Sustainability as a Business-Model Transformation

Many global companies have made public commitments to sustainability targets. Fulfilling these commitments will require firms to transform their business models and organizational architectures. A few pioneers are leading the way, demonstrating that companies can make sustainability not only a goal but also the driver of their business model. They are leveraging what they’ve learned from developing innovation capabilities to help them on their sustainability journey. This article identifies three fundamental tensions that companies must address. First, they need to maintain a long-term sustainability vision while delivering on short-term financial targets. Second, they must introduce systemwide change while keeping their employees engaged at the local level. And third, they have to be open to external collaboration while maintaining strong internal integration. Drawing on real-world examples such as the Italian energy group Enel and Swiss cement giant Holcim Group, the authors describe the practices companies can use to face each challenge with intention.