Taking Part in the Circular Economy: Four Ways to Designing Circular Business Models

Abstract

The traditional “take-make-dispose” consumption model cannot sustain in the long run and companies need to adapt their business models to find more sustainable ways to create, deliver and capture value. Business models that decouple economic growth from raw material input, using a circular approach, will become essential in the near future. This idea has come to be known as the circular economy. In the circular economy, resources are kept in use for as long as possible, by for example reusing or repairing products that would have been thrown away in a linear economy. To illustrate how companies can implement circular business models in practice, we provide examples from the do-it-yourself-construction retail industry in Norway - a traditional industry known for its wasteful “take-make-dispose” approach. We propose four business model designs that offer different ways for companies to become more circular rooted in the ideas of product life extension, resource recovery and product-as-service logic. As we will discuss, while some of these practices can be added to the retailer's existing business model, others require a more radical change in the traditional business model. By means of our findings, we intend to encourage retailers to change their business models towards greater sustainability and eventually steer their suppliers and customers towards more sustainable production and consumption patterns.