Michelin: the right business model can make sustainability profitable

Greg Bernarda
June 14, 2017
#
 min read
topics
Business Models
Business Model Canvas
Transport
Mobility
Engineering

Sustainability can be a valuable business. It starts with looking at the entire business model. Here’s how Michelin does it.

Michelin’s business with haulage companies was changing for a number of reasons. First, the company was facing competition from low cost competitors. Second, Michelin felt it had superior technology in its products but was struggling to capture value from it. And third, climate change regulation was slowly encroaching on Michelin’s core business. Something needed to happen. 

Michelin essentially re-architected its business model to give haulage companies its tires away for free. The organization would provide a suite of services and start charging its customers by the kilometre (chips inside the tires would monitor distance and maintenance needs). This change to the business model transformed the customer relationship from being transactional into one focused on long-term contracts. The move also solved some big pain points for haulage companies with increased fuel efficiency (lower costs), better profitability, and ultimately less carbon emissions to harm the environment. 

Michelin effectively solved a double conflict of interest by giving tires out for free and taking responsibility for their disposal. First with customers by being incentivized to sell as few tires as possible. Then with the planet by ultimately manufacturing less and recycling better.

The traditional approach on environmental or social sustainability in large companies has typically been to respond with a big cheque (philanthropy), a nice ad (public relations), or a team of lobbyists (to influence regulation). We believe sustainability can mean business, too. By turning it into a creative constraint and taking an entire business model perspective, there is an opportunity to generate superior value for the organization, for the customer, and for the planet.

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About the speakers

Greg Bernarda
Author, Speaker, Advisor

Greg Bernarda works with individuals, teams and organizations on re-inventing what they do. He borrows from the fields of leadership, psychology, innovation, and design to create programmes for executives to expand mindsets and create the business models that bring positive change to their stakeholders and to themselves. Greg’s clients range across sectors and geographies. They include among others: Alibaba, Baxter, Colgate-Palmolive, Danone, Harvard and IMD Business Schools, Mastercard, Michelin, Nestlé, Singapore's NTUC Social Enterprises, Pekin University, Richemont, Roche, Tencent, Volkswagen, and the World Economic Forum.

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Greg Bernarda
June 14, 2017
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Michelin: the right business model can make sustainability profitable
Examples

Michelin: the right business model can make sustainability profitable

Michelin: the right business model can make sustainability profitable
Examples

Michelin: the right business model can make sustainability profitable

June 14, 2017
#
 min read
topics
Business Models
Business Model Canvas
Transport
Mobility
Engineering

Sustainability can be a valuable business. It starts with looking at the entire business model. Here’s how Michelin does it.

Michelin’s business with haulage companies was changing for a number of reasons. First, the company was facing competition from low cost competitors. Second, Michelin felt it had superior technology in its products but was struggling to capture value from it. And third, climate change regulation was slowly encroaching on Michelin’s core business. Something needed to happen. 

Michelin essentially re-architected its business model to give haulage companies its tires away for free. The organization would provide a suite of services and start charging its customers by the kilometre (chips inside the tires would monitor distance and maintenance needs). This change to the business model transformed the customer relationship from being transactional into one focused on long-term contracts. The move also solved some big pain points for haulage companies with increased fuel efficiency (lower costs), better profitability, and ultimately less carbon emissions to harm the environment. 

Michelin effectively solved a double conflict of interest by giving tires out for free and taking responsibility for their disposal. First with customers by being incentivized to sell as few tires as possible. Then with the planet by ultimately manufacturing less and recycling better.

The traditional approach on environmental or social sustainability in large companies has typically been to respond with a big cheque (philanthropy), a nice ad (public relations), or a team of lobbyists (to influence regulation). We believe sustainability can mean business, too. By turning it into a creative constraint and taking an entire business model perspective, there is an opportunity to generate superior value for the organization, for the customer, and for the planet.

related reads
No items found.
Michelin: the right business model can make sustainability profitable

Sustainability can be a valuable business. It starts with looking at the entire business model. Here’s how Michelin does it.

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