Through designing ‘circular’ business models, we want to see specific changes in the resource flows in our economy. We want to move away from linear patterns by slowing and closing resource loops. There is one important characteristic of business models that slow and and close resource loops. Their value creation logic is designed to create and capture value from maintaining and utilizing the embedded value in resources for as long as possible. Based on my research and in collaboration with many companies, I have developed a tool to help designing business models that maintain and capitalize on resource value for as long as possible - the circular business model canvas. I identified five interventions to slow and close resource loops: collection and reintegration of resources; enabling prolonged use; enabling additional life-cycles of a product or its parts, and enabling material recycling. As you can see we map collection and reintegration twice, and this is because it can happen both upstream or downstream in a company’s value chain. These interventions are located on the top of the canvas, and on the left side, we have the value dimensions of the TRADITIONAL business model canvas: value proposition, value creation and delivery, and value capture. [MULTIPLE CHOICE QUESTION 1] Which are the key interventions to slow and close resource loops in the Circular Business Model Planning Tool: · collection and reintegration of resources (X) · enabling prolonged use (X) · enabling cascading of materials · enabling additional life-cycles of a product or its parts (X) · enabling material recycling (X) Let’s have a closer look at how we can use this tool by filling it out together using the company Fairphone as an example. The first intervention is Collect and reintegrate. This could be to reintegrate products, parts or materials in order to substitute virgin material with secondary materials like recycled plastic or copper. But at the moment Fairphone does not do this and we will therefore leave this column blank. So let’s move on to the second intervention, enabling prolonged use. Fairphone’s offer is a modular long life phone and access to replacement modules and repair guides on the Fairphone website. Their value proposition includes the competitive performance standards, reparability and low lifecycle costs. Their targeted customers are segmented into individual customers and private and public organizations. Customer relationships are devised to create a community among the Fairphone users. The website provides users a platform to access services via a personal account, organize events with other Fairphone users, like repair cafés, or participate in the Question and Answer Forum. Key activities include the management of production, value chain activities, sustainability standard implementation and operations as sales and shipping. Key resources include fair-sourced minerals - especially gold - the capabilities to develop a competitive, high-quality modular phone design and transparent, sustainable value chain management. Key partners include material and component manufacturers and software developers, but also industry networks such as the Clean Electronics Production Network and NGOs to aid implementation of the sustainability standard programmes. Channels to sell and deliver to customers consist of the website and third-party retailers. Their costs are mainly production and operations, and their revenues are generated from the sales of phones and replacement parts. For Fairphone this is pretty straight forward, but there are many companies that have a more complex pricing structure. So, let’s move on to the next column and that is about post-use collection and reintegration. To do this, Fairphone offers users the possibility to send them two end of use phones. And these can be any phones, not just a Fairphone. The value proposition is convenient shipping of the phones - free of charge. Targeted customers are ALL Fairphone users. The community-based relationship developed with users, incentivises them to return their phones, instead of having them disappear in their drawer. Key activities include motivating the return and informing users about practicalities, such as whether their end-of-use phones are still of sufficient quality for repair or recycling. Key resources are the return system. An important key partner to enable this, is the repair and recycling company Teqcycle, and Phones are shipped directly to Teqcycle. Return channels are devised by offering users free-shipping labels on the Fairphone website. And costs here result from operating the collection scheme and no revenue is generated at this point. Moving on to the next column: additional use phases. Fairphone offers a resale opportunity to their partner Teqcycle. The value proposition includes the modular design of the Fairphone, which makes repair and resale of phones relatively easy. Customers for the repurposed phones are in fact not direct customers of Fairphone, but customers of Teqcycle. So, we don’t map them here in the canvas. Fairphone collaborates with Teqcyle for the take-back system. For key activities, Fairphone is supportive of the end-of-life management, like supporting research to identify improvement opportunities. A key resource to enable this intervention is the design of the product, which facilitates disassembly. And as key partner, we can again put down Teqcycle. So, we see that Fairphone has aligned its business model to also support Teqcycle in creating value. Costs here, could be cost for disassembly and revenue could come from sale of recovered parts, which could to some extent be shared between Fairhone and Tecqycle. The last column is recycling, where materials from phones that are not suitable for repair or reuse are recovered. So, Fairphone offers recovery of materials such as gold, glass and several scarce materials. The value proposition is easy recycling as phones are purposefully designed to increase recovery rates. We can again assume that a collaborative relationship with Teqcycle is maintained to optimize recovery routes. Key activities of Fairphone are those related to support end of life management as research on recycling or engaging in industry networks to support development and scale-up of automated disassembly processes for consumer electronics to further increase recovery rates. A key resource is again the adapted product design to support recycling and the partner obviously Teqcycle. Costs here could be cost of recycling, and revenue could be sale of secondary raw materials. These could also be shared between Fairphone and Tecqycle. Looking at the two last interventions, we see that, as responsibilities between Fairphone and Teqcycle are more and more split, not all business model elements of our focal company Fairphone are filled in. It is also important to note that not all of the interventions have to be addressed in a circular business model. That is because in some cases, some interventions may not be more resource efficient or economically desirable. Also, they can rarely be realized by one company alone, but are rather realized in networks of companies that align their business models to each other. In the case of Fairphone, no integration of secondary materials in their own products is happening yet. But blank columns in the circular business model canvas can indicate that there may be an opportunity for embedding more circularity in the business model, and that is worth exploring. The filled in canvas, can help us to see interdependencies between the interventions and how shaping business models elements in one intervention, enables value creation through other interventions. In the case of Fairphone, the relationship established with users when selling the phone, helps them reach out to users to inform about repair possibilities and to motivate the return of phones. Also a key resource, the design for repair and recycling, facilitates value creation after use for its partner Teqcycle. So, to sum up, the circular business model canvas guides companies which interventions need to be considered to design circular business models. It helps to plan and analyze the business model elements for each intervention, so that a company can implement and capitalize on circular strategies and recognize the interdependencies of business model elements across the lifecycle. On top of this, it can help to identify opportunities to capture residual value of products, parts and materials and reduce the related environmental impacts.
