3.1 Overview of circular business model archetypes

Circular business models are reshaping how companies create and capture value. These models focus on resource efficiency, product longevity, and service-based approaches to minimize waste and maximize resource use throughout product lifecycles.

From circular supply chains to sharing platforms, these archetypes offer diverse strategies for businesses to adopt circular principles. They challenge traditional linear models, promoting innovation in design, production, and consumption patterns to create a more sustainable economy.

Resource Efficiency

Circular Supply Chains and Resource Recovery

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• Circular supplies involve using renewable, recyclable, or biodegradable materials in production processes
• Reduces waste generation and dependence on virgin resources
• Resource recovery extracts value from waste streams through recycling, upcycling, or energy recovery
• Includes techniques like mechanical recycling, chemical recycling, and waste-to-energy conversion
• Industrial symbiosis creates mutually beneficial relationships between companies
  • Waste or by-products from one company become inputs for another
  • Reduces overall resource consumption and waste generation
  • Fosters collaboration and innovation across industries (Kalundborg Symbiosis in Denmark)

Closed-Loop Systems and Material Flows

• Closed-loop systems aim to create a circular flow of materials within production processes
• Materials are continuously reused, recycled, or repurposed within the system
• Minimizes waste generation and reduces the need for new raw materials
• Requires careful design and planning of product lifecycles
• Implements reverse logistics to facilitate the return of used products or materials
• Utilizes technologies like 3D printing and modular design to enhance material efficiency
• Closed-loop systems can be implemented at various scales (individual products, factories, or entire supply chains)

Product Longevity

Product Life Extension Strategies

• Product life extension focuses on prolonging the useful life of products
• Implements design strategies for durability, repairability, and upgradability
• Encourages modular product designs to facilitate easy component replacement
• Offers repair and maintenance services to extend product lifespan
• Provides software updates and upgrades for electronic devices
• Refurbishes and remanufactures products to give them a second life
• Promotes emotional durability by creating products with timeless designs
• Implements take-back programs to ensure proper end-of-life management

Performance Economy and Value Retention

• Performance economy shifts focus from selling products to selling performance or outcomes
• Emphasizes the importance of retaining product value throughout its lifecycle
• Encourages manufacturers to design for longevity and maintainability
• Implements pay-per-use or subscription-based models for product access
• Aligns economic incentives with product durability and efficiency
• Promotes the development of high-quality, long-lasting products
• Reduces overall resource consumption by maximizing product utilization
• Fosters innovation in product design and service delivery (Philips' "pay-per-lux" lighting model)

Service-Based Models

Sharing Platforms and Collaborative Consumption

• Sharing platforms facilitate the sharing of underutilized assets or resources
• Increases asset utilization rates and reduces the need for individual ownership
• Implements peer-to-peer sharing models for various products (cars, homes, tools)
• Utilizes digital technologies to connect users and manage transactions
• Promotes community-building and social interaction through shared resources
• Reduces overall resource consumption and environmental impact
• Challenges traditional ownership models and consumer behavior patterns
• Requires careful consideration of regulatory and liability issues (Airbnb, Uber)

Product-as-a-Service and Servitization

• Product-as-a-Service (PaaS) offers access to products through leasing or subscription models
• Shifts ownership and maintenance responsibilities to the service provider
• Encourages manufacturers to design for durability, repairability, and recyclability
• Aligns economic incentives with product longevity and performance
• Implements pay-per-use or outcome-based pricing models
• Reduces upfront costs for customers and provides flexibility in product access
• Facilitates easier product upgrades and technology adoption
• Requires robust logistics and maintenance systems to support service delivery
• Can be applied to various product categories (office equipment, industrial machinery, clothing)