STUDY | How companies are innovating their business models to meet major societal challenges

Climate change, poverty and inequality are examples of major societal problems that require joint solutions from many actors – not least the business community. A new study shows how businesses are choosing to act in this context.

The researchers have developed a theoretical framework that links environmental dynamics, robust action and business model innovation. Environmental dynamics refers to the predictability or unpredictability of the business environment. Robust action refers to three ways of dealing with major societal challenges: collaborating broadly, bringing in multiple perspectives, and daring to test new solutions.

Different environments – different types of change

The results show that companies in stable environments are usually content with small, incremental changes to their business models. As the environment becomes more changeable, the willingness to collaborate and experiment increases, but practical barriers – such as high coordination costs – mean that changes are rarely very large.

In highly uncertain environments, where existing business models are under threat, incentives to innovate increase. At the same time, many companies are discouraged by the difficulty of managing partnerships and conflicting interests. As a result, they tend to opt for minor business model innovations rather than completely new ones.

In summary, how companies respond to major societal challenges depends above all on how quickly their environment changes – and the degree of uncertainty affects the type of business model innovation they dare to invest in.

Cooperation more important than radical change

The study suggests that companies often avoid the most complex changes, even when these could contribute most to solving societal challenges. At the same time, the researchers show that not all companies need to make major changes.

Instead, multiple actors can contribute different, smaller innovations that together create systemic change – provided they are coordinated through robust action.

Practical lessons for businesses and policy makers

For business leaders, the results imply that it is important to adapt the level of cooperation and innovation to the speed of change in the business environment. Smaller, coordinated steps can be more effective than large unilateral efforts.

The study also underlines the importance of policy support and regulatory frameworks that facilitate collaboration between actors promoting innovation at the system level.

The researchers argue that businesses have a key role to play in meeting the SDGs – but that real change requires collaboration, openness and experimentation.

More about the article and the researchers
The article Navigating grand challenges: How environmental dynamism shapes robust action and business model innovation is published in the scientific journal Strategic Entrepreneurship Journal. The authors are Marziyeh Talebian, Asma Fattoum-Guedri and Rick Molz, all at Concordia University.