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Six ways to build circular business models

Six ways to build circular business models Circular business models can improve resource use in a financially and environmentally feasible way. However, companies struggle to choose among the vast variety of ways to achieve circularity within a business model. The purpose of this paper is to offer a pragmatic guide for making strategic decisions on circular business models.Design/methodology/approachThis paper develops a conceptual model of six different strategic approaches to circular business models and provides examples to business cases and practice to illustrate these.FindingsThis study identifies two critical strategy choices companies should make. First, an innovation strategy addresses the extent to which circularity is achieved with internal or external stakeholders. Second, a resource strategy addresses how companies achieve circularity by narrowing, slowing or closing resource loops. Using examples from business practice, this study illustrates how the combinations of these two strategies can be used to design competitive circular business models. Key managerial questions are also identified to help decide upon a feasible strategy for circular business model innovation.Originality/valueWhile different types of circular business models have been described, it is less clear what the strategic choices are that companies need to make to find feasible business cases for circularity in terms of value proposition, value creation and delivery and value capture. This study outlines these through a “circular business model strategy framework”. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business Strategy Emerald Publishing

Six ways to build circular business models

Bocken, Nancy; Ritala, Paavo
Journal of Business Strategy , Volume 43 (3): 9 – Apr 4, 2022
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References (32)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0275-6668
eISSN
0275-6668
DOI
10.1108/jbs-11-2020-0258
Publisher site
See Article on Publisher Site

Abstract

Circular business models can improve resource use in a financially and environmentally feasible way. However, companies struggle to choose among the vast variety of ways to achieve circularity within a business model. The purpose of this paper is to offer a pragmatic guide for making strategic decisions on circular business models.Design/methodology/approachThis paper develops a conceptual model of six different strategic approaches to circular business models and provides examples to business cases and practice to illustrate these.FindingsThis study identifies two critical strategy choices companies should make. First, an innovation strategy addresses the extent to which circularity is achieved with internal or external stakeholders. Second, a resource strategy addresses how companies achieve circularity by narrowing, slowing or closing resource loops. Using examples from business practice, this study illustrates how the combinations of these two strategies can be used to design competitive circular business models. Key managerial questions are also identified to help decide upon a feasible strategy for circular business model innovation.Originality/valueWhile different types of circular business models have been described, it is less clear what the strategic choices are that companies need to make to find feasible business cases for circularity in terms of value proposition, value creation and delivery and value capture. This study outlines these through a “circular business model strategy framework”.

Journal

Journal of Business Strategy – Emerald Publishing

Published: Apr 4, 2022

Keywords: Collaboration; Strategy; Open innovation; Business model innovation; Business model; Closed innovation; Circular economy

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