Sustainable business models and the automotive industry: A commentary
Vol 25, No 4; Article by Peter Wells; December 2013
On invitation, the author reviews the position articulated in his paper "Creating Sustainable Business Models: The Case of the Automotive Industry", published in December 2004 in Volume 16 No 4 of IIMB Management Review. Mooting a radical redesign of the prevailing business model in the automotive industry to address concerns of profitability, the gap between the production system and the market, the social dimensions of work, and environmental concerns, the article had offered the micro factory retailing (MRF) model as a sustainable alternative and made a case for it along economic, social, and environmental dimensions. The MRF model envisaged the combination of the manufacturing and the distribution operations in one entity, access to customised, environmentally-friendly products, more varied work and stable employment patterns, and environmental advantages resulting from change in product technology.
The original article is first featured, followed by a commentary that traces the new developments with regard to sustainable business models and the automotive industry.
Of the three main areas where the commentary sees new developments, first is the burgeoning academic interest in business model innovation following the acceptance of potentially important co-determinations between technological and organisational change. Second is a sensitising of government policy towards business models, particularly with respect to the introduction of new technologies, and a recognition that innovations in business organisations must parallel innovations in technology. Third, with specific regard to the automotive industry, significant structural trends traced in the original paper have matured and the practical application of the concepts in the original paper has emerged, most notably with respect to electric vehicles. The "ecosystem" way of understanding change in the automotive industry is emerging, challenging standalone business models, as previously distinct systems can no longer maintain barriers against other systems. The conditions are potentially right for an extended automotive industry with multiple stakeholders with new value creation systems, and for the creation of new business models.