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The what and how of circular business models

"Circular business models, on the other hand, are so composed, to extend the life of products, reuse materials and use resources more efficiently."

Nancy Bocken, professor of Sustainable Business

LIOF's circularity event

Sustainability and circular economy are concepts that cannot be ignored in the coming years. In a world where raw materials are becoming scarcer and pressure on the environment is increasing, it is crucial that companies think about how they can adapt their business models to operate more sustainably. During the LIOF circularity event, Nancy Bocken, professor of Sustainable Business and researcher at Circular X, explored the world of circular business models.

CircularX

Would you like to be inspired by various interesting cases of entrepreneurs or would you like to learn more about (the possibilities with) circular business models? This platform is funded by the European Research Council and conducts research on various circular business models.

Circular business models

What are they and why are they so important?

In today's linear economy, raw materials are extracted and used to make new products. This process depletes natural resources and leads to waste of materials. "Circular business models, on the other hand, are formulated to extend the life of products, reuse materials and use resources more efficiently," Nancy explains. "In doing so, it puts less strain on the environment and reduces a company's carbon footprint."

Closed and open innovation

An important aspect of circular business models is the degree of collaboration and innovation. Companies can be divided into different categories based on their approach. On one side, you have the 'level of service' spectrum, where companies sell, lease or rent products, or receive payments based on use or performance. On the other is the 'resource' spectrum, which refers to how companies handle the materials and resources they use.

"An important distinction in this approach is that of closed versus open innovation," Nancy continues. "Closed innovation refers to companies trying to innovate on their own, such as Apple making its packaging recyclable. On the other hand, we see more and more companies collaborating with others to achieve common goals. This happens because certain challenges are cross-industry. Cooperation with competitors, so-called co-opetition, is then necessary to find sustainable solutions."

Circular economy in Limburg

In Limburg, the transition to circular business models is actively encouraged and supported. The Circular Innovation Top 20 is organized annually, where innovative initiatives from various sectors are recognized. "Here you can see that circular models are not limited to only one sector, but are widespread in Limburg. From clothing to solar panels to machinery, both start-ups and established companies, large and small, are involved in this transition." Not all companies are fully circular, but applying the thinking demonstrates a growing awareness and commitment to sustainability.