4 Tools for Developing Circular Business Models
With a multitude of circular tools to choose from, how can you determine which one is right for your company? And how do you get started with circular business models? Read on to learn about four tools that are helpful from organising your thoughts at the very first beginning of your circular transition to measuring impact at later stages of implementation.
Paula Fontell, CEO and Co-founder of Ethica, in the Circular Tools — Sustaining Natural Value Session at the Nordic Circular Summit.
There is no one circular tool that fits all scenarios, rather different tools can be appropriate for different industries or different phases of your company’s circular transition. It is also a matter of how much time and money you can invest.
Some rules of thumb that apply to all circular tools are:
At the beginning of your circular journey, start with low-investment explorative tools that help you organise your thoughts and identify suitable paths for your business.
When you’ve come a bit further, gradually move on to tools that help you finetune your business model and measure the actual impact.
Design products for multiple lifecycles.
Identify which capabilities are needed, which ones you should develop internally and which ones should be delivered by a third party.
Collaborate with key actors in your supply chain to design an efficient circular flow of products and materials.
Appoint a cross-functional team that will be responsible for managing your circular transition.
The following tools were presented during the session Circular Tools – Sustaining Natural Value at the Nordic Circular Summit 2022 aiming to clarify how circular tools can help companies move from theory to practice.
Tool 1: Circular Design Framework — a holistic approach to circular business transformation
The objective of this tool is to establish a more holistic approach to transforming business towards a restorative and regenerative circular economy.
Slide from Paula Fontell’s presentation of the Circular Design Framework.
The tool applies to three levels of your business and is used by adding the following perspectives as an extra layer to your normal design process:
Product and service design: How do we design circularity in all phases — from material extraction throughout multiple use cycles to after a product’s final use phase — and how do we create a winning customer experience?
Business design: How do we create and maintain value?
Strategic design: Which playing field will we play in the future and what is our role in the ecosystem?
The Circular Design Framework was presented by Paula Fontell, the CEO & Co-founder of Ethica. Ethica is currently applying this approach to 50 companies in Finland that want to transition to circular business models as a part of Finland’s National Design Programme funded by the Ministry of Environment.
Tool 2: The Nordic Circular Playbook 2.0 — a guide for scaling and transforming into a truly circular business
The objective of The Nordic Circular Playbook is to enable solutions that are outcome-oriented and improve resource utilisation. Where the first version of the Playbook focused on piloting and developing circular business solutions, this second version focuses on scaling your circular solutions and transforming from the piloting stage into a truly circular business.
Slide from Marthe Haugland’s presentation of the Nordic Circular Economy Playbook 2.0.
Apart from presenting a comprehensive background and a theoretical framework, the Playbook guides you through three key steps:
Identifying inefficiencies in your value chain
Selecting a suitable circular business model
Identifying capabilities that are needed in different parts of the value chain
The Playbook was produced by Nordic Innovation and has been tested and developed in collaboration with a large range of companies in the Nordic manufacturing industry. It was released at the Nordic Circular Summit and presented by Marthe Haugland, a Senior Innovation Adviser at Nordic Innovation.
Tool 3: Tools for quantitative analysis of circular economy strategies — for understanding the impact of complex systems
The objective of these tools is to model and simulate complex circular manufacturing systems for getting an understanding of their economic, environmental and technical performance throughout a product’s multiple life cycles.
Slide from Dr. Amir Rashid’s presentation of Tools for quantitative analysis of circular economy strategies.
A car manufacturer, for example, normally has around 20,000 suppliers. Adding circular business models that introduce multiple lifecycles, repairs, remanufacturing and so on, makes the already complex manufacturing system even more so. Tools like these will help simplify, quantify and simulate a system over a long period of time in just a few minutes.
The tools simulate physical flows, information flows and financial flows among different stakeholders in multiple lifecycles, and assesses:
economic performance (e.g. lifecycle costs, revenues and profits);
environmental performance (e.g. ecological footprint); and
technical performance (e.g. predicting quality, quantity and timing of product return flows).
The tools have been developed and were presented by Dr Amir Rashid, Professor in Manufacturing, and Malvina Roci, PhD candidate in Production Engineering, both from the KTH Royal Institute of Technology.
Tool 4: Three dimensions of circularity — a low-threshold tool for exploring circular business opportunities
The objective of this tool is to provide a pragmatic approach to starting assessing circularity within your business. The tool is intentionally very simplified in order to make it easy to use and get started with.
Slide from Robert Boyer’s presentation on the Three Dimensions of Circularity.
The three dimensions are:
Recirculation, e.g. can a product be produced of recycled materials or resold? Or will it be made of virgin materials and only used once?
Utilisation, e.g. is the product used a lot and provides functionality often? Or will it mostly take up space in a closet?
Endurance, e.g. is it made of strong materials with timeless design? Or will it break easily, be difficult to repair or quickly go out of style?
A good way of getting started is to start assessing the dimension that is most accessible for your business and then move on to the next.
This tool was presented by Robert Boyer, a Senior Researcher at RISE Research Institutes of Sweden, who is also one of the authors of the paper “Three-dimensional product circularity” (2020) in which the concept was originally published.
Which circular tool is the right one for your business?
Are you just beginning to explore, are you in your piloting phase or have you moved on to scaling up your circular business? Which dimension of circularity is the most accessible for you? Just check out one of the tools introduced above or dive deeper to learn more:
Good luck with your circular transition!
Written by Sofia Sundström (Cradlenet).
Audience following the third day of the Nordic Circular Summit 2022 in Stockholm.
Further reading:
You might also be interested in reading the Summit summary article by the circular economy expert Jan Agri in which he explores the key trends and outtakes from the NCS2022: The Nordic Circular Summit 2022 gathered a record audience
