nZEB business models
The project has shown a holistic evaluation method for business models. The requirements for a succeful business model (BM) have been identified. Putting up these requirements together brought up the method to check how promising the business model of a company is according to the necessary factors .
Applying the Osterwalder Business Model Canvas it was shown that different stages of maturity of business models can be found within the described business models. Some models are already well established and are in use during daily business. Some models are in a developing phase where cost and revenue structures are in development. Depending on the maturity of the business model, adaptions can be established to improve the models.
An overview of different stakeholder perspectives and approaches was collected with the different nZEB business models, provided by CRAVEzero industry partners, to capture value in nZEBs’ life cycle. In analyzing the business models, common strengths and key factors were identified. It was seen that the stakeholder perspectives and activities affect the structure of BMs more than geographic clusters.
The results were used to enhance existing and develop new BMs related to nZEBs. The whole workflow around business model generation and development is presented and can be used via the produced documents and interactive tools. It facilitates the market uptake and shall motivate and inspire to enlarge the activities to realize net zero energy buildings. The approach is not limited to new buildings; it is also useful for renovation projects and all building types. It a general approach. During the work all project partners learned how to use and to transfer business model development and it should be easily feasible for the related stakeholders to follow and to use it for their purposes. Via several workshops, web meetings and webinars, the feedback was useful and we could integrate it in the work as well as we created a common understanding of the importance to satisfy the clients and customers’ needs in formulating real value
The typology of business models
A method to analyze business models related to nZEBs was developed together with the involved partners. The project partners used this method to describe their own business models and validate them. A challenge for all partners was the description of revenue streams and costs. The business models from the project partners are sometimes related to the provided case studies. One lesson was that the business models for low LCC nZEBs are often embedded into the “normal” business approach and it seems difficult to separate the nZEB business approach from the “normal” business approach especially regarding costs and revenues.
However, through the described methodology and the incorporated attractiveness portfolio tool , it was possible to assess business models.
The models are analyzed and described mainly based on the Business Model Canvas. The BMs have different stakeholder perspectives, namely:
• Real Estate Developers,
• General Contractors,
• Engineering and Construction,
• FM/ Building Operator and
• Urban Planner.
Thereby they are also related to different stages in a building’s life cycle. While applying the Osterwalder Business Model Canvas it was shown that different stages of maturity of business models can be found. Some models are already well established and are in use during daily business. Some models are in a developing phase regarding cost and revenue structures . Depending on the maturity of the business model, adaptations can be established to improve the models.
With the applied method critical success factors (strengths and key factors) for nZEB-related Business Models were identified. Key strengths, which are essential in several provided models, are the “Guarantee on Comfort and Performance”, “Valuable Project Management”, “Cost Reduction/ Guarantee of Costs” and “Human Expertise and Experience”. “Competences/ Know-how / Experiences” was identified as the key factor for realizing cost efficient nZEBs.
SCREENING THE EU MARKET
The project describes around 60 BMs found in the major European markets. Some of the analyzed models were provided by the CRAVEzero partners. Collected profiles have shown BMs belonging to all life cycle phases of nZEBs. The comparative analysis between these BMs has shed light on the different mentioned parameters and how they vary depending on the stakeholder perspective. It was also shown that the different stages of maturity of business models can be found within this broad range.
The results of the report yx were helpful to enhance existing and to develop new business models related to nZEBs, and they are a fruitful input for the project Pin-board.
The use and the provisioning of the data through CRAVEzero, reporting features and descriptions of business models, contribute to the market acceleration of nearly Zero-Energy Buildings (nZEBs) in different European markets. During workshops and feedback within the project’s dissemination activities, it was stated that there are only some minor adaptions necessary to implement and use the models everywhere in the EU. The business models are described in a profile-manner (see https://cravezero.eu/businessmodels/) considering the following parameters:
• value proposition,
• customer segment
• customer relationship,
• activities and capabilities,
• strengths and key factors,
• maturity and
• Placement along the value chain of nZEBs.
All of which have been described qualitatively.Part of the analyzed business models was provided by the contributing partners of CRAVEzero. Other business models have been described by the partners as well, based on the information found on the respective companies’ websites. Some companies have provided their own BMs. However, it is not guaranteed that the information has been understood and filled into the profiles correctly and holistically.
The business models belong to different stakeholders along a building’s life cycle. The key findings for each parameter of the business models are filtered conducting a comparative analysis. It sheds light on the characteristics that make business models successful, differences, maturity stages of the existing business models and the life cycle phases covered extensively. Consequently, it can be extracted at which point of the life cycle new business models can make sense and contribute to a diverse market, which characteristics are likely to make it successful and which possible cooperation of stakeholders could cause win-win-win situations for all.
Some features are common to the various business models analyzed or very recurring. As to the value proposition, the key features are sustainability and energy efficiency. In most cases, a strong relationship with the client is strategic, because it is necessary to build a relationship of trust in the face of the expenses that will have to be incurred.
For this purpose one of the most relevant activities is customer service and communication.
Besides this the most important and essential activity for all the stakeholders is the design/ engineering and development of projects/ buildings.
With regard to the important issue of cash-flow, the main revenue is the sale of the asset, while the main costs incurred are related to personnel expenditures, which are always present. The most recurring strengths and success factors are widespread competencies, Know-how, innovation & sustainability as well as guaranteed prices/performances. All stakeholders can find in this document a guide for optimal management of their business model.
Cost reduction is perceived as the main advantage in the value proposition of analyzed BMs. However, most of the BMs present a relevant cost structure for running the day-to-day activities, with a focus on personnel costs. Such costs are mostly ascribed to workmanship related to technical tasks, while administrative costs seem to be less relevant. In this frame, it is noticeable how the adoption of systemic approaches in the design and construction phases (e.g. prefabrication of building components, design for assembly) could improve such cost structure in favor of personnel cost reduction. Sustainability is also a prominent parameter in value proposition.
In terms of specific services offered to clients, dismantling, reuse and renovation, facility management, certifications, prefabrication of building parts and grid services are not very widespread. Indeed, they could represent a valuable boost in competitiveness for players that become able to offer a set of integrated services, covering the whole value chain and optimizing resource use all along. These additional services could be proposed on the project pinboard to customize pre-defined business models and evaluate extra opportunities that open up on the market when offering integrated services, which is very much in the direction of a “smart” and “flexible” approach to building design and construction.
Most of the business models collected are connected to the building development phase, cutting out the end-of-life of the building. However, some relevant providers, such as real-estate developers and building product vendors are already focusing their field of activity on building recycling. As the consortium gathered BMs along the whole nZEB value chain, it is noticeable to point out that even those stakeholders acting at a higher level, during the policy making or planning phase, are often discarding the end-of-life planning in their value proposition. As a takeaway of this consideration, it can be said that including this late phase in the value proposition to the final client could boost business opportunities, reducing hidden costs related to building dismantling and recycling. In fact, it is proven that analyzing the whole-life cycle of the building can produce added value, so an accent should be put in integrating the life cycle costing of the building in all planning, design and construction stakeholder companies.
Larger companies seem to cover more phases along the value-chain, as well as certification bodies. On the contrary, specialized service providers are more focused on a part of the construction process. In addition, the BM analysis has shown that most companies acting in the field do not consider having a mature BM as a priority for their activity; this can be linked to the diffused craftsmanship approach to construction adopted by several small and medium size companies including the advantage to be very flexible. On the other hand, the information collected through this analysis can be used as a valuable input to the project pinboard, proposing contamination of business models from a set of similar stakeholders to provide clients with an extended range of services.
CREATE NEW BUSINESS MODELS
The project partners figured out that there is more than one method to find new BMs. As an example, existing gaps in one’s business could cause the need of searching for a new or upgraded BM to fix failures. The other methods are e.g. advantage comparison, literature review, new value proposition, better/ new customer relation, new customer, new activities, making key factors and strengths better, nightmare competitor, adjusting from different sectors, a combination of different business models, using CRAVEzero BM web tool or any other choice of business model canvas. Also combining the methods can be beneficial. In applying some of the methods, some additional BM were described for in sum 70 BM descriptions available . One of the conclusions is that it is quite important to know which customer segment to address during the preparation of a new BM to bring a solution to their problems and excite the market with a new business. Another conclusion is to focus on a clear and sound value proposition. On the other hand, estimating revenue still stays as a problem with the new BMs since revenue is implemented in the overall business of a company. However, estimating the costs is easier both for the existing and the new BMs since expenses, inputs, and contracts etc. can be seen from a firm’s budget.
Business model creation is a challenging duty for each company. Most BMs are in use without being created from a dedicated creation process. Often, companies start with “doing” something, they create value and generate a money stream.
To handle the business in a more structured way, the knowledge on BM creation, the components of a BM or the development of new aspects is crucial.
The analysis of existing BMs is one part of the process from which new ideas can be derived.
The tasks conducted are a core process in the field of business model creation. In practice it is helpful to organize a small team within a company or institution to discuss all aspects of the group and to get valuable feedback. They gave indications on how to start, define, describe, cluster and validate business models in the nZEB sector. Therefore, different methods to find new BMs were described to give an idea and a basis to start thinking about the finding process.
There are several methods and streams to think about new BMs:
This method is about analyzing existing business models and working on their advantages and disadvantages, examining their gaps, and focusing on making these missing parts better.
Literature Review for Method
Reviewing the literature for methods of creating new business models could be used to develop a completely new idea to apply.
Fill the Gaps
New business models can be developed by examining the existing ones, studying them and then improving their weak points.
New Value Proposition
By creating new value propositions and/ or making existing value propositions better could be another method to create new business models.
Better/ New Customer Relation
Customer relationship is a very important success factor. Making it better and/ or easier could be helpful to create new business models.
This could be a good method for the stakeholders who want to launch a new company or for the existing companies which would like to extend their range of customer segments they refer to. Finding a new customer segment, identifying them and addressing their needs could be another method to find new business models in the nZEB sector.
Like the method mentioned above finding, identifying and addressing new activities and capabilities could bring new business model ideas to the nZEB market.
Make Key Factors and Strengths Better
Focusing on making the key factors and the strengths of a company’s business model better could lead to develop new business models.
“Define your nightmare competitor”- is a method to describe the worst new competitor of your own company – then learn from that business model and add/ replace the learnings to your own BM.
It is also possible to develop new BMs with a combination of two or more different business models.
Adjust from Different Sectors
Some business models from different sectors could give an idea for a new business model in the nZEB sector. Combine the existent BMs with models outside the building sector e.g. transportation, energy services, the trading sector could be a different method to create new business models.
The Osterwalder BM canvas as well as the descriptive format developed in CRAVEzero are useful tools to describe the elements of a BM.
During this task, additional new ideas for BMs have been identified. The new found models are described in the descriptive format as a report at the project website.
Additionally and to give a useful overview of the existing and new found BMs, a web based tool to configure new and own BMs using also elements of the BM repository was created:
It comes with a handbook and a webinar for efficient use of the web tool which itself could be another method to create new business models.
In the following, an example business model which is developed with this method will be explained.
‘BM 67: Easy Communication Online’ was inspired by shipment companies which provide a tracking number for the customers to make the following process easy both for the customers and the company itself. By this way, the customer can track their package whenever they want easily and can plan their day accordingly. It is even possible for some shipment companies to set an alert via e-mail or text about the processes which the customer wants to be warned about. When it is not possible to reach the customer, the company can leave them a notice with the available times for them for the customer to get back in touch. In this way, both money and time could be saved for the customer and the company.
Inspired by this business model, a new BM was developed for the nZEB sector where the customer can follow up the main processes of the building design, construction, operation, renovation, monitoring phases etc. The purpose of this BM is to automate the process of following an order from a company. Therefore, automated services (notification, email etc.) can be an option for customer relationships. Besides that, self-service of personal assistance would also serve the purpose.
The benefits of this new BM are:
• One hand solution for complex requirements
• Easy coordination and communication with the tracking app
• Decreasing the staff cost of a company which would be used for communication purposes instead of tracking app