[Note: This is the 23rd post in our “Papers in Brief” series. This series offers a special service as it explains the core ideas of chosen research papers in a nutshell.]

Papers in Brief (XXIII) by Nancy Bocken, Cheyenne Schuit & Christiaan Kraaijenhagen

Bocken, N.M.P.; Schuit, C.S.C. Kraaijenhagen, C. (2018), “Experimenting with a circular business model: Lessons from eight cases”, Environmental Innovation and Societal Transitions, in Press. https://doi.org/10.1016/j.eist.2018.02.001

Background and relevance

With increasing global sustainability challenges, there is an urgent need for experimentation with new sustainable business models, but there is little understanding of how this needs to be done in practice. The topic of experimentation is widespread in fields like natural sciences and economics (Bocken et al., 2016) and has prevailed in literature on strategic niche management and transitions management focusing on searching, learning and experimenting for sustainable development (Kemp et al., 1998). However, there is insufficient evidence on the role of business in sustainability experimentation, except emerging work incorporating the notion of the Lean Startup in circular business experimentation (Antikainen et al., 2017; Weissbrod and Bocken, 2017). Nevertheless, it has been recognised that sustainability oriented paradigm shifts in business may originate from a small number of organisation members and individual actions and practices triggering transitions (Shove et al., 2012). This paper explores the role and process of sustainable business model experimentation within companies that shift from a linear to more circular business model.

Research method

From 2016 to 2017, we conducted action research with eight case studies at Delft University of Technology, in collaboration with a societal and environmental purpose-driven innovation consultancy firm, Innoboost, both based in the Netherlands. The objective of this collaborative project, ‘Kickstarting circular business experimentation’, was to help eight case companies transition to profitable circular business models through experimentation. Collaboration was sought with eight case companies who are on their journey of becoming a sustainable business. Research was done in a participatory, action-led manner.

The case companies varied in terms of size and age and included:

1. Fresh-r (decentralized ventilation system with heat recovery);
2. Mud Jeans (leasing jeans);
3. Bugaboo (strollers);
4. Peerby (product sharing platform);
5. Evides (drinking water & water services);
6. Vereijken Hooijer (stables and nursing homes for pigs);
7. Philips (electronic appliances for a healthy lifestyle); and
8. Boska (accessories for cheese, also called cheesewares)

In the journal paper, we report on the the role of experimentation in the sustainability transition of the case companies as well as the process of experimentation.

Results

Role of experimentation: The cases showed that experimentation could serve as a way to create internal and external traction for a sustainability transition. It can create evidence to bring along internal stakeholders and help build a network of actors to facilitate implementation. Tracking progress against sustainability goals was found to be an important part of the experimentation process in addition to the need to move from experiments to scaling up.

Process: The case studies showed that there is a certain sequence in experimentation steps, starting with the business purpose and value proposition, followed by more operational aspects such as value creation and delivery, and value capture. However, companies tend to go back-and-forth between steps, for example, going back to the business purpose or redoing a value proposition experiment. Circular business experimentation tends to be an iterative process rather than a linear checklist type of approach.

In the journal paper, we develop a “Circular Business Experiment Cycle” (Figure 1), which shows this potential sequence of experiments observed from the cases, starting with the business purpose and sustainable value proposition. In contrast to just ‘making money’, the business purpose for a sustainable business includes clear societal and environmental goals. A value proposition experiment then focuses on the customer viability of the product/service offering. Value delivery experiments focus on customer relationships, customer segments and channels. Other stakeholders, such as local community representatives (‘society’) or environmental NGOs (‘environment’) can get involved in these experiments to test whether and how the business can create and capture wider societal and environmental value. Value creation and value capture experiments are about including stakeholders to operationalize the business model, and developing the business case for all stakeholders involved respectively. Finally, a field experiment can test all assumptions together including operational aspects.

The Circular Business Experiment Cycle in Figure 1 also includes “triple bottom line checks” (i.e., checks for sustainability performance, which can be done using something like the streamlined environmental value proposition approach; Manninen et al., 2018) in addition to deliberate learning after each experiment. After the field experiment, a more thorough LCA could be performed to assess the full environmental impact.

Figure 1. The Circular Business Experiment Cycle

References

Antikainen, M., Aminoff, A., Paloheimo, H., Kettunen, O. (2017), “Designing circular business model experimentation- Case study”, The Proceedings of the 2017 ISPIM Forum, Toronto, Canada, 19-22 March 2017. ISBN 978-952-335-019-9.

Bocken, N.M.P., Weissbrod, I., Tennant, M. (2016), “Business model experimentation for sustainability”, Sustainable Design & Manufacturing Conference, Crete, Greece, 4-6 April 2016.

Kemp, R., Schot, J., Hoogma, R. (1998), “Regime Shifts to Sustainability through Processes of Niche Formation. The Approach of Strategic Niche Management”, Technology Analysis and Strategic Management, Vol. 10 (2), 175-195.

Manninen, K., Koskela, S., Antikainen, R., Bocken, N., Dahlbo, H. and Aminoff, A. (2018), “Do circular economy business models capture intended environmental value propositions?”, Journal of Cleaner Production, Vol. 171, 413-422. DOI

Shove, E., Pantzar, M., & Watson, M. (2012), The dynamics of social practice: Everyday life and how it changes, Sage publication ltd London, 208p.

Weissbrod, I., Bocken, N. (2017), “Developing sustainable business experimentation capability – a case study”, Journal of Cleaner Production, Vol. 142, Part 4, 2663-2676.