The Trends That Are Creating the Next Wave of Sustainable Business Models

By Anum Yoon

During the Industrial Revolution, and for some time after it, the focus of many businesses was growth and development. Rapid expansion took place without regard to long-term stability, fair practices or sustainability. Being the biggest and best was most important; the rest was in the details.

Lately, there’s been a cultural shift, especially in the business world. The model of growing fast and wiping out whatever stands in the way is becoming dated. Today’s focus? Sustainability. Below are a few of the trends that are creating the next wave of sustainable business models.

Superlinear scaling

Nature published a study in 2010 which found that, when a population of a city doubles, per-capita economic productivity increases by around 130 percent on average. It’s logical that productivity would increase when the number of people in a city increases, but why on a per-capita basis?

One answer, proposed by the MIT Media Laboratory’s Human Dynamics Lab, is superlinear scaling. This theory – also referred to as social-tie density – states that increases in population density in urban settings allows more face-to-face interaction for residents.

According to Alex “Sandy” Pentland, director of the Human Dynamics Laboratory at MIT: “When you pack people together, something special happens … This is the sort of thing that Adam Smith wanted to explain. He explained it through specialization: People were able to narrow what they did to get better at it and because they were nearby, they could trade with each other.”

Put simply, the more interactions individuals have on a daily basis – face-to-face, digitally or otherwise – the more productive they’re able to become. This enables a new focus and push for sustainable business practices as more individuals become conscious of their impact on the world and take the time to choose the right company to service their needs.

Non-location dependent connections

In the past, to connect with others, a certain level of travel and scheduling was required. This slowed growth and prohibited many potentially valuable connections in the business world.

With the rise of digital technology, social networking, telecommuting and other practices, connections can form regardless of locations. These connections allow for easy communication and the sharing of ideas, similar to the effects of superlinear scaling. In fact, at many newer, more innovative companies, the percentage of employees that telecommute in one way or another ranges from 30 to 45 percent.

When employees are able to connect at any time, from any location, they are able to communicate with ease and to focus on factors other than the standard “getting to the office and checking off today’s to-do list.” This means that business practices come to the forefront and that sustainability becomes more important than it was in the past. The rise in social technology has a direct impact on sustainable business models.

Enlightened leadership

While other, more balanced business models are growing in popularity, many still retain a certain level of the “top-down” style. When an idea comes from leaders at the top, it requires fewer checks and balances, has fewer channels to travel through and is more likely to take effect. When leaders become more enlightened and more focused on sustainability, change is more likely to happen.

Today, more businesses are looking for ways to use their influence to start conversations and actions relating to value, purpose and class – all important aspects of sustainability. When management and top leaders at big companies – like Nike and Starbucks – begin to look at the bigger picture, change is more likely to take effect. This starts with enlightenment and a focus on change.

The rise of the sharing economy

In the past, consumers and businesses alike were focused on bottom-line purchases. Once a home was sold, it was designed to be used as a primary residence. When there was a need for a household appliance that receives little use throughout the course of the year, or a child’s toy that would be built once and forgotten, it was purchased, then likely stored away for an indeterminate amount of time. Object permanence was in; the idea of sharing was out.

Today, the idea of a sharing economy is rising. Websites like Airbnb, that allows homeowners to rent out rooms or their homes on their own, or Pley, that allows parents to rent out otherwise expensive Lego sets for their children to build, then return, are on the rise. The idea that objects can be borrowed at a lower cost and in a more practical manner is growing.

This change in thought and business practices creates a direct path toward sustainability. Use what you need, when you need it, then allow someone else to do the same. This trend thrives because of the increase in digital technology and connectivity, and is an important driver in the movement toward sustainable business models.

Today’s focus on business sustainability, coupled with emerging technological and social trends that have not been possible in the past, means that real change is happening. It’s exciting to consider what the future holds as these trends continue to take hold and grow in a global manner.

Image credit: Life of Pix under Creative Commons license 

Anum Yoon is a writer who is passionate about personal finance and sustainability. She often looks for ways she can incorporate money management with environmental awareness. You can read her updates on Current on Currency.