Kill your darlings. A case study on balancing perform and transform towards net zero emission and what implications shifts in green technology may have on business models
Large manufacturing companies with the ability to use internal sources of capital to finance their investments in green technologies face several complex issues and decisions on how to perform today to finance their transition. There is currently a lack of research on how companies can accelerate sustainable transitions. Previous research has recently implied that companies need to decline and phase out undesirable technologies to accelerate sustainable transitions. This study investigates how large manufacturing companies can perform to transform while maintaining profitability and what effect the transformation has on large manufacturing companies' business models. The research approach in this study is a multiple-case study, investigating four companies in adjacent industries in which data was collected from 22 qualitative interviews with key-decision makers, experts, and scholars. For large manufacturers to transform, they must perform financially on their current business and simultaneously decrease and eliminate traditional technology to transform. This requires a balance where the large manufacturer must develop a phase-out plan to decrease investments in existing products to invest more resources into green technology. Dynamic planning emphasizing qualitative aspects will play a more decisive role in assessing how much to invest in exploiting and exploring activities. Partnerships can accelerate the transition by sharing costs, advancing R&D, and bringing new solutions to the market. Entering partnerships can reduce the risk of developing new technologies while compensating for the company's capabilities shortage. Still, in doing so, the company also loses some control over the development of the new technology. Implementing as-a-service business models can be successful for both OEMs and component suppliers. When companies offer a higher level of service concentration, the business model goes from linear towards circular, provided it provides value for the costumers and from a sustainability point of view. This is because the company wants to maintain a high residual value of the product to make it last longer, which leads to the development of products that have longer life cycles. Companies that have only dealt with linear transactions in the past need to establish new structures focusing on defining, structuring, and creating long-term relationships with their customers.