How to tackle the two puzzling factors hindering Circular Business

Climate change and the scarcity of natural resources affect everyone. Therefore, discussions of circular economy as a means to promote sustainability have come to the fore. Moving from linear operations towards circular value creation is going to change various industries across the world.

Digitalisation can contribute significantly in transitioning to a more sustainable Circular Economy (CE). Digital solutions could help to close the material loops by providing precise data on the availability, location, and condition of products. In addition, organisations like Sitra and Ellen MacArthur are providing inspiring descriptions of different companies that have changed their operations according to CE principles.
Despite of these good intents, digital possibilities and increasing interest, the transition from a traditional linear business to a circular one is not easy. There are at least two puzzling factors, which you should consider, when aiming to advance circular business. They do not have generic models that fits for all.

1. How to Manage the Information?

Although the information items are quite generic in all CE business cases, each company has different requirements concerning data and information when executing business following CE principles. Different types of information are required depending on the business case, such as information about condition of assets, composition of material flows, relevant partners and stakeholders, customer needs and the technologies relevant for processing information flows.

2. How to Reconstruct the Value Network?

Implementation of CE business often requires a new kind of cooperation in the value network or even the creation of a new business ecosystem. To realise the value of CE business opportunities, the entire network needs to be described to better understand the whole value creation logic and potential new ways of doing CE business together. The collaboration model of the new CE value network, or ecosystem, should also support the governance of the actors involved in the network.

Therefore, if you want to move your company towards circular economy business, be at least prepared to identification of the necessary information flow and re-think your value network actors.

Our recent publication “Advancing Circular Business” provides five practical tools to solve the above-mentioned challenges. It provides approaches for:

  1. Building Circular Economy Scenarios
  2. Circular Business Idea and Concept Evaluation
  3. Assessing CE Impacts for Assets
  4. Road mapping the Knowledge Utilisation
  5. Network Perspective on CE Business Development

The “Advancing Circular Business” publication is available at VTT’s website: 

Pasi Valkokari
Senior Scientist

Jyri Hanski
Research Scientist

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