Project

Capitalising on Invisible Value -User-driven Business Models in the Emerging Circular Economy (AARRE)

Goal: AARRE focuses on user centric business models of CE. The goal of AARRE is to solve how to transform the invisible global value of the CE into successful: 1) business boost of existing companies, 2) new business of emerging companies. More info:http://www.vtt.fi/sites/AARRE/en Twitter: @AarreResearch

Methods: consumer workshop, Rapid experiments

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Maria Antikainen
added a research item
In this chapter, Antikainen and Bocken illustrate how a 5-step circular business model experimentation process model approach can be used. The main challenges across different phases are identified. Based on a case study they identify challenges related to feasibility of the needed technology, environmental challenges and challenges related to the scalability. Also, the collaboration between company and other stakeholders as well as with communication and visibility were identified as relevant challenges. The approach helps organisations to focus on the most relevant issues that are also most prone for challenges during the process offering also very practical tools. To conclude, various future research paths are identified for this new research field.
Maria Antikainen
added a research item
We are already overusing non-renewable resources and exceeding the environmental capacity of our planet and consumption is constantly growing. There is an alarming need to replace the current linear economic model with a more sustainable and preserving model called the Circular Economy (CE). The idea of the CE is to keep products and materials in use as long as possible, preserving or even increasing their value. The transition towards a CE requires a fundamental redesign of business models and end-to-end value chains. Instead of selling products, companies should move to retain ownership and sell their use as a service, allowing them to optimize the use of resources. Thus, buying for a service creates value differently for consumers than buying and owning a product. Therefore, there is a need to understand how CE-based services create value for consumers. In this study, customer value is perceived as a trade-off between the benefits and sacrifices that a consumer perceives when purchasing a product or a service. Our data is derived from consumer group interviews that took place in February 2016 in Finland. In the group interviews we introduced potential CE services to consumers. The data show that consumers are gaining practical, economic and personal benefits from three potential CE rental services: a sofa, a washing machine and clothing. Moreover, the study revealed that the benefits elicited by the washing machine model related mainly to practical benefits, while the sofa model, in particular, offered personal benefits to consumers. It also seemed that the sofa and clothing CE models entailed more psychological sacrifices compared to the washing machine model. The results also indicate that when making a decision on renting or owning, the balance between the economic benefits and sacrifices is crucial. If buying is seen as economically favourable, it easily wins out over renting, since it is a more familiar way to act. With regards to some products, personal and emotional benefits tend to override other factors.
Maria Antikainen
added an update
2015-2017
 
Maria Antikainen
added a research item
The circular economy (CE) focuses on keeping materials in use for as long as possible and also to preserve, or even upgrade, their value by creating added value through services and smart solutions. To succeed in this, instead of selling products, companies should move to retain ownership and sell their solutions as a service. Yet, mainstream consumers are still used to owning many products, such as tools, clothes, furniture, and domestic appliances. To attract consumers to choose a service instead of product ownership, the service offering needs to provide superior value. We explored the customer value journey regarding a tool rental service called Liiteri. On the journey the benefits were related to, for example, better quality and no need for storage and maintenance. On the other hand, the sacrifices were realised in the pickup and return steps, which were regarded as more laborious if the tool was rented.
Anna Aminoff
added 2 research items
Recently, the circular economy (CE) has attracted increasing attention as a way to reduce global sustainability pressures and to enable sustainable growth. A CE is an industrial system aiming to slow, close or narrow the cycles of the global economy. The lock-in to the linear supply chains of today is one of the major barriers in transition towards a CE, but academic literature is in its infancy. This paper develops a framework that helps to structure the vast concept of SCM in a CE and to classify the core SCM issues according to specific business models. The framework is applied in two cases.
The Circular Economy concept drives innovative practices and business models targeting sustainable economic growth while increasing resource efficiency. In supply chain management literature, sustainability has been framed frequently with economic performance as main goal rather than sustainability. Our research aims at bringing together supply chain research and industrial cases inspired on circular economy. Our selected industrial cases are companies performing new ways of creating value from previously wasted materials. Our results indicate that there are significant challenges in the structure and processes of today's supply chains. Yet, there are ways to overcome these, including close collaboration within the supply chain.
Anna Aminoff
added 2 research items
The transition towards a circular economy cannot be achieved if individual organizations advance their own interests independently. Companies need to build new collaborative networks for value co-creation. Therefore, identification of what kind of value will be created or destroyed for different partners in the networks is critical. In this paper, we propose a framework for mapping multidimensional value in co-creation networks by combining streams of literature on three topics: (1) Circular Economy, (2) Co-Creation and Collaborative networks, (3) Sustainable value creation. The specific contribution of the framework is that it recognizes that the value created in different parts of networks is linked, and the change of value in one link influences others. Moreover, the approach of the paper adds the dimension of circularity into analyses of value creation.
Recently the concept of the Circular Economy (CE) has attracted growing interest as a novel economic model aiming to foster sustainable economic growth, boost global competitiveness, and generate new jobs. A system-wide disruptive innovation shaping new ecosystems and changing the whole process of value creation is needed to tackle the current challenges and transformation to the CE. This paper asks how disruptive business model innovations work as a change mechanism for the CE. The paper develops a conceptual framework for shaping the industrial systems towards CE ecosystems and proposes how value circles and co-creation of value with a variety of partners are crucial aspects in enabling CE. The paper highlights that the concept of value circles would be beneficial in clarifying the difference to linear value chain models and the co-existence of several overlapping value circles.
Maria Antikainen
added 2 research items
Local food supports local finance, employment and cultural traditions. Local food producers often have limited resources to invest in R'D, and their risk-taking ability is low. Earlier studies in the online community context indicate that utilising the user's creativity and innovation capability has a great deal of potential for new product development and service design. For local food producers, social media offers cost-efficient opportunities for involving customers in product and service development. The aim of the study is to explore the potential of a co-creation approach for local food producers and how to engage consumers in that co-creation. The study is dyadic, taking both the consumers' and producers' perspectives. The results indicate that consumers seem to be interested in having long-term relationships with producers. Their motivations to participate in co-creation processes were found to be mostly related to the possibility of producing better products and of learning and gaining new insigh...
The concept of the Circular Economy has recently caught the attention of academia as well and businesses and decision makers offering an attractive solution for an environmentally sustainable economic growth. Companies need to consider how to close material loops, reduce the resources needed and think more about how materials and products are kept in the loop as long as possible. In order to do that, companies need to find new collaboration partners and reconsider the value offered for stakeholders. To solve that, we need new or modified innovation tools and processes to guide businesses in their innovation journey resulting in novel business models in a circular economy. Thus, the aim of this study is to increase our understanding of the circular business model innovation process. Our main focus is to explore what kind of mixed methods create value in circular business model innovation and what kind of challenges there are related to each method and how is it possible to overcome those challenges. The paper highlights the importance of involving different perspectives, stakeholders and using mixed methods during the innovation process.
Maria Antikainen
added 5 research items
There is a need to accelerate the change from the current linear economy towards a circular economy (CE), which is regenerative by intention and design. The transformation towards CE entails radical changes in the business environment. Thus, in CE-based business model (BM) innovation, we need to understand consumer preferences, their everyday life, and the role of material objects. We here build a preliminary framework based on consumer practices and the product–service system (PSS) literature. We also present the results of a small survey investigating consumers' opinions about BMs based on services, which was carried out (n=239) at the Housing Fair in Finland in 2015. The findings indicated consumers' past experiences were most strongly related to conventional service use, such as a car utilisation, though consumers also indicated interest in trying other CE-based services. Consumers seem to more easily adopt a BM that does not require dramatic changes in their practices.
The circular economy concept is a novel economic model aiming to foster sustainable economic growth, boost global competitiveness, and generate new jobs. In order to make the circular economy mainstream, radical and systemic innovation is needed. Currently, a majority of the business modelling tools and methods lack at least some of the identified and needed elements for innovating business models in a circular economy. In this article, we build a framework for sustainable circular business model innovation by adding important perspectives: recognizing trends and drivers at the ecosystem level; understanding value to partners and stakeholders within a business; and evaluating the impact of sustainability and circularity. We present the results of a case study with a startup company, which was designed to test the framework and provide a concrete example of its usage and future development needs.
In order to move towards sustainability and a circular economy, there is need for systemic innovation in all aspects of society, including our values and consuming practices, and technological and business innovations to all society structures (Wells 2016, Ellen MacArthur Foundation 2013). Companies need to consider how to close the material loops, reduce the resources needed and consider how materials and products are kept in the loop, as long as possible. With business model experimentations, companies can demonstrate a model’s feasibility, consumer acceptance and the environmental impacts in a cost-efficient way (Thomke 2003). Academic research related to designing business model experimentation is lacking. The aim of this study is to improve our understanding of how to design circular business model experimentation that takes into consideration both the companies’ and the research organizations’ needs. In this paper, we describe a pilot of a five-stage process model for rapid experimentation that takes into account both the entrepreneur’s and the research organisation’s needs and objectives.
Maria Antikainen
added a project goal
AARRE focuses on user centric business models of CE. The goal of AARRE is to solve how to transform the invisible global value of the CE into successful: 1) business boost of existing companies, 2) new business of emerging companies. More info:http://www.vtt.fi/sites/AARRE/en Twitter: @AarreResearch