In this chapter, the central question is which core activities you will undertake in order to achieve your goal, organizing your value proposition with success. Because you are working towards a specific goal, and with selected strategies, it is useful to state which (core) activities are necessary to realize your sustainable business model. The idea of a core activity is that a specific part of the organizational activities can be seen as the speciality of a company, a network, or a community: it tells what they are really good at. Core activities should contribute to operationalizing the chosen strategy, thus contributing to the realization of the overall goal, coherent with the value proposition. We offer a core activities framework based on the conventional sustainability trio: reduce, reuse, recycle. This has evolved over the years into a whole family—commonly referred to as the RE-strategies and presented here as the 13 REs.
- Core activities
- Goal attainment
- Operationalizing strategy
Ahrend is the only manufacturer of cradle-to-cradle chairs in the Benelux. This means that we use materials that can be reused time and again, use renewable energy, and respect diversity. […] During the design of vitalizing workspaces, we always aim to close the cycle with our products. That’s why we also like to maintain ownership of the products and assist users with our services. We call this Furniture as a Service. In this way, we ensure that the circular economy becomes a reality. Ahrend, www.ahrend.com.
Tesla’s home battery integrates with solar energy to utilize the infinite power of the sun and reduce dependence on fossil fuels. Tesla, www.tesla.com/nl.
Felyx is a successful scale-up, offering shared electric scooters as a new and disrupting urban mobility concept. Felyx, https://felyx.com.
Sustainability is in our DNA, which is why we believe sustainable business operations are important. In 2019, we were the first supermarket in the Netherlands to open an energy-neutral store. More and more of our trucks are also running on LNG (Liquid Natural Gas), which emits far less CO2, and more than 90% of our residual flows are recycled into new raw materials. Lidl, https://corporate.lidl.nl.
Innovating with waste flows to create fascinating circular products, TRIBOO is the circular office furnisher. TRIBOO, www.triboo.nl.
We are expanding the system of separate waste processing at stations and on trains. We are also researching how we can already reduce waste at the time of purchase with more possibilities for reuse. Dutch Railways, www.ns.nl.
iPhone Kliniek has specialized in iPhone and iPad repairs for many years. iPhone Kliniek, www.iphonekliniek.nl.
Refurbished devices are devices that are pre-used and are, after an overhaul by our experts, like new again. This way they get a second life. The products that are refurbished usually come from the business community and trade-in programmes. They are extensively checked, tested, cleaned, repaired, replaced, and upgraded whenever necessary. With a refurbished device you are not only environmentally conscious, but it also saves you a few pennies in your wallet. So: hello nice sustainable product and possibly that new pair of shoes with the money you saved! LEAPP, https://leapp.nl/pages/refurbishment.
Railway sleepers are used in the construction of railways. We use the oak variants, which logically have a well-lived appearance. We clean the wood thoroughly in advance and convert it into tabletops. Oak & Steel, www.oaknsteel.nl.
Europe is at the head of aluminium recycling and this position is something that Alumeco wants to keep contributing to. This contribution includes a thorough sorting of our waste metal, which is collected in containers and sorted by types of alloy, ready to be recycled. This careful waste sorting actually ensures that aluminium can be reused repeatedly to produce the same types of products. In this way, optimum use of aluminium is achieved. Alumeco, www.alumeco.nl.
Generating energy from waste is sustainable and offers many benefits. In addition to the energy and reducing the amount of waste, the combustion residue is also used effectively. Road construction, in particular, can benefit from this residue. More than 85% of this combustion residue is now being put to good use. Energy from waste appears to be here to stay. Duurzaamheidskompas, https://duurzaamheidskompas.nl/blogs/energie-uit-afval/.
In Germany, ReFood collects around 500,000 tons of food waste every year. From these raw materials, they generate electricity and heat in their own biogas plants for currently some 50,000 households, replacing energy from such sources as nuclear power plants and coal. Refood, www.refood.nl/nl/rf-nl/groene-energie/.
1 The More Specific the Better
Now it is time to specify what you are going to do. Which core activities will you undertake alone or with others to achieve your goal through the chosen strategy or mix of strategies? These can be both technical and organizational activities. Given the wide variety of companies, business models, and the context in which they operate, it is impossible to present a comprehensive list of activities. However, bear in mind that the core activities should align with the chosen strategy (or strategies), enable the realization of the overall goal, and ultimately be coherent within the proposition.
In an existing company, it is about evaluating/re-evaluating existing activities, adding new activities, or discarding activities that no longer sufficiently match your new objective(s). With a new venture, you have more freedom in devising new activities, without having to take into account the potential constraints that may accompany existing business operations.
The activities that are needed to initiate a change or to start a new business model (such as training people or purchasing resources) we will refer to as the starting or initial activities. The activities you undertake after the business model sets off we will refer to as the operational core activities. These are always available and are a central part of the daily management of your business model. Companies can profile themselves well through a social issue or problem that they adopt if there is a logical connection with the core activities of the company and the problem concerned. If this is not the case, there is a chance of greenwashing (Hollander & Gadella-van Wersch, 2017).
Sustainable business operations
Companies and organizations have an ever-growing need to integrate sustainability into their core activities. Sustainability principles are therefore an important motive in determining the business strategy. They are integrated into medium-term policies and objectives and the development of practices and procedures. By ensuring sustainable business operations, companies are better able to meet the demands of stakeholders, initiate change, and create long-term value. Luca Crisciotti (2016), CEO DNV GL, www.dnvgl.co.uk.
The core activity concept emerged in the last century after many companies developed into conglomerates of companies, often with very different activities (Prahalad & Hamel, 1990). The idea of a core activity is that a specific part of the business activities can be seen as the speciality of the company: what it is really good at. Other organizations are better at handling matters that fall outside of this speciality.
2 Core Activities Framework
The American environmental programme of the 1970s introduced the now-familiar sustainability activities: reduce, reuse, recycle. Although the origin is not entirely clear, most sources refer to the launch of these concepts during the first Earth Day in 1970 and they can potentially be attributed to The Environmental Handbook by Garrett de Bell (1970).
The reduce, reuse, recycle trinity has evolved over the years. For example, a whole family has been built up of what is commonly referred to as RE-strategies (REs). Some authors propose a family of ten REs (see, for example, Potting et al., 2017), which we modify slightly and extend, to incorporate the circular bioeconomy considerations, and present as 13 REs. While it is easy on reflection to quickly expand the list to about 30–35 strategies, this would lead to an unworkable framework.
The REs of circularity
Below we outline a list of 13 REs that we consider core activities within strategies for the development of sustainable business models, building on and extending Potting et al. (2017).
Refusing raw materials or products that are harmful to people and the environment, or that make it difficult to reuse a product at the end of its life in whatever form.
Redesigning products and components so that they can be repaired and the materials can be recovered at the end of the life cycle.
Bio-based Redesign (Substitution) is the commitment to develop and valorize renewable raw materials to replace fossil fuel-based virgin raw materials. For example, potato peels can be used to make cellophane, and rejected fruit to make fruit leather (Fruitleather Rotterdam, www.fruitleather.nl).
Rethinking whether the use of the product can be intensified, for example, by sharing assets (such as machines, buildings, vehicles).
Reducing the use of raw materials and energy in production and use.
Reusing the product, for instance by finding another user or application.
Repairing defective products without replacing crucial parts.
Refurbishing a product by updating products and parts, so that it can be put on the market again.
Remanufacturing products by harvesting key components or cores to create equivalent products guaranteed as new.
Repurposing the components of a product for another application. Examples are the bike paths in the Dutch cities of Giethoorn and Zwolle that are made of plastic, or Remade Industry that transforms discarded police uniforms into an overnight bag, backpack, or barbecue apron (Remade Industry, 2019).
Recycling products to recover raw materials for use in new products. The technological challenge lies in the production of secondary raw materials with the same properties as virgin materials. In an ideal scenario this means that the same products can be made without the need to add virgin raw materials. Ioniqa, for example, recovers the materials from PET bottles so that they can be perpetually recycled, so to speak, into PET bottles (Ioniqa Technologies, n.d.).
Recovering refers to capturing energy from products at the end of their life cycle when all other REs have been exhausted.
Re-convertingFootnote 1 of waste into raw materials with another application. For example, converting CO2 into methanol (fuel), raw materials for medicines, or as a growth accelerator in agriculture.
Over the past 50 years there has been a recurring debate in strategic management regarding the nature of the relationship between strategy and core activities. Is strategic management concerned with the question of setting a route a strategic choice? Or is it about things that we should not do, or should do differently? In other words, is it a strategy or an activity? In the latter case, these questions could also be regarded as a core activity within a strategy. For the sake of clarity, we make a choice here in which we describe and elaborate on the strategies in Chapter 8 and see the REs as core activities within them. To clarify this, we have also linked strategies and core activities to the three types of business models (see Chapter 6—Business Model Archetypes).
Because you work from a specific goal (see Chapter 5—The Value Proposition) and selected strategies (see Chapter 8—Strategy), it is useful to state which (core) activities are necessary to realize sustainable business models. As our aim is the creation of multiple values, here we distinguish ourselves from conventional business administration where core activities are often solely identified in such terms as processes, competencies, and technology.
That does not mean that these conventional structures are no longer important. Rather, we focus on those core activities that are a first step towards the concrete operationalization of the sustainable business model that is being scoped. This means that if we opt for Refuse, for example, we indicate which raw materials can no longer be used or which processes are no longer permissible. We can also take this a step further, such as by indicating that we no longer consider certain types of waste (heat, CO2) acceptable. Whatever the considerations, choosing them explicitly leads to demonstrable interpretations of the core activities and is thus a first step towards the measurable indication of those core activities (see Chapter 11—Impact) (Fig. 9.1).
3 Case Studies: Core Activities
Case study: GreeNet
GreeNet’s dream is to reduce litter produced by train passengers. For this purpose, GreeNet has created and launched the Clean Mobility Initiative (CMI) to change the behaviour of travellers, so that they return their waste at train stations via Reverse Vending Machines (RVMs). An RVM is a machine in which travellers can return their waste, just like the machines for returning empty glass or plastic bottles in the supermarket. Here the technology has been extended so other types of waste can be returned as well. The actual pilot mainly focuses on the return of plastic bottles or paper cups. This smart machine scans the material and separates it into various independent mono-streams of waste. The ease of the return process is a crucial factor in making the project work.
Travellers are incentivized to return their waste to an RVM through a savings system. After returning the bottles or cups, the traveller has two choices: receive a fixed amount of GreenCredits, or the chance of a prize. The GreenCredits can be used for such things as discounts on mobility (public transport), consumer goods such as coffee, or to pay for the use of public services like a public toilet. There is also the potential for Dutch Railways to offer travel credit, upgrades to first-class or use of public bikes. Other companies can also contribute to the CMI initiative by offering tickets for the lottery.
Case study: WashingGreen
WashingGreen provides an industrial linen laundry service to the hotel industry using CO2. WashingGreen purchases fair trade linen from their linen suppliers. This linen is then chipped, given a barcode, and transported to their customers with a CO2-neutral means of transport. Hotels use the linen and can indicate when a dirty load of laundry needs to be collected via the WashingGreen app. At key points in the process the linen is scanned—so the hotels know where the linen is located and WashingGreen knows how many washing cycles the linen can go through before it must be recycled. After the washing process using CO2 the linen is sorted, with suitable items going back to the hotels, or reused or recycled by one of WashingGreen’s partners.
Case study: Rotterzwam
Rotterzwam, an oyster mushroom farm in Rotterdam, the Netherlands, believes in a society where material loops are closed, resource usage is optimized, and food is produced locally. They cultivate oyster mushrooms on locally collected coffee grounds, which they sell to restaurants and supermarkets in the Rotterdam area. Rotterzwam’s philosophy is not only to emphasize locally produced vegetable proteins but also to stimulate the ease with which residual flows are used to produce mushrooms locally, regionally, and internationally.
Rotterzwam opened its nursery to the public in May 2019. Here they convert 6,000–7,000 kg of coffee grounds into 1,200–1,400 kg of oyster mushrooms every month. Core activities of Rotterzwam are the logistics of collecting coffee grounds daily (using 100% electric transport), to ensure stability of supply in the oyster mushroom cultivation process, and last but not least to establish the nursery as a circular economy experience centre. The ambition is to share knowledge and experience through guided tours, business networks, and workshops at their new nursery. These three core activities together lead to a business model that yields both economic and environmental benefits (www.rotterzwam.nl).
4 A Running Score
Thus far in the BMT methodology, you have completed the Definition Stage and most of the Design Stage. It is OK to take a break now, take the dog for a walk, go for a workout or a swim, or have a drink. In fact, a night’s sleep does not hurt you every now and again. Our advice is to proactively get some distance from your pet project and actively try not to think about your BMT.
Once you have had a break from your BMT, come back with a fresh pair of eyes and take another look at how you have completed the seven building blocks of the BMT so far and how each building block relates to one another. If necessary, fine-tune and adjust your choices. The fifth and final stage of the Design Stage/Phase now awaits you—the next step is to take what you have in front of you and go through the steps of Building Block #8—External Test.
Of course, Conversion is not a real RE. But if we formulated it as an RE that would cause confusion, we would have to use Remake or Reuse, and that, in turn, would also lead to confusion.
Crisciotti, L. (2016). Duurzaamheid wordt onderdeel van kernactiviteiten [Sustainability becomes part of core activities]. Retrieved on 21.2.2020 from: www.duurzaam-ondernemen.nl/duurzaamheid-wordt-onderdeel-van-kernactiviteiten-conclusie-groot-internationaal-onderzoek-onder-bedrijven/.
Fruitleather Rotterdam (n.d.). Retrieved on 19.5.2019 from: www.fruitleather.nl.
Hollander, H., & Gadella-van Wersch, C. (2017). Duurzaamheid is passé: 8 ingrediënten voor succesvol en toekomstbestendig ondernemen. Business contact. http://mgtbk.nl/1jr3ln.
Ioniqa Technologies. (n.d.). Retrieved on 19.5.2019 from: https://ioniqa.com/applications.
Potting, J., Hekkert, M. P., Worrell, E., & Hanemaaijer, A. (2017). Circular Economy: Measuring innovation in the product chain. PBL.
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Jonker, J., Faber, N. (2021). Core Activities. In: Organizing for Sustainability. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-78157-6_9
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