Holistic Business Models Drive Waste Elimination in Circular Economies

Why It Matters

Transitioning to a circular economy requires a fundamental shift in how businesses operate. This research highlights that isolated efforts are insufficient; a comprehensive, systems-level approach to business model design is crucial for achieving sustainability goals and fostering resilience.

Key Finding

To successfully operate in a circular economy and eliminate waste, businesses need to consider and integrate at least seven key components of their business model in a connected way, rather than focusing on individual aspects in isolation.

Key Findings

• A circular business model is defined as an organization's rationale for creating, delivering, and capturing value while simultaneously designing out waste, relying on renewable energy, thinking in systems, and embracing diversity for resilience.
• Companies need to address at least seven of the nine business model elements to effectively design out waste.
• A holistic, systems thinking perspective is essential for designing effective circular business models, rather than focusing on isolated elements.

Research Evidence

Aim: How can companies design and implement business models that effectively eliminate waste and operate within a circular economic system?

Method: Exploratory case study

Procedure: A literature review was conducted to define circular business models. Four companies (Patagonia, Rype Office, Splosh, and Desso) were then analyzed using the business model canvas as a framework to understand how they integrate circular principles into their operations.

Context: Corporate strategy and business model innovation within the context of the circular economy.

Design Principle

Integrate multiple business model components holistically to achieve systemic waste reduction and circularity.

How to Apply

When developing a product or service for a circular economy, map out how it impacts and is impacted by at least seven elements of the business model canvas (e.g., value proposition, customer segments, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, cost structure) to ensure a holistic approach to waste elimination.

Limitations

The study is exploratory and based on a small number of case studies, limiting the generalizability of findings. The definition of a circular business model is proposed and requires further validation.

Student Guide (IB Design Technology)

Simple Explanation: To make products and businesses more eco-friendly and less wasteful, you can't just change one thing. You need to think about how all the different parts of the business work together, like how they make things, how they sell them, and how customers use them, to make sure waste is designed out from the start.

Why This Matters: Understanding how business models can be designed for circularity is crucial for creating products and systems that are not only functional but also environmentally responsible and economically viable in the long term.

Critical Thinking: To what extent can a single company truly achieve a fully circular business model, or does it inherently require collaboration across multiple businesses and industries?

IA-Ready Paragraph: This research emphasizes that achieving a circular economy necessitates a holistic approach to business model design, moving beyond isolated initiatives. By integrating at least seven key business model elements, organizations can effectively design out waste and build resilience, a principle directly applicable to the systemic considerations of sustainable product development.

Project Tips

• When researching a sustainable design project, consider how your design impacts multiple aspects of the business model.
• Use frameworks like the Business Model Canvas to analyze the systemic implications of your design choices.

How to Use in IA

• Reference this study when discussing the importance of a holistic approach to designing sustainable products or services, particularly when analyzing the business model implications of your design.

Examiner Tips

• Demonstrate an understanding that sustainable design often requires a systemic approach, extending beyond the product itself to the entire business model.

Independent Variable: Integration of business model elements

Dependent Variable: Waste elimination and circularity

Controlled Variables: Company size, industry sector, specific circular strategies employed

Strengths

• Provides a clear definition of a circular business model.
• Uses a recognized framework (Business Model Canvas) for analysis.

Critical Questions

• How can the 'embracing diversity' aspect of the circular business model be practically measured and implemented?
• What are the primary challenges companies face when attempting to redesign seven or more business model elements simultaneously for circularity?

Extended Essay Application

• Investigate the feasibility of designing a circular business model for a specific product or service, analyzing the current business model and proposing a redesigned, holistic circular model with detailed strategies for at least seven elements.

Source

Designing out waste: an exploratory study of circular business models · Aaltodoc (Aalto University) · 2015