This paper evaluates 13 tools for circular business model innovation from a system perspective. The results indicate that the analysis of the interactions between business models remains unexplored. Thus, approaches for the system-level quantitative assessment of circularity and sustainability benefits are yet lacking. The article suggests future directions to address these gaps.
Keywords
Circular economy; business ecosystem; value network; value chain; business model tools
Introduction
The circular economy (CE) has recently emerged as one of the main paradigms for the sustainable development of socio-economic systems, striving for zero waste and pollution through the efficient use of resources (Geissdoerfer et al., 2017; Nobre and Tavares, 2021). Accordingly, circular business model innovation (CBMI) is increasingly viewed as a key driver of the transition from the current linear take-make-use-dispose economy to a circular model (Velenturf et al., 2019).
Circular business models (CBMs) focus their value proposition, creation, delivery and capture dimensions (Geissdoerfer, 2019; Hernández-Chea et al., 2021) to narrowing (reducing resource consumption), slowing (using resources for the longest possible) and closing (facilitating effective recycling and recovery) resource loops to minimise negative impacts (Konietzko et al., 2020; Mendoza and Ibarra, 2023). Thus CBM have the potential to transform entire industries, as they connect multiple actors, mediate between production and consumption systems, facilitate the diffusion of sustainable technologies and act as non-technological innovation niches (Gorissen et al., 2016; Roberto Hernández-Chea et al., 2021).
However, CE transitions require the deployment of systemic innovations, targeting not only unsustainable business models, but the entire business ecosystems, in order to manage potential rebound effects and trade-offs to mitigate global impacts (Bocken et al., 2019b; Castro et al., 2022; Mendoza et al., 2022). Business ecosystems can be described as value-oriented multi-stakeholder networks, represented by transactions between stakeholders, which include 1) actors internal to the company (e.g. shareholders, employees or management), 2) actors and business models affected by a company across the value chain (e.g. consumers, suppliers or retailers) and 3) value network stakeholders, which can be directly or indirectly related to the company’s BM such as competitors, universities, local communities, government, society and environment (Bertassini et al., 2021).
CBMI to support a sustainable development, requires, therefore, to adopt a multi-stakeholder network perspective, integrating stakeholder values into the firm’s value creation, delivery and capture mechanisms, and developing both formal and informal forms of collaboration, within and across value chains, towards a common goal of sustainability (Breuer et al., 2021; Breuer and Lüdeke-Freund, 2017).
To operationalise and facilitate the implementation of CBMs in practice, different CBMI approaches and tools have been developed in recent years, including process models (e.g. Geissdoerfer et al., 2017), frameworks (e.g. Joyce et al., 2016; Mendoza et al., 2017), configurators (Henry et al., 2020; Lüdeke-Freund et al., 2019) and innovation patterns (Bocken et al., 2014; Pieroni et al., 2021). Given the wide variety of tools available, several authors have attempted to systematise the range of tools for CBMI (Bocken et al., 2019a; Pieroni et al., 2019) to provide an overview of existing sustanability- and CE-oriented tools and their applicability across the different stages of the CBMI process. However, the evaluation of the existing CBMI tools from a system perspective has not been yet addressed in the literature.
The present study aims to address this gap by providing an overview of the scope and applicability of CBMI tools that, in addition to the principles of circularity and sustainability, integrate a system perspective (business ecosystem approach) across the life cycle of CBMs, to drive innovation and change.
Method
A methodology combining a systematic literature review and content analysis was applied for the identification and categorisation of CBMI tools that integrate a system perspective.
Systematic literature review
Four search strings were used in titles, abstracts and keywords combining 1) circular economy and sustainability, 2) business model innovation, 3) Tools and 4) ecosystem related keywords to identify relevant tool-oriented academic and conference articles, using SCOPUS as the search engine. The search yielded a total of 43 articles which were reduced to eight after excluding those out of scope (i.e. not presenting and/or analysing the use of CBMI tools and/or focused on interaction assessment). In addition, five articles identified by snowballing were added to the final sample, giving a total of 13 articles for review.
Content analysis
Building on Bocken et al. (2019a), a framework was designed to structure the analysis of the scope and facilitate the comparison of the tools identified in the literature review. The framework consists of three categories (Table 1) with a set of pre-defined sub-categories and codes that were refined as the content analysis was conducted Hernández-Chea et al. (2021).
Table 1. Framework to analyse the scope of the CBMI tools.
Categories
Sub-categories
Coding examples
Purpose
CBMI stage
Ideate and design; implement and test; evaluate and improve
Raw material extraction & processing; manufacturing; transportation; use & maintenance; waste management
CE strategy
Slowing, narrowing, closing, regenerating
Sustainability impact
Social; economic; environmental
The categories were defined based on previous articles focused on CBMI tools analysis (Bocken et al., 2019a; Pieroni et al., 2019) and CBMI-related studies that integrate ecosystem, life-cycle, circularity and sustainability aspects (Antikainen and Valkokari, 2016; Bertassini et al., 2021; Mendoza et al., 2022; Nußholz, 2018).
Results
Table 2 shows the results of the purpose (end-goal) and scope (Table 1) of the 13 CBMI tools analysed.
All the identified CBMI tools focused on the ideation and design stage of the BMI process and were, unsurprisingly, business-oriented. All the tools are generalisable with the exception of three (Averina et al., 2022; Huynh, 2022; Kaipainen et al., 2022) that were specific to the context of a particular industry (i.e. mining and electrical industries, fashion industry, and pulp and paper industry, respectively). Only six tools have been validated with practitioners or students (Aminoff et al., 2016; Antikainen and Valkokari, 2016; Bocken et al., 2019b; Mentink, 2014; Nußholz, 2018; Santa-Maria et al., 2022), the rest being conceptual.
Overall, the authors usually present and analyse the application of a single tool rather than toolboxes. The only article that provide a toolbox is Santa-Maria et al. (2022) who adapted the Design Thinking methodology replacing some conventional tools (e.g. Customer journey map, Persona or Empathy map) with Value chain and Value exchange mapping tools to facilitate a system level lifecycle perspective. They also include tools related to vision co-creation and a sustainability scan to support sustainability-oriented thinking.
The identified CBMI tools are usually designed to guide practitioners in the transition from linear to CBMs with training resources, such as frameworks (Aminoff et al., 2016; R. Hernández-Chea et al., 2021) and canvases (Antikainen and Valkokari, 2016; Bocken et al., 2019b; Mentink, 2014; Nußholz, 2018; Santa-Maria et al., 2022) that rely on the use of qualitative data. Most of them follow a component-based approach to conceptualise the CBM usually building upon the Business Model Canvas (BMC) by Osterwalder and Pigneur (2010) by extending the profit-based and business-centric view of the BMC to integrate sustainable value creation and capture for all parties throughout the CBM lifecycle. For instance, Antikainen and Valkokari (2016) adapts the BMC by integrating the business ecosystem and sustainability impact dimensions. Mentink (2014) developed the Business Cycle Canvas, which integrates a life cycle assessment approach to facilitate business systems thinking. Nußholz (2018), in turn, developed a CBM mapping tool that enable designing the BM components across the full life cycle of products and the affected value chain. The framework provided by Aminoff et al. (2016) enable to explore the value creation, missed or destroyed, visualising the stakeholders and main value dimensions between the actors within a value network.
Some authors present CBM typologies following a pattern-based approach, which can be suitable to map CBMs according to their degree of innovation with respect to the innovation strategy (product-, service- and process-innovation) and required circular supply chain innovation (from incremental to radical) (Kaipainen et al., 2022) and visualise communication flows between different stakeholders (Huynh, 2022). Some combine CBM patterns, life cycle assessment and value chain aspects to support strategic decisions regarding the development of circular value architectures (e.g. vertical integration, network, outsourcing and laissez-faire) for a specific product (e.g. smartphones) (Hansen and Revellio, 2020).
Two CBMI tools focus on decision-making processes for the evaluation of circularity and sustainability opportunities (Averina et al., 2022; Lieder et al., 2017). The Sustainability opportunity assessment framework (Averina et al., 2022) consist of a set of criteria for the analysis and selection of opportunities that can subsequently lead to CBMs to support decision-making. Those criteria include the qualitative assessment of ecosystem readiness to address the sustainability opportunity and the potential benefits in the triple bottom line.
On the other hand, the analysis tool developed by Lieder et al. (2017) stands out as being the only tool identified based on quantitative data and modeling tools linking product design, CBMs and supply chains. The authors combine agent-based and discrete event simulation to model closed-loop manufacturing systems to investigate the consequences of different end-of-life design options (e.g. reuse, remanufacturing, recycling) throughout the product lifecycle (e.g. use, manufacture and recovery phases). As a result, Lieder et al. (2017) quantify the economic costs, material savings and environmental impact (CO2 emissions) over time for different CBM and supply chain configurations (e.g. buy-back, leasing, pay-per-use), which significantly reduces uncertainty and improves decision making on the implementation of circular systems.
Additionally, three tools that bring new perspectives to the study of CBMI from a system view deserve to be highlighted. The first one relates to the Framework for CBMI developed by Sopelana et al. (2021). Using System Dynamics modelling techniques the authors explore the interactions between variables regarding value chain, techonology, legal and sustainability aspects to understand how the company/system combines investments in new technologies and value creation in line with sustainability objectives within the EC perspective.
Hernández-Chea et al. (2021), propose the Business model activity system for sustainability transitions. The framework links BM activity systems with transition management. It is the only tool identified that adopts the approach developed by Zott and Amit (2010), who describe BM as a set of interdependent activities that transcend firm boundaries. Their findings highlight that experimenting with collaborations in the short-term and creating interdependent networks and collaboration with stakeholders across the value chain in the medium term drive sustainable BMs. The authors provide a set of guiding questions and sustainability practices to guide companies to move towards sustainability.
Finally, the Business Models Experimentation Map developed by Bocken et al. (2019b) guides experimentation with new BM building on five design considerations (Boons and Bocken, 2018) that include product design, value chain, infrastructure, BM dependency, interactions with existing BM and rebound effects. Thus, it is the only CBMI tool identified that addresses the analysis of dependencies and interactions between BMs (e.g. neutral, mutualism, symbiosis, competition, parasitism and dominance) to reduce unsustainable practices and maximise positive impact on business ecosystem.
Overall, CBMI tools include CE and triple sustainability practices in a generic way, which facilitate a sustainable ecosystem view in the early stages of the CBMI, however, there is a lack of criteria, metrics and indicators for circularity and sustainability assessment from a system perspective. Only three articles (Hansen and Revellio, 2020; Huynh, 2022; Lieder et al., 2017) address specific CE strategies, which focus on slowing (e.g. maintain, repair, reuse and remanufacture) and closing (e.g. recycle) resource loops in the usage/retail and waste disposal stages of the life cycle to reduce environmental impact thorough the value chain.
Conclusions
The present study provides an overview of 13 tools for CBMI from a system perspective identified through a systematic literature review. Tools are evaluated according to their purpose and characteristics focusing on the ecosystem, life-cycle, circularity and sustainability aspects addressed.
Overall, the CBMI identified rely on frameworks and canvases that apply qualitative data to guide the transition from linear to CBMs in the early stages of CBMI. The results indicate a lack of CBMI tools embedding systems thinking to explore unintended consequences and rebound effects during the BMI process. Additionally, there is a lack of quantitative approaches providing metrics and indicators to assess the interdependencies and impacts between CBMs within and across value chains. Moreover, studies do not usually specify the system boundaries of the CBMI, while the terms value network and business ecosystem are often use interchangeably, making it difficult to compare the CBMI tools and systematise the results.
These findings are in line with recent publications that emphasize the need to integrate a systemic view into tools for the circularity and sustainability assessment of CBMs in the early-stages of CBMI, in order to anticipate and avoid unintended consequences and rebound effects (Mendoza et al., 2022; Schlüter et al., 2023). It also reflects recent concerns about the lack of tools to assess the direct and indirect impacts of CBMs, due to the difficulty of predicting possible outcomes (Bocken et al., 2019b).
This paper presents a brief overview that should therefore be expanded to provide a more comprehensive view of the tools that can be used to fill the abovementioned gaps. Some suggestions are listed below:
Due to the novelty of the field, tools from other research streams such as co-creation/collaborative networks and business ecosystems should be evaluated to explore their suitability for analysing CBMs from a system view.
Future studies should also extend the review to the field of business models. For instance, the early schools of thought representing business models as systems of interdependent activites (Zott and Amit, 2010) and strategic choices (Casadesus-Masanell and Ricart, 2010) could bring new perspectives to the development of CBMI tools for the analysis of dependencies and impacts of CBMs.
In line with this, further research is needed on the potential modelling tools such as system dynamics and agent-based modeling to explore CBM interactions within and across value chains and to assess sustainable value loops between multiple stakeholders.
The business models ecology approach (Bocken et al., 2019b; Boons and Bocken, 2018) provides a promising starting point for further exploration of the dependencies and interactions between BMs from a system perspective. This should be complemented with the consideration of system-level sustainability approaches, such as the planetary boundaries and the doughnut economic model, among other approaches.
Future research must also focus on combining case studies with quantitative indicators and metrics for circularity and sustainability assessment of BMs. Sustainability- Resource-efficiency and lifecycle- assessment tools that could be adapted for the quantitative evaluation of interactions and impacts of CBMs from a system view should be further explored.
Finally academic literature should be complemented with a review of grey literature to include current websites and platforms for CBMI (Bocken et al., 2019).
This short article is part of an ongoing project funded by the Provincial Council of Gipuzkoa (Nº EZAGUTZA-8/2022) that seeks to address the gaps listed above.
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