the region. By municipalities and ﬁrms as biogas consumers and biogas expanding its local presence, Sigma can use new marketing ambassadors, Sigma may increase its revenue stream as it strategies to reach more customers and other stakeholders. strengthens its sustainability proﬁle. Platforms such as social media and websites are cost-ef- The third BM prototype, ‘‘local market development’’ fective ways to attract public attention and to communicate (Fig. 4), focuses on creating the local conditions needed to with existing and prospective customers. In addition, make biogas production proﬁtable in the long term. To cooperation with municipalities, other farmers, and other create these conditions, Sigma should cooperate with local biogas producers is also in focus. Cooperation with car actors who would beneﬁt from an association with a farm- manufacturers and dealers can promote the manufacture based biogas producer. Working with Sigma, such actors and sale of biogas-powered vehicles. can create a local/regional brand that produces and delivers The second BM prototype, ‘‘proﬁtability through sus- locally and sustainably produced renewable energy. Sigma tainability’’ (Fig. 3), mainly focuses on brand creation by can also contribute to the local economy as a tourist des- emphasizing the green trend with its growing demand for tination (farm tourism) and as a seller of locally produced sustainable products and services. By creating a strong products (e.g., meat, vegetables, and organic fertilizer). brand (e.g., ‘‘Green Sigma’’), Sigma and its geographic With the developmental work on the conversion of biogas region can create an image of an organic and sustainable to liquid fuel and the plan to build another biogas plant, region that features production and use of farm-based Sigma may increase its local customer segment as well as biogas and biofertilizer. In addition, a focus on biotourism increase local tax revenues. On a more abstract level, in which Sigma offers farm study visits that educate Sigma’s cooperation with its local actors can create a stakeholders and the general public about the biogas con- regional image of responsible environmental and sustain- cept can lead to more investments and more green cus- able development. Success with such an image may lead to tomers. Eventually, under a fees arrangement, biotourism greater local ﬁnancial support from governing bodies. might become a proﬁt centre for Sigma. By involving local 123 Sustainability Science Fig. 4 The ‘‘local market development’’ BM prototype developed in Workshop 2 The fourth BM prototype, ‘‘long-distance sales and be prioritized. Moreover, Sigma can develop the serviti- distribution’’ (Fig. 5), focuses on the expansion of Sigma’s zation concept by working more with veterinarians, dairies, current markets. Sigma may investigate opening a distri- and agricultural equipment repair shops that are outside the bution channel to the national gas grid. Or Sigma may look network. As tangential service suppliers, they may estab- for new customers amongst their established suppliers such lish mutually beneﬁcial relationships with Sigma. as the large dairy company or the agricultural cooperative that sells seeds and fertilizer. Sigma may even look for The conceptual network-level business model customers willing to pay a premium for farm-based biogas approach because of its social beneﬁts (the reduction in greenhouse gases and the increase in rural development and In this section, we describe the approach for developing a employment). network-level BM for sustainability (Fig. 7) that is based The ﬁfth BM prototype, ‘‘servitization’’ (Fig. 6), focuses on the ﬁve sustainable BM prototypes. First, we present the on providing additional customer services and producing four network-level BM drivers behind Sigma’s motivation locally grown and processed food. One possibility for to develop the current BM towards a network-level BM. Sigma is to work with ﬁlling stations to promote car Drivers 2, 3, and 4 are a consequence of driver 1. The washes and automatic refueling and to sell organically resulting network-level BM is expected to be a signiﬁcant grown fruit and vegetables. In the interest of serving the improvement over the current single-ﬁrm BMs of the net- customer and society, Sigma can produce environmental worked ﬁrms. New business opportunities opened up by the performance reports that focus on the beneﬁts of farm- network-level BM can promote Sigma’s biogas production based biogas. Because environmental regulations are likely as an example of a stakeholder business case for sustain- to increase, Sigma should position itself in the forefront of ability and thereby help solve some of the ﬁrms’ ﬁnancial this movement. In promoting the service concept, distri- difﬁculties. bution channels that link producers and customers should 123 Sustainability Science Fig. 5 The ‘‘long-distance sales and distribution’’ BM prototype developed in Workshop 2 1. Increased cooperation and novel partnerships: More context and internal actors who are well informed of the cooperation with stakeholders such as local companies, context participate in this ideation activity. This heteroge- other biogas producers, public actors, and universities. neous mixture of participants promotes a broad perspective For example, cooperation with car manufacturers and and enables idea creation, unrestricted by the current dealers can lead to the promotion of the manufacture industry logic. At the same time, the mixture can provide and sale of biogas-powered vehicles. further realistic feasibility assessments of the ideas and of 2. Improved marketing/visibility: The creation of a the BM prototypes. The second step involves the identiﬁ- sales/marketing position, so that Sigma and its prod- cation of the network-level BM drivers that correspond to ucts are better advertised as locally produced. Renew- key network-level BM requirements held by various able fuel as a contributor to sustainable regional stakeholders, including private-sector ﬁrms and public- development. sector customers (e.g., municipalities). The drivers lie 3. Sustainability brand creation: Promotion of an organic behind the strategies used to create sustainable value via and sustainable brand in which farm-based biogas resource efﬁciency, waste reduction, pollution prevention/ production is an important activity. reduction measures, production increase, and the use of 4. Servitization: Additional services related to the sale clean energy and bio-based fertilizer. The third step is the and promotion of biogas. More distribution channels, conceptualization of the network-level BM. At this point, complementary services, and communications on the Sigma becomes an integral component in the network as it favourable environmental impact of farm-based biogas searches for new business opportunities and formulates production. strategies for the co-creation of sustainable value for the networked ﬁrms and their stakeholders. Finally, the net- The ﬁrst step of the network-level BM approach is to work-level BM can enable a fourth step if stakeholder envision future scenarios as sustainable BM prototypes. relationships are managed, such that a stakeholder business External actors who have no prior knowledge of the 123 Sustainability Science Fig. 6 The ‘‘servitization’’ BM prototype developed in Workshop 2 case for sustainability can be created, developed, and Previous research on farm-based biogas production realized. concludes that the single-ﬁrm logic for creating BMs does not provide sufﬁcient knowledge, expertise, resources, and inﬂuence for the management of biogas production in the Discussion development and establishment stages (Negro et al. 2007; Negro and Hekkert 2008; Wadin Lagerstedt et al. 2017). The creation of, and experimentation with, various BM Our results support this conclusion. In its dependence on prototypes at an early stage of business development is an individual BMs at the single ﬁrm level, Sigma has failed to effective way of initiating the work of designing and realize its intended biogas expansion. An alternative aimed establishing an actual BM (e.g., Demil and Lecocq 2015). at the achievement of the member ﬁrms’ business goals and In the last decade, Swedish farmers have begun looking at the realization of the beneﬁts of farm-based biogas pro- the possibility that the production of farm-based biogas duction is a joint network-level BM for sustainability. might generate a new income stream and also contribute to Success with such a network-level BM, to a large extent, environmental and social sustainability (Lybæk et al. depends on the stakeholder relationships and the formation 2013). This new perspective on farm-based biogas pro- of networks that share the risks and the rewards (Hellstrom duction as a stakeholder business case for sustainability et al. 2015; Lindgren et al. 2010). Such BM collaboration suggests farmers and their stakeholders require joint BMs. can complement Sigma’s lack of business skills (in mar- For this purpose, this paper proposes an approach for keting, sustainable brand creation, and servitization) and developing a network-level BM for sustainability derived can provide the required ﬁnancial resources for the needed from ﬁve sustainable BM prototypes (Figs. 2, 3, 4, 5, 6) biogas infrastructure (investment capital for production, based on research conducted at a farm network (Sigma) in upgrading, and distribution of the biogas). southern Sweden. Gauthier and Gilomen (2016) and Schaltegger and Burritt (2015) report that some organizations join 123 Sustainability Science Table 2 The 215 ideas related to the FBC building blocks FBC building Ideas blocks Goals Expand by selling additional products and knowledge, ﬁnd investors, reduce greenhouse gas emissions, enter into public transport partnerships, ﬁnd customers willing to pay for added value, focus on long-term proﬁtability, use ﬂexible distribution methods, promote environmental protection, create a sales/marketing position, identify new market opportunities, merge with the west coast biogas network, take a holistic view, secure more contracts, share beneﬁts, promote the service-based concept, use biogas for vehicle fuel, create a new image of the company, create a green brand, become the most sustainable area in Sweden, expand pipelines, promote a strong local spirit, and dare to take risks Total: 23 Beneﬁts Upgraded gas, new business possibilities, renewable energy, clean fuel, social beneﬁts, reduction of methane emissions, creation of different ﬁnancial strategies, fewer negative effects of climate change, improved resource efﬁciency, a long- term vision, new supplier market, new skills, job creation, increased cooperation, renewable vehicle fuel, waste management, manure management, zero emissions, more customers, promotion of main farm activities, rural development, sales of knowledge, waste management, and increased manure value Total: 24 Costs Investments, infrastructure building, communication campaigns, production and distribution, operations, transportation, environmental effects, new employees, potential loss of partnership rights, upgrading, R&D, new pipelines, salaries, additional production plants, and administration Total: 15 Ecosystem actors Public sector, energy companies, farmers, private companies, NGOs, the media, and the R&D sector Total: 7 Needs Renewable energy, waste management, social needs, esteem needs, self-actualization needs, proﬁt, greater cooperation, sustainable development, expansion of markets and resources, secure production, green trend, greater food production, increase in employment, and long-term political decisions Total: 14 Stakeholders Governing bodies, farmers, environmental groups, the transport sector, the private sector, ﬁlling stations, salespeople, recent graduates, environmental representatives, the Board of Directors, new customers, banks, energy companies, industries, companies that control the gas grid, local authorities, cities, green associations, Sigma, companies that own and manage plants, and local and regional customer segments Total: 21 Relationships With other farmers, municipalities, local companies and residents, universities, private companies, network farmers, other network actors, environmental institutions, biogas networks, vehicle companies, and representatives for the national gas grid Total: 11 Channels Truck transportation, marketing, face to face meetings, workshops, telephone, e-mail, local focus contacts, meetings, website, and social media Total: 10 Value co-creations Compliance with governmental policies, long-term solutions, acquired experience, solutions to global warming, environmental sustainability, a ‘‘green’’ reputation, presence in the market, energy enthusiasm of young people, new business opportunities, reduced costs, reduced ecological footprint, proﬁtability, new R&D, heat, green cities’ cooperation, transport of liquid gas, ethanol, and increased property values Total: 19 Value co- High investments, uncertain market, limited production, political decisions, lack of awareness, no ﬁxed demand, price destructions ﬂuctuation, liability of energy market plan, uncertain governmental support, expensive production costs, few customers, challenging competition, and low proﬁtability Total: 13 Governance Sigma, network members, employees and suppliers, Board of Directors, farmers, private companies, and governmental bodies Total: 7 Partnerships Subsidy agencies, partner associates, utility companies, farmers, agri-food companies, new customers not in the main pipeline, the local industrial biogas plant, local companies, energy companies, technological companies, the Swedish national government, municipalities, transport companies, local households, and universities Total: 15 123 Sustainability Science Table 2 (continued) FBC building Ideas blocks Resources Manure, farm waste, employee creativity and commitment, investment funds, technical and commercial knowledge, the distribution grid, organic material, subsidies, household waste, new production plants, company waste, and time commitments Total: 12 Biophysical stocks Manure, crop and food waste, farm waste, waste and bi-products from primary production, and organic materials Total: 5 Activities Upgrades, export construction of joint gas pipes, B2B, other marketing, mixing biogas with natural gas, preparation of funding applications, production of biogas, biotourism, marketing the ‘‘green values’’ of farm-based biogas production, pursuit of renewable energy procurements, collection of manure, management of digestates, conversion of biogas to liquid fuel, and creation of a market concept Total: 15 Ecosystem Reduction of global warming, more renewable energy, conversion of waste to energy, and improved nutrient management services Total: 4 collaborative projects more in the expectation that they can engage in the transition from a single-ﬁrm BM to a net- meet sustainability challenges than in the expectation that work-level BM. Sigma used the BM prototypes to explain can realize short-term economic beneﬁts. For instance, the reasons for the planned expansion of biogas production municipalities have provided support to farm-based biogas to these stakeholders in terms of increased proﬁtability and production and distribution activities with such motives sustainable production. (Benjaminsson and Benjaminsson 2013: Karlsson et al. The creation and presentation of sustainable BM pro- 2017). The exploitation of complementary sustainability totypes using the FBC tool can thus greatly help biogas- interests by such key stakeholders is crucial for improving producing farmers and their stakeholders to establish suc- competitiveness (Edgeman and Eskildsen 2014) in the cessful collaborations. Therefore, we claim that network- context of farm-based biogas production. For that reason, level BMs developed using our approach (Fig. 7) can be we argue that the existing and future farm biogas producers the basis for developing farm-based biogas production as a need to prioritize the realization of a stakeholder business stakeholder business case for sustainability that can case for sustainability that addresses the social and envi- improve competitiveness and can lead to new business ronmental needs of local municipalities (Karlsson et al. ventures through the delivery of sustainable outcomes (e.g., 2017; Schaltegger et al. 2017). In collaboration with local mitigated greenhouse gas emissions, job creation, and municipalities, Sigma might develop its biogas infrastruc- increased resource efﬁciency and waste management) ture by investing in new distribution methods (e.g., pipe- (Schaltegger et al. 2017). Furthermore, the visualization line-based transport for biogas). This system could provide and integration of sustainability in a ﬁrm’s BM with the environmental and social beneﬁts such as reductions in help of business modelling is an important strategic activity fossil fuel-based road transport, transportation costs, and that can change the collaborative mindset of managers and greenhouse gas emissions. In addition, Sigma might invest staff (e.g., Stubbs and Cocklin 2008). This change can in an upgrading facility for converting its raw biogas into facilitate the initiation and maintenance of stakeholder biomethane usable as a natural gas replacement in the collaborations and partnerships that address mutual busi- transport sector. ness interests, leading to improved long-term ﬁnancial In line with Seidenstricker et al. (2014) and Upward and viability. These ﬁndings complement the previous results Jones (2016), we found that business modelling facilitates on collaborative business modelling and experimentation the internal and external stakeholder communications in the context of sustainable value co-creation in networks required for the initiation of BM collaboration. Through the (e.g., Evans et al. 2017). visualization of different BM prototypes for future BM scenarios, the internal communications amongst the Sigma Theoretical and managerial contributions members also improved. As a result, the members were empowered to develop a joint vision and a strategy for the The main contribution of this study is its response to the biogas expansion (i.e., the need for a network-level BM for call by Schaltegger et al. (2017) for the use of the theo- sustainability). They also identiﬁed the relevant stake- retical concept of the stakeholder business case for sus- holders (municipalities and local industries) needed to tainability in empirical research. Our study describes a 123 Sustainability Science Fig. 7 The network-level BM approach illustrates how sustainable BM prototypes can be used to develop a network-level BM that can realize farm-based biogas production as a stakeholder business case for sustainability practical approach for the development and potential economic, and social sustainability through which long- realization of a network-level BM in a network of indi- term ﬁnancial viability can be improved. Our ﬁndings vidual ﬁrms. Using business modelling to create BM pro- complement the previous sustainable BM research by totypes based on the sixteen FBC building blocks, we showing how ﬁrms and stakeholders can beneﬁt both col- describe an approach for developing a network-level BM lectively and individually from collaborative business for sustainability. This approach, with its clear focus on modelling and experimentation (Bocken et al. 2013; Evans sustainable value creation and stakeholder management, et al. 2017; Joyce and Paquin 2016). Furthermore, we show can be used as a template for developing other network- that the emerging design focus in sustainable BM research level BMs that can create stakeholder business cases for (Geissdoerfer et al. 2016; Lehmann et al. 2015) can be sustainability in different contexts. facilitated by business modelling and analyzed using BM By forming a ‘‘community of practice’’ based on our prototypes (Demil and Lecocq 2015). network-level BM approach, ﬁrm owners and managers From a practical perspective, our results can be used to can work with researchers, consultants, and other stake- identify and visualize the drivers of collaborative networks holders to identify ways to advance environmental, and partnerships, the relevant stakeholders, and the new 123 Sustainability Science business opportunities associated with a network-level BM level BM implementation and evaluates its results (eco- for sustainability. We found that the development of a nomic, environmental, and social). network-level BM for sustainability and a stakeholder business case for sustainability in the biogas-producing activity is mainly driven by sustainability-oriented brand- Conclusions ing and marketing, stakeholder involvement, and changes in the competitive environment. With these results, our This study offers a new, collaborative approach to the study complements the research on antecedents and drivers development of network-level BMs for sustainability in of BM renewal and adaptation (Foss and Saebi, 2017; farm-based biogas production. In its examination of the Saebi et al. 2017) by showing that sustainability pioneers network concept in the practice of sustainable BM devel- such as biogas-producing farmers require a holistic opment, the study concludes that collaborative business approach. Such an approach includes internal and external modelling using the FBC can be used to progress from a activities at the ﬁrm level if network-level BMs for sus- narrow ﬁrm-level focus to a broad network-level focus. tainability are to support long-term ﬁnancial viability. Furthermore, this study shows that business modelling is an effective way to facilitate the work of turning ideas for Suggestions for further research change into BMs, and for understanding the potential beneﬁts of network-level BMs. A network-level BM (ver- The development of a network-level BM for sustainability sus the single-ﬁrm BM) for sustainability can result in requires that a number of dedicated ﬁrm owners and public more customers, the expansion of business activities, an actors collaborate as they try to achieve long-term goals. increase in sustainable value creation, and higher ﬁnancial There are several research opportunities in the examination returns. Thus, we conclude that sustainability can be both a of such collaborative networks. trigger for, and a result of, collaborative BM development. Future research may examine our network-level BM The perspectives and interests of the various stake- approach in other industrial contexts and with other ﬁrm holders in networked biogas production systems may be networks and stakeholders. For example, empirical studies rather different. Such diversity can pose challenges to their of the use of the approach in other business groups would collaborative efforts. However, the need for change, be fruitful. Such research might also address the roles and whatever its reason, can motivate various actors to unite as input of various stakeholders (e.g., local authorities, cus- they formulate and try to achieve common goals. For tomers, external stakeholders, and researchers) when a Sigma, the poor proﬁtability of the biogas activity moti- network-level BM is created and implemented. In the vated its need for change. The challenge, therefore, was to development of a network-level BM and a stakeholder create and develop conditions for improved ﬁnancial via- business case for sustainability in practice, researchers bility. A network-level BM developed for and with stake- might also investigate the moderating effects of, for holders could create such conditions and generate positive example, ethical motivations, organizational values, and synergistic outcomes. These (possible) outcomes included leadership characteristics that Schaltegger and Burritt sustainable value co-creation and greater competitiveness (2015) describe. in the long term. We also suggest that researchers further examine the The traditional BMs frequently centre on speciﬁc areas speciﬁc industry context of our study. They might take an (e.g., key activities or distribution channels). However, we empirical approach as they study the key actors in network- found that sustainable BMs in farm-based biogas produc- level BMs for farm-based biogas production. For example, tion are quite complex and require a holistic approach that which roles do the various actors play? Which governance recognizes the importance of environmental and social rules and power distribution schemes favour the creation beneﬁts as contributors to ﬁnancial viability. As we describe and development of sustainable network-level BMs and the in the discussion section, this approach depends on the subsequent realization of farm-based biogas as a stake- development of a network-level BM for sustainability that holder business case for sustainability? includes committed ﬁrm owners, supportive local admin- The Sigma case also offers further research opportuni- istrations, and other stakeholders who are willing to make ties. Our study covers the conceptualization of the network- long-term investments as they share the risks and rewards. level BM intended to help solve Sigma’s ﬁnancial prob- Such network-level BMs form the foundation for the lems. The next step for Sigma and its stakeholders is to development and realization of a stakeholder business case implement the network-level BM. There is much to be for sustainability in which farmers and other stakeholders learned about the theoretical and practical issues that arise jointly, through the solution of environmental and social when a network-level BM is implemented. Therefore, we problems, create and promote conditions for the long-term recommend that future research investigates the network- ﬁnancial proﬁtability of farm-based biogas production. 123 Sustainability Science in agriculture—minimization of risks in realized projects]. 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Published: Jun 1, 2018

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Business modelling in farm-based biogas production: towards network-level business models and stakeholder business cases for sustainability

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Business modelling in farm-based biogas production: towards network-level business models and stakeholder business cases for sustainability

Business modelling in farm-based biogas production: towards network-level business models and stakeholder business cases for sustainability

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